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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 2, 1999
Correctional Services Corporation
(Exact name of registrant as specified in charter)
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<S> <C> <C>
Delaware 0-23038 11-3182580
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1819 Main Street, Suite 1000
Sarasota, FL 34236
(Address of principal executive (Zip Code)
offices)
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Registrant's telephone number, including area code: (941) 953-9199
Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index on Page 4
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Item 5. Other Events.
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On March 2, 1999, Correctional Services Corporation ("CSC") and Youth
Services International, Inc. ("YSI") executed a Second Amendment (the "Second
Amendment") to the Agreement and Plan of Merger between YSI, CSC and Palm
Merger Corp. dated as of September 23, 1998 (the "Merger Agreement"), as amended
by the First Amendment to the Agreement and Plan of Merger, dated as of January
12, 1999. The Second Amendment amends the Merger Agreement to provide that each
outstanding share of YSI common stock will be converted into the right to
receive .275 shares of CSC common stock.
The Second Amendment also effects other changes to the Merger
Agreement.
The joint press release issued by CSC and YSI with respect to the
announcement of the Second Amendment is included as Exhibit 99.1 hereto.
The foregoing description of and reference to the above-mentioned
agreements and documents are qualified in their entirety by reference to the
complete texts of the agreements and documents, which are filed as exhibits to
this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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2.3 Second Amendment, dated as of March 2, 1999, to the Agreement
and Plan of Merger, dated as of September 23, 1998, among YSI, CSC and Palm
Merger Corp.
99.1 Joint Press Release of CSC and YSI, dated March 2, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
Correctional Services Corporation
By: /s/ James F. Slattery
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James F. Slattery
President
Dated: March 3, 1999
3
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EXHIBIT INDEX
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Exhibit No. Description
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2.3 Second Amendment, dated as of March 2, 1999, to the Agreement and
Plan of Merger, dated as of September 23, 1998, among YSI, CSC
and Palm Merger Corp.
99.1 Joint Press Release, dated March 2, 1999.
4
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Exhibit 2.3
Second Amendment, dated as of March 2, 1999, to the Agreement and Plan of
Merger, dated as of September 23, 1998, among YSI, CSC and Palm Merger Corp.
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SECOND AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
This Second Amendment ("Amendment") to the Agreement and Plan of Merger
dated as of September 23, 1998 by and among Youth Services International, Inc.,
Correctional Services Corporation and Palm Merger Corp., as amended by the First
Amendment thereto dated as of January 12, 1999 (as so amended, the "Merger
Agreement"), is entered into as of this ___ day of March, 1999.
WHEREAS, the parties desire to amend the Merger Agreement to address
certain issues;
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Merger Agreement is hereby amended as set forth below.
1. Section 3.1.(a). The reference to ".375 shares" in Section 3.1.(a)
shall be deleted and replaced with a reference to ".275 shares."
2. Section 7.4. A new Section 7.4. shall be added as follows:
"7.4. Limitation on Conditions to Each Party's Obligation to Effect
the Merger.
(a) Notwithstanding the provisions of Section 7.1. and Section
7.2., no event or circumstance of which either Parent or Merger
Subsidiary had actual knowledge at the time of execution of the Second
Amendment to the Agreement and Plan of Merger, dated as of March ___,
1999, by and among the Company, Parent and Merger Subsidiary (the
"Second Amendment") shall constitute a permissible basis to relieve
Parent or Merger Subsidiary from their obligations to effect the
Merger pursuant to any condition set forth in Section 7.1. or Section
7.2., including but not limited to the condition set forth in Section
7.1.(g) (if an event or circumstance of which either Parent or Merger
Subsidiary had actual knowledge at the time of execution of the Second
Amendment forms the basis for a failure of J.C. Bradford to render a
fairness opinion to Parent), provided that the limitation in this
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Section 7.4.(a) shall not apply to the condition to Parent's and
Merger Subsidiary's obligation to effect the Merger set forth in
Section 7.1.(a) (relating to a failure by the holders of Shares or the
holders of Parent Common Stock to approve the Merger).
(b) Notwithstanding the provisions of Section 7.1. and Section
7.3., no event or circumstance of which the Company had actual
knowledge at the time of execution of the Second Amendment shall
constitute a permissible basis to relieve the Company from its
obligation to effect the Merger pursuant to any condition set forth in
Section 7.1. or Section 7.3., including but not limited to the
condition set forth in Section 7.1.(f) (if an event or circumstance of
which the Company had actual knowledge at the time of execution of the
Second Amendment forms the basis for a failure of SunTrust Equitable
Securities to render a fairness opinion to the Company), provided that
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the limitation in this Section 7.4.(b) shall not apply to the
condition to the Company's obligation to
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effect the Merger set forth in Section 7.1.(a) (relating to a
failure by the holders of Shares or the holders of Parent Common
Stock to approve the Merger)."
