Document:

exv10w1

 

Exhibit 10.1

INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT, effective as of execution date, (the “Effective Date”) between enherent
Corp., with offices and a principal place of business at 192 Lexington Avenue, New York, New York
10016 (“Company”) and _______________, a non-employee Director of the Company with an address at
_________________________________
(“Director”).

WITNESSTH

WHEREAS, the Company wishes to retain the Director as a non-employee Director.

WHEREAS, the Director wishes to serve on the Company’s Board of Directors as a non-employee
Director on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the promises and mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

	1.	 	Company, at its sole cost and expense, shall maintain directors’ and officers’ liability
insurance coverage in an aggregate amount of no less than $5,000,000, in customary form, which
policy shall benefit the Director.

	2.	 	Provided the Director gives Company notice within ten (10) business days after first being
informed of any claim against Director arising in the course of conduct of Company’s business
or the business of any of its affiliates, Company agrees, to the fullest extent permitted by
applicable law, to indemnify the Director against any and all liabilities to third parties
incurred in the course of conduct of Company’s business or the business of any of its
affiliates. Company’s obligations hereunder shall be offset by any indemnity paid to Director
under any liability insurance policies purchased/maintained by Company which benefit the
Director. In the event of an indemnification of Director by Company as herein provided,
Company shall provide for and pay for the Director’s defense against any legal action in
respect of liabilities as to which it has indemnified the Director and the Director agrees to
reasonably cooperate with Company in connection with its defense of any such action or related
action. The Director shall have the option of retaining counsel of Director’s own choice at
Director’s sole expense.

	3.	 	The Director’s right to indemnification provided for in Section 2 hereof shall not be
exclusive of any other right which the Director may have or hereafter acquire under any
statute, the Company’s Certificate of Incorporation, the Company’s By-laws, agreement, vote of
stockholders, or directors, or otherwise.

 

 

	4.	 	The rights provided under this Indemnification Agreement shall survive the expiration of
the Director’s term or office or the resignation of the Director.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective Date.

	 	 	 	 	 	 
	enherent Corp.	 	DIRECTOR	 
	 
	By:

	 	 	By:	 	 
	

	 
	 	 	 	 
	

	Pamela Fredette

CEO & President
	 	 	[Name]	 
	 
	Date:

	 	 	Date:Stock Purchase Agreement

 

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

     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.

RECITALS

     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:

ARTICLE I

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”.

ARTICLE II

PRE-CLOSING TRANSACTIONS 

     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. 

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ARTICLE III

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.

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     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

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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).

ARTICLE IV

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

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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.

ARTICLE V

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.

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     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.

ARTICLE VI

ADDITIONAL AGREEMENTS

     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;

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          (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

10

 

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

11

 

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.

     6.5 Employees.

          (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.

     6.6 Employee Benefits.

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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.

6.7 Insurance.

          (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) in the case of certain claims-made policies, to the extent that a claim has been
reported as of the Closing Date and (ii) in the case of a policy that is an occurrence based
policy, to the extent the accident, event or occurrence that results in an insurable loss occurs
prior to the Closing Date, which claim shall be promptly reported or noticed by Buyer and/or the
YSI Entities (A) in writing to the respective carrier and GEO, and (B) otherwise in accordance with
the requirements of such policies. Without limiting the generality of the foregoing, Buyer and the
YSI Entities accept the terms and conditions of the Existing Insurance Policies “AS IS” and hereby
acknowledge and agree that Buyer and the YSI Entities shall only be covered under the Existing
Insurance Policies to the extent that (1) the terms of such Existing Policies provide for such
coverage, (2) Buyer and/or the YSI Entities, as applicable, pay the deductibles associated with any
claims made by them following the Closing against the Existing Insurance Policies, and (3) the
coverage limits under the Existing Insurance Policies have not been exhausted. To the extent that
Buyer determines that any of the Existing

13

 

Insurance Policies do not provide adequate coverage for claims relating to the Juvenile
Business arising prior to the Closing, it shall be Buyer’s sole responsibility, at Buyer’s sole
expense, to secure separate insurance coverage for such claims. Buyer and the YSI Entities
acknowledge and agree that coverage under the Existing Insurance Policies will only be available to
the extent that all conditions precedent thereto under the terms of the Existing Insurance Policies
have been satisfied. Notwithstanding anything to the contrary in this Agreement, GEO and Buyer
agree that neither Buyer nor any of the YSI Entities shall have any coverage under any of the
Existing Insurance Policies that provide coverage for the matter listed on Schedule 6.7(a),
and Buyer and the YSI Entities agree to promptly execute any documents as reasonably requested by
GEO in order to forego, waive or otherwise cancel any coverage or other rights that Buyer or any of
the YSI Entities may otherwise have under any of the Existing Insurance Policies that provide
coverage for the matter listed on Schedule 6.7(a).

          (b) With respect to those Existing Insurance Policies that are general liability or automobile
liability policies, and any umbrella or excess policies related thereto (collectively, the
“Existing Auto/GL Policies”), GEO and Buyer agree as follows: (i) Buyer shall, and shall
cause the YSI Entities to, as a condition precedent to coverage, pay the applicable deductible with
respect to any claims arising under such Existing Auto/GL Policies that are related to the Juvenile
Business and arise from acts, omissions or incidents which occur prior to the Closing; (ii) GEO
shall, and shall cause CSC to, as a condition precedent to coverage, pay the applicable deductible
with respect to any claims made under such Existing Auto/GL Policies that are related to the Adult
Business and arise from acts, omissions or incidents which occur prior to the Closing; (iii) each
of GEO (including CSC and any of its Affiliates) and Buyer (including the YSI Entities) shall be
entitled to insurance coverage under each Existing GL/Auto Policy in an amount not to exceed 70%
and 30%, respectively, of the total aggregate limits available under each such policy; (iv) Buyer
shall, and shall cause the YSI Entities to, indemnify and hold harmless GEO, CSC and their
Affiliates for any Losses which they may incur as a result of (A) Buyer’s or any YSI Entity’s
failure to pay any deductible amounts that they are required to pay pursuant to the terms of
Section 6.07(b)(i), and (B) Buyer’s and/or any YSI Entity’s absorption of any amount of insurance
coverage under any Existing Auto/GL Policy in excess of that to which it is entitled pursuant to
the terms of Section 6.07(b)(iii); and (v) GEO shall, and shall cause CSC to, indemnify and hold
harmless Buyer, the YSI Entities and their Affiliates for any Losses which they may incur as a
result of (A) GEO’s or CSC’s failure to pay any deductible amounts that they are required to pay
pursuant to the terms of Section 6.07(b)(ii), and (B) GEO’s or CSC’s absorption of any amount of
insurance coverage under any Existing Auto/GL Policy in excess of that to which it is entitled
pursuant to the terms of Section 6.07(b)(iii).

