This Stock
Purchase Agreement (this “ Agreement ”) is
entered into as of September 15, 2005, by and between The GEO
Group, Inc., a Florida corporation (“ GEO ”),
JFS Development, LLC, a Delaware limited liability company (“
Buyer ”), and James F. Slattery, an individual
resident of the State of Florida and the sole member of Buyer (the
“ Sole Member ”). Certain other capitalized
terms used herein are defined in Article XI and
throughout this Agreement.
WHEREAS,
Correctional Services Corporation (“ CSC ”), its
wholly-owned subsidiary, Youth Services International, Inc., a
Maryland corporation (“ YSI ”), and the YSI
subsidiaries set forth on Exhibit A attached hereto
(YSI and such subsidiaries, the “ YSI Entities
”) operate secure and non-secure correctional and detention
facilities for low, medium and high risk youths (all of the
foregoing juvenile facilities operated by CSC and the YSI Entities,
the “ Juvenile Business ”);
WHEREAS,
CSC’s primary business is the operation of secure,
residential correctional and detention facilities that house and
service adult offenders (the “ Adult Business
”);
WHEREAS, The GEO
Group, Inc. (“ GEO ”) has agreed to acquire CSC
pursuant to that certain Merger Agreement, dated as of
July 14, 2005 (the “ Merger Agreement ”),
by and among GEO, CSC and GEO Acquisition, Inc., a wholly-owned
subsidiary of GEO, which provides that, at the Effective Time (as
defined in the Merger Agreement), GEO Acquisition, Inc. will merge
with and into CSC (the “ Merger ”) and CSC shall
continue as the surviving corporation of the Merger and a direct,
wholly-owned subsidiary of GEO;
WHEREAS, the Sole
Member is currently serving as the Chief Executive Officer and
President of CSC and in such capacity is knowledgeable about and
has access to such information regarding the assets, liabilities
and operations of the YSI Entities and the Juvenile Business for
purposes of effectuating the transactions contemplated by this
Agreement;
WHEREAS, subject
to and following the consummation of the Merger, Buyer desires to
purchase, and GEO desires to cause CSC to sell to Buyer, all of the
outstanding shares of common stock, par value $0.01 per share, of
YSI (the “ Purchased Shares ”) on the terms and
subject to the conditions set forth herein (the “ Stock
Purchase ”);
WHEREAS, Buyer
understands and acknowledges that it is buying the Purchased Shares
“AS IS” and without the benefit of any representations
or warranties, express or implied, of any kind from GEO or CSC
regarding the Purchased Shares or the assets, liabilities and
operations of the YSI Entities or the Juvenile Business;
WHEREAS, the
parties hereto desire that, following the Effective Time and prior
to the Closing, to the extent transferable and provided that the
Required Consents (as defined below) to such transfer have been
obtained, GEO shall cause CSC to transfer, and YSI to assume, on an
“AS IS” basis as a contribution to the capital of YSI,
(i) all rights under the facility management contracts of the
Juvenile Business to which CSC is a party, each of which is listed
on Exhibit B attached hereto (the “ CSC Juvenile
Contracts ”), (ii) all duties, liabilities and
obligations of CSC
under, pursuant
to or related to the Juvenile Business and/or the CSC Juvenile
Contracts, whether arising prior to, on or after the Closing, but
excluding any liability for the matter set forth on
Schedule 6.7(a) hereof (collectively, the “
CSC Juvenile Liabilities ”), (iii) those assets
owned by CSC which were used primarily in the operation of the
Juvenile Business as of July 14, 2005, and (iv) all
accounts receivable of CSC related to the Juvenile Business prior
to the Closing ((i), (iii) and (iv) above are
collectively referred to herein as the “ CSC Juvenile
Assets ”)); and
WHEREAS, the
parties hereto desire that, following the Effective Time and prior
to the Closing, to the extent transferable, GEO shall cause YSI to
(i) transfer to CSC title to the real property described on
Exhibit C attached hereto, and all rights and benefits
related thereto (the “ Genesis Property ”),
together with all non-real property assets and fixtures on the
Genesis Property as of the date hereof and (ii) assign and
transfer to CSC, and CSC to assume, all duties, liabilities and
obligations of YSI related to the Genesis Property and described on
Exhibit D attached hereto, whether arising prior to, on
or after the Closing (the “ Genesis Property
Liabilities ”), all of the foregoing transferred on an
“AS IS” basis for other good and valuable
consideration.
NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound
hereby, GEO and Buyer hereby agree as follows:
PURCHASE OF STOCK; PURCHASE
PRICE; CLOSING
1.1
Purchase of Stock . Upon the terms and subject to the
conditions of this Agreement, at the Closing, GEO shall cause CSC
to convey, assign, transfer and deliver to Buyer, and Buyer shall
purchase and accept from CSC, the Purchased Shares on an “AS
IS” basis.
1.2
Conveyance . The conveyance, assignment, transfer and
delivery of the Purchased Shares shall be effected by delivery at
the Closing by CSC to Buyer of stock certificates representing the
Purchased Shares, duly endorsed or accompanied by stock powers duly
executed in blank.
1.3
Purchase Price . As consideration for the Purchased
Shares, Buyer shall, on the terms and subject to the conditions and
limitations set forth herein, pay to CSC a purchase price equal to
Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000)
(the “ Purchase Price ”), (a) One Million
Seven Hundred and Fifty Thousand Dollars ($1,750,000) of which
shall be payable at Closing by wire transfer of immediately
available funds (the “ Initial Cash Payment ”),
and (b) Two Million Dollars ($2,000,000) of which shall be
payable by Buyer to CSC in quarterly installments over the three
year period immediately following the Closing in accordance with
the terms of a promissory note to be delivered by Buyer to CSC at
Closing, in the form attached hereto as Exhibit E (the
“ Promissory Note ”); provided, however, that
the Purchase Price and the Initial Cash Payment shall be subject to
adjustment pursuant to the terms of Section 6.4 and
Section 6.12 .
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1.4 Closing
Date . Unless this Agreement shall have been terminated in
accordance with Article IX , after the Effective Time
and subject to the satisfaction or waiver of the conditions set
forth in Article VIII , the closing of the Stock
Purchase (the “ Closing ”) will take place on a
date and at a time to be specified by the parties, which shall be
no later than the same day that the conditions set forth in
Article VIII are satisfied or waived (other than those
that by their terms are to be satisfied or waived at the Closing),
at the offices of Akerman Senterfitt, One Southeast Third Avenue,
Suite 2800, Miami, Florida 33131, unless another time, date
and/or place is agreed to in writing by the parties hereto. The
date on which the Closing occurs is referred to herein as the
“ Closing Date ”.
2.1 CSC
Transfer . Following the Effective Time and prior to the
Closing, to the extent transferable and provided that the third
party consents set forth on Exhibit F related to such
transfer (the “ Required Consents ”) have been
obtained, GEO shall cause CSC to deliver to YSI (a) an
“AS IS” bill of sale, in a form mutually agreeable to
GEO and Buyer, to effect the transfer of the CSC Juvenile Assets
from CSC to YSI, and (b) an “AS IS” assignment and
assumption, in a form mutually agreeable to GEO and Buyer, to
effect the assignment and delegation by CSC, and the assumption by
YSI, of the CSC Juvenile Liabilities (the execution and delivery of
the foregoing, together with the acceptance thereof by YSI, the
“ CSC Transfer ”). The obligations of GEO
pursuant to this Section 2.1 shall terminate at the time of
the Closing.
2.2 YSI
Transfer . Following the Effective Time and prior to the
Closing, to the extent transferable, GEO shall cause YSI to deliver
to CSC (a) a quit claim deed for the Genesis Property in a
form mutually agreeable to GEO and Buyer, (b) an “AS
IS” bill of sale, in a form mutually agreeable to GEO and
Buyer, for all non-real property assets and fixtures on the Genesis
Property as of the date hereof, and (c) an “AS IS”
assignment and assumption agreement, in a form mutually agreeable
to GEO and Buyer, to effect the assignment and delegation by YSI,
and the assumption by CSC, of the Genesis Property Liabilities (the
execution and delivery of the foregoing, together with the
acceptance thereof by CSC, the “ YSI Transfer
”). The obligations of GEO pursuant to this Section 2.2
shall terminate at the time of the Closing. The CSC Transfer and
the YSI Transfer are collectively referred to herein as the “
Pre-Closing Transfers .”
2.3 Other
Actions . Except as contemplated by this Agreement,
following the Effective Time and prior to the Closing, GEO shall
take all action reasonably within its control to ensure that no
properties, assets, rights or entitlements related to the Juvenile
Business are transferred to CSC or any of its subsidiaries other
than the YSI Entities and to ensure that no properties, assets,
rights or entitlements related to the Adult Business are
transferred to any YSI Entity.
