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): JANUARY 11, 2000
CORRECTIONAL SERVICES CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 0-23038 11-3182580
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1819 MAIN STREET, SUITE 1000 34236
SARASOTA, FL (Zip Code)
(Address of principal executive
offices)
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 7
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Item 5. OTHER EVENTS.
STOCKHOLDER RIGHTS PLAN.
On January 5, 2000, the Board of Directors of Correctional Services
Corporation (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock, par
value $.01 per share (the "Common Shares"), of the Company. The dividend
is payable to the stockholders of record as of 5:00 P.M., New York, New
York time, on January 11, 2000 (the "Record Date"), and is payable with
respect to Common Shares issued thereafter until the Distribution Date (as
hereinafter defined) and, in certain circumstances, is payable with respect
to Common Shares issued after the Distribution Date. The description and
terms of the Rights are set forth in a Rights Agreement, dated as of
January 11, 2000 (the "Rights Agreement"), between the Company and American
Stock Transfer & Trust Company (the "Rights Agent").
Except as set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one one-
thousandth of a share of Series A Participating Preferred Stock, par value
$.01 per share (the "Preferred Shares"), at a price of $30.00 per one one-
thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment in certain circumstances.
Initially, the Rights will attach to all certificates representing Common
Shares then outstanding and no separate Right Certificates (as hereinafter
defined) will be distributed. The Rights will separate from the Common
Shares and a "Distribution Date" for the Rights will occur upon the earlier
of:
(i) the first date of public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 10%
or more of the outstanding Common Shares (subject to certain exceptions
with respect to certain stockholders that beneficially own 10% or more of
the outstanding Common Shares on the Record Date), except pursuant to a
Permitted Offer, as hereinafter defined; or
(ii) ten business days (or such later date as the Board of Directors of
the Company may determine) following the commencement of, or announcement
of an intention to commence, a tender offer or exchange offer the
consummation of which would result in a person or group becoming an
Acquiring Person (as hereinafter defined).
A person or group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person." The first date
of public announcement that a person or group has become an Acquiring
Person is the "Shares Acquisition Date."
The Rights Agreement provides that until the Distribution Date, the Rights
will be evidenced by the Common Share certificates and will be transferred
with and only with the Common Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
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Distribution Date (and to each initial record holder of certain Common
Shares issued after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at 5:00 p.m., New York, New York time, on January 11, 2010, unless earlier
redeemed or exchanged by the Company as described below.
In the event that any person becomes an Acquiring Person (except pursuant
to a Permitted Offer), each holder of a Right will have (subject to the
terms of the Rights Agreement) the right (the "Flip-In Right") to receive
upon exercise the number of Common Shares, or, in the discretion of the
Board of Directors of the Company, of one one-thousandths of a Preferred
Share (or, in certain circumstances, other securities of the Company)
having a value (immediately prior to such triggering event) equal to two
times the Purchase Price. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person or any affiliate or associate thereof will be
null and void.
A "Permitted Offer" is a tender or exchange offer for all outstanding
Common Shares which is at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by a majority of
Disinterested Directors (as hereinafter defined), to be adequate (taking
into account all factors that such Disinterested Directors deem relevant)
and otherwise in the best interests of the Company and its stockholders
(other than the person, or any affiliate or associate thereof, on whose
basis the offer is being made), taking into account all factors that such
Disinterested Directors may deem relevant. "Disinterested Directors" are
directors of the Company who are not employees of the Company and who are
not Acquiring Persons or affiliates or associates thereof, or
representatives of any of them, or any person who was directly or
indirectly proposed or nominated as a director of the Company by a
Transaction Person (as hereinafter defined).
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in certain mergers or other business combination
transactions in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power, (ii) 50% or
more of the Company's assets or earning power are sold or transferred, in
either case with or to an Acquiring Person or any affiliate or associate
thereof, or any other person in which such Acquiring Person, affiliate or
associate has an interest, or any person acting on behalf of or in concert
with such Acquiring Person, affiliate or associate, or, if in such
transaction all holders of Common Shares are not treated alike, any other
person, or (iii) the Company shall effect a statutory share exchange with
outstanding Common Shares of the Company exchanged for stock or other
securities of any other person, money or other property, then in each case
the holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right (the "Flip-Over Right") to
receive, upon exercise, common shares of the acquiring company having a
value equal to two times the Purchase Price.