          (c) With respect to those Existing Insurance Policies that are workers’ compensation policies
(the “Existing WC Policies”), GEO and Buyer agree as follows: (i) Buyer shall, and shall
cause the YSI Entities to, as a condition precedent to coverage, pay the applicable deductible with
respect to any claims arising under such Existing WC Policies that are related to the Juvenile
Business and arise from acts, omissions or incidents which occur prior to the Closing; (ii) GEO
shall, and shall cause CSC to, as a condition precedent to coverage, pay the applicable deductible
with respect to any claims made under such Existing WC Policies that are related to the Adult
Business and arise from acts, omissions or incidents which occur prior to the Closing; (iii) Buyer
shall, and shall cause the YSI Entities to, pay GEO on a quarterly basis an amount equal to 30% of
the aggregate financing and other fees, costs and expenses incurred by GEO or CSC during such
period in order to maintain letters of credit which secure GEO’s,

14

 

CSC’s and/or the YSI Entities’ obligations to pay deductibles pursuant to the Existing WC
Policies, (iv) Buyer shall, and shall cause the YSI Entities to, indemnify and hold harmless GEO,
CSC and their Affiliates for any Losses which they may incur as a result of (A) Buyer’s or any YSI
Entity’s failure to pay any deductible amounts that they are required to pay pursuant to the terms
of Section 6.07(c)(i), and (B) Buyer’s and/or any YSI Entity’s failure to pay any amounts that they
are required to pay pursuant to the terms of Section 6.07(c)(iii), and (v) GEO shall, and shall
cause CSC to, indemnify and hold harmless Buyer, the YSI Entities and their Affiliates for any
Losses which they may incur as a result of GEO’s or CSC’s failure to pay any deductible amounts
that they are required to pay pursuant to the terms of Section 6.07(c)(ii).

          (d) Buyer shall, and shall on behalf of the YSI Entities, be fully responsible, to the extent
that it deems necessary, for procuring and maintaining all insurance policies relating to the
business and operations of the Juvenile Business following the Closing, including, but not limited
to, general liability insurance, auto liability insurance, workers’ compensation insurance,
property insurance, directors’ and officers’ liability insurance, employers’ liability insurance
and health insurance.

          (e) Except as otherwise expressly provided by GEO in writing, subject to GEO’s reasonable
oversight, Buyer and the YSI Entities, at their own cost and expense (except as otherwise
reimbursable out of the Existing Insurance Policies), shall assume and maintain the defense of any
Action related to the Juvenile Business; provided, however, that Buyer and the YSI Entities may
only settle or compromise any such Action (i) in their reasonable discretion, with respect to any
Action that would require the payment of less than $150,000, and (i) solely with the prior written
consent of GEO, which shall not be unreasonably withheld, for any single Action that would require
the payment of $150,000 or more.

          (f) GEO shall cause CSC to, and Buyer and the YSI Entities shall, reasonably cooperate to
share policy information with respect to the Existing Insurance Policies, and, to the extent
necessary, to pursue coverage actions against the insurers on the Existing Insurance Policies
(provided that the party initiating any such coverage action shall bear all costs and expenses
associated with such action).

     6.8 Cash, Accounts Receivable and Accounts Payable. GEO and Buyer agree that all
cash (other than restricted cash in an amount not to exceed $50,000) relating to the Juvenile
Business held by either CSC or YSI at the Closing Date shall be the sole and exclusive property of
GEO, and Buyer agrees to promptly return any cash (other than restricted cash in an amount not to
exceed $50,000) held by CSC or YSI at the Closing Date which Buyer inadvertently receives. At all
times prior to the Closing, Sole Member agrees to take all actions within his authority that are
necessary to cause CSC and/or YSI to collect all accounts receivable of the Juvenile Business in
the ordinary course of business consistent with past practice. GEO agrees after the Effective
Time to cause CSC to promptly remit any amounts collected by CSC after the Closing Date with
respect to accounts receivable related to the Juvenile Business. Buyer agrees to cause YSI to
promptly remit any amounts collected by YSI after the Closing Date with respect to accounts
receivable arising under the Genesis Property. After the Closing Date, Buyer shall, and shall
cause the YSI Entities to, pay consistent with past practices all accounts payable arising from or
relating to the conduct of the Juvenile Business prior to the Closing, irrespective of whether
such payables are in the name of CSC or any of the YSI Entities. At all times prior to the
Closing, Sole Member agrees to take all

15

 

actions within his authority that are necessary to cause CSC and/or YSI to pay all accounts
payable of the Juvenile Business in the ordinary course of business consistent with past practice.

     6.9 Master Leases. Prior to the Closing, Buyer shall, and shall cause the YSI
Entities to, cause the lessors of the equipment, automobiles and other assets utilized primarily
in the operation of the Juvenile Business as of July 14, 2005 (the “Shared Leased Assets”)
to enter into new leases with YSI for the Shared Leased Assets on substantially the same terms and
conditions as the Shared Leased Assets are currently being leased to CSC; provided, however, that
the foregoing shall not be interpreted to require that CSC guarantee, offer credit enhancement or
otherwise pay any fees or amounts in order for YSI to obtain such new leases. Pending the
execution of new leases for the Shared Leased Assets by YSI, the parties intend that all rights
and obligations with respect to the Shared Leased Assets, to the extent assignable and subject to
obtaining all Required Consents to such assignment, shall be assigned to and assumed by YSI.
Following the Effective Time, GEO agrees to (and shall cause CSC to, and between the Effective
Time and the Closing, cause YSI to) reasonably cooperate with Buyer to facilitate Buyer’s efforts
under this Section 6.9. In the event that the Shared Leased Assets cannot be transferred
from GEO to Buyer after Buyer’s and GEO’s good faith efforts to do so, GEO and/or CSC shall have
the right to terminate any leases or other Contracts relating to such Shared Leased Assets.

     6.10 Joinder of YSI at Closing. Immediately upon Closing, Buyer shall cause YSI to
execute a joinder to this Agreement in the form attached to this Agreement as Exhibit H (the
“Joinder”), pursuant to which YSI, on a joint and several basis with Buyer and Sole
Member, (i) shall be deemed to have made the representations and warranties made by Buyer in this
Agreement, and (ii) shall undertake from and after Closing all covenants, obligations and
agreements of Buyer pursuant to this Agreement including, without limitation, any indemnity
obligations of Buyer hereunder.

     6.11 No Disposition of Shares. Between the Effective Time and the Closing, GEO shall
not permit CSC to dispose of, transfer or assign, or pledge, mortgage or otherwise grant an
interest in (except where such encumbrance or interest is released at Closing), any shares of
capital stock of YSI or enter into any agreement to do the foregoing.

