As filed with the Securities and Exchange Commission on April 15, 1999.
Registration No. 333-72003
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 ON
FORM S-8
TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933*
CORRECTIONAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11-3182580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1819 Main Street
Suite 1000
Sarasota, Florida 34326
(Address of principal executive offices) (Zip Code)
Youth Services International, Inc. Stock Option Plan
Youth Services International, Inc. 1995 Employee Stock Option Plan
Youth Services International, Inc. 1995 Director Stock Option Plan
Youth Services International, Inc. 1996 Employee Stock Option Plan
Amendment No. 1 to and Restated Youth Services International, Inc.
1997 Employee Stock Option Plan
Youth Services International, Inc. 1998 Director Stock Option Plan
(Full title of the plans)
James F. Slattery
Chairman and Chief Executive Officer
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, Florida 34326
(Name and address of agent for service)
(941) 953-9199
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
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Title of Proposed maximum Proposed maximum Amount of
securities to Amount to be offering price aggregate registration
be registered registered per share offering price fee
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Common Stock 245,558 shs. $10.1563 $2,493,961 $694**
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* Filed as a Post-Effective Amendment on Form S-8 to such Registration
Statement pursuant to the procedure described herein-see "Explanatory Note".
**Previously paid.
<PAGE>
EXPLANATORY NOTE
Correctional Services Corporation ("CSC") hereby amends its
Registration Statement on Form S-4 (No. 333-72003), declared effective on
March 4, 1999 (the "S-4"), by filing this Post-Effective Amendment No. 1 on
Form S-8 relating to up to 245,558 shares of common stock, $.01 par value per
share, of CSC ("CSC Common Stock"), issuable upon the exercise of options to
purchase shares of CSC Common Stock pursuant to the provisions of (i) Youth
Services International, Inc. Stock Option Plan, (the "Stock Option Plan"),
(ii) Youth Services International, Inc.'s ("YSI") 1995 Employee Stock Option
Plan (the "1995 Employee Plan"); (iii) YSI's 1995 Director Stock Option Plan
(the "1995 Director Plan"); (iv) YSI's 1996 Employee Stock Option Plan (the
"1996 Employee Plan"); and (v) Amendment No. 1 to and Restated YSI's 1997
Employee Stock Option Plan (the "1997 Employee Plan") and (vi) YSI's 1998
Director Stock Option Plan (the "1998 Director Plan", and together with the
1995 Employee Plan, the 1995 Director Plan, the 1996 Employee Plan, and the
1997 Employee Plan, the "Stock Option Plans"), which have been assumed by CSC
pursuant to the Merger Agreement defined and described below.
Pursuant to the Agreement and Plan of Merger, dated as of September 23,
1998, as amended (the "Merger Agreement"), among CSC, Palm Merger Corp.
("Sub") and YSI, and the transactions contemplated thereby, among other
things: (i) Sub merged with and into YSI (the "Merger"), with YSI surviving
the Merger as a wholly-owned subsidiary of CSC, (ii) each share of common
stock, par value $.01 per share, of YSI (the "YSI Common Stock") issued and
outstanding immediately prior to the effective time of the Merger (the
"Effective Time"), other than shares owned by CSC and YSI, was converted into
the right to receive .275 shares of CSC Common Stock; and (iii) at the
Effective Time, CSC assumed the Stock Option Plans (and all outstanding stock
options granted thereunder).
Prior to the Effective Time:
- stock options granted under the Stock Option Plan related to
shares of YSI Common Stock, which shares had been registered by
YSI under a Registration Statement on Form S-8 (No. 33-71958);
- stock options granted under the 1995 Employee Plan and the 1995
Director Plan related to shares of YSI Common Stock, which shares
had been registered by YSI under a Registration Statement on Form
S-8 (No. 33-84934);
- stock options granted under the 1996 Employee Plan related to
shares of YSI Common Stock, which shares had been registered by
YSI under a Registration Statement on Form S-8 (No. 33-99498);
- stock options granted under the 1997 Employee Plan related to
shares of YSI Common Stock, which shares had been registered by
YSI under a Registration Statement on Form S-8 (No. 333-07157); and
- stock options granted under the 1998 Director Plan related to
shares of YSI Common Stock, which shares have not previously been
registered.
This Post-Effective Amendment relates to an aggregate amount of up to
245,558 shares of CSC Common Stock issuable pursuant to the Stock Option
Plans. When the S-4 was filed, CSC registered 4,593,962 shares of CSC Common
Stock (the "S-4 Registered Shares"). The S-4 Registered Shares included
335,939 shares (based on the initially agreed upon conversion rate of .375
shares of CSC Common Stock for each share of YSI Common Stock), of CSC Common
Stock ("S-4 Option Shares") issuable upon exercise of the outstanding options
under the Stock Option Plans assumed by CSC.
