sv4za
As filed
with the Securities and Exchange Commission on April 16,
2010
Registration Statement No. 333-163912
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 2
To
Form S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
The GEO Group, Inc.
(Exact name of registrant as
specified in its charter)
|
|
|
|
|
Florida
|
|
1520
|
|
65-0043078
|
(State or other jurisdiction of
incorporation or organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
(I.R.S. Employee Identification
Number)
|
*and the
Subsidiary Guarantors listed on Schedule A hereto
(Exact name of registrants as
specified in their charters)
|
|
|
One Park Place, Suite 700
621 Northwest 53rd Street
Boca Raton, Florida
33487-8242
|
|
John J. Bulfin, Esq.
621 Northwest 53rd Street
Boca Raton, Florida 33487-8242
(561) 893-0101
|
(Address, including zip code,
and
telephone number, including area code,
of registrants principal executive offices)
|
|
(Name, address, including zip
code,
and telephone number, including area code,
of agent for service)
|
Copy to:
Jose Gordo, Esq.
Akerman Senterfitt
One S.E. Third Avenue, 25th Floor
Miami, Florida 33131
(305) 374-5600
Facsimile:
(305) 374-5095
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after this
Registration Statement becomes effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, please
check the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer, and smaller reporting company in
Rule 12b-2
of the Exchange Act.
|
|
|
Large accelerated
filer þ
|
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
|
Smaller reporting
company o
|
Each Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until each Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the commission,
acting pursuant to said Section 8(a), may determine.
Schedule A
Table of Subsidiary Guarantors
|
|
|
|
|
|
|
State or Other
|
|
|
|
|
Jurisdiction of
|
|
I.R.S. Employer
|
|
|
Incorporation or
|
|
Identification
|
Exact Name of Subsidiary Guarantor
|
|
Formation
|
|
Number
|
|
Correctional Properties Prison Finance LLC
|
|
Delaware
|
|
*
|
Correctional Services Corporation
|
|
Delaware
|
|
11-3182580
|
CPT Limited Partner, LLC
|
|
Delaware
|
|
*
|
CPT Operating Partnership LP
|
|
Delaware
|
|
*
|
GEO Acquisition II, Inc.
|
|
Delaware
|
|
01-0882442
|
GEO Care, Inc.
|
|
Florida
|
|
65-0749307
|
GEO Holdings I, Inc.
|
|
Delaware
|
|
56-2635779
|
Public Properties Development & Leasing LLC
|
|
Delaware
|
|
*
|
GEO RE Holdings LLC
|
|
Delaware
|
|
*
|
GEO Transport, Inc.
|
|
Florida
|
|
56-2677868
|
Just Care, Inc.
|
|
Delaware
|
|
63-1166611
|
|
|
|
* |
|
Not applicable as these entities are disregarded for Federal
Income Tax Purposes |
The
information in this prospectus is not complete and may be
changed. We may not complete the exchange offer until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
securities and it is not soliciting an offer to buy these
securities in any state where the offer is not permitted.
|
SUBJECT TO COMPLETION DATED
APRIL 16, 2010
Prospectus
$250,000,000
Offer to
Exchange
Up to $250,000,000 aggregate principal amount
of our
73/4% Senior
Notes Due 2017
(which we refer to as the new notes)
and the guaranties thereof which have been registered
under the Securities Act of 1933, as amended,
for a like amount of our outstanding
73/4% Senior
Notes Due 2017
(which we refer to as the old notes)
and the guaranties thereof.
The New
Notes:
|
|
|
|
|
The terms of the new notes are identical to the old notes,
except that some of the transfer restrictions, registration
rights and additional interest provisions relating to the old
notes will not apply to the new notes.
|
Terms of
the Exchange Offer:
|
|
|
|
|
We are offering to exchange up to $250,000,000 of our old notes
for new notes with materially identical terms that have been
registered under the Securities Act of 1933.
|
|
|
|
|
|
Subject to the satisfaction or waiver of specified conditions,
we will exchange the new notes for all old notes that are
validly tendered and not withdrawn prior to the expiration of
the exchange offer.
|
|
|
|
|
|
The exchange offer will expire at 5:00 p.m., New York City
time, on
[ l ],
2010, unless extended.
|
|
|
|
|
|
Tenders of old notes may be withdrawn at any time before the
expiration of the exchange offer.
|
|
|
|
We will not receive any proceeds from the exchange offer.
|
|
|
|
The exchange of outstanding original notes will not be a taxable
exchange for U.S. federal income tax purposes.
|
Investing
in the notes involves risks. See Risk Factors,
beginning on page 16.
Neither the Securities and Exchange Commission nor any other
federal or state securities commission has approved or
disapproved of the notes or determined if this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is
[ l ],
2010.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
ii
|
|
|
|
|
1
|
|
|
|
|
16
|
|
|
|
|
30
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
41
|
|
|
|
|
82
|
|
|
|
|
86
|
|
|
|
|
87
|
|
|
|
|
87
|
|
|
|
|
87
|
|
EX-23.1 |
This prospectus incorporates important business and financial
information about us that is not included in or delivered with
this prospectus. This information is available without charge to
security holders upon written or oral request to The GEO Group,
Inc., 621 NW 53rd Street, Suite 700, Boca Raton,
Florida 33487, Attention: Investor Relations, Telephone:
(561) 893-0101.
In order to obtain timely delivery, you must request the
information no later than
[ l ],
2010, which is five business days before the expiration of the
exchange offer.
Each broker-dealer that receives new notes for its own
account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of the
new notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act
of 1933, as amended, or the Securities Act. This prospectus, as
it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of new notes
received in exchange for old notes where the old notes were
acquired by the broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for
a period of 180 days after the consummation of the exchange
offer, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See
Plan of Distribution.
Neither the Securities and Exchange Commission nor any other
federal or state securities commission has approved or
disapproved of the notes or determined if this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
i
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
The prospectus and the documents incorporated by reference
herein contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements are any
statements that are not based on historical information.
Statements other than statements of historical facts included in
this prospectus, including, without limitation, statements
regarding our future financial position and results of
operations, business strategy, budgets, projected costs and
plans and objectives of management for future operations, are
forward-looking statements. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as may, will,
expect, anticipate, intend,
plan, believe, seek,
estimate or continue or the negative of
such words or variations of such words and similar expressions.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions, which are
difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements and we can give no assurance that
such forward-looking statements will prove to be correct.
Important factors that could cause actual results to differ
materially from those expressed or implied by the
forward-looking statements, or cautionary
statements, include, but are not limited to:
|
|
|
|
|
our ability to timely build
and/or open
facilities as planned, profitably manage such facilities and
successfully integrate such facilities into our operations
without substantial additional costs;
|
|
|
|
|
|
the instability of foreign exchange rates, exposing us to
currency risks in Australia, the United Kingdom, and South
Africa, or other countries in which we may choose to conduct our
business;
|
|
|
|
|
|
our ability to reactivate the North Lake Correctional Facility;
|
|
|
|
|
|
our ability to secure management contracts on suitable terms for
the operation of two facilities that we are currently expanding;
|
|
|
|
|
|
an increase in unreimbursed labor rates;
|
|
|
|
|
|
our ability to expand, diversify and grow our correctional and
mental health and residential treatment services;
|
|
|
|
|
|
our ability to win management contracts for which we have
submitted proposals and to retain existing management contracts;
|
|
|
|
|
|
our ability to raise new project development capital given the
often short-term nature of the customers commitment to use
newly developed facilities;
|
|
|
|
|
|
our ability to estimate the governments level of
dependency on privatized correctional services;
|
|
|
|
our ability to accurately project the size and growth of the
U.S. and international privatized corrections industry;
|
|
|
|
our ability to develop long-term earnings visibility;
|
|
|
|
|
|
our ability to obtain future financing at competitive rates;
|
|
|
|
|
|
our exposure to rising general insurance costs;
|
|
|
|
our exposure to state and federal income tax law changes
internationally and domestically;
|
|
|
|
our exposure to claims for which we are uninsured;
|
|
|
|
our exposure to rising employee and inmate medical costs;
|
|
|
|
our ability to maintain occupancy rates at our facilities;
|
|
|
|
our ability to manage costs and expenses relating to ongoing
litigation arising from our operations;
|
|
|
|
our ability to accurately estimate on an annual basis, loss
reserves related to general liability, workers compensation and
automobile liability claims;
|
ii
|
|
|
|
|
our ability to identify suitable acquisitions, and to
successfully complete and integrate such acquisitions on
satisfactory terms;
|
|
|
|
|
|
the ability of our government customers to secure budgetary
appropriations to fund their payment obligations to us;
|
|
|
|
|
|
the availability of cash to effect stock repurchases,
fluctuations in the market price of our common stock and other
factors affecting our ability to conduct stock repurchases; and
|
|
|
|
|
|
other factors contained in our filings with the Securities and
Exchange Commission, or the SEC, including, but not limited to,
those detailed in this prospectus, our annual report on
Form 10-K,
our
Form 10-Qs
and our
Form 8-Ks
filed with the SEC.
|
iii
SUMMARY
The following summary highlights selected information
contained or incorporated by reference in this prospectus and
does not contain all of the information that may be important to
you. You should carefully read this entire prospectus, including
the financial statements and related notes and the documents
incorporated by reference in this prospectus, before making a
decision to invest in the notes. As used in this prospectus, the
terms The GEO Group, Inc., GEO,
GEO Group, the Company, we,
our and us refer to The GEO Group, Inc.,
its consolidated subsidiaries and unconsolidated affiliates as a
combined entity, except in the Description of Notes
and in other places where it is clear that the terms mean only
The GEO Group, Inc.
Overview
We are a leading provider of government-outsourced services
specializing in the management of correctional, detention,
mental health and residential treatment facilities in the United
States, Canada, Australia, South Africa and the United Kingdom.
We operate a broad range of correctional and detention
facilities including maximum, medium and minimum security
prisons, immigration detention centers and minimum security
detention centers. We also provide secure transportation
services for offender and detainee populations as contracted.
Our correctional and detention management services involve the
provision of security, administrative, rehabilitation,
education, health and food services primarily at adult male
correctional and detention facilities. Our mental health and
residential treatment services, which are operated through our
wholly-owned subsidiary GEO Care, Inc., which we refer to as GEO
Care, involve the delivery of quality care, innovative
programming and active patient treatment, primarily at
privatized state mental health facilities. We also develop new
facilities based on contract awards, using our project
development expertise and experience to design, construct and
finance what we believe are state-of-the-art facilities that
maximize security and efficiency. As of the fiscal year ended
January 3, 2010, we managed 57 facilities totaling
approximately 52,800 beds worldwide.
As of the fiscal year ended January 3, 2010, we had an
additional 4,325 beds under development at three facilities,
including an expansion and renovation of one vacant facility
which we currently own, the expansion of one facility we
currently own and operate and a new 2,000-bed facility which we
will manage upon completion. We maintained an average
companywide facility occupancy rate of 94.6% for the fiscal year
ended January 3, 2010, excluding facilities that are either
idle or under development. For the fiscal year ended
January 3, 2010, we had consolidated revenues of
$1.1 billion.
We conduct our business through four reportable business
segments: our U.S. corrections segment; our International
services segment; our GEO Care segment and our Facility
construction and design segment. We have identified these four
reportable segments to reflect our current view that we operate
four distinct business lines, each of which constitutes a
material part of our overall business. Our U.S. corrections
segment primarily encompasses our
U.S.-based
privatized corrections and detention business. Our International
services segment primarily consists of our privatized
corrections and detention operations in South Africa, Australia
and the United Kingdom. Our International services business
reviews opportunities to further diversify into related
foreign-based governmental-outsourced services on an ongoing
basis. Our GEO Care segment comprises our privatized mental
health and residential treatment services business, all of which
is currently conducted in the U.S. Our Facility
construction and design segment primarily contracts with various
state, local and federal agencies for the design and
construction of facilities for which we generally have been, or
expect to be, awarded management contracts.
Competitive
Strengths
Long-Term
Relationships with Diverse High-Quality Government
Customers
We have developed long-term relationships with our governmental
customers and have been successful at retaining our facility
management contracts. We have provided correctional and
detention management
1
services to the United States Federal Government for
23 years, the State of California for 22 years, the
State of Texas for approximately 22 years, various
Australian state government entities for 18 years and the
State of Florida for approximately 16 years. These
customers accounted for 63.5% of our consolidated revenues for
the fiscal year ended January 3, 2010. Our strong operating
track record has enabled us to achieve a high renewal rate for
contracts, thereby providing us with a stable source of revenue.
Our government customers typically satisfy their payment
obligations to us through budgetary appropriations.
Diverse,
Full-Service Facility Developer and Operator
We have developed comprehensive expertise in the design,
construction and financing of high quality correctional,
detention and mental health facilities. In addition, we have
extensive experience in overall facility operations, including
staff recruitment, administration, facility maintenance, food
service, healthcare, security, supervision, treatment and
education of inmates. We believe that the breadth of our service
offerings gives us the flexibility and resources to respond to
customers needs as they develop. We believe that the
relationships we foster when offering these additional services
also help us win new contracts and renew existing contracts.
Unique
Privatized Mental Health Growth Platform
We are the only publicly traded U.S. corrections company
currently operating in the privatized mental health and
residential treatment services business. We believe that our
target market of state and county mental health hospitals
represents a significant opportunity. Through our GEO Care
subsidiary, we have been able to grow this business to
approximately 1,900 beds and $121.8 million in revenues for
the fiscal year ended January 3, 2010, from 325 beds and
$31.7 million in revenues for the fiscal year ended 2004.
Sizeable
International Business
We believe that our international presence gives us a unique
competitive advantage that has contributed to our growth.
Leveraging our operational excellence in the U.S., our
international infrastructure allows us to aggressively target
foreign opportunities that our
U.S.-based
competitors without overseas operations may have difficulty
pursuing. Our International services business generated
$137.2 million in revenues in 2009, representing 12.0% of
our consolidated 2009 revenues. We believe we are well
positioned to continue benefiting from foreign governments
initiatives to outsource correctional services.
Experienced,
Proven Senior Management Team
Our Chief Executive Officer, George C. Zoley, and our President,
Wayne H. Calabrese, have worked together at our company for more
than 20 years and have established a track record of growth
and profitability. Under their leadership, our annual
consolidated revenues from continuing operations have grown from
$40.0 million in 1991 to $1.1 billion in 2009. Dr.
Zoley is one of the pioneers of the industry, having developed
and opened what we believe to be one of the first privatized
detention facilities in the U.S. in 1986. In addition to
senior management, our operational and facility level management
has significant operational experience. Brian R. Evans, who
recently became our Chief Financial Officer, has been with our
company for over eight years, most recently serving as our Chief
Accounting Officer and Vice-President Finance during
a period of significant growth.
Regional
Operating Structure
We operate three regional U.S. offices and three
international offices that provide administrative oversight and
support to our correctional and detention facilities and allow
us to maintain close relationships with our customers and
suppliers. Each of our three regional U.S. offices is
responsible for the facilities located within a defined
geographic area. We believe that our regional operating
structure is unique within the U.S. private corrections
industry and provides us with the competitive advantage of
having close proximity and direct access to our customers and
our facilities. We believe this proximity increases our
responsiveness and the quality of our contacts with our
customers. We believe that this regional structure has
facilitated the rapid
2
integration of our prior acquisitions, and we also believe that
our regional structure and international offices will help with
the integration of any future acquisitions.
Business
Strategy
Provide
High Quality, Essential Services at Lower Costs
Our objective is to provide federal, state and local
governmental agencies with high quality, essential services at a
lower cost than they themselves could achieve. We have developed
considerable expertise in the management of facility security,
administration, rehabilitation, education, health and food
services. Our quality is recognized through many accreditations
including that of the American Correctional Association, which
has certified facilities representing approximately 70.5% of our
U.S. corrections revenue as of year-end 2009.
Maintain
Disciplined Operating Approach
We manage our business on a contract by contract basis in order
to maximize our operating margins. We typically refrain from
pursuing contracts that we do not believe will yield attractive
profit margins in relation to the associated operational risks.
In addition, we generally have not in the past engaged in
extensive facility development without having a corresponding
management contract award in place, although we have
increasingly begun to do so more recently in select situations
to pursue what we believe are attractive business development
opportunities. We have also elected not to enter certain
international markets with a history of economic and political
instability. We believe that our strategy of emphasizing lower
risk, higher profit opportunities helps us to consistently
deliver strong operational performance, lower our costs and
increase our overall profitability.
Expand
Into Complementary Government-Outsourced Services
We intend to capitalize on our long term relationships with
governmental agencies to become a more diversified provider of
government-outsourced services. These opportunities may include
services which leverage our existing competencies and expertise,
including the design, construction and management of large
facilities, the training and management of a large workforce and
our ability to service the needs and meet the requirements of
government customers. We believe that government outsourcing of
currently internalized functions will increase largely as a
result of the public sectors desire to maintain quality
service levels amid governmental budgetary constraints. We
believe that our successful expansion into the mental health and
residential treatment services sector through GEO Care is an
example of our ability to deliver higher quality services at
lower costs in new areas of privatization.
Pursue
International Growth Opportunities
As a global provider of privatized correctional services, we are
able to capitalize on opportunities to operate existing or new
facilities on behalf of foreign governments. We currently have
international operations in Australia, Canada, South Africa and
the United Kingdom. On January 28, 2009 we announced that
our wholly-owned U.K. subsidiary, The GEO Group UK Ltd.,
referred to as GEO UK, signed a contract with the United Kingdom
Border Agency for the management and operation of the
Harmondsworth Immigration Removal Centre in London, England. We
began operating the Harmondsworth Immigration Removal Centre in
June 2009. On October 1, 2009, our wholly-owned Australian
subsidiary announced that it had been selected by Corrective
Services New South Wales to operate and manage the 823-bed
Parklea Correctional Centre in Australia. We began operating the
Parkela Correctional Centre in October 2009. We intend to
further penetrate the current markets we operate in and to
expand into new international markets which we deem attractive.
Selectively
Pursue Acquisition Opportunities
We consider acquisitions that are strategic in nature and
enhance our geographic platform on an ongoing basis. In November
2005, we acquired Correctional Services Corporation, or CSC,
bringing over 8,000 additional adult correctional and detention
beds under our management. In January 2007, we acquired
3
CentraCore Properties Trust, or CPT, bringing the 7,743 beds we
had been leasing from CPT, as well as an additional 1,126 beds
leased to third parties, under our ownership. In September 2009,
our wholly-owned mental health subsidiary, GEO Care, acquired
Just Care, a provider of detention healthcare focusing on the
delivery of medical and mental health services. Just Care
manages the 354-bed Columbia Regional Care Center in Columbia,
South Carolina. We plan to continue to review acquisition
opportunities that may become available in the future, both in
the privatized corrections, detention, mental health and
residential treatment services sectors, and in complementary
government-outsourced services areas.
The
Corrections and Detention Industry
We believe our network of facilities, diverse full-service
facility development and operation model and financial
flexibility positions us well to capitalize on government
outsourcing of correctional management services. In addition, we
believe that long-term trends related to prison inmate
population growth, acceptance of privatization and lower cost of
private corrections operations favor an increase in the
outsourcing of correctional management services. Following are
the key reasons for this outsourcing trend:
Continued
U.S. Prison Population Growth
Currently, approximately one in every 100 U.S. adults is in
jail or prison, the highest incarceration rate in the world. The
total U.S. corrections population, which includes sentenced
adults in jails or prisons and those in the community on
probation or parole, increased over 123% to 7.2 million
over the last two decades. The demographic shift of offspring of
the baby boom generation now entering the
at-risk age group of
18-29 years
old, combined with stricter incarceration policies are expected
to continue to drive prison population growth over the next five
years. According to the Pew Charitable Trusts, state and federal
prison populations are expected to grow by approximately 192,000
between 2007 and 2011, or approximately 38,000 per year.
Persistent
Overcrowding of Aging Public Correctional
Facilities
Federal and state legislatures historically have had difficulty
enacting expansion of prison capacity due to budgetary
constraints and the disfavor that voters generally exhibit
toward such expenditures. As a result, prison capacity in the
U.S. often lags prison populations, leading to persistent
prison overcrowding. The anticipated continued growth in prison
populations over the next few years is expected to exacerbate
the overcrowding problem currently plaguing state and federal
prison systems. According to the Bureau of Justice Statistics,
as of year-end 2007, 19 states were operating at 100% or
more of their highest capacity and the Federal prison system was
operating at 136% of capacity. In addition, nearly half of
government-operated prisons currently in operation in the United
States are more than 30 years old and 28% of the facilities
are more than 60 years old often needing urgent
refurbishment or reconstruction. Lower costs associated with the
construction and operation of private facilities, as well as the
availability of private capital, are leading federal and state
jurisdictions throughout the United States to increasingly
explore partnerships with private service providers as a viable
and cost-effective alternative to capital intensive projects
such as new prison construction.
State
and Federal Budgetary Constraints
As the total population of United States prisoners continues to
grow, most states are facing prison costs which are rising at an
unsustainable rate. According to the Pew Charitable Trusts,
between 1982 and 2003 national spending on criminal justice in
the United States rose from $36 billion to
$186 billion, while spending on corrections (i.e. jails and
prisons) rose 570% over a similar time frame. Additionally, Pew
expects the cost of projected prison population increases in the
United States (approximately 15% from 2007 through 2011) to
cost states nearly $28 billion during such period. We
believe these factors are causing concern among state lawmakers,
who are facing increasing budgetary concerns related to a slower
economy and lower tax receipts, which in turn presents
opportunities for the privatized correctional facility industry
because it offers governments a cost-effective solution to
reduce their correctional service costs and avoid making large
capital
4
investments in new prison beds. However, it is possible state
and federal budget constraints could have adverse effects on our
industry resulting in governments unexpectedly terminating
contracts, seeking price reductions in connection with contract
renewals or amending criminal laws and regulations to reduce
prisoner headcount by reducing or eliminating mandatory minimum
sentencing guidelines, especially those relating to non-violent
drug possession or technical parole violations.
Government
Agencies Moving Toward Privatized Correctional
Facilities
According to the Bureau of Justice Statistics, the number of
inmates housed in private facilities has grown from 90,542 at
year-end 2000 to 126,249 at mid-year 2008, representing a
compound annual growth rate of 4.5%. Notably, the federal
government increased its use of privately operated facilities at
a compound annual growth rate of 9.2% over the same time period
from 15,524 beds to 32,712 beds. Additionally, ongoing efforts
to secure the nations borders have caused the average
daily population of Immigration and Custom Enforcement (ICE)
detainees to grow from approximately 20,000 in 2005 to nearly
32,000 in 2008. The private prison industry has capitalized on
this opportunity and currently houses a significant portion of
ICE detainees, primarily in facilities along the United
States-Mexican border. The Bureau of Justice Statistics
estimates that as of mid-2008, approximately 7.8% of the total
incarcerated population in the United States was housed in
private facilities, potentially providing significant growth
opportunities for privatized providers.
Increased
Federal Government Focus on Homeland Security and Illegal
Immigration
On the federal level, the Department of Homeland Securitys
increased focus on securing the nations borders has
increased the number of illegal aliens apprehended, detained and
deported. As such, the number of beds necessary to detain
illegal aliens until they are deported has become a significant
source of demand that is expected to continue in the medium
term. According to the Bureau of Justice Statistics, by 2007
immigration related offenses had become the second most
prevalent reason for arrest by federal agents in the United
States, accounting for approximately 11% of total federal cases.
In addition to efforts related to securing the nations
borders, the United States Congress has appropriated
$1.4 billion for the Secure Communities Initiative which
aims to identify, detain and deport criminal aliens who have
been convicted of local, state and federal crimes. In 2008, ICE
detained and removed a total of 358,886 illegal aliens,
including 97,133 criminal aliens.
Recent
Developments
Stock
Repurchase Program
On February 22, 2010, we announced that our Board of Directors
has approved a stock repurchase program of up to $80.0 million
of our common stock effective through March 31, 2011. The stock
repurchase program will be funded primarily with cash on hand,
borrowings under our senior credit facility, and free cash flow.