     6.12 Consents. Prior to the Closing, Buyer and Sole Member shall use their best
efforts to obtain all Required Consents, in a form of consent to assignment and release reasonably
satisfactory to GEO, and take all other actions, necessary, proper or advisable to effectuate at
or prior to the Closing the Pre-Closing Transfers, provided that (i) any CSC Transfer shall be
made in accordance with the terms of the CSC Juvenile Contracts, and (ii) any YSI Transfer shall
be made in accordance with the terms of any contracts or agreements related to the Genesis
Property or pursuant to which the Genesis Property Liabilities arise. Following the Effective
Time, GEO shall (and shall cause CSC to, and between the Effective Time and the Closing, cause YSI
to) reasonably cooperate with Buyer and Sole Member to facilitate Buyer’s and Sole Member’s
efforts to obtain such Required Consents; provided, however, that notwithstanding anything to the
contrary in this Agreement, Buyer agrees to buy the Purchased Shares “AS IS” and GEO and Buyer
expressly acknowledge and agree that (i) the receipt of the Required Consents and/or any other
third party consents is not, and shall not be deemed to be, a condition precedent to the Closing
and the completion of the transactions

16

 

contemplated hereby, (ii) the failure to obtain any Required Consents or any other third
party consents shall in no event affect Buyer’s obligations to complete the Stock Purchase and the
transactions contemplated hereby in accordance with the terms of this Agreement, (iii) in order to
be valid, any Required Consents must be received by GEO prior to the Closing, (iv) any assets
and/or liabilities designated for transfer as part of the Pre-Closing Transfers that are not
transferred prior to the Closing (as evidenced by a bill of sale for such transfer having been
delivered to the buyer thereof) shall thereafter remain the sole and exclusive property of CSC or
YSI, as applicable, (v) neither GEO nor CSC shall have any obligation whatsoever to obtain the
Required Consents, and (vi) Buyer’s sole and exclusive remedy against GEO, and GEO’s sole and
exclusive remedy against Buyer, in the event that any of the Required Consents for the transfer of
a CSC Juvenile Contract are not received prior to the Closing shall be un upward or downward
adjustment in the Purchase Price, as applicable, in accordance with the terms of Schedule
6.12. Any such adjustment to the Purchase Price pursuant to this Section 6.12 shall be
reflected in an equal adjustment to the Initial Cash Payment.

6.13 [INTENTIONALLY OMITTED]

     6.14 Transition Services. GEO and Buyer agree that Buyer shall be solely and
exclusively responsible for all aspects and functions relating to the operation of the Juvenile
Business. At Buyer’s request (at no cost to YSI and without unreasonable effort or expense to
GEO), for a period of 60 days following Closing, GEO shall cause CSC to (i) provide Buyer with
access to any relevant information and records that CSC has in its possession to assist YSI with
the transition of any applicable administrative functions from CSC to YSI, and (ii) provide Buyer
with access to the consolidated payroll system currently used by CSC and the YSI Entities. At
Buyer’s request and expense, for a period of 60 days following Closing, GEO shall otherwise cause
CSC to reasonably cooperate with YSI and make reasonable efforts to assist YSI with the transition
of any applicable administrative functions from CSC to YSI.

     6.15 CSC Juvenile Ancillary Contracts. Following the Effective Time and prior to the
Closing, to the extent transferable and provided that any third-party consents required to
complete such transfer have been obtained (it being understood that neither GEO nor CSC shall have
any obligation to obtain such consents), GEO shall cause CSC to transfer, and YSI to assume, on an
“AS IS” basis for good and valuable consideration, (i) all rights under the ancillary contracts
of the Juvenile Business to which CSC is a party (excluding the CSC Juvenile Contracts), each of
which is listed on Schedule 6.15 attached hereto (the “CSC Juvenile Ancillary
Contracts”), (ii) all duties, liabilities and obligations of CSC under, pursuant to or related
to the CSC Juvenile Ancillary Contracts, whether arising prior to, on or after the Closing. To
the extent that any CSC Juvenile Ancillary Contract or any right or benefit arising thereunder is
not capable of being assigned or transferred to YSI without the consent or waiver of the other
party thereto or any third party (and such consent or waiver has not been obtained by Buyer), or
if such assignment or transfer or attempted assignment or transfer would constitute a breach
thereof or a violation of any law, decree, order, regulation or other government edict, this
Agreement shall not constitute an assignment or transfer thereof, or an attempted assignment or
transfer thereof.

     6.16 Certain Covenants with Respect to Genesis Property. At GEO’s request and at no
cost to GEO, the Sole Member shall use his commercially reasonable efforts to assist GEO and CSC
to remove, settle or otherwise address the Genesis Property Liabilities, to GEO’s

17

 

satisfaction. GEO shall reimburse the Sole Member for any direct out-of-pocket expenses
incurred by the Sole Member in his efforts to comply with the terms of this Section 6.16.

     6.17 Excluded Assets. It is agreed and understood by GEO, Buyer and the Sole Member
that it is the intent of all of the parties hereto that, notwithstanding anything to the contrary
in this Agreement (including that the transactions contemplated hereby are being structured
primarily as a stock purchase), Buyer is solely purchasing pursuant to this Agreement, and/or
shall solely be entitled to receive hereby, such assets, whether owned, leased or otherwise held
in the name of CSC or any of the YSI Entities, which were used primarily in the operation of the
Juvenile Business as of July 14, 2005 (except for (i) accounts receivable related to the operation
of the Juvenile Business, (ii) causes of actions against third parties related to the Juvenile
Business (except for causes of action relating to the matter listed on Schedule 6.7),
(iii) claims for coverage under the Existing Insurance Policies made in accordance with and
subject to the terms of Section 6.7, and (iv) other assets used primarily in the operation of the
Juvenile Business which are acquired after July 14, 2005 in the ordinary course of business and
which would not have a material effect on the Pro Forma Balance Sheet, to which Buyer shall be
entitled through the Closing Date) (collectively the “Designated Juvenile Assets”). GEO,
Buyer and the Sole Member hereby covenant and agree that, to the extent that any assets of CSC or
the YSI Entities other than the Designated Juvenile Assets (the “Excluded Assets”) are
either (i) transferred to Buyer or any of the YSI Entities prior to the Closing Date, or (ii) are
otherwise received, acquired or held by Buyer or any of the YSI Entities following the Closing
Date, Buyer shall (A) immediately take all steps necessary to put CSC in possession of the
Excluded Assets, free of any Liens, and/or (B) indemnify GEO and CSC for any Losses incurred or
suffered by any of them as a result of the transfer to, acquisition by, or receipt or holding of
such Excluded Assets by Buyer or the YSI Entities. GEO hereby covenants and agrees that, to the
extent that any assets Designated Juvenile Assets are either (i) not transferred to Buyer or any
of the YSI Entities at or prior to the Closing Date, or (ii) are otherwise held by CSC or GEO
following the Closing Date, GEO shall, to the extent transferable and provided that any
third-party consents required to complete such transfer have been obtained, immediately take all
steps necessary to put Buyer in possession of such Designated Juvenile Assets.

     6.18 Covenants Relating to Certain Juvenile Facilities. Buyer and YSI shall
indemnify GEO and CSC for any Losses (as defined below) incurred or suffered by either GEO or CSC
arising out of or resulting from (i) the Charles H. Hickey Junior School (including, but not
limited to, CSC’s or YSI’s operation thereof) (the “Hickey School”), (ii) any failure to
comply with the terms of that certain [Settlement Agreement] (the “Settlement Agreement”),
and (iii) any Actions initiated and/or undertaken by the Department of Justice in connection with
or relating to the Hickey Facility, the Settlement Agreement or any other juvenile facilities now
or previously operated by CSC or YSI.

ARTICLE VII

INDEMNIFICATION

     7.1 Agreement by GEO for Indemnification. GEO agrees to indemnify and hold Buyer,
the YSI Entities and their respective stockholders, directors, officers, employees, attorneys and
Affiliates harmless from and against the aggregate of all Losses incurred or

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suffered by any such Person arising out of or resulting from (a) any breach of a
representation or warranty made by GEO in this Agreement, (b) any breach of the covenants,
obligations or agreements made by GEO in this Agreement, (c) any inaccuracy in any certificate,
instrument or other document delivered by GEO as required by this Agreement, (d) the Genesis
Property Liabilities, (e) GEO or CSC’s operation of the Adult Business following the Closing,
and/or (f) the matter described on Schedule 6.7(a).

