EXHIBIT 8.2
February 16, 1999
Board of Directors and Shareholders
Youth Services International, Inc.
0 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Gentlemen/Ladies:
This opinion is being delivered to you in accordance with Section
7.3(d) of the Merger Agreement (the "Agreement") dated as of September 23, 1998,
by and among Youth Services International, Inc. (the "Company"), a Maryland
corporation, Correctional Services Corporation ("Parent"), a Delaware
corporation and Palm Merger Corp. ("Merger Subsidiary"), a Maryland corporation
wholly owned by Parent. Pursuant to the Agreement, Merger Subsidiary will be
merged with and into the Company (the "Merger").
In connection with the preparation of this opinion, we have examined
and with your consent relied upon (without any independent investigation or
review thereof) the following documents (including all exhibits and schedules
thereto): (1) the Agreement; (2) the Registration Statement on Form S-4 filed
with the Securities and Exchange Commission (the "Registration Statement")
and/or the Proxy Statement/Prospectus of Parent and the Company; (3)
representations and certifications made to us by Parent; (4) representations and
certifications made to us by the Company; (5) such other instruments and
documents related to the formation, organization and operation of Parent, Merger
Subsidiary and the Company or to the consummation of the Merger and the
transactions contemplated thereby as we have deemed necessary or appropriate.
In addition, we have reviewed the form of opinion of counsel, received by Parent
from Parent's counsel, Xxxxxxx Xxxxxx & Xxxxx, P.C., with respect to the tax
consequences of the proposed transaction (the "Parent Counsel's Opinion"). 1/
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1/ All capitalized terms used herein and not otherwise defined shall have the
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same meaning as they have in the Agreement. All section references, unless
Youth Services International, Inc.
February 16, 1999
Page 2
The Proposed Transaction
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Based solely upon our review of the documents set forth above, and
upon such information as Parent, Merger Subsidiary and the Company have provided
to us (which we have not attempted to verify in any respect), and in reliance
upon such documents and information, we understand that the proposed transaction
and the relevant facts with respect thereto are as follows:
Parent is the owner of all of the outstanding stock of Merger
Subsidiary, a Maryland corporation. Parent is a developer and operator of adult
and juvenile correctional facilities for federal, state and local governments.
In addition, Parent is an operator of private secure juvenile correctional
facilities. Merger Subsidiary was organized solely for the purpose of
accomplishing the merger described below.
The Company is a provider of private educational, developmental and
rehabilitative programs to adjudicated juveniles.
Because it is believed that the businesses of Parent and the Company
would be complimentary, it is proposed that pursuant to the Agreement and the
laws of the State of Maryland, Merger Subsidiary merge with and into the
Company. Merger Subsidiary's separate corporate existence will cease and the
Company will be the surviving corporation (the "Surviving Corporation"). As the
Surviving Corporation, the Company will succeed to all of the assets and
liabilities of Merger Subsidiary under Maryland General Corporation Law.
By virtue of the Merger, each Share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of
Company Common Stock to be canceled) will be converted into, and become
exchangeable for the right to receive the Merger Consideration, consisting of
.375 shares of Parent Common Stock (the "Exchange Ratio"). At the Effective
Time, each share of common stock of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time will be converted into one validly
issued, fully paid and nonassessable share of common stock, $0.01 par value, of
the Surviving Corporation. At the Effective Time, each Company Warrant will 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
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otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
Youth Services International, Inc.
February 16, 1999
Page 3
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.
No fractional share of Parent Common Stock will be issued, and, in
lieu thereof, a cash payment will be made equal to the amount determined by
multiplying (i) the fraction of a share of Parent Common Stock to which such
holder would otherwise be entitled by (ii) the average closing price of a share
of Parent Common Stock as reported on the NASDAQ National Market Exchange for
the twenty most recent days that Parent Common Stock has traded ending on the
last full trading day prior to the Effective Time. No appraisal rights will be
available in connection with the Merger.
Assumptions and Representations
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In connection with rendering this opinion, we have assumed or obtained
representations (and, with your consent, are relying thereon, without any
independent investigation or review thereof, although we are not aware of any
material facts or circumstances contrary to or inconsistent therewith) that:
1. All information contained in each of the documents we have
examined and relied upon in connection with the preparation of this opinion is
accurate and completely describes all material facts relevant to our opinion,
all copies are accurate and all signatures are genuine. We have also assumed
that there has been (or will be by the Effective Time of the Merger) due
execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof.
2. The Merger will be consummated in accordance with applicable state
law and will qualify as a statutory merger under applicable state law.