We believe we have the ability to fund the stock repurchase
program, our working capital, our debt service requirements, and
our maintenance and growth capital expenditure requirements,
while maintaining sufficient liquidity for other corporate
purposes. The stock repurchase program is intended to be
implemented through purchases made from time to time in the open
market or in privately negotiated transactions, in accordance
with applicable Securities and Exchange requirements. The
program may also include repurchases from time to time from
executive officers or directors of vested restricted stock
and/or vested stock options. The stock repurchase program does
not obligate us to purchase any specific amount of our common
stock and may be suspended or extended at any time at our
discretion. As of April 16, 2010, we have repurchased
2,767,881 shares of our common stock for $53.8 million.
Amendment
of Senior Credit Facility
On October 5, 2009, on October 15, 2009 and again on
December 4, 2009, we completed amendments to the senior
credit facility through the execution of Amendment Nos. 5, 6 and
7, respectively, to the Amended and Restated Credit Agreement
(Amendment No. 5, Amendment
No. 6 and/ or Amendment No. 7)
5
between us, as Borrower, certain of our subsidiaries, as
Grantors, and BNP Paribas, as Lender and as Administrative
Agent. Amendment No. 5 to the Credit Agreement, among other
things, effectively permitted us to issue up to
$300.0 million of unsecured debt without having to repay
outstanding borrowings on our senior credit facility. Amendment
No. 6 to the Credit Agreement, among other things, modified
the aggregate size of the credit facility from
$240.0 million to $330.0 million, extended the
maturity of the revolver (Revolver) to 2012,
modified the permitted maximum total leverage and maximum senior
secured leverage financial ratios and eliminated the annual
capital expenditures limitation. With this amendment, as of
January 3, 2010 our senior credit facility is comprised of
a $155.0 million term loan (Term Loan) bearing
interest at LIBOR plus 2.00% and maturing in January 2014 and
the $330.0 million Revolver which currently bears interest
at LIBOR plus 3.25% and matures in September 2012. As of
January 3, 2010, we had the ability to borrow approximately
$217 million from the excess capacity on the Revolver after
considering our debt covenants. Upon the execution of Amendment
No. 6, we also had the ability to increase our borrowing
capacity under the senior credit facility by another
$200.0 million subject to lender demand, market conditions
and existing borrowings. Amendment No. 7 to the Credit
Agreement made certain revisions to certain definitions therein.
Tender
Offer for
81/4% Senior
Notes Due 2013
On October 5, 2009, we announced the commencement of a cash
tender offer for our $150.0 million aggregate principal
amount of
81/4% Senior
Notes due 2013 (the
81/4% Notes).
Holders who validly tendered their
81/4% Notes
before the early tender date, which expired at
5:00 p.m. Eastern Standard time on October 19,
2009, received a 103% cash payment for their note which included
an early tender payment of 3%. Holders who tendered their notes
after the early tender date, but before the expiration date of
11:59 p.m., Eastern Standard time on November 2, 2009
(Early Expiration Date), received 100% cash payment
for their note. Holders of the
81/4% Notes
accepted for purchase received accrued and unpaid interest up
to, but not including, the applicable payment date. On
October 20, 2009, we announced the results of the early
tender date. Valid early tenders received by us represented
$130.2 million aggregate principal amount of the Notes
which was 86.8% of the outstanding principal balance. We settled
these notes on October 20, 2009 by paying
$136.9 million to the trustee of the
81/4% Senior
Notes. As of November 19, 2009, all of the Notes had been
redeemed. We financed the tender offer and redemption with the
net cash proceeds from our offering of $250.0 million
aggregate principal
73/4% Senior
Notes due 2017, which closed on October 20, 2009. In
connection with the issuance of the
73/4%
Senior Notes, we also executed three interest rate swap
agreements effective November 3, 2009 for an aggregate
notional amount of $75.0 million and a fourth interest rate
swap with a $25.0 million notional amount effective
January 6, 2010. As a result of the tender offer and
redemption, we incurred a loss of approximately
$4.3 million, net of tax, related to the tender premium and
deferred costs associated with the Senior
81/4% Notes.
Contract
Terminations
On April 14, 2010, we announced the results of the rebids of two
of our managed-only contracts in the State of Florida. The State
of Florida has issued a Notice of Intent to Award contracts for
the 1,884-bed Graceville Correctional Facility located in
Graceville, Florida and the 985-bed Moore Haven Correctional
Facility located in Moore Haven, Florida (the
Facilities) to another operator effective
August 1, 2010. We do not expect that the termination of
these contracts will have a material adverse impact,
individually or in the aggregate, on our financial condition,
results of operations or cash flows.
Corporate
Information
Our principal executive offices are located at One Park Place,
Suite 700, 621 Northwest 53rd Street, Boca Raton,
Florida 33487 and our telephone number is
(866) 301-4GEO
(4436). We also maintain a website at www.geogroup.com.
The information on our website is not part of this prospectus.
6
Summary
Description of the New Notes
The following summary is provided solely for your
convenience. This summary is not intended to be complete. You
should read the full text and more specific details contained
elsewhere in this prospectus, including a more detailed summary
of the terms of the notes under Description of
Notes.
|
|
|
Issuer |
|
The GEO Group, Inc. |
|
Notes Offered |
|
$250,000,000 aggregate principal amount of
73/4% Senior
Notes due 2017. |
|
Maturity Date |
|
October 15, 2017. |
|
Interest Payment Dates |
|
April 15 and October 15, commencing April 15, 2010. |
|
|
|
Subsidiary Guarantees |
|
On the issue date, each of our restricted subsidiaries that
guarantees our senior credit facility will guarantee the notes.
The notes may be guaranteed by additional subsidiaries in the
future under certain circumstances. See Description of
Notes Certain Covenants Additional Note
Guarantees. GEO and the initial guarantors generated
approximately 79.3% of our consolidated revenues and 88.2% of
our consolidated EBITDA for the fiscal year ended
January 3, 2010 and held approximately 84.0% of our
consolidated assets as of January 3, 2010. |
|
|
|
Ranking |
|
The new notes and the guarantees will be unsecured,
unsubordinated obligations of The GEO Group, Inc. and the
guarantors and will rank: |
|
|
|
pari passu with any unsecured, unsubordinated
indebtedness of GEO and the guarantors;
|
|
|
|
senior to any future indebtedness of GEO and the
guarantors that is expressly subordinated to the notes and the
guarantees;
|
|
|
|
effectively junior to any secured indebtedness of
GEO and the guarantors, including indebtedness under our senior
credit facility, to the extent of the value of the assets
securing such indebtedness; and
|
|
|
|
effectively junior to all obligations of our
subsidiaries that are not guarantors.
|
|
Optional Redemption |
|
On or after October 15, 2013, we may redeem some or all of
the notes at any time at the redemption prices specified under
Description of Notes Optional Redemption. |
|
|
|
Before October 15, 2013, we may redeem some or all of the
notes at a redemption price equal to 100% of the principal
amount of each note to be redeemed plus a make-whole premium
described under Description of Notes Optional
Redemption together with accrued and unpaid interest. |
|
|
|
In addition, at any time prior to October 15, 2012, we may
redeem up to 35% of the notes with the net cash proceeds from
specified equity offerings at a redemption price equal to
107.750% of the principal amount of each note to be redeemed,
plus accrued and unpaid interest, if any, to the date of
redemption. |
7
|
|
|
Change of Control |
|
Upon a change of control (as defined in Description of
Notes Certain Definitions), we must offer to
repurchase the notes at 101% of the principal amount, plus
accrued interest to the purchase date. |
|
Certain Covenants |
|
The indenture governing the notes will contain certain
covenants, including limitations and restrictions on our and our
restricted subsidiaries ability to: |
|
|
|
incur additional indebtedness or issue preferred
stock;
|
|
|
|
make dividend payments or other restricted payments;
|
|
|
|
create liens;
|
|
|
|
sell assets;
|
|
|
|
enter into transactions with affiliates; and
|
|
|
|
enter into mergers, consolidations, or sales of all
or substantially all of our assets.
|
|
|
|
As of the date of the indenture, all of our subsidiaries, other
than CSC of Tacoma, LLC, GEO International Holdings, Inc.,
certain dormant domestic subsidiaries and all foreign
subsidiaries in existence on the date of the indenture, will be
restricted subsidiaries. Our unrestricted subsidiaries will not
be subject to any of the restrictive covenants in the indenture.
The restrictive covenants set forth in the indenture are subject
to important exceptions and qualifications. In addition, most of
the covenants will be suspended while the notes are rated
investment grade by Moodys Investment Services, Inc. or
Standard & Poors Rating Services. See
Description of Notes Certain Covenants. |
|
|
|
Risk Factors |
|
Noteholders should carefully consider the matters set forth
under the caption Risk Factors and other information
included in this prospectus in deciding whether to exchange
their notes. |
8
The
Exchange Offer
On October 20, 2009, we completed a private offering of the
old notes (Original Notes). We entered into a
registration rights agreement with the initial purchasers in the
private offering in which we agreed to deliver to you this
prospectus and to use commercially reasonable efforts to
complete the exchange offer within 180 days of the issue
date of the old notes.
|
|
|
The Exchange Offer |
|
We are offering to exchange new notes for old notes. |
|
|
|
Expiration Date |
|
The exchange offer will expire at 5:00 p.m., New York City
time, on [], 2010, unless extended. |
|
|
|
Condition to the Exchange Offer |
|
The registration rights agreement does not require us to accept
old notes for exchange if the exchange offer or the making of
any exchange by a holder of the old notes would violate any
applicable law or interpretation of the staff of the Securities
and Exchange Commission. A minimum aggregate principal amount of
old notes being tendered is not a condition to the exchange
offer. |
|
Procedures for Tendering Old Notes |
|
To participate in the exchange offer, you must complete, sign
and date the letter of transmittal, or a facsimile of the letter
of transmittal, and transmit it together with all other
documents required in the letter of transmittal, including the
old notes that you wish to exchange, to Wells Fargo Bank, N.A.,
as exchange agent, at the address indicated on the cover page of
the letter of transmittal. In the alternative, you can tender
your old notes by following the procedures for book-entry
transfer described in this prospectus. |
|
|
|
If your old notes are held through The Depository
Trust Company and you wish to participate in the exchange
offer, you may do so through the automated tender offer program
of The Depository Trust Company. If you tender under this
program, you will agree to be bound by the letter of transmittal
that we are providing with this prospectus as though you had
signed the letter of transmittal. |
|
|
|
If a broker, dealer, commercial bank, trust company or other
nominee is the registered holder of your old notes, we urge you
to contact that person promptly to tender your old notes in the
exchange offer. |
|
|
|
For more information on tendering your old notes, please refer
to the sections in this prospectus entitled Exchange
Offer Terms of the Exchange Offer,
Procedures for Tendering and
Book-Entry Transfer. |
|
Guaranteed Delivery Procedures |
|
If you wish to tender your old notes and you cannot get your
required documents to the exchange agent on time, you may tender
your old notes according to the guaranteed delivery procedures
described in Exchange Offer Guaranteed
Delivery Procedures. |
|
Withdrawal of Tenders |
|
You may withdraw your tender of old notes under the exchange
offer at any time prior to the expiration date. To withdraw, you
must have delivered a written or facsimile transmission notice
of withdrawal to the exchange agent at its address indicated on
the cover page of the letter of transmittal before
5:00 p.m. New York City time on the expiration date of
the exchange offer. |
9
|
|
|
Acceptance of Old Notes and Delivery of New Notes |
|
If you fulfill all conditions required for proper acceptance of
old notes, we will accept any and all old notes that you
properly tender in the exchange offer on or before
5:00 p.m. New York City time on the expiration date.
We will return any old notes that we do not accept for exchange
to you without expense promptly after the expiration date. We
will deliver the new notes promptly after the expiration date
and acceptance of the old notes for exchange. Please refer to
the section in this prospectus entitled Exchange
Offer Terms of the Exchange Offer. |
|
Fees and Expenses |
|
We will bear all expenses related to the exchange offer. Please
refer to the section in this prospectus entitled Exchange
Offer Fees and Expenses. |
|
Use of Proceeds |
|
We will not receive any proceeds from the issuance of the new
notes. We are making this exchange offer solely to satisfy our
obligations under our registration rights agreement. |
|
Appraisal Rights |
|
Holders of old notes will not have dissenters rights or
appraisal rights in connection with the exchange offer. |
|
Resale of New Notes |
|
Based on an interpretation by the Commission set forth in
no-action letters issued to third parties, we believe that you
may resell or otherwise transfer new notes issued in the
exchange offer in exchange for old notes without restrictions
under the federal securities laws if: |
|
|
|
you are not our affiliate;
|
|
|
|
you acquire the new notes in the ordinary course of
your business; and
|
|
|
|
you do not intend to participate in a distribution
of the new notes.
|
|
|
|
If you tender in the exchange offer with the intention of
participating in any manner in a distribution of the new notes,
you |
|
|
|
cannot rely on such interpretations by the staff of
the Commission; and
|
|
|
|
must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a
secondary resale transaction.
|
|
|
|
Only broker-dealers that acquired the old notes as a result of
market-making activities or other trading activities may
participate in the exchange offer. Each broker-dealer that
receives new notes for its own account in exchange for old
notes, where such old notes were acquired by such broker-dealer
as a result of market-making activities or other trading
activities, must deliver a prospectus in connection with any
resale of the new notes. |
|
Consequences of Failure to Exchange Old Notes |
|
If you do not exchange your old notes in the exchange offer, you
will no longer be able to require us to register the old notes
under the Securities Act of 1933, except in the limited
circumstances provided under our registration rights agreement.
In addition, you will |
10
|
|
|
|
|
not be able to resell, offer to resell or otherwise transfer the
old notes unless we have registered the old notes under the
Securities Act of 1933, or unless you resell, offer to resell or
otherwise transfer them under an exemption from the registration
requirements of, or in a transaction not subject to, the
Securities Act of 1933. |
|
U.S. Federal Income Tax Considerations |
|
The exchange of the new notes for the old notes in the exchange
offer should not be taxable events for U.S. federal income tax
purposes. Please read Material U.S. Federal Income Tax
Considerations. |
|
Exchange Agent |
|
We have appointed Wells Fargo Bank, N.A., as exchange agent for
the exchange offer. You should direct questions and requests for
assistance, requests for additional copies of this prospectus or
the letter of transmittal and requests for the notice of
guaranteed delivery to the exchange agent addressed as follows:
[]. Eligible institutions may make requests by facsimile
at []. |
11
Summary
Historical Financial and Other Data
The following summarizes certain of our consolidated historical
financial and operating data. The consolidated statement of
operations data and other financial data for the fiscal year
ended January 1, 2006 and the consolidated balance sheet
data as of January 1, 2006 and December 31, 2006 were
derived from our audited consolidated financial statements,
taking into consideration certain reclassifications to these
periods for discontinued operations and new accounting standards
related to the noncontrolling interest in our consolidated South
Africa subsidiary. The consolidated statement of operations data
and other financial data for the fiscal years ended
December 31, 2006, December 30, 2007,
December 28, 2008 and January 3, 2010 and the
consolidated balance sheet data as of January 3, 2010,
December 28, 2008 and December 30, 2007 were derived
from our audited consolidated financial statements, also taking
into consideration certain reclassifications to these periods
and new accounting standards related to the noncontrolling
interest in our consolidated South Africa subsidiary.
The information contained in this summary should be read in
conjunction with the Selected Financial Data,
Managements Discussion and Analysis of Financial
Condition and Results of Operations and our consolidated
financial statements and notes thereto incorporated by reference
or appearing elsewhere in this prospectus. All amounts are
presented in millions except operational data and ratios.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
580.4
|
|
|
$
|
818.4
|
|
|
$
|
976.3
|
|
|
$
|
1,043.0
|
|
|
$
|
1,141.1
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
510.1
|
|
|
|
680.0
|
|
|
|
788.5
|
|
|
|
822.7
|
|
|
|
897.4
|
|
Depreciation and amortization
|
|
|
15.6
|
|
|
|
21.7
|
|
|
|
33.2
|
|
|
|
37.4
|
|
|
|
39.3
|
|
General and administrative expenses
|
|
|
49.0
|
|
|
|
56.3
|
|
|
|
64.5
|
|
|
|
69.1
|
|
|
|
69.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
$
|
574.7
|
|
|
$
|
758.0
|
|
|
$
|
886.2
|
|
|
$
|
929.2
|
|
|
$
|
1,005.9
|
|
Operating income
|
|
|
5.7
|
|
|
|
60.4
|
|
|
|
90.1
|
|
|
|
113.8
|
|
|
|
135.2
|
|
Interest income
|
|
|
9.1
|
|
|
|
10.7
|
|
|
|
8.7
|
|
|
|
7.0
|
|
|
|
4.9
|
|
Interest expense(1)
|
|
|
(23.0
|
)
|
|
|
(28.2
|
)
|
|
|
(36.1
|
)
|
|
|
(30.2
|
)
|
|
|
(28.5
|
)
|
Write-off of deferred financing fees from extinguishment of debt
|
|
|
(1.3
|
)
|
|
|
(1.3
|
)
|
|
|
(4.8
|
)
|
|
|
0.0
|
|
|
|
(6.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
(9.5
|
)
|
|
$
|
41.6
|
|
|
$
|
57.9
|
|
|
$
|
90.6
|
|
|
$
|
104.8
|
|
Provision for income taxes
|
|
|
(12.6
|
)
|
|
|
15.1
|
|
|
|
22.0
|
|
|
|
33.8
|
|
|
|
42.0
|
|
Equity in earnings of affiliates, net of income tax
|
|
|
2.1
|
|
|
|
1.5
|
|
|
|
2.2
|
|
|
|
4.6
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
5.2
|
|
|
|
28.0
|
|
|
|
38.1
|
|
|
|
61.4
|
|
|
|
66.3
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
1.8
|
|
|
|
2.0
|
|
|
|
3.7
|
|
|
|
(2.5
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
7.0
|
|
|
$
|
30.0
|
|
|
$
|
41.8
|
|
|
$
|
58.9
|
|
|
$
|
66.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
Selected Business Segment Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corrections
|
|
$
|
441.0
|
|
|
$
|
574.1
|
|
|
$
|
629.3
|
|
|
$
|
711.0
|
|
|
$
|
784.1
|
|
International services
|
|
|
98.8
|
|
|
|
103.1
|
|
|
|
128.0
|
|
|
|
128.7
|
|
|
|
137.2
|
|
GEO Care
|
|
|
32.4
|
|
|
|
67.0
|
|
|
|
110.2
|
|
|
|
117.4
|
|
|
|
121.8
|
|
Facility construction and design
|
|
|
8.2
|
|
|
|
74.2
|
|
|
|
108.8
|
|
|
|
85.9
|
|
|
|
98.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
580.4
|
|
|
$
|
818.4
|
|
|
$
|
976.3
|
|
|
$
|
1,043.0
|
|
|
$
|
1,141.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corrections
|
|
$
|
43.0
|
|
|
$
|
103.6
|
|
|
$
|
134.3
|
|
|
$
|
160.1
|
|
|
$
|
182.8
|
|
International services
|
|
|
9.5
|
|
|
|
8.4
|
|
|
|
10.4
|
|
|
|
10.1
|
|
|
|
7.7
|
|
GEO Care
|
|
|
2.3
|
|
|
|
5.2
|
|
|
|
10.1
|
|
|
|
12.4
|
|
|
|
13.5
|
|
Facility construction and design
|
|
|
(0.1
|
)
|
|
|
(0.5
|
)
|
|
|
(0.2
|
)
|
|
|
0.3
|
|
|
|
0.4
|
|
Unallocated G&A expenses
|
|
|
49.0
|
|
|
|
56.3
|
|
|
|
64.5
|
|
|
|
69.1
|
|
|
|
69.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
$
|
5.7
|
|
|
$
|
60.4
|
|
|
$
|
90.1
|
|
|
$
|
113.8
|
|
|
$
|
135.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents (unrestricted)
|
|
$
|
57.1
|
|
|
$
|
111.5
|
|
|
$
|
44.4
|
|
|
$
|
31.7
|
|
|
$
|
33.9
|
|
Restricted cash
|
|
|
26.4
|
|
|
|
33.7
|
|
|
|
34.1
|
|
|
|
32.7
|
|
|
|
13.3
|
|
Accounts receivable, net
|
|
|
120.3
|
|
|
|
152.0
|
|
|
|
164.8
|
|
|
|
199.7
|
|
|
|
200.8
|
|
Property, plant and equipment, net
|
|
|
280.0
|
|
|
|
285.4
|
|
|
|
783.4
|
|
|
|
878.6
|
|
|
|
998.6
|
|
Total assets
|
|
|
639.5
|
|
|
|
743.5
|
|
|
|
1,192.6
|
|
|
|
1,288.6
|
|
|
|
1,447.8
|
|
Total debt
|
|
|
376.0
|
|
|
|
306.0
|
|
|
|
463.9
|
|
|
|
512.1
|
|
|
|
584.7
|
|
Total Shareholders equity
|
|
|
110.4
|
|
|
|
249.9
|
|
|
|
529.3
|
|
|
|
579.6
|
|
|
|
665.1
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
34.8
|
|
|
$
|
46.0
|
|
|
$
|
78.9
|
|
|
$
|
71.3
|
|
|
$
|
130.9
|
|
Net cash provided by (used in) investing activities
|
|
|
(93.0
|
)
|
|
|
(16.9
|
)
|
|
|
(518.9
|
)
|
|
|
(131.6
|
)
|
|
|
(185.3
|
)
|
Net cash provided by (used in) financing activities
|
|
|
24.6
|
|
|
|
21.7
|
|
|
|
372.3
|
|
|
|
53.7
|
|
|
|
52.1
|
|
Capital expenditures
|
|
|
31.5
|
|
|
|
43.2
|
|
|
|
115.2
|
|
|
|
131.0
|
|
|
|
149.8
|
|
Depreciation and amortization expense
|
|
|
15.6
|
|
|
|
21.7
|
|
|
|
33.2
|
|
|
|
37.4
|
|
|
|
39.3
|
|
EBITDA(2)
|
|
|
23.9
|
|
|
|
84.3
|
|
|
|
124.4
|
|
|
|
153.3
|
|
|
|
170.8
|
|
Total debt(3)
|
|
|
376.0
|
|
|
|
306.0
|
|
|
|
463.9
|
|
|
|
512.1
|
|
|
|
584.7
|
|
Total net debt(4)
|
|
|
318.9
|
|
|
|
194.5
|
|
|
|
419.5
|
|
|
|
480.4
|
|
|
|
550.8
|
|
Selected Financial Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges(5)
|
|
|
0.8
|
x
|
|
|
1.9
|
x
|
|
|
2.1
|
x
|
|
|
3.0
|
x
|
|
|
3.4x
|
|
Ratio of total debt to EBITDA(2),(3)
|
|
|
15.7
|
x
|
|
|
3.6
|
x
|
|
|
3.7
|
x
|
|
|
3.3
|
x
|
|
|
3.4x
|
|
Ratio of net debt to EBITDA(2),(4)
|
|
|
13.3
|
x
|
|
|
2.3
|
x
|
|
|
3.4
|
x
|
|
|
3.1
|
x
|
|
|
3.2x
|
|
Ratio of EBITDA to interest expense
|
|
|
1.0
|
x
|
|
|
3.0
|
x
|
|
|
3.4
|
x
|
|
|
5.1
|
x
|
|
|
6.0x
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
Selected Business Segment Operational Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensated Mandays (in millions)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corrections
|
|
|
8.8
|
|
|
|
11.5
|
|
|
|
12.5
|
|
|
|
13.3
|
|
|
|
14.5
|
|
International services
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
2.1
|
|
|
|
2.2
|
|
GEO Care
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensated Mandays
|
|
|
10.9
|
|
|
|
13.8
|
|
|
|
15.0
|
|
|
|
15.9
|
|
|
|
17.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Producing Beds (in thousands) (end of period)(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corrections
|
|
|
31.6
|
|
|
|
35.9
|
|
|
|
36.3
|
|
|
|
42.1
|
|
|
|
41.0
|
|
International services
|
|
|
5.4
|
|
|
|
5.6
|
|
|
|
5.8
|
|
|
|
5.8
|
|
|
|
6.8
|
|
GEO Care
|
|
|
0.5
|
|
|
|
1.2
|
|
|
|
1.5
|
|
|
|
1.5
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue Producing Beds
|
|
|
37.5
|
|
|
|
42.7
|
|
|
|
43.6
|
|
|
|
49.4
|
|
|
|
49.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Occupancy(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corrections
|
|
|
97.5
|
%
|
|
|
97.0
|
%
|
|
|
96.1
|
%
|
|
|
95.7
|
%
|
|
|
93.7
|
%
|
International services
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
GEO Care
|
|
|
99.7
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
96.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Average Occupancy
|
|
|
98.0
|
%
|
|
|
97.5
|
%
|
|
|
96.7
|
%
|
|
|
96.4
|
%
|
|
|
94.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facilities in operation (end of period)
|
|
|
53
|
|
|
|
56
|
|
|
|
57
|
|
|
|
59
|
|
|
|
57
|
|
Design capacity of facilities (in thousands)(9)
|
|
|
42.1
|
|
|
|
46.5
|
|
|
|
47.9
|
|
|
|
53.4
|
|
|
|
52.8
|
|
|
|
|
(1)
|
|
Interest expense excludes the
following capitalized interest amounts for the periods presented
(in millions):
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
January 1,
|
|
December 31,
|
|
December 30,
|
|
December 28,
|
|
January 3,
|
2006
|
|
2006
|
|
2007
|
|
2008
|
|
2010
|
|
|
|
$0.2
|
|
$2.9
|
|
$4.3
|
|
$4.9
|
|
|
|
(2)
|
|
We define EBITDA as income before
interest expense, interest income, income tax provision and
depreciation and amortization expense. We use EBITDA to monitor
and evaluate our operating performance and to facilitate
internal and external comparisons of the historical operating
performance of our business. However, other companies may
calculate differently than we do. EBITDA is not a measure of
performance under GAAP, and it should not be considered as an
alternative to cash flow from operating activities as a measure
of liquidity or as alternatives to net income as an indicator of
our operating performance or any other measure of performance
derived in accordance with GAAP. This data should be read in
conjunction with our consolidated financial statements and
related notes incorporated by reference in this prospectus. A
reconciliation of EBITDA to net income computed in accordance
with GAAP is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 1,
|
|
|
December 31,
|
|
|
December 30,
|
|
|
December 28,
|
|
|
January 3,
|
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2010
|
|
|
Net income
|
|
$
|
7.0
|
|
|
$
|
30.0
|
|
|
$
|
41.8
|
|
|
$
|
58.9
|
|
|
$
|
66.0
|
|
Add (subtract)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
$
|
(12.6
|
)
|
|
$
|
15.1
|
|
|
$
|
22.0
|
|
|
$
|
33.8
|
|
|
$
|
42.0
|
|
Interest income
|
|
|
(9.1
|
)
|
|
|
(10.7
|
)
|
|
|
(8.7
|
)
|
|
|
(7.0
|
)
|
|
|
(4.9
|
)
|
Interest expense
|
|
|
23.0
|
|
|
|
28.2
|
|
|
|
36.1
|
|
|
|
30.2
|
|
|
|
28.4
|
|
Depreciation and amortization expense
|
|
|
15.6
|
|
|
|
21.7
|
|
|
|
33.2
|
|
|
|
37.4
|
|
|
|
39.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(a)
|
|
$
|
23.9
|
|
|
$
|
84.3
|
|
|
$
|
124.4
|
|
|
$
|
153.3
|
|
|
$
|
170.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA includes the operating
results of the entities for which there is principal and
interest associated with non-recourse debt. In calculating
EBITDA, all consolidated interest expense, including interest
expense related to non-recourse debt, is added back.