3
REPRESENTATIONS AND
WARRANTIES
OF BUYER
As a material
inducement to GEO to enter into this Agreement and to consummate
the transactions contemplated hereby, on a joint and several basis
(i) Buyer makes the following representations and warranties
to GEO and (ii) YSI, upon its execution at the Closing of the
Joinder (as defined below) to this Agreement in accordance with
Section 6.10 below, shall be deemed to have made the
representations and warranties made by Buyer in this
Agreement:
3.1 Sole
Member’s Knowledge of YSI Entities and Purchased Shares
. The Sole Member is the Chief Executive Officer and President
of CSC and, as such, is knowledgeable about (a) the assets,
liabilities and operations of the YSI Entities and the Juvenile
Business, and (b) the Purchased Shares, CSC’s ownership
thereof and whether the Purchased Shares are subject to any
Liens.
3.2
“AS IS” Sale . Buyer understands and agrees
that it is purchasing the Purchased Shares “AS IS” and
acknowledges that neither GEO nor CSC have made any representations
or warranties, express or implied, of any kind regarding the
Purchased Shares or the assets, liabilities or operations of any
YSI Entity including, without limitation, any representations and
warranties regarding (i) title to the Purchased Shares,
(ii) whether the Purchased Shares are subject to any Liens, or
(iii) the financial condition or prospects of any YSI Entity.
Buyer is a sophisticated purchaser who on an informed basis accepts
the Purchased Shares “AS IS.” Neither Buyer nor the
Sole Member has relied on any representations or warranties from
GEO or CSC, or any Affiliate thereof, regarding the Purchased
Shares or the YSI Entities.
3.3 Power
and Authority . Buyer has all necessary limited liability
company power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. Each of Buyer and the Sole Member
has the requisite competence and all necessary power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Buyer
and the consummation by Buyer of the transactions contemplated
hereby have been duly and validly authorized by the Sole Member,
and no further actions on the part of Buyer or the Sole Member are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
3.4
Enforceability . This Agreement has been duly executed
and delivered by each of Buyer and the Sole Member, and, assuming
the due authorization, execution and delivery hereof by GEO,
constitutes the legal, valid and binding obligation of Buyer and
the Sole Member, enforceable against each of Buyer and the Sole
Member in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency (including all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in
equity.
4
3.5 No
Conflict; Required Filings and Consents . The execution and
delivery of this Agreement by each of Buyer and the Sole Member do
not, and the performance of this Agreement by Buyer, the YSI
Entities and CSC and the consummation by Buyer, the YSI Entities
and CSC of the transactions contemplated hereby will not,
(i) conflict with or violate the Articles/Certificate or
Organization, Operating Agreement, Articles/Certificate of
Incorporation or Bylaws (or similar organizational documents) of
Buyer or any YSI Entity, (ii) conflict with or violate any
statute, law, ordinance, regulation, rule, code, executive order,
judgment, injunction, decree or other order (“ Law
”) applicable to Buyer or any YSI Entity, (iii) require
any consent, approval, authorization or permit of, or filing with
or notification to, any supranational, national, provincial,
federal, state or local government, regulatory or administrative
authority, or any court, tribunal, or judicial or arbitral body
(each, a “ Governmental Authority ”), or (iv)
except for the Required Consents and as otherwise set forth on
Schedule 3.5 , result in any breach or violation of or
constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, result in a material
loss of a material benefit under, give rise to a right or
obligation under, require any consent or approval, give to others
any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien pursuant to, any contract,
agreement, note, bond, mortgage, indenture, lease, license, permit
or other binding commitment, instrument or obligation (“
Contract ”) to which Buyer, the Sole Member, or any
YSI Entity is a party or by which Buyer, the Sole Member, any YSI
Entity or CSC (solely with respect to Contracts relating to the
Juvenile Business) is bound or by which any of the properties or
assets of Buyer, the Sole Member, any YSI Entity, or the Juvenile
Business are affected, or, solely with respect to Contracts
relating to the Juvenile Business, any Contract to which CSC is a
party or by which CSC is bound or by which any of the properties or
assets of CSC are affected.
3.6 No
Commissions . Neither Buyer nor the Sole Member has
incurred any obligation or liability, contingent or otherwise, for
any finder’s or broker’s or agent’s fees or
commissions or similar compensation in connection with the
transactions contemplated hereby.