The Purchase Price payable, and. the number of one one-thousandths of a
Preferred Share or other securities issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution: (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders
of the Preferred Shares of certain rights, options or warrants to subscribe
for or purchase Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to holders of
the Preferred Shares of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants
(other than those referred to in clause (ii) above).
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The Purchase Price is also subject to adjustment in the event of a stock
split of the Common Shares, or a stock dividend on the Common Shares
payable in Common Shares, or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional one one-thousandths of a Preferred
Share will be issued, and in lieu thereof, an adjustment in cash will be
made based on the market price of the Preferred Shares on the last trading
day prior to the date of exercise.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of
50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange all or part of the then outstanding and exercisable
Rights (other than Rights which have become void under the terms of the
Rights Agreement) for Common Shares at an exchange ratio of one and three-
quarters (1 3/4 ) Common Shares per Right, subject to adjustment.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which redemption shall be effective upon the
action of the Board of Directors of the Company. Additionally, the Company
may redeem the then outstanding Rights in whole, but not in part, at the
Redemption Price after the triggering of the Flip-In Right and before the
expiration of any period during which the Flip-In Right may be exercised in
connection with a merger or other business combination transaction or
series of transactions involving the Company in which all holders of Common
Shares are treated alike but not involving a Transaction Person (as
hereinafter defined). Upon the effective date of the redemption of the
Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
If any term, provision, covenant or restriction of the Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of the Rights Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that if any such term, provision, covenant or restriction is held
by such court or authority to be invalid, void or unenforceable, and the
Board of Directors of the Company determines, at a time when a majority of
the directors then serving are Disinterested Directors, in their good-faith
judgment that severing the invalid language from the Rights Agreement would
adversely affect the purpose or effect thereof, the Company's right of
redemption described in the preceding paragraph shall be reinstated (if
such right has expired or been terminated) and shall not expire until the
close of business on the tenth day following the date of such determination
by the Board of Directors.
The Board of Directors and the Company shall not have any liability to any
person as a result of the redemption or exchange of the Rights pursuant to
the provisions of the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income should the
Rights become exercisable or upon the occurrence of certain events
thereafter.
A copy of the Rights Agreement, together with the terms of the Series A
Participating Preferred Stock, Summary of Rights to Purchase Preferred
Shares and form of Right Certificate (collectively, the "Rights
Documents"), are attached as exhibits to a Registration Statement on Form
8-A filed by the Company with the Securities and Exchange Commission. The
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foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Documents as included
with said Registration Statement on Form 8-A.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
3.1 CERTIFICATE OF DESIGNATION OF SERIES A PARTICIPATING PREFERRED
STOCK OF THE COMPANY FILED WITH THE SECRETARY OF STATE OF THE STATE OF
DELAWARE ON JANUARY 10, 2000 (INCORPORATED BY REFERENCE TO EXHIBIT 3.1 TO
THE COMPANY'S REGISTRATION STATEMENT ON FORM 8-A FILED JANUARY 11, 2000).
4.1(a) Rights Agreement, dated as of January 11, 2000, between the
Company and American Stock Transfer & Trust Company, as Rights Agent, which
includes as Exhibit B thereto the form of Right Certificate (incorporated
by reference to Exhibit 4.1(a) to the Company's Registration Statement on
Form 8-A filed January 11, 2000).
4.1(b) Summary of Rights to Purchase Preferred Shares of the Company
(incorporated by reference to Exhibit 4.1(b) to the Company's Registration
Statement on Form 8-A filed January 11, 2000.)
99.1 Press Release of the Company, dated January 11, 2000.
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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
--------------------------
James F. Slattery
President
Dated: January 12, 2000
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
- ---------- -----------
3.1 Certificate of Designation of Series A Participating Preferred Stock
of the Company filed with the Secretary of State of the
State of Delaware on January 10, 2000 (incorporated by
reference to Exhibit 3.1 to the Company's Registration
Statement on Form 8-A filed January 11, 2000).
4.1(A) RIGHTS AGREEMENT, DATED AS OF JANUARY 11, 2000, BETWEEN THE COMPANY
AND AMERICAN STOCK TRANSFER & TRUST COMPANY, AS RIGHTS
AGENT, WHICH INCLUDES AS EXHIBIT B THERETO THE FORM OF RIGHT
CERTIFICATE (INCORPORATED BY REFERENCE TO EXHIBIT 4.1(A) TO
THE COMPANY'S REGISTRATION STATEMENT ON FORM 8-A FILED
JANUARY 11, 2000).