The designation of this Post-Effective Amendment No. 1 as Registration
No. 333-72003 denotes that this Post-Effective Amendment relates only to the
up to 245,558 shares of CSC Common Stock issuable upon exercise of options
under the Stock Option Plans and that this is the first Post-Effective
Amendment to the S-4 filed with respect to such shares.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
*
Item 2. Registrant Information and Employee Plan Annual Information.
*
*Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with the
Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents which have heretofore been filed by CSC with
the Securities and Exchange Commission (the "Commission") are hereby
incorporated by reference in this Registration Statement:
a. CSC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
b. All reports and proxy statements filed by CSC with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, after the date of this Registration
Statement and prior to the filing of a post-effective amendment which
indicates that all of the shares to which this Registration Statement
relates have been sold or which deregisters all of the shares then
remaining unsold, shall likewise be deemed incorporated herein and
made a constituent part hereof by reference from the respective date
of the filing of such document; and
c. The description of CSC's Common Stock contained in CSC's Registration
Statement on Form 8-A (No. 0-23038), as filed with the Commission on
December 30, 1993.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Epstein Becker & Green, P.C. has passed on the validity of the
shares of CSC Common Stock being offered pursuant to this Registration
Statement. Stuart M. Gerson, a director of CSC, is a member of Epstein Becker
& Green, P.C. and members of the firm own in the aggregate, directly and
indirectly, 3,650 shares of CSC common Stock and warrants and options to
purchase 66,155 shares of CSC Common Stock.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions thereof. Article Tenth of CSC's
Certificate of Incorporation, as amended and Paragraph 11.6 (a) of CSC's By-
laws provide for indemnification of CSC's directors, officers, agents and
employees to the fullest extent permissible under Section 145 of the Delaware
General Corporation Law. CSC presently maintains directors' and officers'
liability insurance coverage with an aggregate policy limit of $10,000,000 for
each policy year.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following are filed as exhibits to this Registration Statement:
Exhibit
No. Description
- ------- -----------
4.1 - Copy of YSI's 1995 Employee Stock Option Plan.(1)
4.2 - Copy of YSI's 1995 Director Stock Option Plan.(2)
4.3 - Copy of YSI's 1996 Employee Stock Option Plan.(3)
4.4 - Copy of Amendment No. 1 to and Restated Youth Services International
Inc.'s 1997 Employee Stock Option Plan.
4.5 - Copy of YSI's 1998 Director Stock Option Plan.
4.6 - Copy of YSI's Stock Option Plan.(4)
5 - Opinion of Epstein Becker & Green, P.C.
23(a) - Consent of Grant Thornton LLP.
23(b) - Consent of Epstein Becker & Green, P.C. (included in Exhibit 5).
24 - Power of Attorney (included in signature page of this Registration
Statement).
(1) Incorporated by reference to Exhibit 10.74 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(2) Incorporated by reference to Exhibit 10.80 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(3) Incorporated by reference to Exhibit 10.75 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(4) Incorporated by reference to Exhibit 10.71 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
Item 9. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change to
such information in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to directors,
officers or controlling persons of the Registrant pursuant to the provisions
of Registrant's Certificate of Incorporation, as amended or By-Laws, or the
provisions of the Delaware General Corporation Law or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Sarasota, State of
Florida, on this 15th day of April, 1999.
CORRECTIONAL SERVICES CORPORATION
By: /s/ James F. Slattery
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James F. Slattery
President, Chairman and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ira Cotler and James F. Slattery, and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any other regulatory authority,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as they or he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities set forth and on the date indicated.
Signature Title Date
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/s/ James F. Slattery President, Chairman of the April 15, 1999
- ------------------------- Board and Director
James F. Slattery (Principal Executive Officer)
/s/ Ira M. Cotler Chief Financial Officer April 15, 1999
- ------------------------- (Principal Financial and
Ira M. Cotler Accounting Officer)
/s/ Aaron Speisman Director April 15, 1999
- -------------------------
Aaron Speisman
/s/ Richard P. Staley Director April 15, 1999
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Richard P. Staley
/s/ Stuart M. Gerson Director April 15, 1999
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Stuart M. Gerson
/s/ Shimmie Horn Director April 15, 1999
- -------------------------
Shimmie Horn
Director April , 1999
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Melvin T. Stith
/s/ Bobbie L. Huskey Director April 15, 1999
- -------------------------
Bobbie L. Huskey
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
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4.1 - Copy of YSI's 1995 Employee Stock Option Plan.(1)
4.2 - Copy of YSI's 1995 Director Stock Option Plan.(2)
4.3 - Copy of YSI's 1996 Employee Stock Option Plan.(3)
4.4 - Copy of Amendment No. 1 to and Restated Youth Services International
Inc.'s 1997 Employee Stock Option Plan.