3.7 Absence
of Litigation . Except as set forth on
Schedule 3.7 , (i) there is no material
litigation, suit, claim, action, proceeding, hearing, petition,
grievance, complaint, investigation, inquiry or audit (an “
Action ”) pending or threatened against CSC (to the
extent such Action relates to the Juvenile Business) or any YSI
Entity, or any property or asset utilized in the operation of the
Juvenile Business, before any Governmental Authority, and
(ii) to the Knowledge of the Sole Member, no incidents or
events have occurred relating to the Juvenile Business that could
reasonably be expected to give rise to such an Action. Except as
set forth on Schedule 3.7 , the Sole Member is not a
defendant in any Action in connection with his status as an officer
or director of CSC, any YSI Entity or Buyer.
3.8 No
Unknown Liabilities; Pro Forma Balance Sheet . Neither CSC
(to the extent related to the Juvenile Business) nor any YSI Entity
has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and
obligations (i) set forth on the consolidated balance sheet of the
Company and the consolidated Subsidiaries as at June 30, 2005
(including the notes thereto) included in CSC’s Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30,
2005, or (ii) incurred in the ordinary course of business
since June 30, 2005. Except as set forth on
Schedule 3.8 , the pro forma balance sheet attached
hereto as Exhibit G (the “ Pro Forma Balance
Sheet ”), (a) consists of the actual balance sheet
of YSI as of June 30, 2005, as adjusted to reflect the
Pre-Closing Transfers
5
as if they had
been consummated on June 30, 2005, and (b) reflects all
assets, liabilities and obligations (whether accrued, absolute,
contingent or otherwise) relating to the Juvenile Business, as of
June 30, 2005. There have been no material changes in the Pro
Forma Balance Sheet between the date of this Agreement and the
Closing.
3.9 Genesis
Property . YSI owns fee simple title to the Genesis
Property, free and clear of all Liens, other than (i) as set
forth on Schedule 3.9 and (ii) Liens for current
taxes and assessments not yet due and payable (collectively,
“ Permitted Liens ”). Schedule 3.9
identifies each lease, license or management agreement for the use
or occupancy of the Genesis Property (collectively, the “
Lease Documents ”). True, correct and complete copies
of all Lease Documents have been delivered to GEO. Each of the
Lease Documents is valid, binding and in full force and effect as
against YSI and, to the Knowledge of Sole Member, as against the
other party thereto. YSI has not received written notice under any
of the Lease Documents of any default which has not been cured to
the satisfaction of the other party thereto, and, to the Knowledge
of Sole Member, no event has occurred which, with notice or lapse
of time or both, would constitute a material default by YSI. The
Genesis Property is not subject to any governmental decree or order
to be sold nor is being condemned, expropriated or otherwise taken
by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Sole Member, has any such
condemnation, expropriation or taking been proposed. Neither CSC
nor any YSI Entity has violated any material covenants, conditions
or restrictions affecting the Genesis Property.
3.10
Employee Benefits . There are no severance costs payable
pursuant to any plans or arrangements maintained by CSC or YSI and
arising out of, or in connection with, this Agreement and the
transactions contemplated hereby (which shall not be deemed to
include the Merger).
REPRESENTATIONS AND
WARRANTIES
OF SOLE MEMBER
As a material
inducement to GEO to enter into this Agreement and to consummate
the transactions contemplated hereby, the Sole Member makes the
following representations and warranties to GEO:
4.1 Sole
Member’s Knowledge of YSI Entities and Purchased Shares
. The Sole Member is the Chief Executive Officer and President
of CSC and, as such, is knowledgeable about (a) the assets,
liabilities and operations of the YSI Entities and the Juvenile
Business, and (b) the Purchased Shares, CSC’s ownership
thereof and whether the Purchased Shares are subject to any
Liens.
4.2
“AS IS” Sale . The Sole Member understands
and agrees that Buyer is purchasing the Purchased Shares “AS
IS” and acknowledges that neither GEO nor CSC have made any
representations or warranties, express or implied, of any kind
regarding the Purchased Shares or the assets, liabilities or
operations of any YSI Entity including, without limitation, any
representations and warranties regarding (i) title to the
Purchased Shares, (ii) whether the Purchased Shares are
subject to any Liens, or (iii) the financial condition or
prospects of any
6
YSI Entity.
Buyer is a sophisticated purchaser who on an informed basis accepts
the Purchased Shares “AS IS.” Neither Buyer nor the
Sole Member has relied on any representations or warranties from
GEO or CSC, or any Affiliate thereof regarding the Purchased Shares
or the YSI Entities.