|
14
|
|
|
|
|
EBITDA has important limitations as
an analytical tool. These limitations include the following:
|
|
|
|
|
|
it does not reflect our capital expenditures, future
requirements for capital expenditures or contractual commitments;
|
|
|
|
it does not reflect the interest expense or the cash
requirements necessary to service principal or interest payments
on our debt;
|
|
|
|
although depreciation and amortization are non-cash charges, the
assets that we currently depreciate and amortize will likely
have to be replaced in the future, and EBITDA does not reflect
the cash required to fund such replacements; and
|
|
|
|
it does not reflect the effect on earnings of charges resulting
from matters that our management does not consider to be
indicative of our ongoing operations. However, some of these
charges have recurred and may re-occur in the future.
|
|
|
|
(3)
|
|
Total debt consists of our total
consolidated indebtedness, including the current portion and our
non-recourse debt.
|
|
|
|
Our non-recourse debt at the end of
each of the periods presented is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
January 1,
|
|
December 31,
|
|
December 30,
|
|
December 28,
|
|
January 3,
|
2006
|
|
2006
|
|
2007
|
|
2008
|
|
2010
|
|
$138.0
|
|
$143.6
|
|
$138.0
|
|
$114.2
|
|
$112.0
|
|
|
|
(4)
|
|
Total net debt consists of our
total debt as discussed in note (3) above, offset by cash and
cash equivalents held at each respective period end. Total net
debt is not a measure presented under accounting principles
generally accepted in the United States, or GAAP, and may not be
comparable to similarly titled measures used by other companies
and should be considered in addition to, but not as a substitute
for, the information contained in our balance sheets.
|
|
(5)
|
|
For purposes of calculating the
ratio of earnings to fixed charges, earnings consists of income
before income taxes and equity in earnings of affiliates plus
fixed charges, excluding capitalized interest, and fixed charges
consist of interest expense (including the interest element of
rental expense), whether expensed or capitalized, and
amortization of deferred financing fees.
|
|
|
|
(6)
|
|
Compensated mandays are calculated
as follows: (a) for per diem rate facilities
the number of beds occupied by residents on a daily basis during
the period; and (b) for fixed rate facilities
the design capacity of the facility multiplied by the number of
days the facility was in operation during the period.
|
|
|
|
(7)
|
|
Revenue producing beds are
available beds under contract, excluding facilities under
development, idle facilities and discontinued operations.
|
|
|
|
(8)
|
|
The average occupancy is calculated
by taking compensated mandays as a percentage of capacity,
excluding mandays and capacity of our idle facilities,
facilities under development and discontinued operations.
|
|
|
|
(9)
|
|
Design capacity of facilities is
defined as the total available beds, excluding facilities under
development, idle facilities and discontinued operations.
|
15
RISK
FACTORS
You should carefully consider the risk factors set forth
below, as well as the other information contained in this
prospectus, before deciding whether to tender your old notes in
the exchange offer. Any of these risks could materially
adversely affect our business, financial condition, or results
of operations. These risks could also cause our actual results
to differ materially from those indicated in the forward-looking
statements contained herein and elsewhere. The risks described
below are not the only risks we face. Additional risks not
currently known to us or those we currently deem to be
immaterial may also materially and adversely affect our business
operations.
Risks
Related to the Exchange Offer
If you
fail to follow the exchange offer procedures, your original
notes will not be accepted for exchange.
We will not accept your old notes for exchange if you do not
follow the exchange offer procedures. We will issue new notes as
part of this exchange offer only after timely receipt of your
old notes, properly completed and duly executed letter of
transmittal and all other required documents. Therefore, if you
want to tender your old notes, please allow sufficient time to
ensure timely delivery. If we do not receive your old notes,
letter of transmittal, and all other required documents by the
expiration date of the exchange offer, or you do not otherwise
comply with the guaranteed delivery procedures for tendering
your old notes, we will not accept your old notes for exchange.
We are under no duty to give notification of defects or
irregularities with respect to the tenders of old notes for
exchange. If there are defects or irregularities with respect to
your tender of old notes, we will not accept your old notes for
exchange unless we decide in our sole discretion to waive such
defects or irregularities.
If you
fail to exchange your original notes for exchange notes, they
will continue to be subject to the existing transfer
restrictions and you may not be able to sell them.
We did not register the old notes, nor do we intend to do so
following the exchange offer. Old notes that are not tendered
will therefore continue to be subject to the existing transfer
restrictions and may be transferred only in limited
circumstances under the securities laws. As a result, if you
hold old notes after the exchange offer, you may not be able to
sell them. To the extent any old notes are tendered and accepted
in the exchange offer, the trading market, if any, for the old
notes that remain outstanding after the exchange offer may be
adversely affected due to a reduction in market liquidity.
Risks
Related to Our High Level of Indebtedness
We are
currently incurring significant indebtedness in connection with
substantial ongoing capital expenditures. Capital expenditures
for these existing and future projects may materially strain our
liquidity.
As of January 3, 2010, we were in the process of
constructing or expanding three facilities representing 4,325
total beds. We are providing the financing for two of the three
facilities representing 2,325 beds. Remaining capital
expenditures related to these and other projects under
development are expected to be $37.7 million, all of which
we expect to spend in 2010. We intend to finance these and
future projects using our own funds, including cash on hand,
cash flow from operations and borrowings under our
$330.0 million Revolver. As of January 3, 2010, we had
$47.5 million outstanding in letters of credit and
$58.0 million in borrowings outstanding under the Revolver.
Consequently, we had the ability to borrow approximately
$217 million under our Revolver after considering our debt
covenants. In addition, we have an ability to borrow
$200.0 million under the accordion feature of our senior
credit facility subject to lender demand and prevailing market
conditions. While we believe we currently have adequate
borrowing capacity under our senior credit facility to fund all
of our committed capital expenditure projects, we may need
additional borrowings or financing from other sources in order
to complete potential capital expenditures related to new
projects in the future. We cannot assure you that such
borrowings or financing will be made available to us on
satisfactory terms, or at all. In addition, the large capital
commitments that these projects will require over the next
12-18 month
period may materially strain our liquidity and our borrowing
capacity for other purposes.
16
Capital constraints caused by these projects may also cause us
to have to entirely refinance our existing indebtedness or incur
more indebtedness. Such financing may have terms less favorable
than those we currently have in place, or not be available to us
at all. In addition, the concurrent development of these and
other large capital projects exposes us to material risks. For
example, we may not complete some or all of the projects on time
or on budget, which could cause us to absorb any losses
associated with any delays.
Our
significant level of indebtedness could adversely affect our
financial condition and prevent us from fulfilling our debt
service obligations.
We have a significant amount of indebtedness. Our total
consolidated long-term indebtedness as of January 3, 2010
was $457.5 million, excluding non-recourse debt of
$112.0 million and capital lease liability balances of
$15.1 million. We had the ability to borrow approximately
$217 million under the Revolver, after considering our debt
covenants, subject to our satisfying the relevant borrowing
conditions under the senior credit facility with respect to the
incurrence of additional indebtedness.
Our substantial indebtedness could have important consequences.
For example, it could:
|
|
|
|
|
require us to dedicate a substantial portion of our cash flow
from operations to payments on our indebtedness, thereby
reducing the availability of our cash flow to fund working
capital, capital expenditures, and other general corporate
purposes;
|
|
|
|
limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate;
|
|
|
|
increase our vulnerability to adverse economic and industry
conditions;
|
|
|
|
place us at a competitive disadvantage compared to competitors
that may be less leveraged; and
|
|
|
|
limit our ability to borrow additional funds or refinance
existing indebtedness on favorable terms.
|
If we are unable to meet our debt service obligations, we may
need to reduce capital expenditures, restructure or refinance
our indebtedness, obtain additional equity financing or sell
assets. We may be unable to restructure or refinance our
indebtedness, obtain additional equity financing or sell assets
on satisfactory terms or at all. In addition, our ability to
incur additional indebtedness will be restricted by the terms of
our senior credit facility and the indenture governing the notes.
Despite
current indebtedness levels, we may still incur more
indebtedness, which could further exacerbate the risks described
above. Future indebtedness issued pursuant to our universal
shelf registration statement could have rights superior to those
of our existing or future indebtedness.
The terms of the indenture governing the notes and our senior
credit facility restrict our ability to incur but do not
prohibit us from incurring significant additional indebtedness
in the future. As of January 3, 2010, we had the ability to
borrow approximately $217 million under the Revolver,
subject to our satisfying the relevant borrowing conditions
under the senior credit facility and the indenture governing the
notes. We also have an ability to borrow an additional
$200.0 million under the accordion feature of our senior
credit facility subject to lender demand, prevailing market
conditions and satisfying relevant borrowing conditions. Also,
we may refinance all or a portion of our indebtedness, including
borrowings under our senior credit facility
and/or the
notes. The terms of such refinancing may be less restrictive and
permit us to incur more indebtedness than we can now. If new
indebtedness is added to our, and our subsidiaries,
current debt levels, the related risks that we, and they, would
face related to our level of indebtedness could intensify.
17
The
covenants in the indenture governing the notes and our senior
credit facility impose significant operating and financial
restrictions which may adversely affect our ability to operate
our business.
The indenture governing the notes and our senior credit facility
impose significant operating and financial restrictions on us
and certain of our subsidiaries, which we refer to as restricted
subsidiaries. These restrictions limit our ability to, among
other things:
|
|
|
|
|
incur additional indebtedness;
|
|
|
|
pay dividends and or distributions on our capital stock,
repurchase, redeem or retire our capital stock, prepay
subordinated indebtedness, make investments;
|
|
|
|
issue preferred stock of subsidiaries;
|
|
|
|
guarantee other indebtedness;
|
|
|
|
create liens on our assets;
|
|
|
|
transfer and sell assets;
|
|
|
|
make capital expenditures above certain limits;
|
|
|
|
create or permit restrictions on the ability of our restricted
subsidiaries to make dividends or make other distributions to us;
|
|
|
|
enter into sale/leaseback transactions;
|
|
|
|
enter into transactions with affiliates; and
|
|
|
|
merge or consolidate with another company or sell all or
substantially all of our assets.
|
These restrictions could limit our ability to finance our future
operations or capital needs, make acquisitions or pursue
available business opportunities. In addition, our senior credit
facility requires us to maintain specified financial ratios and
satisfy certain financial covenants, including maintaining
maximum senior secured leverage ratio and total leverage ratio,
a minimum interest coverage ratio and a limit on the amount of
our annual capital expenditures. Some of these financial ratios
become more restrictive over the life of the senior credit
facility. We may be required to take action to reduce our
indebtedness or to act in a manner contrary to our business
objectives to meet these ratios and satisfy these covenants. We
could also incur additional indebtedness having even more
restrictive covenants. Our failure to comply with any of the
covenants under our senior credit facility, the indenture
governing the notes or any other indebtedness could prevent us
from being able to draw on our revolving credit facility, cause
an event of default under such documents and result in an
acceleration of all of our outstanding indebtedness. If all of
our outstanding indebtedness were to be accelerated, we likely
would not be able to simultaneously satisfy all of our
obligations under such indebtedness, which would materially
adversely affect our financial condition and results of
operations.
Servicing
our indebtedness will require a significant amount of cash. Our
ability to generate cash depends on many factors beyond our
control.
Our ability to make payments on our indebtedness and to fund
planned capital expenditures will depend on our ability to
generate cash in the future. This, to a certain extent, is
subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control.
Our business may not be able to generate sufficient cash flow
from operations or future borrowings may not be available to us
under our senior credit facility or otherwise in an amount
sufficient to enable us to pay our indebtedness or new debt
securities, including the notes, or to fund our other liquidity
needs. We may need to refinance all or a portion of our
indebtedness on or before maturity. However, we may not be able
to complete such refinancing on commercially reasonable terms or
at all.
18
Because
portions of our senior indebtedness have floating interest
rates, a general increase in interest rates will adversely
affect cash flows.
Borrowings under our senior credit facility bear interest at a
variable rate. As a result, to the extent our exposure to
increases in interest rates is not eliminated through interest
rate protection agreements, such increases will result in higher
debt service costs which will adversely affect our cash flows.
We do not currently have any interest rate protection agreements
in place to protect against interest rate fluctuations related
to our senior credit facility. Based on borrowings of
$213.0 million outstanding under the senior credit facility
as of January 3, 2010, a one percent increase in the
interest rate applicable to the senior credit facility, would
increase our annual interest expense by $2.1 million.
We
depend on distributions from our subsidiaries to make payments
on our indebtedness. These distributions may not be
made.
We generate a substantial portion of our revenues from
distributions on the equity interests we hold in our
subsidiaries. Therefore, our ability to meet our payment
obligations on our indebtedness is substantially dependent on
the earnings of our subsidiaries and the payment of funds to us
by our subsidiaries as dividends, loans, advances or other
payments. Our subsidiaries are separate and distinct legal
entities and, unless they expressly guarantee any indebtedness
of ours, they are not obligated to make payments on such
indebtedness nor are any of our subsidiaries obligated to make
funds available for payment of any of our indebtedness in the
form of loans, distributions or otherwise. Our
subsidiaries ability to make any such loans, distributions
or other payments to us will depend on their earnings, business
results, the terms of their existing and any future
indebtedness, tax considerations and legal or contractual
restrictions to which they may be subject. If our subsidiaries
do not make such payments to us, our ability to repay our
indebtedness may be materially adversely affected. For the
fiscal year ended January 3, 2010, our subsidiaries
accounted for 50.1% of our consolidated revenue and, as of
January 3, 2010, our subsidiaries accounted for 59.0% of
our total segment assets.
Risks
Related to the Notes
The
notes and the related guarantees are effectively subordinated to
our and the subsidiary guarantors senior secured
indebtedness and the indebtedness of our subsidiaries that do
not guarantee the notes.
The notes and the related guarantees are unsecured and therefore
will be effectively subordinated to our secured indebtedness,
including borrowings under our senior credit facility, to the
extent of the value of the assets securing such indebtedness. As
of January 3, 2010, borrowings under our senior credit
facility were $213.0 million. In addition, the indenture
governing the notes will allow us and the subsidiary guarantors
to incur a significant amount of additional indebtedness and to
secure indebtedness, including any indebtedness incurred under
credit facilities. In the event we or the guarantors become the
subject of a bankruptcy, liquidation, dissolution,
reorganization or similar proceeding, our assets and the assets
of the guarantors securing indebtedness could not be used to pay
you until after all secured claims against us and the guarantors
have been fully paid.
In addition, the notes and the related guarantees will be
effectively subordinated to all existing and future liabilities
of our subsidiaries that do not guarantee the notes, including
the trade payables. For the fiscal years ended December 28,
2008 and January 3, 2010, our non-guarantor subsidiaries
accounted for 20.6% and 20.7% of our consolidated revenues,
respectively, and 14.3% and 11.8% of our consolidated EBITDA,
respectively, and, as of December 28, 2008 and
January 3, 2010, our non-guarantor subsidiaries accounted
for 15.1% and 16.0% of our total consolidated assets,
respectively.
There
is no public market for the notes.
The notes are a new issue of securities for which there is
currently no established trading market and we do not intend to
list the notes on any securities exchange or seek their
admission to be quoted on any automated dealer quotation system.
However, the notes are eligible for trading in the PORTAL
Market. Although the initial purchasers have advised us that
they currently intend to make a market in the notes, they
19
have no obligation to do so and may discontinue such activity
at any time without notice. In addition, any market-making
activity will be subject to the limits imposed by the Securities
Act and the Securities Exchange Act of 1934 and may be limited
during the exchange offer or the pendency of an applicable shelf
registration statement. We cannot be sure that an active trading
market will develop for the notes or that any trading market
that does develop will be liquid. Moreover, if a market were to
develop, the notes could trade at prices that may be lower than
their initial offering price because of many factors, including,
but not limited to:
|
|
|
|
|
prevailing interest rates for similar securities;
|
|
|
|
general economic conditions;
|
|
|
|
our financial condition, performance or prospects; and
|
|
|
|
the prospects for other companies in the same industry.
|
We may
not be able to repurchase the notes in the event of a change of
control because the terms of our indebtedness or lack of funds
may prevent us from doing so.
Upon a change of control, each holder of the notes will have the
right to require us to repurchase their notes at 101% of their
principal amount, plus accrued and unpaid interest, and,
liquidated damages, if any, to the date of repurchase. The terms
of the senior credit facility limit our ability to repurchase
the notes in the event of a change of control. Any future
agreement governing any of our indebtedness may contain similar
restrictions and provisions. Accordingly, it is possible that
restrictions in the senior credit facility or other indebtedness
that may be incurred in the future will not allow the required
repurchase of notes upon a change of control. Even if such
repurchase is permitted by the terms of our then existing
indebtedness, we may not have sufficient funds available to
satisfy our repurchase obligations.
Fraudulent
conveyance laws may permit courts to void the subsidiary
guarantees of the notes in specific circumstances, which would
interfere with the payment of the subsidiary
guarantees.
Under the federal bankruptcy laws and comparable provisions of
state fraudulent transfer laws, any guarantee made by any of our
subsidiaries could be voided, or claims under the guarantee made
by any of our subsidiaries could be subordinated to all other
obligations of any such subsidiary, if the subsidiary, at the
time it incurred the obligations under any guarantee:
|
|
|
|
|
incurred the obligations with the intent to hinder, delay or
defraud creditors; or
|
|
|
|
received less than reasonably equivalent value, or did not
receive fair consideration, in exchange for incurring those
obligations; and
|
(1) was insolvent or rendered insolvent by reason of that
incurrence;
(2) was engaged in a business or transaction for which the
subsidiarys remaining assets constituted unreasonably
small capital; or
(3) intended to incur, or believed that it would incur,
debts beyond its ability to pay those debts as they mature.
In addition, any payment by that guarantor pursuant to its
guarantee could be voided and required to be returned to the
guarantor, or to a fund for the benefit of the creditors of the
guarantor. In any such case, your right to receive payments in
respect of the notes from any such guarantor would be
effectively subordinated to all indebtedness and other
liabilities of that guarantor.
A legal challenge to the obligations under any guarantee on
fraudulent conveyance grounds could focus on any benefits
received in exchange for the incurrence of those obligations. We
believe that each of our subsidiaries making a guarantee
received reasonably equivalent value for incurring the
guarantee, but a court may disagree with our conclusion or elect
to apply a different standard in making its determination.
20
The measures of insolvency for purposes of the fraudulent
transfer laws vary depending on the law applied in the
proceeding to determine whether a fraudulent transfer has
occurred. Generally, however, an entity would be considered
insolvent if:
|
|
|
|
|
the sum of its debts, including contingent liabilities, is
greater than the fair saleable value of all of its assets;
|
|
|
|
the present fair saleable value of its assets is less than the
amount that would be required to pay its probable liabilities on
its existing debts, including contingent liabilities, as they
become absolute and mature; or
|
|
|
|
it cannot pay its debts as they become due.
|
We cannot assure you, however, as to what standard a court would
apply in making these determinations. If a guarantee of the
notes is voided as a fraudulent conveyance or is found to be
unenforceable for any other reason, you will not have a claim
against the guarantor.
Risks
Related to Our Business and Industry
We do
not have management contracts with clients to operate new beds
at two facilities that we are currently expanding and cannot
assure you that such contracts will be obtained. Failure to
obtain management contracts for these new beds will subject us
to carrying costs with no corresponding management
revenue.
We are currently in the process of expanding two facilities to
add additional beds that we do not yet have corresponding
management contracts to operate. While we are working diligently
with a number of different customers for the use of these
remaining beds, we cannot in fact assure you that contracts for
the beds will be secured on a timely basis, or at all. While
these facilities are vacant, we estimate that we will incur
carrying costs ranging from approximately $1.0 million to
$1.5 million per facility, per fiscal quarter. Failure to
secure management contracts for these projects could have a
material adverse impact on our financial condition, results of
operations
and/or cash
flows. In addition, in order to secure management contracts for
these expanded beds, we may need to incur significant capital
expenditures to renovate or further expand these facilities to
meet potential clients needs.
The
prevailing negative conditions in the capital markets could
prevent us from obtaining financing, which could materially harm
our business.
Our ability to obtain additional financing is highly dependent
on the conditions of the capital markets, among other things.
The capital and credit markets have recently been experiencing
significant volatility and disruption. The recent downturn in
the equity and debt markets, the tightening of the credit
markets, the general economic slowdown and other macroeconomic
conditions, such as the current global recession could prevent
us from raising additional capital or obtaining additional
financing on satisfactory terms, or at all. If we need but
cannot obtain adequate capital as a result of negative
conditions in the capital markets or otherwise, our business,
results of operations and financial condition could be
materially adversely affected. Additionally, such inability to
obtain capital could prevent us from pursuing attractive
business development opportunities, including new facility
constructions or expansions of existing facilities, and business
or asset acquisitions.