4.5 - Copy of YSI's 1998 Director Stock Option Plan.
4.6 - Copy of YSI's Stock Option Plan.(4)
5 - Opinion of Epstein Becker & Green, P.C.
23(a) - Consent of Grant Thornton LLP.
23(b) - Consent of Epstein Becker & Green, P.C. (included in Exhibit 5).
24 - Power of Attorney (included in signature page of this Registration
Statement).
(1) Incorporated by reference to Exhibit 10.74 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(2) Incorporated by reference to Exhibit 10.80 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(3) Incorporated by reference to Exhibit 10.75 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
(4) Incorporated by reference to Exhibit 10.71 to CSC's Registration Statement
on Form S-4 (Registration Number 33-72003).
YOUTH SERVICES INTERNATIONAL, INC.
1997 EMPLOYEE
AMENDED
(FOR AMENDMENT NO. 1)
AND RESTATED
STOCK OPTION PLAN
<PAGE>
AMENDED
(FOR AMENDMENT NO. 1)
AND RESTATED
YOUTH SERVICES INTERNATIONAL, INC.
1997 EMPLOYEE STOCK OPTION PLAN
1. Purpose
The proper execution of the duties and responsibilities of the executives
and key employees of Youth Services International, Inc. and its subsidiaries is
a vital factor in the continued growth and success of the Corporation. Toward
this end, it is necessary to attract and retain effective and capable
individuals to assume positions that contribute materially to the successful
operation of the business of the Corporation. It will benefit the Corporation,
therefore, to bind the interests of these persons more closely to its own
interests by offering them an attractive opportunity to acquire a proprietary
interest in the Corporation and thereby provide them with added incentive to
remain in the service of the Corporation and to increase the prosperity, growth,
and earnings of the Corporation. This stock option plan is intended to serve
these purposes.
2. Definitions
The following terms wherever used herein shall have the meanings set forth
below.
(a) The term "Board of Directors" shall mean the Board of Directors of the
Corporation.
(b) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
(c) The term "Committee" shall mean the Compensation Committee of the
Board of Directors or any other committee appointed by the Board of Directors,
which committee shall consist solely of two or more of those members of the
Board of Directors who are Non-Employee Directors within the meaning of Rule
16b-3 promulgated under the Exchange Act, as it may be amended from time to
time.
(d) The term "Common Stock" shall mean the shares of common stock, par
value $0.01 per share, of the Corporation.
(e) The term "Corporation" shall mean Youth Services International, Inc.
(f) The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(g) The term "Fair Market Value" of a share of Common Stock for any
given date shall mean the closing price of the Common Stock as reported on the
National Association of Securities Dealers Automated Quotation (NASDAQ)
National Market System (or if not traded on such system, as reported by any
national stock exchange on which the Common Stock is traded) on the trading
day immediately preceding such date.
(h) The term "Incentive Stock Option" shall mean any Option granted
pursuant to the Plan that is designated as an Incentive Stock Option and which
satisfies the requirements of Section 422(b) of the Code.
(i) The term "Nonqualified Stock Option" shall mean any Option granted
pursuant to the Plan that is not an Incentive Stock Option.
(j) The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and shall include the
terms Incentive Stock Option and Nonqualified Stock Option.
(k) The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as contemplated by Paragraph 7
of the Plan.
(l) The term "Plan" shall mean this Youth Services International, Inc.
1997 Employee Stock Option Plan, as the same may be amended from time to time.
(m) The term "subsidiary" or "subsidiaries" shall mean a corporation of
which capital stock possessing 50% or more of the total combined voting power of
all classes of its capital stock entitled to vote generally in the election of
directors is owned in the aggregate by the Corporation directly or indirectly
through one or more subsidiaries.
3. Effective Date of the Plan
The Plan became effective upon stockholder approval on November 8, 1996,
provided that any Options granted pursuant to the Plan prior to stockholder
approval were effective upon grant if such Options by their terms were
contingent upon subsequent stockholder approval of the Plan. Amendment No. 1
to the Plan became effective upon approval by the Board of Directors on
February 6, 1998.
4. Administration
(a) The Plan shall be administered by the Committee.
(b) The Committee may establish, from time to time and at any time, in its
sole and absolute discretion, but subject to the limitations of the Plan as set
forth herein, such rules and regulations and amendments and supplements thereto,
as it deems necessary to comply with applicable law and regulation and for the
proper administration of the Plan. A majority of the members of the Committee
shall constitute a quorum. The vote of a majority of a quorum shall constitute
action by the Committee.