4.3 Power
and Authority . The Sole Member has the requisite
competence and all necessary power and authority to execute and
deliver this Agreement, to perform his obligations hereunder and to
consummate the transactions contemplated hereby. No further actions
on the part of the Sole Member are necessary to authorize this
Agreement or to consummate the transactions contemplated
hereby.
4.4
Enforceability . This Agreement has been duly executed
and delivered by the Sole Member, and, assuming the due
authorization, execution and delivery hereof by GEO and Buyer,
constitutes the legal, valid and binding obligation of the Sole
Member, enforceable against the Sole Member in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency (including all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and general
equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
4.5 No
Conflict; Required Filings and Consents . The execution and
delivery of this Agreement by the Sole Member do not, and the
performance of this Agreement by the Sole Member will not,
(i) to the Knowledge of the Sole Member, conflict with or
violate any Law applicable to Buyer or any YSI Entity, (ii) to
the Knowledge of the Sole Member, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, or (iii) except for the Required
Consents or as set forth on Schedule 3.5 , result in
any breach or violation of or constitute a default (or an event
which, with notice or lapse of time or both, would become a
default) under, result in a material loss of a material benefit
under, give rise to a right or obligation under, require any
consent or approval, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the
creation of a Lien pursuant to, any Contract to which the Sole
Member or, to the Knowledge of the Sole Member, Buyer or any YSI
Entity is a party, or by which the Sole Member or, to the Knowledge
of the Sole Member, Buyer or any YSI Entity is bound, or by which
any of the properties or assets of the Sole Member or, to the
Knowledge of the Sole Member, Buyer or any YSI Entity, are
affected.
4.6 No
Commissions . The Sole Member has not incurred any
obligation or liability, contingent or otherwise, for any
finder’s or broker’s or agent’s fees or
commissions or similar compensation in connection with the
transactions contemplated hereby.
4.7 Absence
of Litigation . Except as set forth on
Schedule 3.7 , to the Knowledge of the Sole Member,
(i) there is no material Action pending or threatened against
CSC (to the extent such Action relates to the Juvenile Business) or
any YSI Entity, or any property or asset utilized in the operation
of the Juvenile Business, before any Governmental Authority, and
(ii) no incidents or events have occurred relating to the
Juvenile Business that could reasonably be expected to give rise to
such an Action. Except as set forth on Schedule 3.7 ,
the Sole Member is not a defendant in any Action in connection with
his status as an officer or director of CSC, any YSI Entity or
Buyer.
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4.8 No
Unknown Liabilities . To the Knowledge of the Sole Member,
neither CSC (to the extent related to the Juvenile Business) nor
any YSI Entity has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations (i) set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as
of June 30, 2005 (including the notes thereto) included in
CSC’s Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2005, or (ii) incurred in the ordinary
course of business since June 30, 2005. To the Knowledge of
the Sole Member, except as set forth on Schedule 3.8 ,
the Pro Forma Balance Sheet (a) consists of the actual balance
sheet of YSI as of June 30, 2005, as adjusted to reflect the
Pre-Closing Transfers as if they had been consummated on
June 30, 2005, and (b) reflects all assets, liabilities
and obligations (whether accrued, absolute, contingent or
otherwise) relating to the Juvenile Business, as of June 30,
2005. To the Knowledge of the Sole Member, there have been no
material changes in the Pro Forma Balance Sheet between the date of
this Agreement and the Closing.
4.9 Genesis
Property . To the Knowledge of the Sole Member, except as
set forth on Schedule 3.9 , (i) YSI owns fee
simple title to the Genesis Property, free and clear of all Liens,
other than Permitted Liens, and (ii) there are no existing
leases, licenses or management agreements for the use or occupancy
of the Genesis Property other than the Lease Documents, (iii) the
Genesis Property is not subject to any governmental decree or order
to be sold nor is being condemned, expropriated or otherwise taken
by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Sole Member, has any such
condemnation, expropriation or taking been proposed, and
(iv) neither CSC nor any YSI Entity has violated any material
covenants, conditions or restrictions affecting the Genesis
Property.
4.10
Financing . At the Closing, Buyer will have sufficient
cash available to it to pay the Initial Cash Payment and to
consummate the Stock Purchase.
REPRESENTATIONS AND WARRANTIES
OF GEO
As a material
inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, GEO makes the following
representations and warranties to Buyer; provided, however, that to
the extent any of the representations and warranties set forth
below relate to GEO’s ability or authority to cause CSC to
act, such representations and warranties shall be deemed to be
given at the Effective Time and not as of the date of this
Agreement:
5.1 Power
and Authority . GEO has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement by GEO and the consummation by GEO of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other
corporate proceedings on the part of GEO are necessary to authorize
this Agreement or to consummate the transactions contemplated
hereby.