We are
subject to the loss of our facility management contracts, due to
terminations, non-renewals or competitive re-bids, which could
adversely affect our results of operations and liquidity,
including our ability to secure new facility management
contracts from other government customers.
We are exposed to the risk that we may lose our facility
management contracts primarily due to one of three reasons: the
termination by a government customer with or without cause at
any time; the failure by a customer to exercise its unilateral
option to renew a contract with us upon the expiration of the
then current term; or our failure to win the right to continue
to operate under a contract that has been competitively re-bid
in a procurement process upon its termination or expiration. Our
facility management contracts typically allow
21
a contracting governmental agency to terminate a contract with
or without cause at any time by giving us written notice ranging
from 30 to 180 days. If government agencies were to use
these provisions to terminate, or renegotiate the terms of their
agreements with us, our financial condition and results of
operations could be materially adversely affected.
Aside from our customers unilateral right to terminate our
facility management contracts with them at any time for any
reason, there are two points during the typical lifecycle of a
contract which may result in the loss by us of a facility
management contract with our customers. We refer to these points
as contract renewals and contract
re-bids. Many of our facility management contracts
with our government customers have an initial fixed term and
subsequent renewal rights for one or more additional periods at
the unilateral option of the customer. We count each government
customers right to renew a particular facility management
contract for an additional period as a separate
renewal. For example, a five-year initial fixed term
contract with customer options to renew for five separate
additional one-year periods would, if fully exercised, be
counted as five separate renewals, with one renewal coming in
each of the five years following the initial term. As of
January 3, 2010, eleven of our facility management
contracts representing 10,407 beds are scheduled to expire on or
before December 31, 2010, unless renewed by the customer at
its sole option. These contracts represented 19.3% of our
consolidated revenues for the fiscal year ended January 3,
2010. We undertake substantial efforts to renew our facility
management contracts. Our historical facility management
contract renewal rate exceeds 90%. However, given their
unilateral nature, we cannot assure you that our customers will
in fact exercise their renewal options under existing contracts.
In addition, in connection with contract renewals, either we or
the contracting government agency have typically requested
changes or adjustments to contractual terms. As a result,
contract renewals may be made on terms that are more or less
favorable to us than those in existence prior to the renewals.
We define competitive re-bids as contracts currently under our
management which we believe, based on our experience with the
customer and the facility involved, will be re-bid to us and
other potential service providers in a competitive procurement
process upon the expiration or termination of our contract,
assuming all renewal options are exercised. Our determination of
which contracts we believe will be competitively re-bid may in
some cases be subjective and judgmental, based largely on our
knowledge of the dynamics involving a particular contract, the
customer and the facility involved. Competitive re-bids may
result from the expiration of the term of a contract, including
the initial fixed term plus any renewal periods, or the early
termination of a contract by a customer. Competitive re-bids are
often required by applicable federal or state procurement laws
periodically in order to further competitive pricing and other
terms for the government customer. Potential bidders in
competitive re-bid situations include us, other private
operators and other government entities. As of January 3,
2010, six of our facility management contracts representing 9.1%
and $103.4 million of our fiscal year 2009 consolidated
revenues are subject to competitive re-bid in 2010. While we are
pleased with our historical win rate on competitive re-bids and
are committed to continuing to bid competitively on appropriate
future competitive re-bid opportunities, we cannot in fact
assure you that we will prevail in future re-bid situations.
Also, we cannot assure you that any competitive re-bids we win
will be on terms more favorable to us than those in existence
with respect to the expiring contract.
For additional information on facility management contracts that
we currently believe will be competitively re-bid during each of
the next five years and thereafter, please see
Business Government Contracts
Terminations, Renewals and Re-bids. The loss by us of
facility management contracts due to terminations, non-renewals
or competitive re-bids could materially adversely affect our
financial condition, results of operations and liquidity,
including our ability to secure new facility management
contracts from other government customers.
Our
growth depends on our ability to secure contracts to develop and
manage new correctional, detention and mental health facilities,
the demand for which is outside our control.
Our growth is generally dependent upon our ability to obtain new
contracts to develop and manage new correctional, detention and
mental health facilities, because contracts to manage existing
public facilities have not to date typically been offered to
private operators. Public sector demand for new privatized
facilities in our areas of operation may decrease and our
potential for growth will depend on a number of factors we
cannot
22
control, including overall economic conditions, governmental and
public acceptance of the concept of privatization, government
budgetary constraints, and the number of facilities available
for privatization.
In particular, the demand for our correctional and detention
facilities and services could be adversely affected by changes
in existing criminal or immigration laws, crime rates in
jurisdictions in which we operate, the relaxation of criminal or
immigration enforcement efforts, leniency in conviction,
sentencing or deportation practices, and the decriminalization
of certain activities that are currently proscribed by criminal
laws or the loosening of immigration laws. For example, any
changes with respect to the decriminalization of drugs and
controlled substances could affect the number of persons
arrested, convicted, sentenced and incarcerated, thereby
potentially reducing demand for correctional facilities to house
them. Similarly, reductions in crime rates could lead to
reductions in arrests, convictions and sentences requiring
incarceration at correctional facilities. Immigration reform
laws which are currently a focus for legislators and politicians
at the federal, state and local level also could materially
adversely impact us. Various factors outside our control could
adversely impact the growth our GEO Care business, including
government customer resistance to the privatization of mental
health or residential treatment facilities, and changes to
Medicare and Medicaid reimbursement programs.
We may
not be able to meet state requirements for capital investment or
locate land for the development of new facilities, which could
adversely affect our results of operations and future
growth.
Certain jurisdictions, including California, where we have a
significant amount of operations, have in the past required
successful bidders to make a significant capital investment in
connection with the financing of a particular project. If this
trend were to continue in the future, we may not be able to
obtain sufficient capital resources when needed to compete
effectively for facility management contacts. Additionally, our
success in obtaining new awards and contracts may depend, in
part, upon our ability to locate land that can be leased or
acquired under favorable terms. Otherwise desirable locations
may be in or near populated areas and, therefore, may generate
legal action or other forms of opposition from residents in
areas surrounding a proposed site. Our inability to secure
financing and desirable locations for new facilities could
adversely affect our results of operations and future growth.
We
depend on a limited number of governmental customers for a
significant portion of our revenues. The loss of, or a
significant decrease in business from, these customers could
seriously harm our financial condition and results of
operations.
We currently derive, and expect to continue to derive, a
significant portion of our revenues from a limited number of
governmental agencies. Of our governmental clients, three
customers accounted for over 50% of our consolidated revenues
for the fiscal year ended January 3, 2010. In addition, the
three federal governmental agencies with correctional and
detention responsibilities, the Bureau of Prisons, U.S.
Immigration and Customs Enforcement, which we refer to as ICE,
and the U.S. Marshals Service, accounted for 30.9% of our total
consolidated revenues for the fiscal year ended January 3,
2010, with the Bureau of Prisons accounting for 5.2% of our
total consolidated revenues for such period, ICE accounting for
11.9% of our total consolidated revenues for such period, and
the U.S. Marshals Service accounting for 13.8% of our total
consolidated revenues for such period. Also, government agencies
from the State of Florida accounted for 16.0% of our total
consolidated revenues for the fiscal year ended January 3,
2010. The loss of, or a significant decrease in, business from
the Bureau of Prisons, ICE, U.S. Marshals Service, the State of
Florida or any other significant customers could seriously harm
our financial condition and results of operations. We expect to
continue to depend upon these federal and state agencies and a
relatively small group of other governmental customers for a
significant percentage of our revenues.
A
decrease in occupancy levels could cause a decrease in revenues
and profitability.
While a substantial portion of our cost structure is generally
fixed, most of our revenues are generated under facility
management contracts which provide for per diem payments based
upon daily occupancy. Several of these contracts provide minimum
revenue guarantees for us, regardless of occupancy levels, up to
a specified maximum occupancy percentage. However, many of our
contracts have no minimum revenue
23
guarantees and simply provide for a fixed per diem payment for
each inmate/detainee/patient actually housed. As a result, with
respect to our contracts that have no minimum revenue guarantees
and those that guarantee revenues only up to a certain specified
occupancy percentage, we are highly dependent upon the
governmental agencies with which we have contracts to provide
inmates, detainees and patients for our managed facilities.
Under a per diem rate structure, a decrease in our occupancy
rates could cause a decrease in revenues and profitability. When
combined with relatively fixed costs for operating each
facility, regardless of the occupancy level, a material decrease
in occupancy levels at one or more of our facilities could have
a material adverse effect on our revenues and profitability, and
consequently, on our financial condition and results of
operations.
State
budgetary constraints may have a material adverse impact on
us.
According to the Center on Budget and Policy Priorities, the
imbalance between available revenues and the funding needed for
services led most states to face budget gaps in fiscal year
2009. The vast majority of states also faced or are facing
additional shortfalls in fiscal year 2010. At January 3,
2010, we had ten state correctional clients: Florida,
Mississippi, Louisiana, Virginia, Indiana, Texas, Oklahoma, New
Mexico, Arizona, and California. In response to the budget
crisis, the State of California issued payment deferrals, also
called promissory notes or IOUs, to pay its vendors,
creditors, and employees. During our fiscal year ended 2009, we
received IOUs from the State of California that totaled
$6.7 million, all of which were settled in cash by the end
of our fiscal year. Although we received payment for these
IOUs, we cannot assure you that any payment deferrals
received in the future will be repaid timely or at all. If state
budgetary constraints persist or intensify, our ten state
customers ability to pay us may be impaired and/or we may
be forced to renegotiate our management contracts with those
customers on less favorable terms and our financial condition,
results of operations or cash flows could be materially
adversely impacted. In addition, budgetary constraints at states
that are not our current customers could prevent those states
from outsourcing correctional, detention or mental health
service opportunities that we otherwise could have pursued.
Competition
for inmates may adversely affect the profitability of our
business.
We compete with government entities and other private operators
on the basis of cost, quality and range of services offered,
experience in managing facilities, and reputation of management
and personnel. Barriers to entering the market for the
management of correctional and detention facilities may not be
sufficient to limit additional competition in our industry. In
addition, some of our government customers could assume the
management of a facility currently managed by us upon the
termination of the corresponding management contract or, if such
customers have capacity at the facilities which they operate,
they may take inmates currently housed in our facilities and
transfer them to government operated facilities. Since we are
paid on a per diem basis with no minimum guaranteed occupancy
under many of our contracts, the loss of such inmates and
resulting decrease in occupancy could cause a decrease in both
our revenues and our profitability.
We are
dependent on government appropriations, which may not be made on
a timely basis or at all and may be adversely impacted by
budgetary constraints at the federal, state and local
levels.
Our cash flow is subject to the receipt of sufficient funding of
and timely payment by contracting governmental entities. If the
contracting governmental agency does not receive sufficient
appropriations to cover its contractual obligations, it may
terminate our contract or delay or reduce payment to us. Any
delays in payment, or the termination of a contract, could have
a material adverse effect on our cash flow and financial
condition, which may make it difficult to satisfy our payment
obligations on our indebtedness, including the notes and the
senior credit facility, in a timely manner. In addition, as a
result of, among other things, recent economic developments,
federal, state and local governments have encountered, and may
continue to encounter, unusual budgetary constraints. As a
result, a number of state and local governments are under
pressure to control additional spending or reduce current levels
of spending which could limit or eliminate appropriations for
the facilities that we operate. Additionally, as a result of
these factors, we may be requested in the future to reduce our
existing per diem contract rates or forego prospective increases
to those rates. Budgetary limitations may also make it more
difficult for us to renew our existing contracts on favorable
terms or at all. Further, a number of states in which we operate
are experiencing significant budget deficits for
24
fiscal year 2010. We cannot assure that these deficits will not
result in reductions in per diems, delays in payment for
services rendered or unilateral termination of contracts.
Public
resistance to privatization of correctional and detention
facilities could result in our inability to obtain new contracts
or the loss of existing contracts, which could have a material
adverse effect on our business, financial condition and results
of operations.
The management and operation of correctional and detention
facilities by private entities has not achieved complete
acceptance by either government agencies or the public. Some
governmental agencies have limitations on their ability to
delegate their traditional management responsibilities for such
facilities to private companies and additional legislative
changes or prohibitions could occur that further increase these
limitations. In addition, the movement toward privatization of
correctional and detention facilities has encountered resistance
from groups, such as labor unions. Changes in governing
political parties could also result in significant changes to
previously established views of privatization. Increased public
resistance to the privatization of correctional and detention
facilities in any of the markets in which we operate, as a
result of these or other factors, could have a material adverse
effect on our business, financial condition and results of
operations.
Our
GEO Care business, which has become a material part of our
consolidated revenues, poses unique risks not associated with
our other businesses.
Our wholly-owned subsidiary, GEO Care, operates our mental
health and residential treatment services division. This
business primarily involves the delivery of quality care,
innovative programming and active patient treatment at
privatized state mental health facilities, jails, sexually
violent offender facilities and long-term care facilities. GEO
Cares business has increased substantially over the last
few years, both in general and as a percentage of our overall
business. For the fiscal year ended January 3, 2010, GEO
Care generated approximately $121.8 million in revenues,
representing 10.7% of our consolidated revenues from continuing
operations. GEO Cares business poses several material
risks unique to the operation of privatized mental health
facilities and the delivery of mental health and residential
treatment services that do not exist in our core business of
correctional and detention facilities management, including, but
not limited to, the following:
|
|
|
|
|
the concept of the privatization of the mental health and
residential treatment services provided by GEO Care has not yet
achieved general acceptance by either government agencies or the
public, which could materially limit GEO Cares growth
prospects;
|
|
|
|
GEO Cares business is highly dependent on the continuous
recruitment, hiring and retention of a substantial pool of
qualified physicians, nurses and other medically trained
personnel which may not be available in the quantities or
locations sought, or on the employment terms offered;
|
|
|
|
GEO Cares business model often involves taking over
outdated or obsolete facilities and operating them while it
supervises the construction and development of new, more updated
facilities; during this transition period, GEO Care may be
particularly vulnerable to operational difficulties primarily
relating to or resulting from the deteriorating nature of the
older existing facilities; and
|
|
|
|
the facilities operated by GEO Care are substantially dependent
on government funding, including in some cases the receipt of
Medicare and Medicaid funding; the loss of such government
funding for any reason with respect to any facilities operated
by GEO Care could have a material adverse impact on our business.
|
Adverse
publicity may negatively impact our ability to retain existing
contracts and obtain new contracts.
Any negative publicity about an escape, riot or other
disturbance or perceived poor conditions at a privately managed
facility may result in publicity adverse to us and our industry
in general. Any of these occurrences or continued trends may
make it more difficult for us to renew existing contracts or to
obtain new contracts or could result in the termination of an
existing contract or the closure of one or more of our
facilities, which could have a material adverse effect on our
business.
25
We may
incur significant
start-up and
operating costs on new contracts before receiving related
revenues, which may impact our cash flows and not be
recouped.
When we are awarded a contract to manage a facility, we may
incur significant
start-up and
operating expenses, including the cost of constructing the
facility, purchasing equipment and staffing the facility, before
we receive any payments under the contract. These expenditures
could result in a significant reduction in our cash reserves and
may make it more difficult for us to meet other cash
obligations, including our payment obligations on the notes and
the senior credit facility. In addition, a contract may be
terminated prior to its scheduled expiration and as a result we
may not recover these expenditures or realize any return on our
investment.
Failure
to comply with extensive government regulation and applicable
contractual requirements could have a material adverse effect on
our business, financial condition or results of
operations.
The industry in which we operate is subject to extensive
federal, state and local regulation, including educational,
environmental, health care and safety laws, rules and
regulations, which are administered by many regulatory
authorities. Some of the regulations are unique to the
corrections industry, and the combination of regulations affects
all areas of our operations. Corrections officers are
customarily required to meet certain training standards and, in
some instances, facility personnel are required to be licensed
and are subject to background investigations. Certain
jurisdictions also require us to award subcontracts on a
competitive basis or to subcontract with businesses owned by
members of minority groups. We may not always successfully
comply with these and other regulations to which we are subject
and failure to comply can result in material penalties or the
non-renewal or termination of facility management contracts. In
addition, changes in existing regulations could require us to
substantially modify the manner in which we conduct our business
and, therefore, could have a material adverse effect on us.
In addition, private prison managers are increasingly subject to
government legislation and regulation attempting to restrict the
ability of private prison managers to house certain types of
inmates, such as inmates from other jurisdictions or inmates at
medium or higher security levels. Legislation has been enacted
in several states, and has previously been proposed in the
United States House of Representatives, containing such
restrictions. Although we do not believe that existing
legislation will have a material adverse effect on us, future
legislation may have such an effect on us.
Governmental agencies may investigate and audit our contracts
and, if any improprieties are found, we may be required to
refund amounts we have received, to forego anticipated revenues
and we may be subject to penalties and sanctions, including
prohibitions on our bidding in response to Requests for
Proposals, or RFPs, from governmental agencies to manage
correctional facilities. Governmental agencies we contract with
have the authority to audit and investigate our contracts with
them. As part of that process, governmental agencies may review
our performance of the contract, our pricing practices, our cost
structure and our compliance with applicable laws, regulations
and standards. For contracts that actually or effectively
provide for certain reimbursement of expenses, if an agency
determines that we have improperly allocated costs to a specific
contract, we may not be reimbursed for those costs, and we could
be required to refund the amount of any such costs that have
been reimbursed. If a government audit asserts improper or
illegal activities by us, we may be subject to civil and
criminal penalties and administrative sanctions, including
termination of contracts, forfeitures of profits, suspension of
payments, fines and suspension or disqualification from doing
business with certain governmental entities. Any adverse
determination could adversely impact our ability to bid in
response to RFPs in one or more jurisdictions.
In addition to compliance with applicable laws and regulations,
our facility management contracts typically have numerous
requirements addressing all aspects of our operations which we
may not all be able to satisfy. For example, our contracts
require us to maintain certain levels of coverage for general
liability, workers compensation, vehicle liability, and
property loss or damage. If we do not maintain the required
categories and levels of coverage, the contracting governmental
agency may be permitted to terminate the contract. In addition,
we are required under our contracts to indemnify the contracting
governmental agency for all claims and costs arising out of our
management of facilities and, in some instances, we are required
to
26
maintain performance bonds relating to the construction,
development and operation of facilities. Facility management
contracts also typically include reporting requirements,
supervision and
on-site
monitoring by representatives of the contracting governmental
agencies. Failure to properly adhere to the various terms of our
customer contracts could expose us to liability for damages
relating to any breaches as well as the loss of such contracts,
which could materially adversely impact us.
We may
face community opposition to facility location, which may
adversely affect our ability to obtain new
contracts.
Our success in obtaining new awards and contracts sometimes
depends, in part, upon our ability to locate land that can be
leased or acquired, on economically favorable terms, by us or
other entities working with us in conjunction with our proposal
to construct
and/or
manage a facility. Some locations may be in or near populous
areas and, therefore, may generate legal action or other forms
of opposition from residents in areas surrounding a proposed
site. When we select the intended project site, we attempt to
conduct business in communities where local leaders and
residents generally support the establishment of a privatized
correctional or detention facility. Future efforts to find
suitable host communities may not be successful. In many cases,
the site selection is made by the contracting governmental
entity. In such cases, site selection may be made for reasons
related to political
and/or
economic development interests and may lead to the selection of
sites that have less favorable environments.
Our
business operations expose us to various liabilities for which
we may not have adequate insurance.
The nature of our business exposes us to various types of
third-party legal claims, including, but not limited to, civil
rights claims relating to conditions of confinement
and/or
mistreatment, sexual misconduct claims brought by prisoners or
detainees, medical malpractice claims, claims relating to
employment matters (including, but not limited to, employment
discrimination claims, union grievances and wage and hour
claims), property loss claims, environmental claims, automobile
liability claims, contractual claims and claims for personal
injury or other damages resulting from contact with our
facilities, programs, personnel or prisoners, including damages
arising from a prisoners escape or from a disturbance or
riot at a facility. In addition, our management contracts
generally require us to indemnify the governmental agency
against any damages to which the governmental agency may be
subject in connection with such claims or litigation. We
maintain insurance coverage for these general types of claims,
except for claims relating to employment matters, for which we
carry no insurance. However, we generally have high deductible
payment requirements on our primary insurance policies,
including our general liability insurance, and there are also
varying limits on the maximum amount of our overall coverage. As
a result, the insurance we maintain to cover the various
liabilities to which we are exposed may not be adequate. Any
losses relating to matters for which we are either uninsured or
for which we do not have adequate insurance could have a
material adverse effect on our business, financial condition or
results of operations. In addition, any losses relating to
employment matters could have a material adverse effect on our
business, financial condition or results of operations.
We may
not be able to obtain or maintain the insurance levels required
by our government contracts.
Our government contracts require us to obtain and maintain
specified insurance levels. The occurrence of any events
specific to our company or to our industry, or a general rise in
insurance rates, could substantially increase our costs of
obtaining or maintaining the levels of insurance required under
our government contracts, or prevent us from obtaining or
maintaining such insurance altogether. If we are unable to
obtain or maintain the required insurance levels, our ability to
win new government contracts, renew government contracts that
have expired and retain existing government contracts could be
significantly impaired, which could have a material adverse
affect on our business, financial condition and results of
operations.
Our
international operations expose us to risks which could
materially adversely affect our financial condition and results
of operations.
For the fiscal year ended January 3, 2010, our
international operations accounted for 12.0% of our consolidated
revenues from continuing operations. We face risks associated
with our operations outside the
27
United States. These risks include, among others,
political and economic instability, exchange rate fluctuations,
taxes, duties and the laws or regulations in those foreign
jurisdictions in which we operate. In the event that we
experience any difficulties arising from our operations in
foreign markets, our business, financial condition and results
of operations may be materially adversely affected.
We
conduct certain of our operations through joint ventures, which
may lead to disagreements with our joint venture partners and
adversely affect our interest in the joint
ventures.
We conduct our operations in South Africa through our
consolidated joint venture, South African Custodial Management
Services Pty. Limited (SACM) and through our 50%
owned joint venture South African Custodial Services Pty.
Limited (SACS). We may enter into additional joint
ventures in the future. Although we have the majority vote in
our consolidated joint venture, SACM, through our ownership of
62.5% of the voting shares, we share equal voting control on all
significant matters to come before SACS. These joint venture
partners, as well as any future partners, may have interests
that are different from ours which may result in conflicting
views as to the conduct of the business of the joint venture. In
the event that we have a disagreement with a joint venture
partner as to the resolution of a particular issue to come
before the joint venture, or as to the management or conduct of
the business of the joint venture in general, we may not be able
to resolve such disagreement in our favor and such disagreement
could have a material adverse effect on our interest in the
joint venture or the business of the joint venture in general.
We are
dependent upon our senior management and our ability to attract
and retain sufficient qualified personnel.
We are dependent upon the continued service of each member of
our senior management team, including George C. Zoley, our
Chairman and Chief Executive Officer, Wayne H. Calabrese, our
Vice Chairman and President, and Brian R. Evans, our Chief
Financial Officer. The unexpected loss of Dr. Zoley,
Mr. Calabrese or Mr. Evans could materially adversely
affect our business, financial condition or results of
operations.
In addition, the services we provide are labor-intensive. When
we are awarded a facility management contract or open a new
facility, depending on the service we have been contracted to
provide, we may need to hire operating management, correctional
officers, security staff, physicians, nurses and other qualified
personnel. The success of our business requires that we attract,
develop and retain these personnel. Our inability to hire
sufficient qualified personnel on a timely basis or the loss of
significant numbers of personnel at existing facilities could
have a material effect on our business, financial condition or
results of operations.
Our
profitability may be materially adversely affected by
inflation.
Many of our facility management contracts provide for fixed
management fees or fees that increase by only small amounts
during their terms. While a substantial portion of our cost
structure is generally fixed, if, due to inflation or other
causes, our operating expenses, such as costs relating to
personnel, utilities, insurance, medical and food, increase at
rates faster than increases, if any, in our facility management
fees, then our profitability could be materially adversely
affected.
Various
risks associated with the ownership of real estate may increase
costs, expose us to uninsured losses and adversely affect our
financial condition and results of operations.