(c) The Committee may grant options under the Plan, in its sole and
absolute discretion, and shall determine the numbers of shares for which Options
should be granted to each such person and the nature of the Options to be
granted.
(d) Options granted by the Corporation shall be evidenced by a Stock
Option Certificate.
(e) The Committee's interpretation and construction of the provisions of
the Plan and the rules and regulations adopted by the Committee shall be final.
No member of the Committee shall be liable for any action taken or determination
made, in respect of the Plan, in good faith.
5. Participation in the Plan
(a) Participation in the Plan shall be limited to the executives and key
employees of the Corporation and its subsidiaries who shall be designated by the
Committee.
(b) No member of the Committee and no member of the Board of Directors who
is not also an officer of the Corporation shall be eligible to participate in
the Plan.
6. Stock Subject to the Plan
(a) There shall be reserved for the granting of Options pursuant to the
Plan and for issuance and sale pursuant to such Options Five Hundred Thousand
(500,000) shares of Common Stock. To determine the number of shares of Common
Stock available at any time for the granting of Options, the total number of
reserved shares of Common Stock shall be reduced by the number of shares of
Common Stock with respect to which Options have been granted pursuant to the
Plan that are still outstanding or have been exercised. The shares of Common
Stock to be issued upon the exercise of Options granted pursuant to the Plan
shall be made available from the authorized and unissued shares of Common Stock.
If for any reason shares of Common Stock as to which an Option has been granted
cease to be subject to purchase thereunder, then such shares of Common Stock
again shall be available for issuance pursuant to the exercise of Options
pursuant to the Plan. Except as provided in subparagraph 6(c), however, the
aggregate number of shares of Common Stock that may be issued upon the exercise
of Options granted pursuant to the Plan to any single individual shall not
exceed One Hundred Fifty Thousand (150,000) shares.
(b) Proceeds from the purchase of shares of Common Stock upon the exercise
of Options granted pursuant to the Plan shall be used for the general business
purposes of the Corporation.
(c) In the event of reorganization, recapitalization, stock split, stock
dividend, combination of shares of Common Stock, merger, consolidation, share
exchange, acquisition of property or stock, or any change in the capital
structure of the Corporation, the Committee shall make such adjustments as may
be appropriate in the number and kind of shares reserved for purchase by
executives or other key employees, in the number, kind and price of shares
covered by Options granted pursuant to the Plan but not then exercised.
7. Terms and Conditions of Options
(a) Each Option granted pursuant to the Plan shall be evidenced by a
Stock Option Certificate in such form as the Committee from time to time may
determine.
(b) The exercise price per share for Options shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant of the Options.
(c) Each Option, subject to the other limitations set forth in the Plan,
may extend for a period of up to 10 years from the date on which it is granted.
The term of each Option shall be established by the Committee at the time of
grant of the Option, provided that if no term is established by the Committee
the term of the Option shall be 10 years from the date on which it is granted.
(d) The Committee may provide in the Stock Option Certificate that the
right to exercise each Option for the number of shares subject to each Option
shall vest in the Option holder over such period of time as the Committee, in
its discretion, shall determine for each Option holder.
(e) The Committee may, in its discretion, provide that an Option may not
be exercised in whole or in part for any period or periods of time specified in
the Stock Option Certificate . Except as provided in the Stock Option
Certificate , an Option may be exercised in whole or in part at any time during
its term.
(f) Options shall be nontransferable and nonassignable, except that
Options may be transferred by testamentary instrument or by the laws of descent
and distribution.
(g) Subject to the provisions of paragraph (j) of this Section 7, if an
Option holder's employment with the Company or any of its subsidiaries
terminates without such person having fully exercised any Option, the Option
holder shall have the right, at any time during the ninety (90) days after the
date of termination, to exercise any portion of the option that the option
holder was entitled to exercise on the date of the termination of employment;
provided that in no event may any Option be exercised after the expiration of
the term of the Option. After such ninety (90) day period, the Option and all
rights thereunder shall terminate except (i) to the extent previously exercised
and (ii) as provided in subparagraph (h) of this Paragraph 7.
(h) The Committee may determine, in its discretion, that the option
holder's Option should not terminate upon the 90 day period set forth in
paragraph (g) or the six month period set forth in paragraph (i) and may take
such action with respect to the Option as the Committee deems appropriate,
including extending the time during which the option holder (or the holder's
executor or administrator) is entitled to purchase the shares of Common Stock
subject to the option and/or accelerating the vesting or exercisability of any
unvested or unexercisable portion of the option.