     7.2 Agreement by Buyer and YSI for Indemnification.

          (a) Each of Buyer and YSI, jointly and severally, agrees to indemnify and hold GEO and its
stockholders, directors, officers, employees, attorneys and Affiliates (collectively, the “GEO
Indemnified Parties”) harmless from and against the aggregate of all Losses incurred or
suffered by GEO or CSC arising out of or resulting from (i) any breach of a representation or
warranty made by Buyer, Sole Member or YSI in this Agreement, (ii) any breach of the covenants,
obligations or agreements made by Buyer, Sole Member or YSI in this Agreement, (iii) any inaccuracy
in any certificate, instrument or other document delivered by Buyer, Sole Member or YSI as required
by this Agreement, (iv) the Juvenile Business (including, but not limited to, CSC’s or YSI’s
operation thereof) prior to the Closing, (v) the Juvenile Business (including, but not limited to,
YSI’s operation thereof) following the Closing, (vi) the CSC Juvenile Liabilities, (vii)
obligations arising under the Crisp County Performance Bond, and/or (viii) Buyer’s failure to
fulfill any of its payment obligations under the Note.

          (b) No indemnification under Section 7.2(a) shall be due unless the aggregate amount of Losses
incurred or suffered by GEO or CSC (aggregating all indemnifiable matters under such Section and
Section 7.3(a)) due exceeds $31,250 (the “Indemnification Threshold”), in which case
indemnity shall become due for the entire amount of such Losses including the Indemnification
Threshold.

          (c) The maximum amount of Losses for which the GEO Indemnified Parties shall be entitled to be
indemnified under Section 7.2(a) for any breach of a representation or warranty made by Buyer, Sole
Member or YSI in this Agreement shall be equal to the amount of the Purchase Price (the
“Buyer/YSI Indemnification Cap”); provided, however, that the Buyer/YSI Indemnification Cap
shall not apply to breaches of the covenants, obligations or agreements made by Buyer, Sole Member
or YSI in this Agreement or any of the other bases for indemnification set forth in clauses (ii),
(iii) (iv), (v), (vi), (vii) and (viii) of Section 7.2(a), and any Losses incurred by the GEO
Indemnified Parties arising from such breaches shall be fully indemnified by Buyer and YSI.

          (d) Any Losses otherwise indemnifiable by Buyer and YSI pursuant to this Section 7.2(a) shall
be offset against any amounts paid with respect to such Losses by the Sole Member pursuant to
Section 7.3(a).

     7.3 Agreement by Sole Member for Indemnification.

          (a) Sole Member agrees to indemnify and hold the GEO Indemnified Parties harmless from and
against the aggregate of all Losses incurred or suffered by GEO or CSC arising out of or resulting
from (i) any breach of a representation or warranty made by Sole Member in this Agreement, (ii) any
breach of the covenants, obligations or agreements made by

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Buyer, Sole Member or YSI in this Agreement, (iii) any inaccuracy in any certificate,
instrument or other document delivered by Buyer or Sole Member as required by this Agreement, (iv)
obligations arising under the Crisp County Performance Bond, and/or (v) Buyer’s failure to fulfill
any of its payment obligations under the Note.

          (b) No indemnification under Section 7.3(a) shall be due unless the aggregate amount of Losses
incurred or suffered by GEO or CSC (aggregating all indemnifiable matters under such Section and
Section 7.2(a)) due exceeds the Indemnification Threshold, in which case indemnity shall become due
for the entire amount of such Losses including the Indemnification Threshold.

          (c) The maximum amount of Losses for which the GEO Indemnified Parties shall be entitled to be
indemnified under Section 7.3(a) shall be One Million Dollars ($1,000,000) (the “Sole Member
Indemnification Cap”).

          (d) At the Closing, Sole Member shall deliver to GEO a clean, irrevocable letter of credit
(the “Letter of Credit”), securing his indemnification obligations pursuant to Section
7.3(a). The Letter of Credit shall be maintained for a period of four (4) years following the
Closing and shall be in an amount equal to $750,000 for the first three (3) years following the
Closing and in an amount equal to $500,000 for the last year of the four year period. GEO shall
not call the Letter of Credit unless (i) GEO believes, in its reasonable discretion, that a GEO
Indemnified Party has suffered a Loss as a result of any breach of the covenants, obligations or
agreements made by Buyer, Sole Member or YSI in Sections 6.4, 6.5, 6.6, 6.7 or 6.8 of this
Agreement and/or Buyer’s failure to fulfill any of its payment obligations under the Note
(including upon an Event of Default (as defined under the terms of the Note)), or (ii) in the event
that it is finally determined in accordance with Section 12.9 that a GEO Indemnified Party is
entitled to indemnification under Section 7.3(a).

          (e) Any Losses otherwise indemnifiable by the Sole Member pursuant to Section 7.3(a) shall be
offset against any amounts paid with respect to such Losses by Buyer or YSI pursuant to Section
7.2(a).

     7.4 Survival of Representations and Warranties. Each covenant or agreement in this
Agreement shall survive the Closing without limitation as to time. Each representation and
warranty in this Agreement shall survive the Closing until the third (3rd) anniversary
of the Closing Date. Notwithstanding any knowledge of facts determined or determinable by any
party hereto, such party shall have the right to fully rely on the representations, warranties,
covenants, obligations and agreements of the other parties hereto contained in this Agreement or
in any other instrument or other document required to be delivered in connection herewith. Each
representation, warranty, covenant, obligation and agreement contained in this Agreement is
independent of each other representation, warranty, covenant, obligation and agreement. Provided
notice of any claim for indemnification pursuant to this Article VII is given to the party against
whom indemnification is sought prior to the termination of the relevant survival period, the party
seeking indemnification shall have the right to pursue such claim for indemnification following
the termination of the relevant survival period.

     7.5 Allocation of Tax Liabilities; Indemnification.

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          (a) Subject to Section 7.6, GEO and CSC shall be liable for and shall hold the YSI Entities
harmless against any liability for Taxes of (i) GEO and CSC and its subsidiaries (other than the
YSI Entities) for any taxable year or other taxable period that ends on or before the Closing Date
and, in the case of any taxable year or other taxable period that includes the Closing Date, that
part of the taxable year or other taxable period that ends at the close of the Closing Date, and
(ii) the YSI Entities that are attributable to any other corporation and that are imposed on the
YSI Entities as a result of membership of the YSI Entities in a consolidated, combined or unitary
group which includes GEO or CSC prior to the Closing Date.

          (b) Buyer shall be liable for and shall hold GEO harmless against any liability for Taxes of
the YSI Entities for any taxable year or other taxable period that begins after the close of the
Closing Date and, in the case of any taxable year or other taxable period that includes the Closing
Date, that part of the taxable year or other taxable period that begins after the close of the
Closing Date.

          (c) Whenever it is necessary for purposes of this Section 7.4 to determine the liability for
Taxes for a taxable year or period that begins on or before and ends after the Closing Date, the
determination shall be made by assuming a taxable year which ended at the close of business on the
Closing Date, except that exemptions, allowances or deductions that are calculated on an annual
basis (such as the deduction for depreciation) shall be apportioned on a time basis.