Our ownership of correctional and detention facilities subjects
us to risks typically associated with investments in real
estate. Investments in real estate, and in particular,
correctional and detention facilities, are relatively illiquid
and, therefore, our ability to divest ourselves of one or more
of our facilities promptly in response to changed conditions is
limited. Investments in correctional and detention facilities,
in particular, subject us to risks involving potential exposure
to environmental liability and uninsured loss. Our operating
costs may be affected by the obligation to pay for the cost of
complying with existing environmental laws, ordinances and
regulations, as well as the cost of complying with future
legislation. In addition, although we maintain insurance for
many types of losses, there are certain types of losses, such as
losses from earthquakes, riots and acts of terrorism, which may
be either uninsurable or for which it may not be economically
feasible
28
to obtain insurance coverage, in light of the substantial costs
associated with such insurance. As a result, we could lose both
our capital invested in, and anticipated profits from, one or
more of the facilities we own. Further, even if we have
insurance for a particular loss, we may experience losses that
may exceed the limits of our coverage.
Risks
related to facility construction and development activities may
increase our costs related to such activities.
When we are engaged to perform construction and design services
for a facility, we typically act as the primary contractor and
subcontract with other companies who act as the general
contractors. As primary contractor, we are subject to the
various risks associated with construction (including, without
limitation, shortages of labor and materials, work stoppages,
labor disputes and weather interference) which could cause
construction delays. In addition, we are subject to the risk
that the general contractor will be unable to complete
construction at the budgeted costs or be unable to fund any
excess construction costs, even though we typically require
general contractors to post construction bonds and insurance.
Under such contracts, we are ultimately liable for all late
delivery penalties and cost overruns.
The
rising cost and increasing difficulty of obtaining adequate
levels of surety credit on favorable terms could adversely
affect our operating results.
We are often required to post performance bonds issued by a
surety company as a condition to bidding on or being awarded a
facility development contract. Availability and pricing of these
surety commitments is subject to general market and industry
conditions, among other factors. Recent events in the economy
have caused the surety market to become unsettled, causing many
reinsurers and sureties to reevaluate their commitment levels
and required returns. As a result, surety bond premiums
generally are increasing. If we are unable to effectively pass
along the higher surety costs to our customers, any increase in
surety costs could adversely affect our operating results. In
addition, we may not continue to have access to surety credit or
be able to secure bonds economically, without additional
collateral, or at the levels required for any potential facility
development or contract bids. If we are unable to obtain
adequate levels of surety credit on favorable terms, we would
have to rely upon letters of credit under our senior credit
facility, which would entail higher costs even if such borrowing
capacity was available when desired, and our ability to bid for
or obtain new contracts could be impaired.
We may
not be able to successfully identify, consummate or integrate
acquisitions.
We have an active acquisition program, the objective of which is
to identify suitable acquisition targets that will enhance our
growth. The pursuit of acquisitions may pose certain risks to
us. We may not be able to identify acquisition candidates that
fit our criteria for growth and profitability. Even if we are
able to identify such candidates, we may not be able to acquire
them on terms satisfactory to us. We will incur expenses and
dedicate attention and resources associated with the review of
acquisition opportunities, whether or not we consummate such
acquisitions. Additionally, even if we are able to acquire
suitable targets on agreeable terms, we may not be able to
successfully integrate their operations with ours. We may also
assume liabilities in connection with acquisitions that we would
otherwise not be exposed to.
Adverse
developments in our relationship with our employees could
adversely affect our business, financial condition or results of
operations.
At January 3, 2010, approximately 19% of our workforce was
covered by collective bargaining agreements. While only
approximately 19% of our workforce schedule is covered by
collective bargaining agreements, increases in organizational
activity or any future work stoppages could have a material
adverse effect on our business, financial condition, or results
of operations.
29
THE
EXCHANGE OFFER
Purpose
and Effect of the Exchange Offer
We entered into a registration rights agreement with respect to
the old notes. Under the registration rights agreement, we
agreed, for the benefit of the holders of the old notes that we
will, (a) not later than 75 days after the date of
original issuance of the notes, file a registration statement
for the old notes with the Commission with respect to a
registered offer to exchange the old notes for new notes of the
Company having terms substantially identical in all material
respects to such old notes (except that the new notes will
generally not contain terms with respect to transfer
restrictions) and (b) use our best efforts to cause the
registration statement provided for under the registration
rights agreement to be declared effective under the Securities
Act not later than 180 days after the date of original
issuance of the old notes. We will keep the exchange offer for
the old notes open for not less than 20 business days (or longer
if required by applicable law) after the date notice of the
exchange offer is mailed to the holders of the old notes
eligible to participate in the exchange offer.
For each old note surrendered to us pursuant to the exchange
offer, the holder of the old note will receive a new note having
a principal amount equal to that of the surrendered old note.
Interest on each new note will accrue from the last interest
payment date on which interest was paid on the old note
surrendered in exchange thereof or, if no interest has been paid
on such outstanding note, from the date of its original issue.
Under existing Commission interpretations, new notes acquired in
a registered exchange offer by holders of old notes are freely
transferable without further registration under the Securities
Act if the holder of the new notes represents that it is
acquiring the new notes in the ordinary course of its business,
that it has no arrangement or understanding to participate in
the distribution of the new notes and that it is not an
affiliate of the Company, as such terms are interpreted by the
Commission, provided that broker-dealers (participating
broker-dealers) receiving new notes in a registered
exchange offer will have a prospectus delivery requirement with
respect to resales of such new notes. The Commission has taken
the position that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to new notes
(other than a resale of an unsold allotment from the original
sale of the old notes) with the prospectus contained in the
exchange offer registration statement relating to such new notes.
Under the registration rights agreement, we are required to
allow participating broker-dealers and other Persons, if any,
with similar prospectus delivery requirements to use the
prospectus contained in the exchange offer registration
statement in connection with the resale of such new notes for
180 days following the effective date of such exchange
offer registration statement (or such shorter period during
which participating broker-dealers are required by law to
deliver such prospectus).
A holder of old notes who wishes to exchange its old notes for
new notes in the exchange offer will be required to represent in
the letter of transmittal that any new notes to be received by
it will be acquired in the ordinary course of its business and
that at the time of the commencement of the exchange offer it
has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the
Securities Act) of the new notes and that it is not an
affiliate of the Company, as defined in
Rule 405 of the Securities Act, or if it is an affiliate,
that it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable.
Resale of
New Notes
Based on no action letters of the Commission staff issued to
third parties, we believe that new notes received in the
exchange offer may be offered for resale, resold and otherwise
transferred by you without further compliance with the
registration and prospectus delivery provisions of the
Securities Act if:
|
|
|
|
|
you are not our affiliate within the meaning of
Rule 405 under the Securities Act;
|
|
|
|
the new notes are acquired in the ordinary course of your
business; and
|
|
|
|
you do not intend to participate in a distribution of the new
notes.
|
30
The Commission, however, has not considered the exchange offer
for the new notes in the context of a specific no action letter,
and the Commission may not make a similar determination as in
the no action letters issued to these third parties.
If you tender in the exchange offer with the intention of
participating in any manner in a distribution of the related new
notes, you
|
|
|
|
|
cannot rely on such interpretations by the Commission
staff; and
|
|
|
|
must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction.
|
This prospectus may be used for an offer to resell, resale or
other retransfer of new notes only as specifically described in
this prospectus. Only broker-dealers that acquired the old notes
as a result of market-making activities or other trading
activities may participate in the exchange offer. Each
broker-dealer that receives new notes for its own account in
exchange for old notes, where such old notes were acquired by
such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge in the letter of
transmittal that it will deliver a prospectus in connection with
any resale of the new notes. Please read the section captioned
Plan of Distribution for more details regarding the
transfer of new notes.
Terms of
the Exchange Offer
Subject to the terms and conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange
any old notes properly tendered and not withdrawn prior to
5:00 p.m. New York City time on the expiration date.
We will issue new notes in principal amount equal to the
principal amount of old notes surrendered under the exchange
offer. Old notes may be tendered only for new notes and only in
integral multiples of $1,000.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of old notes being tendered for exchange.
As of the date of this prospectus, $250,000,000 in aggregate
principal amount of the Notes are outstanding. This prospectus
and the letter of transmittal are being sent to all registered
holders of old notes. There will be no fixed record date for
determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the
provisions of the registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange
Act of 1934 and the rules and regulations of the Commission. Old
notes that the holders thereof do not tender for exchange in the
exchange offer will remain outstanding and continue to accrue
interest. These old notes will be entitled to the rights and
benefits such holders have under the indenture relating to the
Notes and the registration rights agreement.
We will be deemed to have accepted for exchange properly
tendered old notes when we have given oral or written notice of
the acceptance to the exchange agent and complied with the
provisions of the registration rights agreement. The exchange
agent will act as agent for the tendering holders for the
purposes of receiving the new notes from us.
If you tender old notes in an exchange offer, you will not be
required to pay brokerage commissions or fees or, subject to the
letter of transmittal, transfer taxes with respect to the
exchange of old notes. We will pay all charges and expenses,
other than certain applicable taxes described below, in
connection with the exchange offer. It is important that you
read the section labeled Fees and
Expenses for more details regarding fees and expenses
incurred in the exchange offer.
We will return any old notes that we do not accept for exchange
for any reason without expense to their tendering holder
promptly after the expiration or termination of the exchange
offer.
31
Expiration
Date
The exchange offer will expire at 5:00 p.m., New York City
time,
on ,
2010 unless, in our sole discretion, we extend it.
Extensions,
Delays in Acceptance, Termination or Amendment
We expressly reserve the right, at any time or various times, to
extend the period of time during which the exchange offer is
open. We may delay acceptance of any old notes by giving oral or
written notice of such extension to their holders. During any
such extensions, all old notes previously tendered will remain
subject to the exchange offer, and we may accept them for
exchange.
In order to extend the exchange offer, we will notify the
exchange agent orally or in writing of any extension. We will
notify the registered holders of old notes that are subject to
the exchange offer of the extension no later than
9:00 a.m., New York City time, on the business day after
the previously scheduled expiration date.
If any of the conditions described below under
Conditions to the Exchange Offer have
not been satisfied in relation to the exchange offer, we reserve
the right, in our sole discretion
|
|
|
|
|
to delay accepting for exchange any old notes,
|
|
|
|
to extend the exchange offer, or
|
|
|
|
to terminate the exchange offer,
|
by giving oral or written notice of such delay, extension or
termination to the exchange agent. Subject to the terms of the
registration rights agreement, we also reserve the right to
amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders of old notes
that are subject to the exchange offer. If we amend the exchange
offer in a manner that we determine to constitute a material
change, we will promptly disclose such amendment by means of a
prospectus supplement. The supplement will be distributed to the
registered holders of the old notes that are subject to the
exchange offer. Depending upon the significance of the amendment
and the manner of disclosure to the registered holders, we will
extend the exchange offer if it would otherwise expire during
such period. We are generally required to extend the exchange
offer for any material amendment so that at least five business
days remain in the exchange offer after the amendment.
Conditions
to the Exchange Offer
We will not be required to accept for exchange, or exchange any
new notes for, any old notes if the exchange offer, or the
making of any exchange by a holder of old notes, would violate
applicable law or any applicable interpretation of the staff of
the Commission. Similarly, we may terminate the exchange offer
as provided in this prospectus before the expiration date in the
event of such a potential violation.
In addition, we will not be obligated to accept for exchange the
old notes of any holder that has not made to us the
representations described under Purpose and
Effect of the Exchange Offer, Procedures
for Tendering and Plan of Distribution and
such other representations as may be reasonably necessary under
applicable Commission rules, regulations or interpretations to
allow us to use an appropriate form to register the new notes
under the Securities Act.
We expressly reserve the right to amend or terminate the
exchange offer, and to reject for exchange any old notes not
previously accepted for exchange, upon the occurrence of any of
the conditions to the exchange offer specified above. We will
give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as
promptly as practicable.
32
These conditions are for our sole benefit, and we may assert
them or waive them in whole or in part at any time or at various
times in our sole discretion before the expiration of the
exchange offer. If we fail at any time to exercise any of these
rights, this failure will not mean that we have waived our
rights. Each such right will be deemed an ongoing right that we
may assert at any time or at various times, provided that all
conditions to the exchange offer must be satisfied or waived
before the expiration of the exchange offer.
In addition, we will not accept for exchange any old notes
tendered, and will not issue new notes in exchange for any such
old notes, if at such time any stop order has been threatened or
is in effect with respect to the registration statement of which
this prospectus constitutes a part or the qualification of the
indenture relating to the Notes under the Trust Indenture
Act of 1939.
Procedures
for Tendering
How to
Tender Generally
Only a holder of old notes may tender such old notes in the
exchange offer. To tender in the exchange offer, a holder must:
|
|
|
|
|
complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal;
|
|
|
|
have the signature on the letter of transmittal guaranteed if
the letter of transmittal so requires; and
|
|
|
|
mail or deliver such letter of transmittal or facsimile to the
exchange agent prior to 5:00 p.m. New York City time
on the expiration date; or
|
|
|
|
comply with the automated tender offer program procedures of The
Depository Trust Company, or DTC, described below.
|
In addition, either:
|
|
|
|
|
the exchange agent must receive old notes along with the letter
of transmittal; or
|
|
|
|
the exchange agent must receive, prior to
5:00 p.m. New York City time on the expiration date, a
timely confirmation of book-entry transfer of such old notes
into the exchange agents account at DTC according to the
procedure for book-entry transfer described below or a properly
transmitted agents message; or
|
|
|
|
the holder must comply with the guaranteed delivery procedures
described below.
|
To be tendered effectively, the exchange agent must receive any
physical delivery of the letter of transmittal and other
required documents at its address indicated on the cover page of
the letter of transmittal. The exchange agent must receive such
documents prior to 5:00 p.m. New York City time on the
expiration date.
The tender by a holder that is not withdrawn prior to
5:00 p.m. New York City time on the expiration date
will constitute an agreement between the holder and us in
accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
The method of delivery of old notes, the letters of
transmittal and all other required documents to the exchange
agent is at your election and risk. Rather than mail these
items, we recommend that you use an overnight or hand delivery
service. In all cases, you should allow sufficient time to
assure delivery to the exchange agent before
5:00 p.m. New York City time on the expiration date.
You should not send the letters of transmittal or old notes to
us. You may request your brokers, dealers, commercial banks,
trust companies or other nominees to effect the above
transactions for you.
How to
Tender if You Are a Beneficial Owner
If you beneficially own old notes that are registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender those notes, you should
contact the registered holder promptly and instruct it to tender
on your behalf. If you are a beneficial owner and wish to tender
on your
33
own behalf, you must, prior to completing and executing the
letter of transmittal and delivering your old notes, either:
|
|
|
|
|
make appropriate arrangements to register ownership of the old
notes in your name; or
|
|
|
|
obtain a properly completed bond power from the registered
holder of the old notes.
|
The transfer of registered ownership, if permitted under the
indenture for the Notes, may take considerable time and may not
be completed prior to the expiration date.
Signatures
and Signature Guarantees
You must have signatures on a letter of transmittal or a notice
of withdrawal (as described below) guaranteed by a member firm
of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United
States, or an eligible guarantor institution within
the meaning of
Rule 17Ad-15
under the Securities Exchange Act. In addition, such entity must
be a member of one of the recognized signature guarantee
programs identified in the letter of transmittal. Signature
guarantees are not required, however, if the notes are tendered:
|
|
|
|
|
by a registered holder who has not completed the box entitled
Special Issuance Instructions or Special
Delivery Instructions on the letter of transmittal;
|
|
|
|
for the account of a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an
office or correspondence in the United States, or an eligible
guarantor institution.
|
When
You Need Endorsements or Bond Powers
If a letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be
endorsed or accompanied by a properly completed bond power. The
bond power must be signed by the registered holder as the
registered holders name appears on the old notes. A member
firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial
bank or trust company having an office or correspondent in the
United States, or an eligible guarantor institution must
guarantee the signature on the bond power.
If a letter of transmittal or any old notes or bond powers are
signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in
a fiduciary or representative capacity, those persons should so
indicate when signing. Unless waived by us, they should also
submit evidence satisfactory to us of their authority to deliver
the letter of transmittal.
Tendering
Through DTCs Automated Tender Offer Program
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTCs system may use
DTCs automated tender offer program to tender.
Participants in the program may, instead of physically
completing and signing a letter of transmittal and delivering it
to the exchange agent, transmit their acceptance of the exchange
offer electronically. They may do so by causing DTC to transfer
the old notes to the exchange agent in accordance with its
procedures for transfer. DTC will then send an agents
message to the exchange agent.
The term agents message means a message
transmitted by DTC, received by the exchange agent and forming
part of the book-entry confirmation, to the effect that:
|
|
|
|
|
DTC has received an express acknowledgment from a participant in
its automated tender offer program that is tendering old notes
that are the subject of such book-entry confirmation;
|
|
|
|
such participant has received and agrees to be bound by the
terms of the letter of transmittal or, in the case of an
agents message relating to guaranteed delivery, that such
participant has received and agrees to be bound by the notice of
guaranteed delivery; and
|
34
|
|
|
|
|
the agreement may be enforced against such participant.
|
Determinations
Under the Exchange Offer
We will determine in our sole discretion all questions as to the
validity, form, eligibility, time of receipt, acceptance of
tendered old notes and withdrawal of tendered old notes in the
exchange offer. Our determination will be final and binding. We
reserve the absolute right to reject any old notes not properly
tendered or any old notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the right
to waive any defect, irregularities or conditions of tender as
to particular old notes, provided that we will apply any such
waiver equally to all holders of old notes. Our interpretation
of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, all defects or
irregularities in connection with tenders of old notes must be
cured within such time as we shall determine. Although we intend
to notify holders of defects or irregularities with respect to
tenders of old notes, neither we, the exchange agent nor any
other person will incur any liability for failure to give such
notification. Tenders of old notes will not be deemed made until
such defects or irregularities have been cured or waived. Any
old notes received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not
been cured or waived will be returned to the tendering holder,
unless otherwise provided in the letter of transmittal, as soon
as practicable following the expiration date.
When
We Will Issue New Notes
In all cases, we will issue new notes for old notes that we have
accepted for exchange under an exchange offer only after the
exchange agent timely receives:
|
|
|
|
|
old notes or a timely book-entry confirmation of such old notes
into the exchange agents account at DTC; and
|
|
|
|
a properly completed and duly executed letter of transmittal and
all other required documents or a properly transmitted
agents message.
|
Return
of Old Notes Not Accepted or Exchanged
If we do not accept any tendered old notes for exchange or if
old notes are submitted for a greater principal amount than the
holder desires to exchange, the unaccepted or non-exchanged old
notes will be returned without expense to their tendering
holder. In the case of old notes tendered by book-entry transfer
in the exchange agents account at DTC according to the
procedures described below, such non-exchanged old notes will be
credited to an account maintained with DTC. These actions will
occur promptly after the expiration or termination of the
exchange offer.
Your
Representations to Us
By signing or agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things:
|
|
|
|
|
any new notes that you receive will be acquired in the ordinary
course of your business;
|
|
|
|
you have no arrangement or understanding with any person or
entity to participate in the distribution of the new notes;
|
|
|
|
you are not engaged in and do not intend to engage in the
distribution of the new notes;
|
|
|
|
if you are a broker-dealer that will receive new notes for your
own account in exchange for old notes, you acquired those notes
as a result of market-making activities or other trading
activities and you will deliver a prospectus, as required by
law, in connection with any resale of such new notes; and
|
|
|
|
you are not our affiliate, as defined in
Rule 405 of the Securities Act.
|
35
Book-Entry
Transfer
The exchange agent will establish an account with respect to the
old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution
participating in DTCs system may make book-entry delivery
of old notes by causing DTC to transfer such old notes into the
exchange agents account at DTC in accordance with
DTCs procedures for transfer. Holders of old notes who are
unable to deliver confirmation of the book-entry tender of their
old notes into the exchange agents account at DTC or all
other documents required by the letter of transmittal to the
exchange agent on or prior to 5:00 p.m. New York City
time on the expiration date must tender their old notes
according to the guaranteed delivery procedures described below.
Guaranteed
Delivery Procedures
If you wish to tender your old notes but your old notes are not
immediately available or you cannot deliver your old notes, the
letter of transmittal or any other required documents to the
exchange agent or comply with the applicable procedures under
DTCs automated tender offer program prior to the
expiration date, you may tender if:
|
|
|
|
|
the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States, or an
eligible guarantor institution,
|
|
|
|
prior to the expiration date, the exchange agent receives from
such member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc.,
commercial bank or trust company having a office or
correspondent in the United States, or eligible guarantor
institution either a properly completed and duly executed notice
of guaranteed delivery by facsimile transmission, mail or hand
delivery or a properly transmitted agents message and
notice of guaranteed delivery:
|
|
|
|
|
|
setting forth your name and address, the registered number(s) of
your old notes and the principal amount of old notes tendered,
|
|
|
|
stating that the tender is being made thereby, and
|
|
|
|
guaranteeing that, within three (3) New York Stock Exchange
(NYSE) trading days after the applicable expiration
date, the letter of transmittal or facsimile thereof, together
with the old notes or a book-entry confirmation, and any other
documents required by the letter of transmittal will be
deposited by the eligible guarantor institution with the
exchange agent, and
|
|
|
|
|
|
the exchange agent receives such properly completed and executed
letter of transmittal or facsimile thereof, as well as all
tendered old notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three (3) NYSE trading days after the
expiration date.
|
Upon request to the exchange agent, a notice of guaranteed
delivery will be sent you if you wish to tender your old notes
according to the guaranteed delivery procedures described above.
Withdrawal
of Tenders
Except as otherwise provided in this prospectus, you may
withdraw your tender under the exchange offer at any time prior
to 5:00 p.m. New York City time on the expiration date.
For a withdrawal to be effective:
|
|
|
|
|
the exchange agent must receive a written notice of withdrawal
at the address indicated on the cover page of the letter of
transmittal; or
|
|
|
|
you must comply with the appropriate procedures of DTCs
automated tender offer program system.
|
36
Any notice of withdrawal must:
|
|
|
|
|
specify the name of the person who tendered the old notes to be
withdrawn; and
|
|
|
|
identify the old notes to be withdrawn, including the principal
amount of such old notes.
|
If old notes have been tendered under the procedure for
book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be
credited with withdrawn old notes and otherwise comply with the
procedures of DTC.
We will determine all questions as to the validity, form,
eligibility and time of receipt of notices of withdrawal. Our
determination shall be final and binding on all parties. We will
deem any old notes so withdrawn not to have been validly
tendered for exchange for purposes of the exchange offer.
Any old notes that have been tendered for exchange but that are
not exchanged for any reason will be returned to their holder
without cost to the holder. In the case of old notes tendered by
book-entry transfer into the exchange agents account at
DTC according to the procedures described above, such old notes
will be credited to an account maintained with DTC for the old
notes. This return or crediting will take place as soon as
practicable after withdrawal, rejection of tender or termination
of the exchange offer. You may retender properly withdrawn old
notes by following one of the procedures described under
Procedures for Tendering above at any
time on or prior to the expiration date.
Fees and
Expenses
We will bear the expenses of soliciting tenders with respect to
the exchange offer. The principal solicitation is being made by
mail; however, we may make additional solicitation by telegraph,
telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to broker-dealers
or others soliciting acceptances of the exchange offer. We will,
however, pay the exchange agent reasonable and customary fees
for its services and reimburse it for its related reasonable
out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with
the exchange offer. They include:
|
|
|
|
|
Commission registration fees;
|
|
|
|
fees and expenses of the exchange agent and trustee;
|
|
|
|
accounting and legal fees and printing costs; and
|
|
|
|
related fees and expenses.
|
Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchange of old notes under the exchange offer. The tendering
holder, however, will be required to pay any transfer taxes,
whether imposed on the registered holder or any other person, if:
|
|
|
|
|
certificates representing old notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are
to be issued in the name of, any person other than the
registered holder of old notes tendered;
|
|
|
|
tendered old notes are registered in the name of any person
other than the person signing the letter of transmittal; or
|
|
|
|
a transfer tax is imposed for any reason other than the exchange
of old notes under the exchange offer.
|
If satisfactory evidence of payment of any transfer taxes
payable by a note holder is not submitted with the letter of
transmittal, the amount of such transfer taxes will be billed
directly to that tendering holder.