(i) If an Option holder dies during the term of the holder's Option
(whether while employed or during the period after employment pursuant tot
paragraph (g) or (h) of this Section 7) without having fully exercised the
Option, the executor or administrator of the holder's estate or the person who
inherits the right to exercise the Option by bequest or inheritance shall have
the right within six months of the Option holder's death to purchase the number
of shares of Common Stock that the deceased Option holder was entitled to
purchase at the date of death, after which time the Option shall lapse, provided
that in no event may any Option be exercised after the expiration of the term of
the Option.
(j) The Committee may cancel an Option immediately upon termination of
employment or at any time during the ninety day period referred to in paragraph
(g), if the person had engaged during employment with the Company or engages
during such 90 day period in employment or activities contrary, in the opinion
of the Committee, to the best interests of the Corporation.
(k) The granting of an Option pursuant to the Plan shall not constitute or
be evidence of any agreement or understanding, express or implied, on the part
of the Corporation or any of its subsidiaries to retain or employ the Option
holder for any specified period.
(l) In addition to the general terms and conditions set forth in this
Paragraph 7 in respect of Options granted pursuant to the Plan, Incentive Stock
Options granted pursuant to the Plan shall be subject to the following
additional terms and conditions:
(i) "Incentive stock options" shall be granted only to individuals
who, at the date of grant of the Option, are regular, full-time employees
of the Corporation or any of its subsidiaries;
(ii) No employee who owns beneficially more than 10% of the total
combined voting power of all classes of stock of the Corporation shall be
eligible to be granted an "incentive stock option;"
(iii) The aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the shares of Common Stock in respect
of which "incentive stock options" are exercisable for the first time by
the Option holder during any calendar year (under all such plans of the
Corporation and its subsidiaries) shall not exceed $100,000; and
(iv) The Option Agreement in respect of an Incentive Stock Option
may contain any other terms and conditions specified by the Committee that
are not inconsistent with the Plan, except that such terms and conditions
must be consistent with the requirements for "incentive stock options"
under Section 422 of the Code.
8. Methods of Exercise of Options
(a) An optionee desiring to exercise an Option as to all or a part of
the shares of Common Stock covered by the Option shall deliver to the Company
(i) a completed and signed Stock Option Exercise Form (as attached to the
Stock Option Certificate) specifying the number of shares to be purchased,
(ii) payment (as set forth in Subsection 8(b)) in full for the aggregate
exercise price for the shares of Common Stock being purchased; and (iii) if a
Non-Qualified Option, payment (as set forth in Subsection 8(b)) of an amount
equal to the amount required by the Company to be withheld for federal and
state taxes in connection with the exercise.
(b) Payments of the exercise price and the withholding taxes shall be
paid as follows:
(i) in United States dollars by certified check, or bank draft,
or
(ii) in shares of Common Stock owned by the person exercising the
Option and having a Fair Market Value on the date of exercise (as
defined in subparagraph 1(g) above) equal to the exercise price and
withholding amount, or
(iii) by surrender of a number of shares subject to the Option
with a "Net Value" equal to the Exercise Price and withholding amount
for the shares being purchased in the exercise (a "Cashless
Exercise"). The Net Value is equal to the Fair Market Value of the
shares being surrendered on the date of exercise less the exercise price
for such surrendered shares; or
(iv) by a combination of the consideration in clauses (i), (ii)
and (iii).
(c) Notwithstanding the foregoing provisions, the Committee, in granting
Options pursuant to the Plan, may limit the methods in which an Option may be
exercised by any person and, in processing any purported exercise of an Option
granted pursuant to the Plan, may refuse to recognize the method of exercise
selected by the Option holder (other than the method of exercise set forth in
subparagraph 8(b)(i)) if, in the opinion of counsel to the Corporation, there is
a substantial likelihood that the method of exercise selected by the Option
holder would subject the Option holder to a substantial risk of liability under
Section 16 of the Exchange Act.
(d) Notwithstanding the foregoing provisions, the Committee may include in
the Stock Option Certificate relating to any such Nonqualified Stock Option
provisions limiting or eliminating the Option holder's ability to pay his
withholding tax obligation with shares of Common Stock or, if no such provisions
are included in the Stock Option Certificate but in the opinion of the committee
such withholding would have an adverse tax or accounting effect to the
Corporation, at or prior to exercise of the Nonqualified Stock Option the
Committee may so limit or eliminate the Option holder's ability to pay his
withholding tax obligation with shares of Common Stock. Notwithstanding the
foregoing provisions, a holder of a Nonqualified Stock Option may not elect any
of the methods of satisfying his withholding tax obligation in respect of any
exercise if, in the opinion of counsel to the Corporation, there is a
substantial likelihood that the election or timing of the election would subject
the holder to a substantial risk of liability under Section 16 of the Exchange
Act.