8
5.2
Enforceability . This Agreement has been duly executed
and delivered by GEO, and, assuming the due authorization,
execution and delivery by Buyer and the Sole Member, constitutes
the legal, valid and binding obligation of GEO, enforceable against
GEO in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency (including all laws relating
to fraudulent transfers), reorganization, moratorium or similar
laws affecting the enforcement of creditors’ rights generally
and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in
equity.
5.3 No
Conflict; Required Filings and Consents . The execution and
delivery of this Agreement by GEO do not, and the performance of
this Agreement by GEO and the consummation by GEO of the
transactions contemplated hereby will not, (i) conflict with
or violate the Articles of Incorporation or Bylaws of GEO,
(ii) conflict with or violate any Law applicable to GEO, or
(iii) except as set forth on Schedule 5.3 , result in
any breach or violation of or constitute a default (or an event
which, with notice or lapse of time or both, would become a
default) under, result in a material loss of a material benefit
under, give rise to a right or obligation under, require any
consent or approval, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the
creation of a Lien pursuant to, any Contract to which GEO is a
party or by which GEO is bound or by which any of the properties or
assets of GEO are affected.
5.4 No
Commissions . Except as set forth on
Schedule 5.4 , GEO has not incurred any obligation or
liability, contingent or otherwise, for any finder’s or
broker’s or agent’s fees or commissions or similar
compensation in connection with the transactions contemplated
hereby for which Buyer or YSI will have any liability or
responsibility.
6.1 Conduct
of the Juvenile Business Prior to the Closing . Except as
contemplated by this Agreement, between the Effective Time and the
Closing or the earlier termination of this Agreement, GEO shall
cause YSI not to take any of the following actions (except upon the
prior written consent of Buyer, which consent shall not be
unreasonably withheld):
(a) merge
or consolidate with any other Person;
(b) sell,
lease, license or otherwise dispose of any material assets or
properties;
(c) create
any material Lien, claim, restriction or liability on any
properties or assets (other than Liens which will be released at
Closing);
(d) cancel
or compromise any accounts receivable, except in the ordinary
course of business consistent with past practice;
9
(e) acquire
a material amount of properties or assets of any other Person,
except in the ordinary course of business consistent with past
practice;
(f) enter
into or terminate any material contract or agreement, except in the
ordinary course of business consistent with past
practice;
(g) change
any accounting methods or practices in any material
respect;
(h) grant
or agree to grant any preferential right to purchase any properties
or assets;
(i) make
any purchase, sale or transfer of assets in anticipation of this
Agreement, or which would in any manner contravene the intent of
this Agreement;
(j) cancel
or waive any claims or rights of substantial value;
(k) conduct
its business or enter into any transaction, except in the ordinary
course of business consistent with past practices;
(l) improve
or enhance any compensation or benefit plans or arrangements
maintained by CSC for its employees, or adopt or implement such a
plan or arrangement; or
(m) agree
or commit to do any of the foregoing.
6.2 Further
Assurances; Access to Books and Records .
(a) Each
party hereto shall (and, (i) following the Effective Time, GEO
shall cause CSC to, (ii) following the Effective Time and
prior to the Closing, GEO shall cause the YSI Entities to, and
(iii) from and after the Closing, Buyer shall cause the YSI
Entities to) execute and deliver such additional instruments and
other documents and shall take such further actions as may be
necessary or appropriate to effectuate, carry out and comply with
all of the terms of this Agreement and the transactions
contemplated hereby. Without limiting the generality of the
foregoing, at any time at or after the Closing, each party hereto
shall (and, (i) following the Effective Time, GEO shall cause
CSC to, and (ii) from and after the Closing, Buyer shall cause
the YSI Entities to) (A) execute, deliver, acknowledge, file
and record, or cause to be executed, delivered, acknowledged, filed
and recorded, such further bills of sale, deeds, general
conveyances, endorsements, assignments and other good and
sufficient instruments of sale, transfer, assignment and conveyance
and such further consents, certifications, affidavits and
assurances the other party may reasonably request in order ensure
that all right, title and interest in and to the CSC Juvenile
Assets and the CSC Juvenile Liabilities are vested in YSI and all
right, title and interests in and to the Genesis Property and the
Genesis Property Liabilities are vested in CSC and (B) take,
or cause to be taken, all actions and do, or cause to be done, all
such things as the other party may reasonably request in order to
put YSI in actual possession and operating control of the Juvenile
Assets and to put CSC in actual possession and operating control of
the Genesis Property.