37
Consequences
of Failure to Exchange
If you do not exchange your old notes for new notes under the
exchange offer, you will remain subject to the existing
restrictions on transfer of the old notes. In general, you may
not offer or sell the old notes unless they are registered under
the Securities Act, or if the offer or sale is exempt from the
registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights
agreement, we do not intend to register resales of the old notes
under the Securities Act.
Accounting
Treatment
We will record the new notes in our accounting records at the
same carrying values as the old notes. For each issue of the old
notes, this carrying value is the aggregate principal amount of
the old notes less any applicable original issue discount, as
reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for
accounting purposes in connection with the exchange offer.
Other
Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult
your financial and tax advisors in making your own decision on
what action to take.
We may in the future seek to acquire untendered old notes in
open market or privately negotiated transactions, through
subsequent exchange offers or otherwise. We have no present
plans to acquire any old notes that are not tendered in the
exchange offer or to file a registration statement to permit
resales of any untendered old notes.
38
USE OF
PROCEEDS
This exchange offer is intended to satisfy our obligations under
the Registration Rights Agreement. We will not receive any
proceeds from the exchange offer. You will receive, in exchange
for old notes tendered by you and accepted by us in the exchange
offer, new notes in the same principal amount. The old notes
surrendered in exchange for the new notes will be retired and
cancelled and cannot be reissued. Accordingly, the issuance of
the new notes will not result in any increase of our
indebtedness.
39
DESCRIPTION
OF SENIOR CREDIT FACILITY
The following is a description of our senior credit facility.
The summary is not complete and is subject and is qualified in
its entirety by reference to the terms of the senior credit
facility.
On October 5, 2009, on October 15, 2009, and again on
December 4, 2009 we completed amendments to our senior
credit facility through the execution of Amendment Nos. 5, 6 and
7, respectively, to the Amended and Restated Credit Agreement
(Amendment No. 5, Amendment
No. 6 and/ or Amendment No. 7)
between us, as Borrower, certain of our subsidiaries, as
Guarantors, and BNP Paribas, as Lender and as Administrative
Agent. Amendment No. 5 to the Credit Agreement among other
things, effectively permitted us to issue up to
$300.0 million of unsecured debt without having to repay
outstanding borrowings on our senior credit facility. Amendment
No. 6 to the Credit Agreement, among other things, modified
the aggregate size of the credit facility from
$240.0 million to $330.0 million, extended the
maturity of the Revolver to 2012, modified the permitted maximum
total leverage and maximum senior secured leverage financial
ratios and eliminated the annual capital expenditures
limitation. With this amendment, our senior secured credit
facility is now comprised of a $155.0 million Term Loan
bearing interest at LIBOR plus 2.00% and maturing in January
2014 and the $330.0 million Revolver which currently bears
interest at LIBOR plus 3.25% and matures in September 2012. Upon
the execution of Amendment No. 6, we also had the ability
to increase our borrowing capacity under the senior credit
facility by another $200.0 million subject to lender
demand, market conditions and existing borrowings. Amendment
No. 7 to the Credit Agreement made revisions to certain
definitions therein.
As of January 3, 2010, we had $155.0 million
outstanding under the Term Loan portion of our senior credit
facility and our $330.0 million Revolver had
$58.0 million outstanding in loans, $47.5 million
outstanding in letters of credit and approximately
$217 million available for borrowings.
All of the obligations under our senior credit facility are
unconditionally guaranteed by our material domestic subsidiaries
that are restricted subsidiaries under the senior credit
facility. GEO and these restricted subsidiaries generated
approximately 79.3% of our consolidated revenues and 88.2% of
our consolidated EBITDA for the fiscal year ended
January 3, 2010 and held approximately 84.0% of our
consolidated assets as of January 3, 2010. The senior
credit facility and the related guarantees are secured by
substantially all of our present and future tangible and
intangible assets and all present and future tangible and
intangible assets of each guarantor, including but not limited
to (i) a first-priority pledge of all of the outstanding
capital stock owned by us and by each guarantor (other than 35%
of the voting stock of foreign subsidiaries) and
(ii) perfected first-priority security interests in all of
our present and future tangible and intangible assets and the
present and future tangible and intangible assets of each
guarantor.
Our senior credit facility contains certain customary
representations and warranties and customary covenants that
restrict our ability to, among other things (i) create,
incur or assume any indebtedness, (ii) incur liens,
(iii) make loans and investments, (iv) engage in
mergers, acquisitions and asset sales, (v) sell our assets,
(vi) make certain restricted payments, including declaring
any cash dividends or redeeming or repurchasing capital stock,
except as otherwise permitted, (vii) transact with
affiliates, (viii) amend or modify the terms of any
subordinated indebtedness, (ix) enter into debt agreements
that contain negative pledges on our assets or covenants more
restrictive than contained in our senior credit facility,
(x) alter the business we conduct, and (xi) materially
impair our lenders security interests in the collateral
for our loans. Our senior credit facility also requires us to
comply with certain specified financial and affirmative
covenants, including compliance with maximum senior secured and
total leverage ratios and a minimum interest coverage ratio.
Events of default under our senior credit facility agreement
include, but are not limited to, (i) our failure to pay
principal or interest when due, (ii) our material breach of
any representations or warranty, (iii) covenant defaults,
(iv) bankruptcy, (v) cross default to certain other
material indebtedness, (vi) unsatisfied final judgments
over a threshold, (vii) material environmental claims which
are asserted against us, and (viii) a change of control.
Voluntary prepayments and commitment reductions of our loans are
permitted in whole or in part, subject to minimum prepayment or
reduction requirements. Such voluntary prepayments and
commitment reductions may be made without premium or penalty.
40
DESCRIPTION
OF NOTES
General
You can find the definitions of certain terms used in this
description under the subheading Certain
Definitions. In this description, references to
we, us, our, and the
Company refer to The GEO Group, Inc. and not to any
of its Subsidiaries and references to the Notes
refer to the
73/4% Senior
Notes due 2017 offered by this prospectus and any additional
notes issued under the Indenture in accordance with the terms of
the Indenture.
The old notes were issued and the new notes will be issued under
an indenture dated as of October 20, 2009 (the
Indenture) between us, the Initial Guarantors and
Wells Fargo Bank, N.A., as trustee. The terms of the Notes
include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939,
as amended, which we refer to as the Trust Indenture Act.
The following description is a summary of the material
provisions of the Indenture. It does not restate the Indenture
in its entirety. We urge you to read the Indenture because it,
and not this description, defines your rights as a holder of the
Notes. A copy of the Indenture is available from us at The GEO
Group, Inc., One Park Place, 621 NW 53rd Street,
Suite 700, Boca Raton, Florida, 33487, Attn: Chief
Financial Officer. Certain defined terms used in this
description but not defined below under
Certain Definitions have the meanings
assigned to them in the Indenture or the registration rights
agreement.
The registered Holder of a Note will be treated as the owner of
it for all purposes. Only registered Holders will have rights
under the Indenture.
The
Notes
The Notes will be:
|
|
|
|
|
our general, unsecured obligations;
|
|
|
|
equal in right of payment with all of our existing and future
unsecured, unsubordinated indebtedness;
|
|
|
|
effectively junior to our secured indebtedness, to the extent of
the assets securing such indebtedness;
|
|
|
|
senior in right of payment to any of our future subordinated
indebtedness;
|
|
|
|
unconditionally guaranteed by the Guarantors as described under
The Note Guarantees;
|
|
|
|
structurally subordinated to all existing and future
indebtedness and other liabilities, including trade payables, of
our Subsidiaries that do not guarantee the Notes.
|
As of the date of the Indenture, all of our Subsidiaries, other
than CSC of Tacoma, LLC, GEO International Holdings, Inc.,
certain dormant Domestic Subsidiaries and all Foreign
Subsidiaries in existence as of the date of the Indenture, will
be Restricted Subsidiaries, and each of our Subsidiaries that
has guaranteed our obligations under the Credit Agreement will
guarantee the Notes. However, under the circumstances described
below under the subheading Certain
Covenants Designation of Restricted and
Unrestricted Subsidiaries, we will be permitted to
designate other Subsidiaries, as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be
subject to the restrictive covenants in the Indenture and will
not guarantee the Notes. The Unrestricted Subsidiaries generated
approximately 20.7% of our consolidated revenues and 11.8% of
our consolidated EBITDA for the fiscal year ended
January 3, 2010 and held approximately 16.0% of our
consolidated assets as of January 3, 2010.
The Note
Guarantees
The Notes will initially be fully and unconditionally guaranteed
by each of our Restricted Subsidiaries that has guaranteed our
obligations under the Credit Agreement (collectively, the
Initial Guarantors) and
41
may be guaranteed by additional Subsidiaries of ours as
described below under Certain covenants
Additional Note Guarantees. Each Note
Guarantee of a Guarantor will be:
|
|
|
|
|
a general unsecured obligation of such Guarantor;
|
|
|
|
equal in right of payment with all existing and future
unsecured, unsubordinated indebtedness of such Guarantor;
|
|
|
|
effectively junior to such Guarantors secured
indebtedness, to the extent of the assets securing such
indebtedness, and to any indebtedness and other liabilities,
including trade payables, of any Subsidiaries of such Guarantor
that do not guarantee the Notes; and
|
|
|
|
senior in right of payment to any future subordinated
indebtedness of such Guarantor.
|
The obligations of each Guarantor under its Note Guarantee will
be limited as necessary to prevent that Note Guarantee from
constituting a fraudulent conveyance under applicable law. See
Risk Factors Fraudulent conveyance laws may
permit courts to void the guarantees of the notes in specific
circumstances.
Not all of our Subsidiaries will guarantee the Notes. We and the
Initial Guarantors generated approximately 79.3% of our
consolidated revenues and 88.2% of our consolidated EBITDA for
the fiscal year ended January 3, 2010 and held
approximately 84.0% of our consolidated assets as of
January 3, 2010.
The Note Guarantee of a Guarantor may be released in certain
circumstances. See Certain
Covenants Additional Note Guarantees.
Principal,
Maturity and Interest
The Notes will be unlimited in aggregate principal amount, with
$250.0 million aggregate principal amount to be issued in
this offering, and will mature on October 15, 2017. We may
issue additional Notes from time to time, subject to the
covenant described below under the subheading
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock. The
Notes and any additional Notes subsequently issued under the
Indenture will be treated as a single class for all purposes
under the Indenture, including, without limitation, redemptions
of Notes, offers to purchase Notes and the percentage of Notes
required to consent to waivers of provisions of, and amendments
to, the Indenture. We will issue Notes only in denominations of
$2,000 and integral multiples of $1,000 in excess thereof
Interest on the Notes will accrue at the rate of
73/4%
per annum and will be payable semi-annually in arrears on April
15 and October 15, commencing on April 15, 2010. We
will make each interest payment to the Holders of record on the
close of business on the immediately preceding April 1 and
October 1. Interest on the Notes will accrue from the date
of original issuance or, if interest has already been paid, from
the date it was most recently paid. Interest will be computed on
the basis of a
360-day year
comprised of twelve
30-day
months.
Methods
of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to us, we will
pay all principal, interest and premium and Liquidated Damages,
if any, on that Holders Notes in accordance with those
instructions. All other payments on the Notes will be made at
the office or agency of the paying agent and registrar within
the City and State of New York unless we elect to make interest
payments by check mailed to the Holders at their address set
forth in the register of Holders.
Paying
Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar for
the Notes. We may change the paying agent or registrar without
prior notice to the Holders of the Notes, and we or any of our
Subsidiaries may act as paying agent or registrar.
42
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. The registrar and the trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of Notes. Holders will be required to
pay all taxes due on transfer. We are not required to transfer
or exchange any Note selected for redemption. Also, we are not
required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
Ranking
The Notes and the Note Guarantees will be our and the
Guarantors unsecured, general obligations and the
indebtedness evidenced by the Notes and the Note Guarantees will
rank equal in right of payment to all of our and the
Guarantors other existing and future unsecured general
obligations and senior in right of payment to all of our and the
Guarantors future obligations expressly subordinated in
right of payment to the Notes and the Note Guarantees. The Notes
and the Note Guarantees, however, will be effectively
subordinated to our and the Guarantors secured
indebtedness with respect to the assets securing such
obligations, including indebtedness under the Credit Agreement,
which is secured by liens on substantially all of our and our
Domestic Subsidiaries tangible and intangible assets as
specified in the Credit Agreement. We conduct some of our
business through our Subsidiaries and joint ventures. The Notes
will be effectively subordinated to all existing and future
liabilities of our Subsidiaries that do not guarantee the Notes
and joint ventures, including trade payables.
As of January 3, 2010, we had a total of
$457.5 million of consolidated debt outstanding, excluding
$112.0 million of non-recourse debt and capital lease
liability balances of $15.1 million. As of January 3,
2010, we also had outstanding eight letters of guarantee
totaling $8.9 million under separate international credit
facilities. We also have the ability to increase borrowing
capacity by $200.0 million under the accordion feature of
our senior credit facility, as amended, subject to lender demand
and market conditions. In addition, as of January 3, 2010,
our non-guarantor Subsidiaries had $96.8 million of
long-term
indebtedness, which is non-recourse to us and the Guarantors.
Optional
Redemption
At any time on or prior to October 15, 2012, we may on any
one or more occasions redeem up to 35% of the aggregate
principal amount of outstanding Notes issued under the Indenture
at a redemption price of 107.750% of their principal amount,
plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net cash proceeds of one or
more Equity Offerings; provided, that: (1) at least
65% of the aggregate principal amount of Notes issued under the
Indenture remains outstanding immediately after the occurrence
of such redemption (excluding Notes held by us and our
Subsidiaries); and (2) the redemption occurs within
90 days of the date of the closing of such Equity Offering.
At any time prior to October 15, 2013, we may, at our
option, redeem all or a part of the Notes upon not less than 30
nor more than 60 days prior notice at a redemption
price equal to the sum of (i) 100% of the principal amount
thereof, plus (ii) the Applicable Premium as of the date of
redemption, plus (iii) accrued and unpaid interest and
Liquidated Damages, if any, to the date of redemption.
After October 15, 2013, we may, at our option, redeem all
or a part of the Notes upon not less than 30 nor more than
60 days notice, at the redemption prices (expressed
as percentages of principal amount) set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, on
the Notes redeemed, to the applicable redemption date, if
redeemed during the
12-month
period beginning on October 15 of the years indicated below:
|
|
|
|
|
Year
|
|
Percentage
|
|
|
2013
|
|
|
103.875
|
%
|
2014
|
|
|
101.938
|
%
|
2015 and thereafter
|
|
|
100.000
|
%
|
43
For a description of the procedures applicable to a redemption
of all or part of the Notes pursuant to the provisions of the
Indenture described in this section, see
Selection and Notice.
Mandatory
Redemption
We are not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Repurchase
at the Option of Holders
Change
of Control
If a Change of Control occurs, each Holder of Notes will have
the right to require us to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess thereof) of
that Holders Notes pursuant to a Change of Control Offer
on the terms set forth in the Indenture. In the Change of
Control Offer, we will offer a Change of Control Payment in cash
equal to 101% of the aggregate principal amount of Notes
repurchased, plus accrued and unpaid interest and Liquidated
Damages, if any, on the Notes repurchased, to the date of
purchase. Within 30 days following any Change of Control,
we will mail a notice to each Holder describing the transaction
or transactions that constitute the Change of Control and
offering to repurchase Notes on the Change of Control Payment
Date specified in the notice, which date will be no earlier than
30 days and no later than 60 days from the date such
notice is mailed, pursuant to the procedures required by the
Indenture and described in such notice. We will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with
the Change of Control provisions of the Indenture, we will
comply with the applicable securities laws and regulations and
will not be deemed to have breached our obligations under the
Change of Control provisions of the Indenture by virtue of such
conflict.
On the Change of Control Payment Date, we will, to the extent
lawful:
(1) accept for payment all Notes or portions of Notes
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of
Notes properly tendered; and
(3) deliver or cause to be delivered to the trustee the
Notes properly accepted together with an Officers
Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by us.
The paying agent will promptly deliver to each Holder of Notes
properly tendered the Change of Control Payment for such Notes,
and the trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each new Note will be
in a principal amount of $2,000 or an integral multiple of
$1,000 in excess thereof.
We will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control
Payment Date.
The provisions described above that require us to make a Change
of Control Offer following a Change of Control will be
applicable whether or not any other provisions of the Indenture
are applicable. Except as described above with respect to a
Change of Control, the Indenture does not contain provisions
that permit the Holders of the Notes to require that we
repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
We will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture applicable to a
Change of Control Offer made by us and purchases all Notes
properly tendered and not withdrawn under the Change of Control
Offer.
44
The definition of Change of Control includes a phrase relating
to the direct or indirect sale, lease, transfer, conveyance or
other disposition of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken
as a whole. Although there is a limited body of case law
interpreting the phrase substantially all, there is
no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require us
to repurchase the Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets
of the Company and its Subsidiaries taken as a whole to another
Person or group may be uncertain. In addition, Holders of the
Notes may not be entitled to require the Company to repurchase
their Notes in certain circumstances involving a significant
change in the composition of the Companys Board of
Directors, including, in connection with the proxy contest where
the Companys Board of Directors does not endorse a
dissident slate of directors but approves them as Continuing
Directors. In this regard, a recent decision of the Delaware
Chancery Court (not involving the Company or its securities)
considered a change of control redemption provision of an
indenture governing publicly traded debt securities
substantially similar to the change of control event described
in clause (5) of the definition of Change of
Control. In its decision, the court noted that a board of
directors may approve a dissident shareholders
nominees solely for purposes of such an indenture, provided the
board of directors determines in good faith that the election of
the dissident nominees would not be materially adverse to the
interests of the corporation or its stockholders (without taking
into consideration the interests of the holders of debt
securities in making this determination).
The Credit Agreement contains, and other indebtedness of the
Company may contain, prohibitions on the occurrence of events
that would constitute a Change of Control or require that
indebtedness be repurchased upon a Change of Control. A Change
of Control will constitute an event of default under the Credit
Agreement and, unless the Company were able to obtain a waiver
from the lenders under the Credit Agreement, the terms of the
Credit Agreement would prohibit our purchase of the Notes in the
event we are required to make a Change of Control Offer. There
can be no assurance that the Company would be able to obtain a
waiver from the lender under the Credit Agreement to purchase
the Notes in connection with a Change of Control. In addition,
if a Change of Control Offer occurs, there can be no assurance
that we will have available funds sufficient to make the Change
of Control Payment for all of the Notes that might be delivered
by Holders seeking to accept the Change of Control Offer. In the
event we are required to purchase outstanding Notes pursuant to
a Change of Control Offer, we expect that we would seek
third-party financing to the extent we do not have available
funds to meet our purchase obligations and any other obligations
in respect of our other indebtedness. However, there can be no
assurance that we would be able to obtain the necessary
financing. See Risk Factors Risks Related to
the Notes. We may not be able to repurchase the Notes in the
event of a change of control because the terms of our
indebtedness or lack of funds may prevent us from doing so.
Asset
Sales
We will not, and we will not permit any of our Restricted
Subsidiaries to, directly or indirectly, consummate an Asset
Sale unless:
(1) we (or the Restricted Subsidiary, as the case may be)
receive consideration at the time of the Asset Sale at least
equal to the fair market value of the assets or Equity Interests
issued or sold or otherwise disposed of (except in respect of
Designated Assets sold pursuant to a Designated Asset Contract);
(2) the fair market value or Designated Asset Value, as
applicable, in the case of any Asset Sales or series of related
Asset Sales having a fair market value of $25.0 million or
more, is determined by our Board of Directors and evidenced by a
resolution of our Board of Directors set forth in an
Officers Certificate delivered to the trustee; and
(3) at least 75% of the consideration received in the Asset
Sale by us or such Restricted Subsidiary is in the form of cash.
For purposes of this clause (3) only, each of the following
will be deemed to be cash:
(a) any liabilities, as shown on the Companys or such
Restricted Subsidiarys most recent balance sheet, of the
Company or any Restricted Subsidiary (other than contingent
liabilities and
45
liabilities that are by their terms subordinated to the Notes or
any Note Guarantee) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further
liability;
(b) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted
Subsidiary into cash or Cash Equivalents within 90 days
after the applicable Asset Sale, to the extent of the cash or
Cash Equivalents received in that conversion;
(c) notes or other obligations or Indebtedness actually
received by the Company or any such Restricted Subsidiary as
consideration for the sale or other disposition of a Designated
Asset pursuant to a contract with a governmental or
quasi-governmental agency, but only to the extent that such
notes or other obligations or Indebtedness were explicitly
required to be included, or permitted to be included solely at
the option of the purchaser, in such consideration pursuant to
such contract;
(d) Indebtedness actually received by the Company or any
such Restricted Subsidiary as consideration for the sale or
other disposition of an Unoccupied Facility, in an aggregate
principal amount, in any fiscal year of the Company, when taken
together with all Indebtedness received as consideration
pursuant to this clause (d) since the date of the Indenture
(but, to the extent that the principal of any Indebtedness
received pursuant to this clause (d) is repaid in cash or
such Indebtedness is sold or otherwise liquidated for cash,
minus the amount of such cash received), not to exceed
$20 million; and
(e) any Designated Non-Cash Consideration received by the
Company or any such Restricted Subsidiary in the Asset Sale, in
an aggregate amount in any fiscal year of the Company (measured
on the date such Designated Non-Cash Consideration was received
without giving effect to subsequent changes in value), when
taken together with all other Designated Non-Cash Consideration
received as consideration pursuant to this clause (e)
during such fiscal year (but, to the extent that any such
Designated Non-Cash Consideration is sold or otherwise
liquidated for cash, minus the lesser of (a) the amount of
the cash received (less the cost of disposition, if any) and
(b) the initial amount of such Designated Non-Cash
Consideration), not to exceed $25 million.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may engage in Asset Swaps; provided that,
(1) immediately after giving effect to such Asset Swap, the
Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of the covenant described below
under the caption Certain
Covenants Incurrence of Indebtedness and Issuance of
Preferred Stock and
(2) the Board of Directors of the Company determines that
the fair market value of the assets received by the Company or
the Restricted Subsidiary in the Asset Swap is not less than the
fair market value of the assets disposed of by the Company or
such Restricted Subsidiary in such Asset Swap and such
determination is evidenced by a resolution of the Board of
Directors set forth in an Officers Certificate delivered
to the trustee.
Within 360 days after the receipt of any Net Proceeds from
an Asset Sale, the Company or the applicable Restricted
Subsidiary may apply those Net Proceeds, at its option:
(1) to repay permanently Indebtedness under the Credit
Agreement (and with respect to Net Proceeds of a Restricted
Subsidiary that is not a Guarantor, Indebtedness of such
Restricted Subsidiary) and, if the Indebtedness permanently
repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto;
(2) to acquire, or enter into a definitive agreement to
acquire, all or substantially all of the assets of, a Permitted
Business or a majority of the Voting Stock of a Person engaged
in a Permitted Business, provided that such Person becomes a
Restricted Subsidiary and provided, further, however, in the
case of a definitive agreement, that such acquisition closes
within 120 days of such 360 day period;
46
(3) to make a capital expenditure in or that is used or
useful in a Permitted Business (provided that the completion of
(i) construction of new facilities, (ii) expansions to
existing facilities and (iii) repair or construction of
damaged or destroyed facilities, in each case, which commences
within such 360 days may extend for an additional
360 day period if the Net Proceeds to be used for such
construction, expansion or repair are committed specifically for
such activity within such 360 days); or
(4) to acquire other long-term assets that are used or
useful in a Permitted Business.
Pending the final application of any Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise
invest the Net Proceeds in any manner that is not prohibited by
the Indenture.
Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph, or that the
Company determines will not be applied or invested as provided
in the preceding paragraph, will constitute Excess
Proceeds. When the aggregate amount of Excess Proceeds
exceeds $25.0 million, the Company will make an Asset Sale
Offer to all Holders of Notes and, at the Companys option,
all holders of other Indebtedness that is pari passu with the
Notes containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets, to purchase on a pro rata basis the
maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds.
The offer price in any Asset Sale Offer will be equal to 100% of
the principal amount, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, and will be
payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use those
Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and other
pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Notes and such other
pari passu Indebtedness shall be purchased on a pro rata basis.
Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds will be reset at zero.
The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with each repurchase of Notes
pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the Asset Sale provisions of the Indenture, the Company will
comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the
Asset Sale provisions of the Indenture by virtue of such
conflict.
The agreements governing the Companys other Indebtedness
contain prohibitions of certain events, including certain types
of Asset Sales. The terms of the Credit Agreement would prohibit
our purchase of the Notes in the event we were required to make
an Asset Sale Offer. In addition, the exercise by the holders of
Notes of their right to require the Company to repurchase the
Notes in connection with an Asset Sale Offer could cause a
default under these other agreements, even if the Asset Sale
itself does not, due to the financial effect of such repurchases
on the Company. Finally, the Companys ability to pay cash
to the Holders of Notes upon a repurchase may be limited by the
Companys then existing financial resources.
Selection
and Notice
If less than all of the Notes are to be redeemed at any time,
the trustee will select Notes for redemption as follows:
(1) if the Notes are listed on any national securities
exchange, in compliance with the requirements of the principal
national securities exchange on which the Notes are
listed; or
(2) if the Notes are not listed on any national securities
exchange, on a pro rata basis (based on amounts tendered), by
lot or by such method as the trustee deems fair and appropriate.
No Notes of $2,000 or less can be redeemed in
part. Notices of redemption will be mailed by
first class mail at least 30 but not more than 60 days
before the redemption date to each Holder of Notes to be
redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a
47
redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction and discharge of the
Indenture. Notices of redemption may not be conditional.
If any Note is to be redeemed in part only, the notice of
redemption that relates to that Note will state the portion of
the principal amount of that Note that is to be redeemed. A new
Note in principal amount equal to the unredeemed portion of the
original Note will be issued in the name of the Holder of Notes
upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Notes or
portions of them called for redemption.
Certain
Covenants
Changes
in Covenants When Notes Rated Investment Grade
If on any date following the date of the Indenture:
(1) the Notes are rated Baa3 or better by Moodys or
BBB- or better by Standard & Poors (or, if
either such entity ceases to rate the Notes for reasons outside
of the control of the Company, the equivalent investment grade
credit rating from any other nationally recognized
statistical rating organization within the meaning of
Section 3(a)(62) under the Exchange Act, selected by the
Company as a replacement agency); and
(2) no Default or Event of Default shall have occurred and
be continuing,
then, beginning on that day and subject to the provisions of the
following paragraph, the covenants specifically listed under the
following captions in this prospectus will be suspended:
(a) Repurchase at the Option of
Holders Asset Sales;
(b) Restricted Payments;
(c) Incurrence of Indebtedness and
Issuance of Preferred Stock;
(d) Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries;
(e) Designation of Restricted and
Unrestricted Subsidiaries;
(f) Transactions with Affiliates;
(g) clause (4) of the covenant described below under
the caption Merger, Consolidation or Sale of
Assets;
(h) clauses (1)(a) and (3) of the covenant described
below under the caption Sale and Leaseback
Transactions; and
(i) Business Activities.
During any period that the foregoing covenants have been
suspended, the Companys Board of Directors may not
designate any of its Subsidiaries as Unrestricted Subsidiaries
pursuant to the covenant under the caption
Designation of Restricted and Unrestricted
Subsidiaries unless such designation would have been
permitted if a Suspension Period had not been in effect at such
time.
Notwithstanding the foregoing, if the rating assigned by such
rating agency should subsequently decline and the Notes are not
rated Baa3 or better by Moodys nor BBB- or better by
Standard & Poors (or if either such agency
ceases to rate the Notes, the equivalent investment grade credit
rating from another nationally recognized statistical rating
organization), the foregoing covenants will be reinstated as of
and from the date of such rating decline. Calculations under the
reinstated Restricted Payments covenant will be made
as if the Restricted Payments covenant had been in
effect since the date of the indenture except that no default
will be deemed to have occurred solely by reason of a Restricted
Payment made while that covenant was suspended. Notwithstanding
that the suspended covenants may be reinstated, no default will
be deemed to have occurred as a result of a failure to comply
with such suspended covenants during any period such
48
covenants have been suspended. There can be no assurance that
the Notes will ever achieve an investment grade rating or that
any such rating will be maintained.
Restricted
Payments
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly:
(1) declare or pay any dividend or make any other payment
or distribution on account of the Companys, or any
Restricted Subsidiarys, Equity Interests (including,
without limitation, any payment in connection with any merger or
consolidation involving the Company or any Restricted
Subsidiary) or to the direct or indirect holders of the
Companys or any Restricted Subsidiarys Equity
Interests in their capacity as such (other than dividends or
distributions payable (A) in Equity Interests (other than
Disqualified Stock) of the Company or (B) to the Company or
a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for
value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity
Interests of the Company;
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness that is expressly subordinated to the Notes or any
Note Guarantee, except a payment of interest or principal to the
Company or any Restricted Subsidiary or except any payment made
at the Stated Maturity thereof (or any payment, purchase or
other acquisition, in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity due within
one year); or
(4) make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through
(4) above being collectively referred to as
Restricted Payments),
unless, at the time of and after giving effect to such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence of such Restricted
Payment; and
(2) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the
applicable four-quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under the caption
Incurrence of Indebtedness and Issuance of
Preferred Stock; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the date of the Indenture
(excluding Restricted Payments permitted by clauses (2), (3),
(4), and (5) of the next succeeding paragraph) and the
aggregate of any Permitted Investments then outstanding pursuant
to clause (15) of the definition thereof, is less than the
sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company, for
the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of the
Indenture to the end of the Companys most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100%,
of such deficit); plus
(b) (i) 100% of the aggregate net cash proceeds plus
(ii) 100% of the aggregate fair market value of any
Permitted Business or assets used or useful in a Permitted
Business (other than Restricted Investments), in each case, to
the extent received by the Company since the date of the
Indenture as a contribution to its common equity capital or in
consideration of the issuance of Equity Interests of the Company
(other than Disqualified Stock), except to the extent used to
make an Investment pursuant to clause (12) or (14) of
the definition of Permitted Investments, or from the issue or
sale of Disqualified Stock or debt securities of the Company
that have been converted into
49
or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company); plus
(c) to the extent that any Restricted Investment that was
made after the date of the Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of
(i) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and
(ii) the initial amount of such Restricted Investment;
plus
(d) to the extent that any Unrestricted Subsidiary of the
Company is redesignated as a Restricted Subsidiary after the
date of the Indenture, the lesser of (i) the fair market
value of the Companys or any Restricted Subsidiarys
Investment in such Subsidiary as of the date of such
redesignation or (ii) the fair market value of the
Companys or any Restricted Subsidiarys Investment in
such Subsidiary as of the date on which such Subsidiary was
originally designated as an Unrestricted Subsidiary to the
extent such Investment was treated as a Restricted Payment, plus
the amount of any Investments made in such Subsidiaries
subsequent to such designation (or in the case of any Subsidiary
that is an Unrestricted Subsidiary as of the date of the
Indenture, subsequent to the date of the Indenture) to the
extent any such Investment was treated as a Restricted Payment
by the Company or any Restricted Subsidiary; plus
(e) 100% of any other dividends or other distributions
received by the Company or a Restricted Subsidiary since the
date of the Indenture from an Unrestricted Subsidiary of the
Company to the extent that such dividends were not otherwise
included in Consolidated Net Income of the Company for such
period in an amount not to exceed the amount of Restricted
Investments previously made by the Company and its Restricted
Subsidiaries in such Unrestricted Subsidiary.
So long as no Default has occurred and is continuing or would be
caused thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after
the date of declaration of the dividend, if at the date of
declaration the dividend payment would have complied with the
provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or
other acquisition of any subordinated Indebtedness of the
Company or any Guarantor or of any Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Company) of, Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition will be
excluded from clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company or any
Guarantor with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary
to the holders of its Equity Interests on a pro rata basis;
(5) repurchases of Equity Interests of the Company deemed
to occur upon the exercise of stock options if such Equity
Interests represent a portion of the exercise price thereof;
(6) the repurchase, redemption or other acquisition or
retirement for value of Equity Interests of the Company or any
Restricted Subsidiary held by any member of the Companys
(or any Restricted Subsidiarys) management; provided that
the aggregate amount expended pursuant to this clause (6)
shall not exceed $2.0 million in any twelve-month
period; and
(7) Restricted Payments not otherwise permitted in an
amount not to exceed $150.0 million.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued
by the Company or a Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. The fair market value of any
assets or securities that are required to be valued by this
covenant will be determined by the Board of
50
Directors of the Company whose resolution with respect thereto
will be delivered to the trustee. Except with respect to a
Restricted Payment permitted by clauses (1) through
(7) above, the Board of Directors determination must
be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if the
fair market value exceeds $10.0 million. Not later than the
date on which such Restricted Payment was made, the Company will
deliver to the trustee an Officers Certificate stating
that such Restricted Payment is permitted and setting forth the
basis upon which the calculations required by this
Restricted Payments covenant were computed.
Incurrence
of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to
(collectively, incur) any Indebtedness (including
Acquired Debt), and the Company will not issue any Disqualified
Stock and will not permit any Restricted Subsidiary to issue any
Disqualified Stock or preferred stock; provided, however,
that the Company may incur Indebtedness (including Acquired
Debt) or issue Disqualified Stock, and any Guarantor may incur
Indebtedness or issue Disqualified Stock and any Foreign
Subsidiary may incur Indebtedness, if the Fixed Charge Coverage
Ratio for the Companys most recently ended four full
fiscal quarters for which internal financial statements are
available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock
or preferred stock is issued would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the preferred stock or
Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period;
The first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness or the
issuance of Disqualified Stock, as set forth below
(collectively, Permitted Debt):
(1) the incurrence by the Company and any Restricted
Subsidiary of Indebtedness under the Credit Agreement in an
aggregate principal amount at any one time outstanding under
this clause (1) not to exceed $525.0 million, less the
aggregate amount of all Net Proceeds of Asset Sales applied by
the Company or any Restricted Subsidiary to repay any
Indebtedness under the Credit Agreement and, if the Indebtedness
repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto, pursuant to the
covenant described under the subheading
Repurchase at the Option of
Holders Asset Sales;
(2) the incurrence by the Company and any Restricted
Subsidiary of Existing Indebtedness;
(3) the incurrence by the Company of Indebtedness
represented by the Notes to be issued on the date of the
Indenture and any Guarantees thereof by any Guarantor;
(4) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations,
in each case, incurred for the purpose of financing all or any
part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business
of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (4), not to exceed
the greater of (i) $20.0 million and (ii) 5.0% of
Consolidated Tangible Assets, at any time outstanding;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to refund, refinance
or replace Indebtedness (other than intercompany Indebtedness)
that was permitted by the Indenture to be incurred under the
first paragraph of this covenant or clauses (2), (3) or
(5) of this paragraph;
51
(6) the incurrence by the Company or any Restricted
Subsidiary of intercompany Indebtedness between or among the
Company and any Restricted Subsidiary; provided, however, that:
(a) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated
to the prior payment in full in cash of all Obligations with
respect to the Notes, in the case of the Company, or the Note
Guarantee, in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary and
(ii) any sale or other transfer of any such Indebtedness to
a Person that is not either the Company or a Restricted
Subsidiary; will be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not
permitted by this clause (6);
(7) the incurrence by the Company or any Restricted
Subsidiary of Hedging Obligations that are incurred for the
purpose of fixing, hedging or swapping interest rate risk with
respect to any Indebtedness that is permitted by the terms of
the Indenture to be outstanding or for hedging foreign currency
exchange risk, in each case to the extent the Hedging
Obligations are incurred in the ordinary course of the
Companys financial management and not for any speculative
purpose;
(8) the guarantee by the Company or any Restricted
Subsidiary of Indebtedness of the Company or a Restricted
Subsidiary that was permitted to be incurred by another
provision of this covenant;
(9) the accrual of interest, the accretion or amortization
of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Stock
in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant; provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued;
(10) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness, including Indebtedness represented
by letters of credit for the account of the Company or any
Restricted Subsidiary, incurred in respect of workers
compensation claims, self-insurance obligations, performance,
proposal, completion, surety and similar bonds and completion
guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business; provided, that the
underlying obligation to perform is that of the Company or its
Restricted Subsidiaries and not that of the Companys
Unrestricted Subsidiaries; provided further, that such
underlying obligation is not in respect of borrowed money;
(11) the incurrence by the Company or any Restricted
Subsidiary of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (11), not to exceed
$50.0 million;
(12) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness, including but not limited to
Indebtedness represented by letters of credit for the account of
the Company or any Restricted Subsidiary, arising from
agreements of the Company or a Restricted Subsidiary providing
for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or Equity Interests
of the Company or a Restricted Subsidiary, other than guarantees
of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Equity Interests for the
purpose of financing such acquisition;
(13) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar
instrument (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business,
provided that such Indebtedness is extinguished within five
business days of incurrence; or
(14) the issuance of preferred stock of a Restricted
Subsidiary to the Company that is pledged to secure the Credit
Agreement, provided that any subsequent transfer that results in
such preferred stock
52
being held by a Person other than the Company or a Restricted
Subsidiary will be deemed to constitute an issuance of preferred
stock not permitted by this clause (14).
The Company will not, and will not permit any Guarantor, to
incur any Indebtedness (including Permitted Debt) that is
contractually subordinated in right of payment to any other
Indebtedness of the Company or such Guarantor unless such
Indebtedness is also contractually subordinated in right of
payment to the Notes or such Note Guarantee on substantially
identical terms; provided, however, that no Indebtedness
of the Company or any Guarantor will be deemed to be
contractually subordinated in right of payment to any other
Indebtedness of the Company or any Guarantor solely by virtue of
being unsecured or by virtue of the fact that the holders of
secured Indebtedness have entered into intercreditor
arrangements giving one or more of such holders priority over
the other holders in the collateral held by them.
For purposes of determining compliance with the provisions in
the Indenture described in this Incurrence
of Indebtedness and Issuance of Preferred Stock
covenant, in the event that an item of proposed Indebtedness
meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through
(14) above, or is entitled to be incurred pursuant to the
first paragraph of this covenant, the Company will be permitted
to classify such item of Indebtedness on the date of its
incurrence, or later reclassify all or a portion of such item of
Indebtedness, in any manner that complies with this covenant.
Indebtedness under the Credit Agreement outstanding on the date
on which Notes are first issued and authenticated under the
Indenture will be deemed to have been incurred on such date in
reliance on the exception provided by clause (1) of the
definition of Permitted Debt.
Liens
The Company will not and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind (other
than Permitted Liens) upon any of their property or assets, now
owned or hereafter acquired, unless all payments due under the
Indenture and the Notes are secured on an equal and ratable or
prior basis with the Obligations so secured until such time as
such Obligations are no longer secured by a Lien.
Dividend
and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted
Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and the
Credit Facilities as in effect on the date of the Indenture and
any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
of those agreements; provided, that, the amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are not materially more
restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in those
agreements on the date of the Indenture;
(2) the Indenture, the Notes and the exchange Notes;
(3) applicable law, rule, regulation or order;
53
(4) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so
acquired; provided, that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the Indenture to be
incurred;
(5) customary non-assignment provisions of any contract or
agreement entered into in the ordinary course of business and
customary provisions restricting subletting or transfer of any
interest in real or personal property contained in any lease or
easement agreement of the Company or any Restricted Subsidiary;
(6) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on that
property of the nature described in clause (3) of the
preceding paragraph;
(7) any agreement for the sale or other disposition of all
or substantially all of the assets or Capital Stock of a
Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale or other disposition of
all or substantially all of the assets or Capital Stock of such
Restricted Subsidiary;
(8) Permitted Refinancing Indebtedness; provided, that, the
restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness with respect to dividends and
other payments are not materially more restrictive, taken as a
whole, than those contained in the agreements governing the
Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of the covenant described above
under the caption Liens that limit the
right of the debtor to dispose of the assets subject to such
Liens;
(10) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements,
asset sale agreements, stock sale agreements and other similar
agreements entered into in the ordinary course of business;
(11) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(12) any Indebtedness incurred in compliance with the
covenant under the caption Incurrence of
Indebtedness and issuance of Preferred Stock by any
Foreign Subsidiary or any Guarantor, or any agreement pursuant
to which such Indebtedness is issued, if the encumbrance or
restriction applies only to such Foreign Subsidiary or Guarantor
and only in the event of a payment default or default with
respect to a financial covenant contained in the Indebtedness or
agreement and the encumbrance or restriction is not materially
more disadvantageous to the Holders of the Notes than is
customary in comparable financings (as determined by the Board
of Directors of the Company) and the Board of Directors of the
Company determines that any such encumbrance or restriction will
not materially affect the Companys ability to pay interest
or principal on the Notes; or
(13) an arrangement or circumstance arising or agreed to in
the ordinary course of business, not relating to any
Indebtedness, and that does not, individually or in the
aggregate, detract from the value of property or assets of the
Company or any Restricted Subsidiary in any manner material to
the Company or any Restricted Subsidiary.
Merger,
Consolidation or Sale of Assets
The Company shall not, in a single transaction or a series of
related transactions, consolidate with or merge with or into any
other Person or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties
and assets to any Person or group of affiliated Persons, or
permit any of its Restricted Subsidiaries to enter into any such
transaction or transactions if such transaction or transactions,
in the aggregate, would result in an assignment, conveyance,
transfer, lease or disposition of all or substantially
54
all of the properties and assets of the Company and its
Restricted Subsidiaries taken as a whole to any other Person or
group of affiliated Persons, unless at the time and after giving
effect thereto:
(1) either: (a) the Company is the surviving
corporation; or (b) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to
which such sale, assignment, lease, transfer, conveyance or
other disposition has been made is a corporation organized or
existing under the laws of the United States, any state of the
United States or the District of Columbia;
(2) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, lease, transfer,
conveyance or other disposition has been made assumes all the
obligations of the Company under the Notes, the Indenture and
the registration rights agreement pursuant to agreements
reasonably satisfactory to the trustee;
(3) no Default or Event of Default exists;
(4) the Company or the other Person formed by or surviving
any such consolidation or merger (if other than the Company), or
to which such sale, assignment, lease, transfer, conveyance or
other disposition has been made will, on the date of such
transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described under the caption
Incurrence of Indebtedness and Issuance of
Preferred Stock; and
(5) the Company or the other Person formed by or surviving
any such consolidation or merger (if other than the Company), or
to which such sale, assignment, lease, transfer, conveyance or
other disposition has been made will have delivered to the
trustee, in form and substance reasonably satisfactory to the
trustee, an Officers Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale,
assignment, lease, conveyance, transfer, or other disposition,
and if a supplemental indenture is required in connection with
such transaction, such supplemental indenture, comply with the
requirements of the Indenture and that all conditions precedent
therein provided for relating to such transaction have been
complied with.
Clause (4) of this Merger,
Consolidation or Sale of Assets covenant will not
apply to: (a) a sale, transfer or other disposition of
assets between or among the Company and any of its Restricted
Subsidiaries or (b) any merger or consolidation of a
Restricted Subsidiary into the Company.
Transactions
with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or amend any
contract, agreement, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an Affiliate
Transaction), unless:
(1) the Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and
(2) the Company delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration
in excess of $10.0 million, a resolution of the Board of
Directors of the Company set forth in an Officers
Certificate certifying that such Affiliate Transaction complies
with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board
of Directors of the Company; and
(b) except with respect to leases of facilities entered
into in the ordinary course of business with a Wholly Owned
Subsidiary, with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate
consideration in excess of $25.0 million, an opinion as to
55
the fairness to the Company of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the
provisions of the prior paragraph:
(1) indemnity agreements and reasonable employment
arrangements (including severance and retirement agreements)
entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business of the Company
or such Restricted Subsidiary, in each case approved by the
disinterested members of the Board of Directors of the Company;
(2) transactions between or among the Company
and/or its
Restricted Subsidiaries;
(3) payment of reasonable directors fees to Persons who are
not otherwise Affiliates of the Company;
(4) sales of Equity Interests (other than Disqualified
Stock) of the Company;
(5) Permitted Investments and Restricted Payments that are
permitted by the provisions of the Indenture described above
under the caption Restricted Payments;
(6) any issuance of securities, or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the
funding of employment arrangements, stock options and stock
ownership plans and other reasonable fees, compensation,
benefits and indemnities paid or entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of
business to or with officers, directors or employees of the
Company and its Restricted Subsidiaries; and
(7) any pledge of any Government Operating Agreement to
secure Non-Recourse Project Financing Indebtedness related to
the facility that is the subject of such Government Operating
Agreement.
Additional
Note Guarantees
The Company will not permit any of its Restricted Subsidiaries
which are not Guarantors directly or indirectly, to Guarantee
the payment of (a) any Indebtedness of the Company or any
Guarantor under any Credit Facility or (b) any Indebtedness
of the Company or any Guarantor evidenced by bonds, notes or
other debt securities in an aggregate principal amount of
$100 million or more, unless, in each case, such Restricted
Subsidiary simultaneously executes and delivers a supplemental
indenture providing for the Guarantee of the payment of the
Notes by such Restricted Subsidiary, which Note Guarantee shall
be senior to or pari passu with such Subsidiarys
Guarantee of such other Indebtedness. The form of the Note
Guarantee will be attached as an exhibit to the Indenture.
A Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person), another Person, other than the Company or another
Guarantor, unless:
(1) immediately after giving effect to that transaction, no
Default or Event of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such
consolidation or merger assumes all the obligations of that
Guarantor under the Indenture, its Note Guarantee and the
registration rights agreement pursuant to a supplemental
indenture satisfactory to the trustee; or
(b) such sale or other disposition complies with the
provisions of the Indenture described under the subheading
Repurchase at the Option of
Holders Asset Sales, including the
application of the Net Proceeds therefrom.
56
The Note Guarantee of a Guarantor will be released:
(1) in connection with any sale of all of the Capital Stock
of a Guarantor (including by way of merger or consolidation) to
a Person that is not (either before or after giving effect to
such transaction) a Subsidiary of the Company, if the sale
complies with the provisions of the Indenture described under
the subheading Repurchase at the Option of
Holders Asset Sales;
(2) if the Company designates any Restricted Subsidiary
that is a Guarantor as an Unrestricted Subsidiary in accordance
with the applicable provisions of the Indenture;
(3) upon Legal Defeasance or Covenant Defeasance of the
Notes, as described in Legal Defeasance and
Covenant Defeasance; or
(4) upon the release or termination (other than a
termination or release resulting from the payment thereon) of
the Guarantee of (a) all Indebtedness of the Company or any
Guarantor under any Credit Facility and (b) all
Indebtedness of the Company or any Guarantor evidenced by bonds,
notes or other debt securities in an aggregate principal amount
of $100 million or more.
Designation
of Restricted and Unrestricted Subsidiaries
The Board of Directors of the Company may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary if that
designation would not cause a Default or Event of Default. If a
Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries
in the Subsidiary properly designated will be deemed to be
Investments made as of the time of the designation, subject to
the limitations on Restricted Payments. That designation will
only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors
of the Company may redesignate any Unrestricted Subsidiary to be
a Restricted Subsidiary if the redesignation would not cause a
Default; provided, that, such designation shall be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary
of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under the
covenant described under the caption
Incurrence of Indebtedness and Issuance of
Preferred Stock, calculated on a pro forma basis as if
such designation had occurred at the beginning of the
four-quarter reference period; and (2) no Default or Event
of Default would be in existence following such designation.
Sale
and Leaseback Transactions
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction;
provided, that, the Company or any Restricted Subsidiary
may enter into a Sale and Leaseback Transaction if:
(1) the Company or that Restricted Subsidiary, as
applicable, could have (a) incurred Indebtedness in an
amount equal to the Attributable Debt relating to such Sale and
Leaseback Transaction under the Fixed Charge Coverage Ratio test
in the first paragraph of the covenant described above under the
caption Incurrence of Indebtedness and
Issuance of Preferred Stock and (b) incurred a Lien
to secure such Indebtedness pursuant to the covenant described
above under the caption Liens;
(2) the gross cash proceeds of that Sale and Leaseback
Transaction are at least equal to the fair market value, as
determined in good faith by the Board of Directors of the
Company and set forth in an Officers Certificate delivered
to the trustee, of the property that is the subject of that Sale
and Leaseback Transaction; and
(3) the transfer of assets in that Sale and Leaseback
Transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, the covenant
described above under the caption
Repurchase
at the Option of Holders Asset Sales.