(e) An Option holder at any time may elect in writing to abandon an Option
in respect of all or part of the number of shares of Common Stock as to which
the Option shall not have been exercised.
(f) An Option holder shall have none of the rights of a stockholder of the
Corporation until the shares of Common Stock covered by the Option are issued to
him upon exercise of the Option.
9. Amendments and Discontinuance of the Plan
(a) The Committee shall have the right at any time and from time to time
to amend, modify, or discontinue the Plan provided that, except as provided in
subparagraph 6(c), no such amendment, modification, or discontinuance of the
Plan shall (i) revoke or alter the terms of any valid Option previously granted
pursuant to the Plan, (ii) increase the number of shares of Common Stock to be
reserved for issuance and sale pursuant to Options granted pursuant to the Plan,
(iii) change the maximum aggregate number of shares of Common Stock that may be
issued upon the exercise of Options granted pursuant to the Plan to any single
individual, (iv) decrease the price determined pursuant to the provisions of
subparagraph 7(b), (v) change the class of persons to whom Options may be
granted pursuant to the Plan, or (vi) provide for Options exercisable more than
10 years after the date granted.
10. Plan Subject to Governmental Laws and Regulations
The Plan and the grant and exercise of Options pursuant to the Plan shall
be subject to all applicable governmental laws and regulations. Notwithstanding
any other provision of the Plan to the contrary, the Committee may in its sole
and absolute discretion make such changes in the Plan as may be required to
conform the Plan to such laws and regulations.
11. Duration of the Plan
No Option shall be granted pursuant to the Plan after the close of business
on September 7, 2006.
YOUTH SERVICES INTERNATIONAL, INC.
1998 DIRECTOR STOCK OPTION PLAN
1. Purpose
The purpose of the Youth Services International, Inc. 1998 Director
Stock Option Plan ("the Plan") is to secure for Youth Services
International, Inc. (the "Company") and its stockholders the benefits of the
incentive inherent in increased common stock ownership by the members of the
Board of Directors (the "Board") of the Company who are not officers or
employees of the Company or any of its subsidiaries.
2. Administration
(a) The Plan shall be administered by the Board.
(b) The Board shall have all the powers vested in it by the terms of
the Plan, such powers to include authority (within the limitations described
herein) to prescribe the form of the agreement embodying awards of stock
options made under the Plan ("Options").
(c) The Board shall, subject to the provisions of the Plan, grant
Options under the Plan and shall have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such rules
and regulations for the administration of the Plan as it may deem desirable.
Any decision of the Board in the administration of the Plan, as described
herein, shall be final and conclusive.
(d) The Board may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their number
or the Secretary or any other officer of the Company to execute and deliver
documents on behalf of the Board.
(e) No member of the Board shall be liable for anything done or
omitted to be done by such member or by any other member of the Board in
connection with the Plan, except for such member's own willful misconduct or
as expressly provided by statute.
3. Amount of Stock
(a) The stock which may be issued and sold under the Plan will be the
Common Stock (par value $0.01 per share) of the Company, of a total number not
exceeding one hundred and sixty-five thousand (165,000) shares, subject to
adjustment as provided in Paragraph 6 below. The stock to be issued may be
either authorized and unissued shares or issued shares acquired by the Company
or its subsidiaries. In the event that Options granted under the Plan shall
terminate or expire without being exercised in whole or in part, new Options
may be granted covering the shares not purchased under such lapsed Options.
(b) Proceeds from the purchase of shares of Common Stock upon exercise
of Options granted pursuant to the Plan shall be used for the general business
purposes of the Corporation.
4. Eligibility
Each member of the Board of the Company who is not an officer or
employee of the Company or any of its subsidiaries, who does not receive
compensation (a "Non-Employee Director") shall be eligible to receive an
Option in accordance with Paragraph 5 below.
5. Terms and Conditions of Options
Each Option granted under the Plan shall be evidenced by a Stock Option
Certificate in such form as the Board shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions:
(a) The Option exercise price for each share of Common Stock subject
to an Option shall be the Fair Market Value of the Common Stock on the date
the Option is granted. For purposes of this Plan, "Fair Market Value" for
any given date means the closing price of the Common Stock as reported on the
The Nasdaq Stock Market (or if not traded on such system, as reported by any
national stock exchange on which the Common Stock is traded) on the trading
day immediately preceding such date.