4.1(b) Summary of Rights to Purchase Preferred Shares of the Company
(incorporated by reference to Exhibit 4.1(b) to the
Company's Registration Statement on Form 8-A filed January
11, 2000.)
99.1 Press Release of the Company, dated January 11, 2000.
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EXHIBIT 99.1
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NEWS
FOR IMMEDIATE RELEASE
COMPANY CONTACT:
Ira Cotler
Executive Vice President-Finance
(941) 953-9199
JANUARY 11, 2000
CORRECTIONAL SERVICES CORPORATION
ADOPTS STOCKHOLDER RIGHTS PLAN
Sarasota, Florida - January 11, 2000 - Correctional Services Corporation
(Nasdaq: CSCQ) announced today that its Board of Directors has adopted a
stockholder rights plan. Under the terms of the plan, each stockholder
of record as of the close of business on January 11, 2000 will receive
one right for each share of common stock held by the stockholder. Upon
the occurrence of certain triggering events described in the plan, each
right will entitle the stockholder to purchase for $30 a number of shares
of the Company's common or preferred stock having a fair market value
equal to $60 on the date of the triggering event (subject to exceptions
described in the plan).
The rights plan is intended to prevent a potential acquirer from gaining
control of the Company without fairly compensating all of the Company's
stockholders and to protect the Company and its stockholders against
coercive takeover tactics. The plan was not adopted in response to any
specific effort to acquire the Company, however, as previously announced
the Company is exploring a broad range of business alternatives and
financial strategies to enhance stockholder's value.
The rights are triggered and become exercisable if any person or group
acquires, or launches a tender or exchange offer to acquire, ten percent
or more of the Company's outstanding shares of common stock (or any
additional shares in the case of any person or group that already owns or
controls ten percent or more). Unless and until the rights are
triggered, the rights will not trade independently and will transfer
automatically with any transfer of the common stock. The initial
issuance of the rights has no dilutive effect on the Company's
outstanding shares or earnings, is not taxable to either the Company or
its stockholders and does not otherwise affect the trading of the
Company's shares. Under circumstances described in the rights plan, the
Board of Directors of the Company may elect to redeem the rights at a
price of $.01 per right. If the rights are not triggered or redeemed,
the rights will expire on January 11, 2010.
James F. Slattery, Chief Executive Officer and President of the Company,
stated "the Board of Directors believes the stockholder rights plan is
in the best interest of all stockholders to reduce the possibility of an
unfair takeover offer and to encourage fair and equal treatment to all
stockholders in the event of any proposed takeover. The rights will not
prevent an appropriate transaction that the Board believes is in the
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best interest of stockholders and in no way adversely effects the
Company's financial strength, reported earnings per share or execution
of its strategic plan".
Through its Youth Services International subsidiary, the Company is the
nation's leading private provider of juvenile programs for adjudicated
youths with 38 facilities and over 4,300 juveniles in its care. In
addition, the Company is a leading developer and operator of adult
correctional facilities operating 19 facilities, representing
approximately 7,200 beds. On a combined basis, the Company provides
services in 22 states and Puerto Rico, including aftercare services,
representing approximately 11,500 beds.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Certain statements contained in this press release are not historical
but are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These include statements regarding the
expectations, beliefs, intentions or strategies regarding the future.
The Company intends that all forward-looking statements be subject to
the safe-harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements reflect the Company's
views as of the date they are made with respect to future events and
financial performance, but are subject to many uncertainties and risks
which could cause the actual results of the Company to differ
materially from any future results expressed or implied by such
forward-looking statements. Examples of such uncertainties and risks
include, but are not limited to: the integration of Youth Services
International; occupancy levels; the renewal of contracts, the ability
to secure new contracts; availability and cost of financing to redeem
YSI's debentures and to expand our business; and public resistance to
privatization. Additional risk factors include those discussed in the
Form 10-K as well as those set forth in the Company's joint proxy
statement/prospectus, dated March 4, 1999 and those set forth in
reports filed by the Company from time to time on Forms 10-Q and 8-K.
The Company does not undertake any obligation to update any forward-
looking statements.
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