          (d)     (i) Buyer shall promptly notify GEO in writing upon receipt by Buyer, or any of its
Affiliates, of notice of any pending or threatened audits or assessments relating to Taxes for
which GEO or CSC would be required to indemnify Buyer pursuant to Section 7.5(a).

               (ii) GEO shall have the sole right to represent GEO’s interest in any audit or administrative
or court proceeding relating to any such Taxes that GEO or CSC is required to indemnify pursuant to
Section 7.5(a), and to employ counsel of its choice at its expense. Notwithstanding the foregoing,
GEO shall not be entitled to settle, either administratively or after the commencement of
litigation, any claim for such Taxes which would materially adversely affect the liability for such
Taxes of Buyer or the YSI Entities for any period after the Closing Date without the prior written
consent of Buyer, which consent shall not be unreasonably withheld or delayed. If GEO elects not
to assume the defense of any claim for such Taxes which may be the subject of indemnification by
GEO pursuant to Section 7.5(a), GEO shall be entitled to participate in such defense at its
expense. Neither Buyer nor the YSI Entities may agree to settle any claim for such Taxes which may
be the subject of indemnification by GEO under Section 7.5(a) without the prior written consent of
GEO, which consent shall not be unreasonably withheld or delayed.

          (e) GEO shall have no liability under Section 7.5(a) for the payment of any Taxes attributable
to or resulting from any action described in Section 7.6.

          (f) The indemnities provided under this Section 7.5, shall be in addition to those provided in
the remainder of Article VII.

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          (g) Any stamp tax, transfer tax, or other tax (excluding income tax) imposed in connection
with the transfers contemplated by this Agreement shall be borne solely by GEO.

     7.6 Tax Covenant. Buyer covenants that it will not cause or permit any Affiliate of
Buyer to make or change any Tax election, amend any Tax Return or take any Tax position on any Tax
Return, take any action, omit to take any action or enter into any transaction that results in any
increased Tax liability or reduction of any Tax asset of GEO or CSC in respect to any Tax period
including the Closing Date or ending on or before the close of business on the Closing Date.

     7.7 Returns and Reports.

          (a) Following the Closing, GEO shall file or cause to be filed when due all Tax Returns with
respect to Taxes that are required to be filed by or with respect to the YSI Entities for taxable
years or periods ending on or before the Closing Date. Buyer shall file or cause to be filed when
due all Tax Returns with respect to Taxes that are required to be filed by or with respect to the
YSI Entities for taxable years or periods ending after the Closing Date and shall pay any Taxes due
in respect of such Tax Returns. A copy of such Tax Returns shall be provided to the Buyer for its
review within 30 days prior to the due date (including extensions) for the filing thereof.

          (b) With respect to any such Tax Return that covers a period beginning before and ending after
the Closing Date, a copy of such Tax Return shall be provided to GEO within 30 days prior to the
due date (including extensions) for the filing thereof, and GEO shall have the right to approve
(which approval shall not be unreasonably withheld or delayed) such Tax Return to the extent it
relates to the portion of the period ending on the Closing Date.

     7.8 Cooperation; Access to Records. After the Closing Date, GEO and Buyer shall:

          (a) assist (and cause its respective Affiliates to assist) the other party in preparing any
Tax Returns or reports which such other party is responsible for preparing and filing in accordance
with Section 7.7;

          (b) cooperate fully in preparing for and conducting any audits of, or disputes with taxing
authorities regarding, any Tax Returns of GEO, CSC or the YSI Entities;

          (c) make available to the other party and to any taxing authority as reasonably requested all
records, documents, accounting data and other information relating to Taxes of GEO, CSC or the YSI
Entities;

          (d) furnish the other party with copies of all correspondence received from any taxing
authority in connection with any tax audit or information request with respect to any such taxable
period for which the other party may have a liability under Section 7.5; and

          (e) execute and deliver such powers of attorney and other documents as are necessary to carry
out the intent of this Section 7.8.

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     7.9 Refunds. Any refunds (including interest thereon) of Taxes paid or indemnified
by GEO or CSC pursuant to Section 7.5(a) shall be for the account of GEO. Any refunds (including
interest thereon) of Taxes paid or indemnified by Buyer pursuant to Section 7.5(b) shall be for
the account of Buyer. Buyer agrees to assign and promptly remit (and to cause the YSI Entities to
assign and promptly remit) to GEO all refunds (including interest thereon) of Taxes which GEO is
entitled to hereunder and which are received by Buyer or the YSI Entities or any other Affiliate
of Buyer. GEO agrees to assign and promptly remit to Buyer all refunds (including interest
thereon) of Taxes which Buyer is entitled to hereunder and which are received by GEO or any of its
Affiliates.

     7.10 Price Adjustment. Buyer and GEO agree that any payment made under this Section
7.4 through 7.10 will be treated by the parties on its Tax Returns as an adjustment to the
Purchase Price.

     7.11 Survival. Notwithstanding anything in this Agreement to the contrary, the
provisions of Sections 7.4 through 7.10 shall survive through the applicable statute of
limitations as the same may be extended plus 30 days thereafter.

     7.12 No Bar; Remedies Cumulative. The remedies provided herein shall be cumulative
and shall not preclude any party hereto from asserting any other right, or seeking any other
remedies against any other party to this Agreement.

ARTICLE VIII

CONDITIONS TO THE OBLIGATIONS

OF THE PARTIES

     8.1 Conditions to the Obligations of Buyer. The obligations of Buyer to effect the
transactions contemplated hereby, shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, any or all of which may be waived in whole or in part by Buyer:

          (a) The Effective Time shall have occurred;

          (b) GEO shall have caused CSC to transfer to Buyer the Purchased Shares in accordance with
Section 1.2;

          (c) The representations and warranties of GEO contained in this Agreement shall be accurate in
all material respects as of the date of this Agreement and as of the Closing Date, as though made
on and as of the Closing Date or, to the extent representations and warranties speak as of an
earlier date, as of such earlier date;

          (d) GEO shall have performed or complied in all material respects with all agreements,
obligations and covenants required by this Agreement to be performed or complied with by it on or
prior to the Closing Date;

          (e) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, judgment, decree, executive order or award which

23

 

is then in effect and has the effect of making the Stock Purchase or any Pre-Closing Transfers
illegal or otherwise prohibiting consummation of the Stock Purchase or any Pre-Closing Transfers;

          (f) The Pre-Closing Transfers shall have occurred, except to the extent any portion of such
Pre-Closing Transfers have not occurred because a Required Consent has not been obtained; and

          (g) Buyer shall have received insurance coverage for the Juvenile Business in the areas of
workers’ compensation, general liability, automobile, and employee health, with terms reasonably
acceptable to the Buyer.

