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EXHIBIT 2.1
FIRST AMENDMENT, DATED AS OF JANUARY 12, 1999, TO THE AGREEMENT AND PLAN
OF MERGER, DATED AS OF SEPTEMBER 23, 1998, AMONG YSI, CSC AND PALM
MERGER CORP.
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FIRST AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
This First Amendment ("Amendment") to the Agreement and Plan of
Merger dated as of September 23, 1998 (the "Merger Agreement") by and among
Youth Services International, Inc. ("YSI"), Correctional Services Corporation
("CSC") and Palm Merger Corp., is entered into as of this 12th day of January,
1999.
WHEREAS, the parties desire to amend the Merger Agreement to
address certain issues;
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, the Merger Agreement is hereby amended as set forth below.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Merger Agreement.
1. Section 3.5. A new Section 3.5. shall be added as follows:
"3.5. ASSUMPTION OF WARRANTS.
(a) At the Effective Time, each warrant to purchase Company Common
Stock described in Section 4.2 of the Company Disclosure Schedule (each, a
"Company Warrant"), whether then exerciseable or not, without any action
on the part of the holder, shall be deemed to constitute a warrant to
acquire, on the same terms and conditions as were applicable under such
Company Warrant, a number of shares of Parent Common Stock equivalent to
(A) the number of Shares that could have been purchased immediately prior
to the Effective Time under such Company Warrant multiplied by (B) the
Exchange Ratio (rounded down to the nearest whole number), at a price per
share of Parent Common Stock (rounded up to the nearest whole cent) equal
to the exercise price per share pursuant to such Company Warrant
immediately prior to the Effective Time divided by the Exchange Ratio. At
or prior to the Effective Time, the Company shall make all necessary
arrangements with respect to the Company Warrants to permit the assumption
of the unexercised Company Warrants by Parent pursuant to this SECTION
3.5.
(b) Effective at the Effective Time, Parent shall assume each
Company Warrant. At or prior to the Effective Time, Parent shall take all
corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Company
Warrants assumed by it in accordance with this Section."
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2. Section 6.10.(a). The second and third sentences of Section 6.10.(a) shall
be deleted in their entirety and the following sentence shall be inserted
in their place:
"The Company shall exercise its best efforts to deliver or cause to be
delivered to Parent, at least 35 days prior to the Effective Time, from
each Affiliate of the Company identified in the foregoing list and any
other person who Parent or the Company reasonably believes to be an
Affiliate of the Company, a letter in the form attached as EXHIBIT A-2
(the "Company Affiliates Letter.")"
3. Section 6.10.(c). A new Section 6.10.(c) shall be added as follows:
"(c) In order to preserve pooling-of-interests accounting treatment of
the Merger, the Company shall be entitled, with regard to Shares
held by a Person deemed by the Company to be an "Affiliate" of
the Company (within the meaning of Rule 145 under the Securities
Act and for purposes of applicable interpretations regarding the
pooling-of-interests method of accounting, and regardless of
whether or not such person is listed on EXHIBIT A-1), and Parent
shall be entitled, with regard to shares of Parent Common Stock
held by a Person deemed by Parent to be an "Affiliate" of Parent
(within the meaning of Rule 145 under the Securities Act and for
purposes of applicable interpretations regarding the
pooling-of-interests method of accounting, and regardless of
whether or not such person is listed on the list delivered to the
Company by Parent pursuant to SECTION 6.10.(b)), or shares of
Parent Common Stock to be issued pursuant to the terms of this
Agreement to a Person deemed by Parent to be an Affiliate of the
Company (under the definition given above), to place appropriate
legends on the certificates for such Shares or shares of Parent
Common Stock, as the case may be, and to issue appropriate stop
transfer instructions to the transfer agent for the Shares or the
Parent Common Stock, as the case may be, and shall be entitled to
impose restrictions on any such Shares or shares of Parent Common
Stock, to the effect that such Shares or shares of Parent Common
Stock may only be sold, transferred or otherwise conveyed, and
the holder thereof may only reduce his interest in or risks
relating to such Shares or shares of Parent Common Stock,
pursuant to an effective registration statement under the
Securities Act or in accordance with the provisions Rule 145(d)
promulgated under the Securities Act or pursuant to an exemption
from registration under the Securities Act and, in any event,
only after financial results covering at least 30 days of
combined operations of the Company and Parent after the Effective
Time shall have been published. The foregoing restrictions
relating to
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the transferability of the shares of Parent Common Stock to be
issued to any deemed Affiliate pursuant to this Agreement shall
apply to all purported sales, transfers and other conveyances of
such shares of Parent Common Stock and to all purported reductions
in the interest in or risks relating to such shares of Parent
Common Stock, whether or not such deemed Affiliate has exchanged
the certificates previously evidencing such deemed Affiliate's
Shares for certificates evidencing shares of Parent Common Stock
into which such Shares were converted, and whether or not such
deemed Affiliate has executed and delivered a Company Affiliates
Letter or a Parent Affiliates Letter."
4. Sections 8.1.(d) and 8.1.(e). The references to "January 31, 1999" in
Sections 8.1.(d) and 8.1.(e) shall be deleted and replaced with references
to "March 31, 1999."
5. Exhibit A-1. Exhibit A-1 shall be deleted in its entirety and Exhibit A-1
to this Amendment shall be inserted in its place.
6. Exhibits C and D. Exhibits C and D shall be amended to reflect that they
will be addressed to both Xxxxx & Xxxxxxx L.L.P. and Xxxxxxx Xxxxxx &
Green, P.C.
7. Exhibit E. Exhibit E shall be deleted in its entirety and Exhibit E to
this Amendment shall be inserted in its place.
8. Company Disclosure Schedule. Section 4.14.(b) of the Company Disclosure
Schedule shall be amended to include the following:
"Services Agreement dated as of March 18, 1998 between Youth Services
International, Inc. and P. Xxxxxxx Xxxxxxx
Advisory Services Agreement dated as of November 1, 1997 between Youth
Services International, Inc. and Xxxxx X. Xxxxxxx & Associates, Inc."
9. Counterparts. This Amendment may be executed in counterparts, each of
which shall constitute one agreement, binding on the parties, and each
party hereby covenants and agrees to execute all duplicates or replacement
counterparts of this Amendment as may be required.
10. Merger Agreement. The terms and provisions of the Merger Agreement, as
amended hereby, shall remain in full force and effect. All references to
the Merger Agreement contained therein shall refer to the Merger Agreement
as amended hereby.
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
YOUTH SERVICES INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President, General
Counsel and Acting Chief Financial
Officer
CORRECTIONAL SERVICES CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
PALM MERGER CORP.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
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