(b) Each Non-Employee Director who is a director on January 1 of any
year shall receive, automatically and without any action on the part of the
Committee, an Option for 7,500 shares of Common Stock on January 1 (except for
1998, options for which shall be issued as set forth in Subsection (c)). Each
Non-Employee Director shall be entitled to participate in the Plan during
his/her tenure as a Director provided the Plan remains in effect. The options
shall vest and become exercisable in four equal quarterly installments as of
the end of each calendar quarter of the year in which the Option is issued.
(c) Notwithstanding Subsection 5(b), for 1998, each director shall be
granted, on February 9, 1998 (the business day immediately subsequent to the
approval of this Plan by directors), Options to acquire that number of shares
equal to the sum of (i) 7,500 (except that any director appointed in 1998
shall not be granted any options pursuant to this clause (i)); plus (ii) the
pro-rata portion of 7,500 shares that is equal to the portion of the year
(based on calendar days) that is represented by the period from the director's
anniversary in 1998 of the appointment to the Board, or the date of
appointment to the Board in 1998, as applicable, through December 31, 1998.
The Option shall vest and become exercisable as follows: (1) for the portion
of the Option set forth in clause (i), the option shall vest ratably over the
period from (A) the director's appointment to the Board of Directors or the
anniversary of the director's appointment to the Board of Directors, whichever
occurred in 1997, to (B) the anniversary in 1998 of the director's appointment
to the Board of Directors; and (2) for the portion of the Option set forth in
clause (ii), the option shall vest ratably over the period from (A) the
director's appointment to the Board of Directors or the anniversary of the
director's appointment to the Board of Directors, whichever occurs in 1998,
through (B) December 31, 1998.
(d) Each Non-Employee Director shall be entitled to participate in the
Plan immediately upon becoming a Director. Each new director shall be
granted, on the date of the director's appointment to the Board of Directors,
an Option to acquire a pro-rata portion of 7,500 shares that is equal to the
portion of the year (based on calendar days) that is represented by the period
from (A) the director's appointment to the Board to (B) December 31 of that
year. The Option shall vest and become exercisable in equal installments at
the end of each calendar quarter then remaining in the year of appointment.
(e) The Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during the optionee's lifetime only by the optionee.
(f) No Option or any part of an Option shall be exercisable after the
expiration of ten years from the date the Option was granted.
(g) An optionee desiring to exercise an Option as to all or a part of
the shares of Common Stock covered by the Option shall deliver to the Company
(i) a completed and signed Stock Option Exercise Form (as attached to the
Stock Option Certificate) specifying the number of shares to be purchased and
(ii) payment in full for the aggregate exercise price for the shares of Common
Stock being purchased as follows:
(A) in United States dollars by certified check, or bank draft,
or
(B) in shares of Common Stock owned by the person exercising the
Option and having a Fair Market Value on the date of exercise (as defined in
subparagraph 5(a) above) equal to the exercise price, or
(C) by surrender of a number of shares subject to the Option with
a "Net Value" equal to the Exercise Price for the shares being purchased in
the exercise (a "Cashless Exercise"). The Net Value is equal to the Fair
Market Value of the shares being surrendered on the date of exercise less the
exercise price for such surrendered shares; or
(D) by a combination of the consideration in clauses (A), (B) and (C).
(h) No Option or any part of the Option shall be exercisable at any
time after a Director ceases to be a director of the Company, except that
(i) if such a person shall cease to be a Director for reasons
other than death, while holding an Option that has not expired and has not
been fully exercised, such person, at any time within 90 days after the date
he or she ceases to be a Director (but in no event after the Option has
expired under the provisions of subparagraph 5(f) above), may exercise the
Option with respect to any shares of Common Stock as to which such person has
not exercised the Option on the date the person ceased to be a Director; or
(ii) if such person shall cease to be a Director by reason of
death while holding an Option that has not expired and has not been fully
exercised, or if a person shall die during the 90 day period referenced in
clause (i) of this subparagraph 5(h), the executors, administrators or
distributees, as the case may be, of the estate of such deceased person may,
at any time within six months after the date of such person's death (but in no
event after the Option has expired under the provisions of subparagraph 5(f)
above), exercise the Option with respect to any shares of Common Stock as to
which such person had not exercised the Option on the date of the person's
death. In the event any option is exercised by the executors, administrators,
legatees or distributees of the estate of a deceased optionee, the Company
shall be under no obligation to issue stock thereunder unless and until the
Company is satisfied that the person or persons exercising the option are the
duly appointed legal representatives of the deceased optionee's estate or the
proper legatees or distributees thereof.