     8.2 Conditions to the Obligations of GEO. The obligations of GEO to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, any or all of which may be waived in whole or in part by GEO:

          (a) The Effective Time shall have occurred;

          (b) Buyer shall have delivered to CSC the Purchase Price in accordance with Section 1.3
including, without limitation, the Promissory Note to be delivered by Buyer thereunder;

          (c) The representations and warranties of Buyer contained in this Agreement shall be accurate
in all material respects as of the date of this Agreement and as of the Closing Date, as though
made on and as of the Closing Date or, to the extent representations and warranties speak as of an
earlier date, as of such earlier date;

          (d) Buyer shall have performed or complied in all material respects with all agreements,
obligations and covenants required by this Agreement to be performed or complied with by him on or
prior to the Closing Date;

          (e) The Sole Member shall have delivered to GEO the Letter of Credit; and

          (f) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, judgment, decree, executive order or award which is then in effect and has
the effect of making the Stock Purchase or any Pre-Closing Transfers illegal or otherwise
prohibiting consummation of the Stock Purchase or any Pre-Closing Transfers.

ARTICLE IX

TERMINATION

     9.1 Termination. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing Date, as follows (the date of any such
termination, the “Termination Date”):

          (a) by the mutual written consent of GEO and Buyer;

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          (b) automatically in the event that the Merger Agreement shall be terminated;

          (c) by either GEO or Buyer if the Closing shall not have occurred on or before the earlier to occur
of: (i) 11:59 p.m., Eastern Time, on the date of the Effective Time; or (ii) December 1, 2005;
provided, however, that the right to terminate this Agreement under this Section
9.1(c) shall not be available to either party hereto if such party’s failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date.

          (d) by either GEO or Buyer if any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary,
preliminary or permanent) or taken any other action (including the failure to have taken an action)
which has become final and non-appealable and has the effect of making the consummation of the
Stock Purchase illegal or otherwise preventing or prohibiting consummation of the Stock Purchase;

          (e) by GEO, if GEO is not in material breach of its obligations under this Agreement, and if
there shall have been a breach of any representation, warranty, covenant, obligation or agreement
on the part of Buyer or YSI contained in this Agreement, or if any such representation or warranty
shall have become untrue or inaccurate, such that (i) the conditions set forth in subsections (c)
or (d) of Section 8.2 would not be capable of being satisfied, and (ii) such breach or inaccuracy
is not capable of being cured or, if reasonably capable of being cured, has not been cured within
30 days after notice to Buyer; or

          (f) by Buyer, if Buyer is not in material breach of its obligations under this Agreement, and if
there shall have been a breach of any representation, warranty, covenant, obligation or agreement
on the part of GEO contained in this Agreement, or if any such representation or warranty shall
have become untrue or inaccurate, such that (i) the conditions set forth in subsections (c) or (d)
of Section 8.1 would not be capable of being satisfied, and (ii) such breach or inaccuracy is not
capable of being cured or, if reasonably capable of being cured, has not been cured within 30 days
after notice to GEO.

9.2 Termination Fees; Effect of Termination.

          (a) Buyer and the Sole Member agree that if this Agreement shall be terminated by GEO pursuant
to Section 9.1(e), then Buyer and/or the Sole Member shall pay GEO a termination fee of $250,000
(the “Termination Fee”) in immediately available funds no later than two business days
after such termination by GEO.

          (b) GEO agrees that if this Agreement shall be terminated by Buyer pursuant to Section 9.1(f),
then GEO shall pay Buyer the Termination Fee in immediately available funds no later than two
business days after such termination by Buyer.

          (c) Notwithstanding anything to the contrary in this Agreement, except as otherwise set forth
in Section 9.2(d), in the event of a termination of this Agreement pursuant to Section 9.1(e), (i)
GEO’s receipt of the Termination Fee pursuant to Section 9.2(a) shall constitute liquidated damages
and shall be the sole and exclusive remedy of GEO for (A) any breach of any representation,
warranty, covenant, obligation or agreement contained in this Agreement on the part of Buyer or
Sole Member, (B) any Losses suffered by GEO as a result of

25

 

the failure of the Stock Purchase and the other transactions contemplated hereby to be
consummated, and/or (C) any other Losses incurred by GEO in connection with this Agreement, and
upon payment of the Termination Fee, none of the Sole Member or Buyer, or any officers, directors,
employees, agents, representatives or stockholders of Buyer, shall have any further liability or
obligation relating to or arising out of this Agreement. Notwithstanding anything to the contrary
in this Agreement, except as otherwise set forth in Section 9.2(d), in the event of a termination
of this Agreement pursuant to Section 9.1(f), (i) Buyer’s receipt of the Termination Fee pursuant
to Section 9.2(b) shall constitute liquidated damages and shall be the sole and exclusive remedy of
Buyer for (A) any breach of any representation, warranty, covenant or agreement contained in this
Agreement on the part of GEO, (B) any Losses suffered by Buyer as a result of the failure of the
Stock Purchase and the other transactions contemplated hereby to be consummated, and/or (C) any
other Losses incurred by Buyer in connection with this Agreement, and upon payment of the
Termination Fee, none of GEO or any officers, directors, employees, agents, representatives or
stockholders of GEO, shall have any further liability or obligation relating to or arising out of
this Agreement.

          (d) Prior to the termination of this Agreement pursuant to Section 9.1, GEO and Buyer shall
have the right to seek specific performance of the terms hereof in the event that any provisions of
this Agreement are not performed in accordance with the terms hereof, to the extent available under
applicable Law.

          (e) Each of GEO and Buyer acknowledges that the agreements contained in this Section 9.2 are
an integral part of the transactions contemplated by this Agreement. In the event that Buyer shall
fail to pay the Termination Fee if and when due or GEO shall fail to pay the Termination Fee if and
when due, GEO or Buyer, as the case may be, shall reimburse the other party for all reasonable
costs and expenses actually incurred or accrued by such other party (including reasonable fees and
expenses of counsel) in connection with the collection under and enforcement of this Section 9.2.

          (f) Except as otherwise provided in this Section 9.2 and Article XII (which shall
survive any termination of this Agreement), in the event of the termination of this Agreement
pursuant to Section 9.1, this Agreement shall forthwith become void, and there shall be no
liability under this Agreement on the part of any party hereto to any other party hereto including
any third-party beneficiary thereof.

ARTICLE X

CHANGE IN CONTROL

     10.1 Change in Control Transaction. In the event that, during the 24 month period
following the Closing (the “Targeted Change in Control Period”), the Sole Member, Buyer,
any YSI Entity, or any of their Affiliates, enters into an agreement or other arrangement which,
directly or indirectly, would, either immediately or with the passage of time, result in a Change
in Control, then, upon the consummation of such Change in Control (provided that such Change in
Control is consummated during the Targeted Change in Control Period or within 12 months
thereafter) GEO and/or CSC shall be entitled to receive fifty percent (50%) of the Net Proceeds
(as defined below) received by the Sole Member, Buyer, the applicable YSI Entity, or

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any of their Affiliates, as the case may be, in connection with such Change in Control, in
the same form and at the same time as such Net Proceeds are paid to the Sole Member, Buyer, the
applicable YSI Entity, or such Affiliates, as the case may be.