(b) Without
limiting the generality of paragraph (a) above, except as
otherwise expressly provided in this Agreement, in the event that
on or after the Closing Date if either GEO or CSC receives any
checks or any other amounts in cash in respect of any
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properties,
assets, rights or entitlements relating to the Juvenile Business or
YSI receives any checks or any other amounts in cash in respect of
any properties, assets, rights or entitlements relating to the
Adult Business or the Genesis Property (including, but not limited
to, any checks or cash from collections of any accounts
receivable), such checks or cash (i) shall be held in trust
for the benefit of the other party or parties, (ii) in the
case of checks, shall be duly and properly endorsed to the other
party or parties in accordance with such instructions as such party
or parties shall from time to time furnish to the party receiving
the same and shall be forwarded, no later than ten
(10) Business Days after the date of receipt thereof to the
other party or parties at the location specified as its address for
notice in this Agreement, and (iii) in the case of cash in a form
other than a check, shall be immediately forwarded to the other
party or parties in such manner as the receiving party shall from
time to time direct.
(c) Buyer
shall (and, (i) following the Effective Time, GEO shall cause
CSC to, (ii) following the Effective Time and prior to the
Closing, GEO shall cause the YSI Entities to, and (iii) from
and after the Closing, Buyer shall cause the YSI Entities to), at
the request of any party hereto and at such requesting
party’s expense, provide such party with reasonable access to
the books, records, properties and other assets of Buyer, CSC
and/or the YSI Entities, as applicable, to the extent that such
party requests such information in connection with (A) the
preparation of any financial statements, (B) the initiation or
defense of any Action, (C) the response to any audits or
inquiries by any Governmental Authority, (D) the preparation
and/or filing of any tax returns or other tax related documents,
(E) the procurement of insurance coverage, and (F) any
other reasonably legitimate business purpose.
6.3
Publicity; Confidentiality . No press release or other
public announcement concerning the transactions contemplated by
this Agreement shall be made by any party without the prior
consultation with, and agreement of, the other party, except for
any legally required communication by any party. Notwithstanding
the foregoing, (a) GEO may issue press releases and otherwise
communicate with investors, analysts, lenders, customers, financial
advisers and other third parties with whom GEO deems it necessary
and/or advisable to communicate, regarding the terms of this
Agreement and the transactions contemplated hereby, subject to the
applicable requirements of Regulation F-D, and (b) GEO
may disclose information regarding this Agreement and the
transactions contemplated hereby in any proxy statement filed by
CSC with the Securities and Exchange Commission with respect to the
Merger; provided, however, that Buyer shall be given a reasonable
opportunity to review and comment on any such proxy statement;
further provided, however, that GEO shall be under no obligation to
accept any comments or other input provided by Buyer with respect
to such proxy statement. Each party agrees not to, and to cause
their respective directors, officers, employees, agents and
representatives not to, divulge, communicate, use or disclose any
trade secrets or other information of the other party and its
Affiliates (which, in the case of GEO will include CSC, and, in the
case of Buyer, will include YSI) that is of a proprietary or
confidential nature (“ Confidential Information
”), except as required by applicable law or compelled to
disclose by judicial or administrative process. Confidential
Information shall not include (i) information that is already
in or subsequently enters the public domain, other than as a result
of any direct or indirect action or inaction by such party, or
(ii) information that was lawfully received from a third party
free of any obligation of confidence of or to such
party.
6.4 Crisp
County Performance Bond . If the Closing occurs on or
before October 14, 2005, Buyer and YSI shall indemnify GEO for
any Losses (as defined below) paid by GEO
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or CSC for
claims made against the Crisp County Performance Bond (defined
below) between the Closing Date and October 14, 2005; provided
that CSC and GEO shall not settle or compromise any claim made
under the Crisp County Performance Bond during such period without
the consent of Buyer, which consent shall not be unreasonably
withheld. If the Closing occurs after October 14, 2005, CSC
shall renew the Crisp County Performance Bond solely in the name of
YSI, for the one year period between October 14, 2005 and
October 14, 2006, and pay the premium for such renewal;
provided, however, that the cash portion of the Purchase Price
payable by Buyer at Closing shall be increased by an amount equal
to (a) the premium for the renewal paid by CSC minus
(b) a portion of the premium prorated to account for the
period between October 14, 2005 and the Closing. The “
Crisp County Performance Bond ” means the performance
bond required by that certain contract
(No. 461-030-0000000043) between the Georgia Department of
Juvenile Justice and Youth Services International, Inc., effective
November 1, 2003.