3. All representations made in the exhibits hereto are true, correct,
and complete in all material respects. Any representation or statement made "to
the best of knowledge" or similarly qualified is correct without such
qualification.
4. The Merger will be consummated in accordance with the Agreement
and as described in the Proxy Statement/Prospectus (including satisfaction of
all covenants and conditions to the obligations of the parties without
Youth Services International, Inc.
February 16, 1999
Page 4
amendment or waiver thereof); each of Parent, Merger Sub and the Company will
comply with all reporting obligations with respect to the Merger required under
the Code and the Treasury Regulations thereunder; and the Agreement and all
other documents and instruments referred to therein or in the Proxy
Statement/Prospectus are valid and binding in accordance with their terms.
5. The Parent Counsel's Opinion has been concurrently delivered and
not withdrawn.
Opinion - Federal Income Tax Consequences
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Based upon and subject to the assumptions and qualifications set forth
herein, it is our opinion that for Federal income tax purposes the following
will result:
1. The Merger will qualify as a reorganization pursuant to Section
368(a) of the Code and Parent, Merger Subsidiary and the Company will each be a
party to such "reorganization" within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Company as a result of
the Merger.
3. No gain or loss will be recognized by a holder of Company Common
Stock upon the exchange of its shares solely for shares of Parent Common Stock
pursuant to the Merger, except with respect to cash, if any, received by a
holder of Company Common Stock in lieu of a fractional share of Parent Common
Stock.
In addition to the assumptions set forth above, this opinion is
subject to the exceptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment
regarding the application of relevant current provisions of the Code and
interpretations of the foregoing as expressed in existing court decisions,
administrative determinations (including the practices and procedures of the
Internal Revenue Service (the "IRS") in issuing private letter rulings, which
are not binding on the IRS except with respect to the taxpayer that receives
such a ruling) and published rulings and procedures all as of the date hereof.
An opinion of counsel merely represents counsel's best judgment with respect to
the probable outcome on the merits and is not binding on the Internal Revenue
Service or the courts. There can be no assurance that positions contrary to our
opinions will not
Youth Services International, Inc.
February 16, 1999
Page 5
be taken by the IRS, or that a court considering the issues would not hold
contrary to such opinions. Parent has not requested a ruling from the IRS (and
no ruling will be sought) as to any of the federal income tax consequences
addressed in this opinion. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the opinion
expressed herein. Nevertheless, we undertake no responsibility to advise you of
any new developments in the law or in the application or interpretation of the
federal income tax laws.
2. This letter addresses only the specific tax opinions set forth
above. This letter does not address any other federal, state, local or foreign
tax consequences that may result from the Merger or any other transaction
(including any transaction undertaken in connection with the Merger).
3. Our opinion is intended to address only the tax consequences to
the Company and the holders of Company Common Stock and is not intended to
address (nor may it be relied upon for) the tax consequences to Parent or Merger
Subsidiary. We express no opinion regarding, among other things, the tax
consequences of the Merger (including the opinion set forth above) as applied to
specific holders of Company Common Stock that may be relevant to particular
classes of holders of Company Common Stock, such as dealers in securities,
corporate shareholders subject to the alternative minimum tax, foreign persons,
and holders of shares acquired upon exercise of stock options or in other
compensatory transactions.
4. Our opinion set forth herein is based upon the description of the
contemplated transactions as set forth above in the section captioned "The
Proposed Transaction," the Agreement and the Proxy Statement/Prospectus. If the
actual facts relating to any aspect of the transactions differ from this
description in any material respect, our opinion may become inapplicable. No
opinion is expressed as to any transaction other than those set forth in the
section captioned "The Proposed Transaction," the Agreement and the Proxy
Statement/Prospectus or to any transaction whatsoever, including the Merger, if
all the transactions described in the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus are not
consummated in accordance with the terms of the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus and without
waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we relied are
not true and accurate at all relevant times. In the event any one of the
statements, representations, warranties or assumptions upon which
Youth Services International, Inc.
February 16, 1999
Page 6
we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
This opinion is provided to the Company and the holders of Company
Common Stock only, and without our prior consent, may not be relied upon, used,
circulated, quoted or otherwise referred to in any manner by any person, firm,
governmental authority or entity whatsoever other than reliance thereon by the
Company and the holders of Company Common Stock. Notwithstanding the prior
sentence, we hereby consent to the use of the opinion letter as an exhibit to
the Registration Statement and to the use of our name in the Registration
Statement. In giving the consent, we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.
Sincerely yours,
/s/ Xxxxx & Xxxxxxx L.L.P.
XXXXX & XXXXXXX L.L.P.