     10.2 Certain Terms Defined. For the purposes of this Agreement:

          (a) “Change in Control” means a transaction, or series of transactions, pursuant to
which any of the following shall have occurred: (i) any Person, or any two or more Persons acting
as a group, other than James F. Slattery and his Affiliates, (a “Group”) shall, through
sale, merger, consolidation or otherwise, obtain ownership or Control of (A) more than fifty
percent (50%) of the outstanding common stock or other equity interests of any Control Person, (B)
more than fifty percent (50%) of the outstanding voting power, with respect to the election of
members of the board of directors or other similar body, of any Control Person, or (C) more than
fifty percent (50%) of the outstanding economic interests of any Control Person; or (ii) any Person
or Group, shall acquire 50% or more of the assets of the Juvenile Business;

          (b) “Change in Control Percentage” means a percentage equal the actual percentage of
the equity, voting power or economic interests in any Control Person, or the percentage of assets
of the Juvenile Business (calculated by reference to the revenues generated by such assets as
compared to the aggregate revenues of the Juvenile Business during the most recently completed
fiscal year of the Juvenile Business), acquired by a Person or Group other than James F. Slattery
and his Affiliates.

          (c) “Control” means (i) the power to vote thirty percent (30%) or more of the
securities or other equity interests of a Person having ordinary voting power, or (ii) the
possession, directly or indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting securities, by contract or
otherwise;

          (d) “Control Person” means any of Buyer, any YSI Entity or any Person which then owns
or controls the Juvenile Business.

          (e) “Net Proceeds” means all gross proceeds of any kind or nature directly or
indirectly received by the Sole Member, Buyer, any YSI Entity, or any of their Affiliates, in
connection with or as a result of a Change in Control, less (i) any outstanding
indebtedness of Buyer or any YSI Entity that is borrowed on an arms-length basis on market terms
and which is extinguished and fully paid off in connection with such a Change in Control (other
than the Promissory Note), less (ii) any amounts contributed by Buyer or the Sole Member to
the Juvenile Business at any time, including contributions of equity capital, that are contributed
on an arms-length basis on market terms and which are repaid or otherwise returned to the Buyer or
the Sole, as the case may be, in connection with such a Change in Control, less (iii) the
Proportionate Threshold Amount, plus (iv) any amounts directly or indirectly received by
Sole Member or any Control Person, or any of their Affiliates, at any time, that constitute golden
parachute or severance payments, dividends, loans, related party transactions (other than on market
terms) or other extraordinary compensation (including, but not limited to, any amounts which shall
be paid to any of them in connection with the Change in Control, other than in their capacity as
equity participants in the Juvenile Business); and

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          (f) “Proportionate Threshold Amount” means the (i) amount of the Purchase Price
actually paid by Buyer to CSC under the terms of this Agreement multiplied by (ii) the
Change in Control Percentage.

     10.3 Audit Rights. In the event of a Change in Control, upon the request of GEO, the
Sole Member, Buyer and the YSI Entities shall provide GEO in a timely manner with reasonable
access to all records, documents and other information necessary to audit and confirm compliance
by the Sole Member, Buyer and YSI with the provisions of this Article X.

ARTICLE XI

DEFINITIONS

     11.1 Defined Terms. As used herein, the following terms shall have the following
meanings:

     “Affiliate” shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the Closing Date.

     “Expenses” means any and all expenses incurred in connection with investigating, defending or
asserting any claim, action, suit or proceeding incident to any matter indemnified against
hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants,
accountants and other professionals).

     “GAAP” means generally accepted accounting principles in effect in the United States of
America from time to time.

     “Knowledge of the Sole Member” whether or not capitalized, means, with respect to any fact or
other matter, (i) James F. Slattery’s actual knowledge of such fact or other matter, and/or (ii) a
fact or matter that James F. Slattery would reasonably be expected to have knowledge of given his
(a) position as Chief Executive Officer and President of CSC prior to the Effective Time and (b)
his management and operation of the Juvenile Business.

     “Lien” means any mortgage, pledge, security interest, encumbrance, lien, restriction, charge
(including, but not limited to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing statement under the
Uniform Commercial Code) or other claim of any kind, including, but not limited to, any easement,
right of way or other encumbrance to title, or any option, right to purchase, right to lease, right
of first refusal, right of first offer or other similar rights.

     “Losses” means any and all losses, costs, obligations, liabilities, settlement payments,
awards, judgments, fines, penalties, damages, Expenses, deficiencies or other charges.

     “Person” means an individual, partnership, corporation, business trust, joint stock company,
estate, trust, unincorporated association, joint venture, Governmental Authority or other entity,
of whatever nature.

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     “Taxes” means all taxes, fees or other assessments, including, but not limited to, income,
excise, property, sales, franchise, intangible, payroll, withholding, social security and
unemployment taxes imposed by any federal, state, local or foreign governmental agency, and any
interest or penalties related thereto.

11.2 Other Definitional Provisions.

          (a) All terms defined in this Agreement shall have the defined meanings when used in any
certificates, reports or other documents made or delivered pursuant hereto or thereto, unless the
context otherwise requires.

          (b) Terms defined in the singular shall have a comparable meaning when used in the plural, and
vice versa.

          (c) All matters of an accounting nature in connection with this Agreement and the transactions
contemplated hereby shall be determined in accordance with GAAP applied on a basis consistent with
prior periods, where applicable.

          (d) As used herein, the neuter gender shall also denote the masculine and feminine, and the
masculine gender shall also denote the neuter and feminine, where the context so permits.

29

 

     11.3 Term Defined Elsewhere in this Agreement. For purposes of this Agreement, the
following terms have meanings set forth in the sections indicated:

	 	 	 	 	 	 
	 	Term
	 	 	Section	 
	 	Adult Business
	 	 	Recitals	 
	 	Agreement
	 	 	Preamble	 
	 	Asset Transfers
	 	 	2.2	 
	 	Buyer
	 	 	Preamble	 
	 	Closing
	 	 	1.4	 
	 	Closing Date
	 	 	1.4	 
	 	Contract
	 	 	3.5	 
	 	Crisp County Performance Bond
	 	 	5.4	 
	 	CSC
	 	 	Recitals	 
	 	CSC Closing
	 	 	2.1	 
	 	CSC Juvenile Contracts
	 	 	Recitals	 
	 	CSC Juvenile Assets
	 	 	Recitals	 
	 	Effective Time
	 	 	Recitals	 
	 	Genesis Property
	 	 	Recitals	 
	 	Governmental Authority
	 	 	3.5	 
	 	Juvenile Assets
	 	 	Recitals	 
	 	Juvenile Business
	 	 	Recitals	 
	 	Juvenile Medicaid Services
	 	 	5.12	 
	 	Juvenile Permits
	 	 	5.12	 
	 	Law
	 	 	3.5	 
	 	Medicaid Permits
	 	 	5.12	 
	 	Merger
	 	 	Recitals	 
	 	Merger Agreement
	 	 	Recitals	 
	 	Promissory Note
	 	 	1.3	 
	 	Purchase Price
	 	 	1.3	 
	 	Purchased Shares
	 	 	Recitals	 
	 	Required Permits
	 	 	5.12	 
	 	Required Consents
	 	 	2.1	 
	 	Shared Leased Assets
	 	 	5.8	 
	 	Sole Member
	 	 	Recitals	 
	 	Stock Purchase
	 	 	Recitals	 
	 	Target Juvenile Business Net Book Value
	 	 	3.8	 
	 	YSI
	 	 	Recital	 
	 	YSI Closing
	 	 	2.2	 
	 	YSI Entities
	 	 	Recitals	 
	 

30

 

ARTICLE XII

GENERAL PROVISIONS

     12.1 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery, or facsimile transmission if such transmission
is confirmed by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers (or to such other
addresses or telecopy numbers which such party shall designate in writing to the other party):

	 	 	 
	if to GEO to:

	 	with a copy to:
	 
	 	 
	     The GEO Group, Inc.