6. Adjustment in the Event of Change of Stock
In the event of changes in the outstanding Common Stock of the Company
by reason of stock dividends, recapitalizations, mergers, consolidations,
split-ups, combinations or exchanges of shares and the like, the aggregate
number and class of shares available under the Plan, and the number, class and
the price of shares of Common Stock subject to outstanding Options shall be
appropriately adjusted by the Committee to maintain the same relative rights
of the optionees regarding the purchase and ownership of stock, whose
determination shall be conclusive.
7. Miscellaneous Provisions
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any Non-Employee Director any right to be retained in the
service of the Company.
(b) An optionee's right and interest under the Plan may not be
assigned or transferred in whole or in part either directly or by operation of
law or otherwise (except in the event of an optionee's death, by will or the
laws of descent and distribution), including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan shall be
subject to any obligation or liability of such participant.
(c) No Common Stock shares shall be issued hereunder unless counsel
for the Company shall be satisfied that such issuance will be in compliance
with applicable federal, state and other securities laws and regulations.
(d) It shall be a condition to the obligation of the Company to issue
Common Stock shares upon exercise of an Option, that the optionee (or any
beneficiary or person entitled to act under subparagraph 5(f)(ii) above) pay
to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal,
state, local or foreign income or other taxes. If the amount requested is not
paid, the Company may refuse to issue Common Stock shares. Such amount may be
paid in any manner specified in subparagraph 5(e)(ii) for the payment of the
exercise price.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to
the claims of the Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
optionee and each person claiming under or through such person shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or the Board.
8. Amendment or Discontinuance
The Plan may be amended at any time and from time to time by the Board
as the Board shall deem advisable including, but not limited to amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations, provided, however, that except as provided in Paragraph 6 above,
the Board may not, without further approval by the shareholders of the Company
in accordance with Paragraph 10 below, increase the maximum number of shares
of Common Stock as to which Options may be granted under the Plan, increase
the number of shares subject to an Option, reduce the minimum Option exercise
price described in subparagraph 5(a) above, extend the period during which
Options may be granted or exercised under the Plan or change the class of
persons eligible to receive Options under the Plan. No amendment of the Plan
shall materially and adversely affect any right of any optionee with respect
to any Option theretofore granted without such optionee's written consent.
9. Termination
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) ten years from the date the Plan is initially approved and adopted
by the shareholders of the Company in accordance with Paragraph 10 below.
10. Effective Date of Plan
The Plan shall become effective as of January 1, 1998 or such later date
as the Board may determine, provided that the Company's stockholders shall
have adopted the Plan at the Company's 1998 Annual Meeting of Stockholders.
[EPSTEIN BECKER & GREEN, P.C. LETTERHEAD]
April 15, 1999
Correctional Services Corporation
1819 Main Street
Suite 1000
Sarasota, FL 34236
Re: Correctional Services Corporation
Post-Effective Amendment No. 1
on Form S-8 to Form S-4 Registration Statement
----------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Correctional Services Corporation (the
"Company") in connection with its filing of a Post-Effective Amendment No. 1
on Form S-8 to Form S-4 Registration Statement (the "Registration Statement")
covering up to 245,558 shares (the "Shares") of the Company's authorized and
unissued shares of Common Stock, $.01 par value, and/or outstanding shares of
such Common Stock, to be issued upon exercise of stock options pursuant to:
Youth Services International, Inc.'s Stock Option Plan, Youth Services
International, Inc.'s 1995 Employee Stock Option Plan; Youth Services
International, Inc.'s 1995 Director Stock Option Plan; Youth Services
International, Inc.'s 1996 Employee Stock Option Plan; Amendment No. 1 to and
Restated Youth Services International, Inc.'s 1997 Employee Stock Option Plan;
and Youth Services, International Inc.'s 1998 Director Stock Option Plan.
As such counsel, we have examined originals, or copies certified to
our satisfaction, of the corporate records of the Company, agreements and
other instruments, certificates of public officials, certificates of officers
of the Company and such other documents as we deemed necessary as a basis for
the opinion hereinafter set forth.
In such examination we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to original documents of documents submitted to us as
certified or photostatic copies.
On the basis of the foregoing, we are of the opinion that the
authorized and unissued Shares have been duly authorized and, when issued,
delivered and paid for in accordance with the relevant Plan named above, will
be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
aforesaid Registration Statement.
Very truly yours,
EPSTEIN BECKER & GREEN, P.C.
By: /s/ Seth I. Truwit
--------------------------
Seth I. Truwit
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Post-Effective
Amendment No. 1 on Form S-8 to Form S-4 Registration Statement of our report
dated March 5, 1999, with respect to the consolidated financial statements
and schedules of Correctional Services Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1998 filed with the
Securities and Exchange Commission.
GRANT THORNTON LLP
Tampa, Florida
April 15, 1999