(a) With
respect to any CSC employees employed in the Juvenile Business
prior to or as of the Closing (the “ Juvenile Business
Employees ”), each of GEO and Buyer acknowledges and
agrees that (a) YSI may make offers of employment to any of
the Juvenile Business Employees to be effective as of the Closing
Date, (b) some or all of such employees may accept employment
with YSI, effective as of the Closing Date (such employees that
accept employment, the “ Transferred Employees
”) and (c) neither GEO nor CSC shall be obligated to
employ or continue to employ any Juvenile Business Employees
following the Closing.
(b) With
respect to the Juvenile Business Employees, YSI shall assume and
pay (in accordance with past practices, but in any event no later
than when such amounts are due) all accrued but unpaid salary,
wages, unused vacation and personal days (except as where required
by applicable law) and bonuses attributable to services performed
by the Juvenile Business Employees prior to and including the
Closing Date.
(c) Pursuant
to the “ Alternate Procedure ” provided in
Section 5 of Revenue Procedure 2004-53, 2004-34 IRB 320, to
the extent permitted, (i) YSI and CSC shall report on a
predecessor/successor basis as set forth therein, (ii) CSC
will be relieved from filing a Form W-2 with respect to any
Transferred Employees for the year that includes the Closing Date,
(iii) YSI will undertake to file (or cause to be filed) a Form
W-2 for each such Transferred Employee with respect to the entire
year (including the portion during which such Transferred Employees
are employed by CSC) that includes the Closing Date, and
(iv) CSC agrees to cooperate with YSI and, upon request from
YSI, provide YSI with information relating to the period during
which the Transferred Employees are employed by CSC. Such
information, if requested, shall be provided to YSI no later than
20 days before the due date for filing the Forms
W-2.
(d) With
respect to the Juvenile Business Employees and/or the Transferred
Employees, neither Buyer nor any YSI Entity shall take any action
(i) to effectuate a “plant closing” or “mass
layoff,” as those terms are defined in the Worker Adjustment
and Retraining Notification Act of 1988 (“ WARN Act
”) or (ii) which would impose any obligations or
liabilities on CSC or GEO pursuant to the WARN Act.
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(a) CSC
and YSI shall cooperate and perform all actions necessary to
effectuate, as of the Closing, the termination of YSI’s
participation in each employee benefit plan maintained or sponsored
by CSC. YSI shall be responsible for adopting, implementing and
administering all employee benefit plans relating to employees
employed by the Juvenile Business following the Closing.
(b) CSC
shall pay all amounts withheld from the Transferred
Employees’ pay pursuant to the Correctional Services Employee
Stock Purchase Plan, effective July 1, 1997 (the “
Stock Purchase Plan ”), and not already otherwise used
to purchase shares of CSC stock, to the Transferred Employees in
accordance with the terms of the Stock Purchase Plan.
(c) YSI
shall be responsible for administering compliance under Title X of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and Health Insurance Portability and Accountability Act of
1996 for those Transferred Employees whose health insurance
coverage terminates after or in connection with the
Closing.
(d) Nothing
contained in this Section 6.6 or elsewhere in this
Agreement shall be construed to prevent the termination of
employment of any Transferred Employee or employee of YSI or any
change in the employee benefits available to any such
Person.
(e) At
Buyer’s request (at no cost to YSI and without unreasonable
effort or expense to GEO), GEO shall cause CSC to provide Buyer
with access to any relevant information and records that CSC has in
its possession to assist YSI with the implementation of its
employee benefit plans and/or the establishment of its contracts or
agreements with insurance companies, insurance brokers, third party
administrators, vendors or any other providers.
(a) From
and after the Effective Time, GEO shall cause CSC to keep all
insurance policies presently maintained relating to the Juvenile
Business and its properties in full force and effect through the
close of business on the Closing Date, and, to the extent that YSI
is a named beneficiary of such insurance policies as of the
Effective Time, to cause YSI to continue to be a named beneficiary
of such insurance policies up to the Closing Date the (“
Existing Insurance Policies ”); provided, however,
that Buyer acknowledges and agrees that, as of the Closing Date,
neither Buyer nor the YSI Entities will be insured under any
insurance policies maintained by CSC or GEO, except
(i)
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