     One Park Place

     621 Northeast 53rd Street, Suite 700

     Boca Raton, FL 33487

     Attention: John J. Bulfin,

     Senior Vice President and General
Counsel

     Facsimile: (561) 999-7635

	 	     Akerman Senterfitt

     One S.E. Third Avenue, 27th Floor

     Miami, FL 33131

     Attention: Jose Gordo, Esq.

     Facsimile: (305) 374-5095
	 
	 	 
	if to YSI or Buyer:

	 	with a copy to:
	 
	 	 
	     Youth Services International, Inc.

     1819 Main Street, Ste. 1000

     Sarasota, FL 34236

     Attention: James F. Slattery

	 	     Baker Botts L.L.P.

     2001 Ross Avenue, Suite 700

     Dallas, Texas 75201

      Attention: William D. Howell

     Facsimile: (214) 953-6503

     12.2 Entire Agreement; Recitals. This Agreement (including the Schedules attached
hereto and the Recitals set forth on the first page hereof) and other documents delivered
concurrently herewith, contains the entire understanding of the parties in respect of its subject
matter and supersedes all prior agreements and understandings (oral or written) between or among
the parties with respect to such subject matter. The Schedules constitute a part hereof as though
set forth in full above. The Recitals are true and correct and are incorporated herein by
reference.

     12.3 Expenses. Except as otherwise provided herein, the parties shall pay their own
fees and expenses, including their own professional fees, incurred in connection with this
Agreement or any transaction contemplated hereby.

     12.4 Amendment; Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all parties. No failure to
exercise, and no delay in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right, power

31

 

or privilege hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be implied from any
course of dealing between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an extension of the time
for performance of any other obligations or any other acts. The rights and remedies of the
parties under this Agreement are in addition to all other rights and remedies, at law or equity,
that they may have against each other.

     12.5 Binding Effect; Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of the parties and their respective successors and assigns. Nothing
expressed or implied herein shall be construed to give any other person any legal or equitable
rights hereunder. Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by any party hereto without the prior written consent
of the other parties hereto.

     12.6 Counterparts; Execution by Facsimile. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken together shall
constitute one and the same Agreement. Delivery of an executed counterpart hereof by facsimile
shall be effective as manual delivery of an executed counterpart hereof.

     12.7 Interpretation. When a reference is made in this Agreement to an article,
section, paragraph, clause, schedule or exhibit, such reference shall be deemed to be to this
Agreement unless otherwise indicated. The headings contained herein and on the schedules are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement or the schedules. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without limitation.” Time shall
be of the essence in this Agreement.

     12.8 Governing Law; Interpretation. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Florida applicable to contracts
executed and to be wholly performed within such State, without regard to conflict of laws
principles.

     12.9 Dispute Resolution/Arbitration.

          (a) The parties agree to negotiate in good faith to resolve any controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation, performance,
non-performance, validity or breach of this Agreement; provided that whether the parties negotiated
in good faith to resolve any disputes will not be an issue to be resolved in any forum. In the
event the parties are unable to resolve any such dispute, any party may demand that the dispute
(but excluding any Termination Dispute discussed below) be determined by arbitration, and the place
of arbitration shall be Orlando, Florida. Such arbitration shall be conducted by the American
Arbitration Association (“AAA”) and, except as otherwise provided herein, in accordance
with the rules of the AAA in effect at the time of such arbitration, by, and all decisions and
awards shall be rendered by, three arbitrators listed on the AAA roster, one

32

 

appointed by GEO, one appointed by Buyer and one appointed by the two arbitrators appointed by
the parties. All decisions and awards rendered by the arbitrators shall be final, binding and
nonappealable, and judgment may be entered on any such award by any state or federal court having
competent jurisdiction. The prevailing party in any arbitration conducted pursuant to this Section
12.9(a) shall be entitled to reimbursement from the non-prevailing party of all attorneys’ fees and
other costs and expenses associated with such arbitration and/or the initiation or defense thereof.

          (b) Notwithstanding anything to the contrary set forth in subsection (a) of this Section 12.9,
any disputes related to the termination of this Agreement including, without limitation, any
disputes regarding the propriety thereof or any liabilities or damages resulting therefrom
(collectively, the “Termination Disputes”) shall be heard and determined exclusively by the
state and federal courts of Orange County, Florida, and each party hereto submits to the exclusive
jurisdiction of such courts with respect to any Termination Disputes. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any action or proceeding arising out of or relating to a
Termination Dispute brought in Orange County, Florida or any judgment entered by any court located
in Orange County, Florida in respect thereof. A final judgment in any action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

     12.10 Certain Limitations Relating to Sole Member. The Sole Member is not entering
this Agreement in his capacity as a director or officer of CSC, and nothing contained herein shall
require the Sole Member to take, or prevent Sole Member from taking, any actions in his capacity
as an officer or director of CSC. Sole Member reserves the right to take any actions he
determines in his sole discretion are necessary in order to fulfill his fiduciary duties as an
officer or director of CSC.

     12.11 Arm’s Length Negotiations. Each party herein expressly represents and warrants
to all other parties hereto that (a) before executing this Agreement, said party has fully
informed itself of the terms, contents, conditions and effects of this Agreement; (b) said party
has relied solely and completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in executing this
Agreement; (e) said party is not acting under duress, whether economic or physical, in executing
this Agreement; and (f) this Agreement is the result of arm’s length negotiations conducted by and
among the parties and their respective counsel.

     12.12 No Reliance on Promises Not Set Forth Herein. No promise or representation has
been made to Buyer to induce it to enter into this Agreement that is not set forth in this
Agreement and the Buyer executed this Agreement freely, voluntarily and without reliance upon any
statement or representation by CSC, GEO or any of their Affiliates.

     12.13 Buyer Has Read this Agreement. Buyer has read and fully understands this
Agreement and the meaning of its provisions and has had the opportunity to consult with an
attorney before entering into this Agreement.

33

 

     12.14 JURY TRIAL WAIVER. EACH OF GEO AND BUYER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THE PARTIES
ACKNOWLEDGE THAT EACH OF THEM HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO
CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS JURY TRIAL WAIVER AND UNDERSTANDS THE LEGAL
EFFECT OF THIS WAIVER.

[Signatures Begin on Following Page]

34

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and
year first above written.

	 	 	 	 	 
	 	THE GEO GROUP, INC.

 	 
	 	By:  	/s/
George C. Zoley
 	 
	 	 	Name:  	George C. Zoley 	 
	 	 	Title:  	Chairman and CEO 	 
	 
	 	JFS DEVELOPMENT , LLC

 	 
	 	By:  	/s/ James F. Slattery
 	 
	 	 	Name:  	James F. Slattery 	 
	 	 	Title:  	President 	 
	 
	 	THE SOLE MEMBER:

 	 
	 	/s/ James F. Slattery
 	 
	 	James F. Slattery, individually 	 
	 	 	 
	 

35

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