3. Section 8.1.(d). The reference to "March 31, 1999" in Section
8.1.(d) shall be deleted and replaced with a reference to "April 30, 1999."
4. Section 8.1.(e). Section 8.1.(e) is hereby amended and restated to
read in its entirety as follows:
"(e) By Parent after April 30, 1999, if any of the
conditions set forth in Article VII hereof, to which the Parent
and the Merger Subsidiary's obligations are subject, have not
been fulfilled or waived, unless such fulfillment has been
frustrated or made impossible by any act or failure to act of
Parent or the Merger Subsidiary;"
5. Counterparts. This Amendment may be executed in counterparts, each
of which shall constitute one agreement, binding on the parties, and each party
hereby covenants and agrees to execute all duplicates or replacement
counterparts of this Amendment as may be required.
6. Merger Agreement. The terms and provisions of the Merger
Agreement, as amended hereby, shall remain in full force and effect. All
references to the Merger Agreement contained therein shall refer to the Merger
Agreement as amended hereby.
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
YOUTH SERVICES INTERNATIONAL, INC.
By: /s/ Mark S. Dernilio
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Name: Mark S. Dernilio
Title: Sr. Vice President
CORRECTIONAL SERVICES CORPORATION
By: /s/ Ira Cotler
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Name: Ira Cotler
Title: Chief Financial Officer
PALM MERGER CORP.
By: /s/ Ira Cotler
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Name: Ira Cotler
Title: Treasurer
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EXHIBIT 99.1
Joint Press Release, dated March 2, 1999.
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NEWS
For Immediate Release COMPANY CONTACTS:
Ira Cotler (Correctional Services Corporation)
Executive Vice President-Finance
(941) 953-9199
Mark Demilio (Youth Services International)
Chief Financial Officer
(410) 356-8600
March 2, 1999
CORRECTIONAL SERVICES CORPORATION
AND YOUTH SERVICES INTERNATIONAL
ADJUST MERGER TERMS
Sarasota, Florida and Owings Mills, Maryland-- Correctional Services
Corporation ("CSC") (NASDAQ NMS:CSCQ) and Youth Services International, Inc.
("YSI") (NASDAQ NMS: YSII) announced today the terms of the previously announced
merger will be adjusted. Youth Services shareholders will now receive .275
shares of Correctional Services stock for each share of Youth Services' stock,
rather than the .375 previously announced. The Board of Directors of each
company has approved the adjusted terms and unanimously recommends its approval
to its shareholders.
Although Youth Services has been generating increasing revenues and
population levels, the companies agreed to reduce the exchange ratio to reflect
reductions in Youth Services' operating margins.
"Since the signing of the Merger Agreement, we have been working with Youth
Services' management and certain clients to explore growth opportunities and
areas for margin improvement", stated James F. Slattery, CEO and President of
Correctional Services. "However, in light of Youth Services' reduced operating
margins and recent balance sheet adjustments, we felt compelled to reevaluate
the deal's terms for all shareholders. CSC has developed a detailed integration
plan that addresses these issues and achieves our synergy goals, which we are
ready to implement as soon as the transaction is completed."
Correctional Services Corporation is a leading developer and manager of
privatized correctional and detention facilities in the United States. The
Company provides a diverse range of Adult and Juvenile programs and services to
local, state, and federal governmental agencies. The Company has 37 contracts to
manage facilities in twelve (12) states and Puerto Rico with an aggregate of
9,790 beds.
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YSI currently operates 27 residential juvenile justice facilities and
conducts non-residential programs in a total of thirteen (13) states serving a
total of approximately 3,200 youth.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
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This press release contains forward-looking statements involving various risks
and uncertainties. There can be no assurance that the merger will be
consummated. Even if consummated, actual results, including the level of
earnings of both CSC and YSI, and the success of the proposed merger, could
differ materially from those projected due to factors which may include
difficulties in the assimilation of operations, diversification of management's
attention from other business concerns, other acquisition risks, population
fluctuations, market and industry conditions, government funding and
availability of financing. These and other risk factors are outlined in the
reports filed by the Company with the Securities and Exchange Commission.