57
Business
Activities
The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to
the Company and its Restricted Subsidiaries taken as a whole.
Payments
for Consent
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid
any consideration to or for the benefit of any Holder of Notes
for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of the Indenture or the Notes
unless such consideration is offered to be paid to all Holders
of the Notes that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
Reports
Whether or not required by the Commission, so long as any Notes
are outstanding, the Company, upon request, will furnish to the
Holders of Notes:
(1) all quarterly and annual financial and other
information that would be required to be contained in a filing
with the Commission on
Forms 10-Q
and 10-K if
the Company were required to file such Forms, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect to
the annual information only, a report on the annual financial
statements by the Companys certified independent
accountants; and
(2) all current reports that would be required to be filed
with the Commission on
Form 8-K
if the Company were required to file such reports.
In addition, whether or not required by the Commission, the
Company will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the
Commission for public availability within the time periods
specified in the Commissions rules and regulations (unless
the Commission will not accept such a filing) and make such
information available to prospective investors upon request. In
addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to the Holders and to
prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, if any such information is required to be
delivered.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual
financial information required by the preceding paragraph will
include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes thereto, and in
Managements Discussion and Analysis of Financial Condition
and Results of Operations, of the financial condition and
results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results
of operations of the Unrestricted Subsidiaries of the Company.
Notwithstanding anything herein to the contrary, the Company
will not be deemed to have failed to comply with any of its
obligations hereunder for purposes of clause (4) under
Events of Default and Remedies until 120 days
after the date any report hereunder is due.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the
Trustees receipt of such shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Companys
compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers
Certificates).
Events of
Default and Remedies
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes;
58
(2) default in payment when due of the principal of, or
premium, if any, on the Notes;
(3) failure by the Company or any Restricted Subsidiary to
comply with the provisions described under the subheadings
Repurchase at the Option of
Holders Change of Control,
Repurchase at the Option of
Holders Asset Sales, or
Certain Covenants Merger,
Consolidation or Sale of Assets;
(4) failure by the Company or any Guarantor for 60
consecutive days after notice to comply with any of the other
agreements in the Indenture;
(5) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company
or any Restricted Subsidiary (or the payment of which is
guaranteed by the Company or any Restricted Subsidiary) whether
such Indebtedness or guarantee now exists, or is created after
the date of the Indenture, if that default:
(a) is caused by a failure to make any payment due at final
maturity of such Indebtedness (a Payment
Default); or
(b) results in the acceleration of such Indebtedness prior
to its express maturity,
and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default
or the maturity of which has been so accelerated, aggregates
$15.0 million or more;
(6) failure by the Company or any Restricted Subsidiary to
pay final judgments not covered by insurance aggregating in
excess of $15.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(7) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations
under its Note Guarantee; and
(8) certain events of bankruptcy or insolvency described in
the Indenture with respect to the Company or any Restricted
Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary.
In the case of an Event of Default arising from certain events
of bankruptcy or insolvency, with respect to the Company, or any
Restricted Subsidiary that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will
become due and payable immediately without further action or
notice. If any other Event of Default occurs and is continuing,
the trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be
due and payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the trustee in its exercise of
any trust or power. The trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default if it
determines that withholding Notes is in their interest, except a
Default or Event of Default relating to the payment of principal
or interest or Liquidated Damages.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the trustee may on behalf of
the Holders of all of the Notes waive any existing Default or
Event of Default and its consequences under the Indenture except
a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the
Notes.
The Company is required to deliver to the trustee annually a
written statement regarding compliance with the Indenture. Upon
becoming aware of any Default or Event of Default, the Company
is required to deliver to the trustee a written statement
specifying such Default or Event of Default.
59
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or the Guarantors under the
Notes, the Indenture, the Note Guarantees or for any claim based
on, in respect of, or by reason of, such obligations or their
creation.
Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be
effective to waive liabilities under the federal securities laws.
Legal
Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have
all of its obligations discharged with respect to the
outstanding Notes and all obligations of the Guarantors
discharged with respect to their Note Guarantees (Legal
Defeasance) except for:
(1) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, or interest or premium
and Liquidated Damages, if any, on such Notes when such payments
are due from the trust referred to below;
(2) the Companys obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the trustee, and the Companys and the Guarantors
obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company and the Guarantors
released with respect to certain covenants that are described in
the Indenture (Covenant Defeasance) and thereafter
any omission to comply with those covenants will not constitute
a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including
non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described above under the caption
Events of Default and Remedies will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) the Company must irrevocably deposit with the trustee,
in trust, for the benefit of the Holders of the Notes, cash in
U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium
and Liquidated Damages, if any, on the outstanding Notes on the
Stated Maturity or on the applicable redemption date, as the
case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date
and, if the Notes are being defeased to a particular redemption
date, the Company must have delivered to the trustee an
irrevocable notice of redemption;
(2) in the case of Legal Defeasance, the Company shall have
delivered to the trustee an Opinion of Counsel reasonably
acceptable to the trustee confirming that (a) the Company
has received from, or there has been published by, the Internal
Revenue Service a ruling or (b) since the date of the
Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel will confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
60
(3) in the case of Covenant Defeasance, the Company shall
have delivered to the trustee an Opinion of Counsel reasonably
acceptable to the trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is
continuing either (a) on the date of such deposit or
(b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period
ending on the 123rd day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than the
Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is
bound;
(6) the Company must have delivered to the trustee an
Officers Certificate stating that the deposit was not made
by the Company with the intent of preferring the Holders of
Notes over the other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding creditors of the
Company or others;
(7) the Company must have delivered to the trustee an
Opinion of Counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of
Section 547 of the U.S. Bankruptcy Code or
Section 15 of the New York Debtor and Creditor Law; and
(8) the Company must deliver to the trustee an
Officers Certificate and an Opinion of Counsel, each
stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of,
or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture or the
Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for,
Notes).
Without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a
non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any Note or change the optional redemption dates or optional
redemption prices from those stated under the caption
Optional Redemption;
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default or Event of Default in the payment of
principal of, or interest or premium, or Liquidated Damages, if
any, on the Notes (except a rescission of acceleration of the
Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(5) make any Note payable in currency other than that
stated in the Notes;
61
(6) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of
Notes to receive payments of principal of, or interest or
premium or Liquidated Damages, if any, on the Notes;
(7) waive a redemption payment with respect to any Note;
(8) release any Guarantor from any of its obligations under
its Note Guarantee or the Indenture, except in accordance with
the terms of the Indenture;
(9) impair the right to institute suit for the enforcement
of any payment on or with respect to the Notes or the Note
Guarantees;
(10) amend, change or modify the obligation of the Company
to make and consummate an Asset Sale Offer with respect to any
Asset Sale in accordance with the covenant described under the
subheading Repurchase at the Option of
Holders Asset Sales after the obligation to
make an Asset Sale Offer has arisen or the obligation of the
Company to make and consummate a Change of Control Offer in the
event of a Change of Control in accordance with the covenant
described under the subheading Repurchase at
the Option of Holders Change of Control, after
a Change of Control has occurred including, in each case,
amending, changing or modifying any definition relating
thereto; or
(11) make any change in the preceding amendment and waiver
provisions.
Notwithstanding the preceding, without the consent of any Holder
of Notes, the Company, the Guarantors, if any, and the trustee
may amend or supplement the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(3) to provide for the assumption of the Companys or
any Guarantors obligations to Holders of Notes in the case
of a merger or consolidation or sale of all or substantially all
of the Companys or such Guarantors assets;
(4) to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not
adversely affect the legal rights under the Indenture of any
such Holder;
(5) to comply with requirements of the Commission in order
to effect or maintain the qualification of the Indenture under
the Trust Indenture Act;
(6) to conform the text of the Indenture, the Note
Guarantees or the Notes to any provision of this Description of
Notes to the extent that such provision in this Description of
Notes was intended to be a verbatim recitation of a provision of
the Indenture, the Note Guarantees or the Notes;
(7) to provide for the issuance of additional Notes in
accordance with the limitations described herein; or
(8) to allow a Subsidiary to execute a supplemental
indenture for the purpose of providing a Note Guarantee in
accordance with the provisions of the Indenture.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes issued thereunder, when:
(1) either:
(a) all Notes that have been authenticated, except lost,
stolen or destroyed Notes that have been replaced or paid and
Notes for whose payment money has been deposited in trust and
thereafter repaid to the Company, have been delivered to the
trustee for cancellation; or
(b) all Notes that have not been delivered to the trustee
for cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or will become
due and
62
payable within one year, and the Company or any Guarantor has
irrevocably deposited or caused to be deposited with the trustee
as trust funds in trust solely for the benefit of the Holders,
cash in U.S. dollars, non-callable Government Securities,
or a combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on the Notes not delivered to
the trustee for cancellation for principal, premium and
Liquidated Damages, if any, and accrued interest to the date of
maturity or redemption;
(2) no Default or Event of Default has occurred and is
continuing on the date of the deposit or will occur as a result
of the deposit and the deposit will not result in a breach or
violation of, or constitute a default under, any other
instrument to which the Company or any Guarantor is a party or
by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be
paid all sums payable by it under the Indenture; and
(4) the Company has delivered irrevocable instructions to
the trustee under the Indenture to apply the deposited money
toward the payment of the Notes at maturity or the redemption
date, as the case may be.
In addition, the Company must deliver an Officers
Certificate and an Opinion of Counsel to the trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Concerning
the Trustee
If the trustee becomes a creditor of the Company or any
Guarantor, the Indenture limits its right to obtain payment of
claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise.
The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest, as described
in the Trust Indenture Act, it must eliminate such conflict
within 90 days, apply to the Commission for permission to
continue or resign.
The Holders of a majority in principal amount of the then
outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the trustee, subject to certain exceptions. The
Indenture provides that in case an Event of Default occurs and
is continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the
trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder has offered to the trustee
security and indemnity satisfactory to it against any loss,
liability or expense.
Book-Entry,
Delivery and Form
Notes initially will be represented by one or more Notes in
registered, global form without interest coupons (the
Global Notes). The Global Notes will be deposited
upon issuance with the trustee as custodian for The Depository
Trust Company (DTC), in New York, New York, and
registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC
as described below.
Except as set forth below, the Global Notes may be transferred,
in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the
Global Notes may not be exchanged for Notes in certificated form
except as described below. See Exchange of
Global Notes for Certificated Notes. Owners of beneficial
interests in the Global Notes will not be entitled to receive
physical delivery of Notes in certificated form.
In addition, transfers of beneficial interests in the Global
Notes will be subject to the applicable rules and procedures of
DTC and its direct or indirect participants (including, if
applicable, those of Euroclear and Clearstream), which may
change from time to time.
63
Depository
Procedures
The following description of the operations and procedures of
DTC, the Euroclear System (Euroclear ) and
Clearstream Banking, S.A. (Clearstream) is provided
solely as a matter of convenience. These operations and
procedures are solely within the control of the respective
settlement systems and are subject to changes by them. We take
no responsibility for these operations and procedures and urge
investors to contact the system or their participants directly
to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company
created to hold securities for its participating organizations
(collectively, the Participants) and to facilitate
the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in
accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and
certain other organizations. Access to DTCs system is also
available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly
(collectively, the Indirect Participants). Persons
who are not Participants may beneficially own securities held by
or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers
of ownership interests in, each security held by or on behalf of
DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised us that, pursuant to procedures established
by it:
(1) upon deposit of the Global Notes, DTC will credit the
accounts of Participants designated by the Initial Purchasers
with portions of the principal amount of the Global
Notes; and
(2) ownership of these interests in the Global Notes will
be shown on, and the transfer of ownership of these interests
will be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
Investors in the Global Notes who are Participants in DTCs
system may hold their interests therein directly through DTC or
indirectly through organizations (including Euroclear and
Clearstream) which are Participants in such system. Investors in
the Regulation S Global Notes may hold their interests in
such Notes through Euroclear, Clearstream or DTC if they are
Participants in such systems or indirectly through organizations
which are Participants in such systems. However, upon issuance,
we intend to settle by delivering interests in the
Regulation S Global Notes solely through Euroclear or
Clearstream. All interests in a Global Note, including those
held through Euroclear or Clearstream, may be subject to the
procedures and requirements of DTC. Those interests held through
Euroclear or Clearstream may also be subject to the procedures
and requirements of such systems. The laws of some states
require that certain Persons take physical delivery in
definitive form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Note to
such Persons will be limited to that extent. Because DTC can act
only on behalf of Participants, which in turn act on behalf of
Indirect Participants, the ability of a Person having beneficial
interests in a Global Note to pledge such interests to Persons
that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Except as described below, owners of interest in the Global
Notes will not have Notes registered in their names, will not
receive physical delivery of Notes in certificated form and will
not be considered the registered owners or Holders
thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest and
premium and liquidated damages, if any, on a Global Note
registered in the name of DTC or its nominee will be payable to
DTC in its capacity as the registered Holder under the
Indenture. Under the terms of the Indenture, we and the trustee
will treat the Persons in whose names the Notes, including the
Global Notes, are registered as the owners of the Notes for
64
the purpose of receiving payments and for all other purposes.
Consequently, neither we, the trustee nor any of our agents has
or will have any responsibility or liability for:
(1) any aspect of DTCs records or any
Participants or Indirect Participants records
relating to or payments made on account of beneficial ownership
interest in the Global Notes or for maintaining, supervising or
reviewing any of DTCs records or any Participants or
Indirect Participants records relating to the beneficial
ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices
of DTC or any of its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of
any payment in respect of securities such as the Notes
(including principal and interest), is to credit the accounts of
the relevant Participants with the payment on the payment date
unless DTC has reason to believe it will not receive payment on
such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest
in the principal amount of the relevant security as shown on the
records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed
by standing instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants
and will not be the responsibility of DTC, the trustee or us.
Neither we nor the trustee will be liable for any delay by DTC
or any of its Participants in identifying the beneficial owners
of the Notes, and we and the trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Transfers between Participants in DTC will be effected in
accordance with DTCs procedures, and will be settled in
same-day
funds, and transfers between participants in Euroclear and
Clearstream will be effected in accordance with their respective
rules and operating procedures.
Subject to compliance with the transfer restrictions applicable
to the Notes described herein, cross-market transfers between
the Participants in DTC, on the one hand, and Euroclear or
Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTCs rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective
depositary; however, such cross-market transactions will require
delivery of instructions to Euroclear or Clearstream, as the
case may be, by the counterparty in such system in accordance
with the rules and procedures and within the established
deadlines (Brussels time) of such system. Euroclear or
Clearstream, as the case may be, will, if the transaction meets
its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement
on its behalf by delivering or receiving interests in the
relevant Global Note in DTC, and making or receiving payment in
accordance with normal procedures for
same-day
funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly
to the depositories for Euroclear or Clearstream.
DTC has advised us that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more
Participants to whose account DTC has credited the interests in
the Global Notes and only in respect of such portion of the
aggregate principal amount of the Notes as to which such
Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC
reserves the right to exchange the Global Notes for legended
Notes in certificated form, and to distribute such Notes to its
Participants.
Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures to facilitate transfers of interests in the
Global Notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to
continue to perform such procedures, and may discontinue such
procedures at any time. Neither we nor the trustee nor any of
their respective agents will have any responsibility for the
performance by DTC, Euroclear or Clearstream or their respective
participants or indirect participants of their respective
obligations under the rules and procedures governing their
operations.
65
Exchange
of Global Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form (Certificated Notes) if:
(1) DTC (a) notifies us that it is unwilling or unable
to continue as depositary for the Global Notes or (b) has
ceased to be a clearing agency registered under the Exchange Act
and, in either case, we fail to appoint a successor depositary;
(2) we, at our option, notify the trustee in writing that
we elect to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default or Event
of Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be
exchanged for Certificated Notes upon prior written notice given
to the trustee by or on behalf of DTC in accordance with the
Indenture. In all cases, Certificated Notes delivered in
exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
Same
Day Settlement and Payment
We will make payments in respect of the Notes represented by the
Global Notes (including principal, premium, if any, interest and
liquidated damages, if any) by wire transfer of immediately
available funds to the accounts specified by the Global Note
Holder. We will make all payments of principal, interest and
premium and liquidated damages, if any, with respect to
Certificated Notes by wire transfer of immediately available
funds to the accounts specified by the Holders of the
Certificated Notes or, if no such account is specified, by
mailing a check to each such Holders registered address,
but only, in connection with any payment of principal or
redemption or purchase price of or premium on any certificated
note, upon surrender thereof at the office of the trustee or any
paying agent. The Notes represented by the Global Notes are
expected to be eligible to trade in the PORTAL market and to
trade in DTCs
Same-Day
Funds Settlement System, and any permitted secondary market
trading activity in such Notes will, therefore, be required by
DTC to be settled in immediately available funds. We expect that
secondary trading in any Certificated Notes will also be settled
in immediately available funds.
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant purchasing an interest in a
Global Note from a Participant in DTC will be credited, and any
such crediting will be reported to the relevant Euroclear or
Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC.
DTC has advised us that cash received in Euroclear or
Clearstream as a result of sales of interests in a Global Note
by or through a Euroclear or Clearstream participant to a
Participant in DTC will be received with value on the settlement
date of DTC but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day for
Euroclear or Clearstream following DTCs settlement date.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all
such terms, as well as any other capitalized terms used herein
for which no definition is provided.
Acquired Debt means, with respect to any specified
Person:
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Subsidiary
of such specified Person, whether or not such Indebtedness is
incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Subsidiary of, such
specified Person; and
66
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
Affiliate of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For purposes of this definition, control, as
used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise;
provided, that, beneficial ownership of 10% or more of
the Voting Stock of a Person will be deemed to be control. For
purposes of this definition, the terms controlling,
controlled by and under common control
with have correlative meanings.
Applicable Premium means, with respect to a Note at
any date of redemption, the greater of (i) 1.0% of the
principal amount of such Note and (ii) the excess of
(A) the present value at such date of redemption of
(1) the redemption price of such Note at October 15,
2013 (such redemption price being described under
Optional Redemption) plus (2) all
remaining required interest payments due on such Note through
October 15, 2013 (excluding accrued but unpaid interest to
the date of redemption), computed using a discount rate equal to
the Treasury Rate plus 50 basis points, over (B) the
principal amount of such Note.
Asset Sale means:
(1) the sale, lease, transfer, conveyance or other
disposition of any assets or rights; provided, that, the
sale, lease, conveyance, transfer or other disposition of all or
substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the
provisions of the Indenture described above under the subheading
Repurchase at the Option of
Holders Change of Control
and/or the
provisions described above under the subheading
Certain Covenants Merger,
Consolidation or Sale of Assets and not by the
provisions of the covenant described under the
subheading Repurchase at the Option of
Holders Asset Sales; and
(2) the issuance or sale by the Company or any of its
Restricted Subsidiaries of Equity Interests of any of the
Companys Subsidiaries.
Notwithstanding the preceding, the following items will not be
deemed to be Asset Sales:
(1) any single transaction or series of related
transactions that involves the sale of assets or the issuance or
sale of Equity Interests of a Restricted Subsidiary having a
fair market value of less than $10.0 million;
(2) a transfer of assets by the Company to any of its
Restricted Subsidiaries or by any Restricted Subsidiary to the
Company or any other Restricted Subsidiary;
(3) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary;
(4) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash
Equivalents; and
(6) a Restricted Payment or Permitted Investment that is
permitted by the covenant described above under the subheading
Certain Covenants Restricted
Payments.
Asset Swap means an exchange of assets other than
cash, Cash Equivalents or Equity Interests of the Company or any
Subsidiary by the Company or a Restricted Subsidiary of the
Company for :
(1) one or more Permitted Businesses;
(2) a controlling equity interest in any Person that
becomes a Restricted Subsidiary whose assets consist primarily
of one or more Permitted businesses; and/or
(3) one or more real estate properties.
67
Attributable Debt in respect of a Sale and Leaseback
Transaction means, at the time of determination, the present
value of the obligation of the lessee for net rental payments
during the remaining term of the lease included in such Sale and
Leaseback Transaction including any period for which such lease
has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a
discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.
Beneficial Owner has the meaning assigned to such
term in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act, except that in calculating the
beneficial ownership of any particular person (as
that term is used in Section 13 (d) (3) of the
Exchange Act), such person will be deemed to have
beneficial ownership of all securities that such
person has the right to acquire by conversion or
exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a
subsequent condition. The terms Beneficially Owns
and Beneficially Owned have a corresponding meaning.
Board of Directors means:
(1) with respect to a corporation, the board of directors
of the corporation;
(2) with respect to a partnership, the board of directors
of the general partner of the partnership; and
(3) with respect to any other Person, the board or
committee of such Person serving a similar function.
Capital Lease Obligation means, at the time any
determination is to be made, the amount of the liability in
respect of a capital lease that would at that time be required
to be capitalized on a balance sheet in accordance with GAAP.
Capital Stock means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
Cash Equivalents means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality of the United States government (provided
that the full faith and credit of the United States is
pledged in support of those securities) (Government
Securities) having maturities of not more than one year
from the date of acquisition;
(3) readily marketable direct obligations issued by any
state of the United States of America or any political
subdivision thereof having one of the two highest ratings
obtainable from either Moodys or Standard &
Poors with maturities of 12 months or less from the
date of acquisition;
(4) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of
acquisition, bankers acceptances with maturities not
exceeding one year and overnight bank deposits, in each case,
with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thomson Bank Watch Rating of
B or better;
(5) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (2), (3) and (4) above entered into with any
financial institution meeting the qualifications specified in
clause (4) above;
68
(6) commercial paper having the highest rating obtainable
from Moodys or Standard & Poors and in
each case maturing within one year after the date of
acquisition; and
(7) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in
clauses (1) through (6) of this definition; and
(8) with respect to any Foreign Subsidiary, deposit
accounts held by such Foreign Subsidiary in local currency at
local commercial banks or savings banks or saving and loan
associations in the ordinary course of business.
Change of Control means the occurrence of any of the
following:
(1) the direct or indirect sale, transfer, assignment,
lease, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries, taken as a whole, to
any person (as that term is used in
Section 13(d)(3) of the Exchange Act other than the Company
and any Restricted Subsidiary);
(2) the approval by the holders of the Voting Stock of the
Company of a plan relating to the liquidation or dissolution of
the Company or, if no such approval is required, the adoption of
a plan by the Company relating to the liquidation or dissolution
of the Company;
(3) the consummation of any transaction (including without
limitation any merger or consolidation) the result of which is
that any person or group (as that term
is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the Beneficial Owner, directly or indirectly, of more
than 45% of the voting power of the Voting Stock of the Company;
(4) the Company consolidates with, or merges with or into,
any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction
in which any of the outstanding Voting Stock of the Company or
such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction
where (A) the Voting Stock of the Company outstanding
immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of
the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such
issuance) and (B) immediately after such transaction, no
person or group (as such terms are used
in Section 13(d) and 14(d) of the Exchange Act), becomes,
directly or indirectly, the Beneficial Owner of 45% or more of
the voting power of all classes of Voting Stock of the
Company; or
(5) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
Consolidated Cash Flow means, with respect to any
specified Person for any period, the Consolidated Net Income of
such Person for such period; plus, in each case, to the
extent deducted in computed Consolidated Net Income,
(1) losses realized by such Person and its Restricted
Subsidiaries in connection with sales of assets outside the
ordinary course of business; plus
(2) provision for taxes based on income or profits of such
Person and its Restricted Subsidiaries for such period;
plus
(3) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of
letters of credit or bankers acceptance financings, and
net of the effect of all payments made or received pursuant to
Hedging Obligations), net of Non-Recourse Interest Payments
received in cash by the Company or any Restricted Subsidiary
relating to any Non-Recourse
69
Project Financing Indebtedness up to the amount of interest
expense for such Non-Recourse Project Financing Indebtedness;
plus
(4) depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash payments in any
future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted
Subsidiaries for such period; minus
(5) non-cash items increasing such Consolidated Net Income
for such period, other than the accrual of revenue in the
ordinary course of business;
in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on
the income or profits of, and the depreciation and amortization
and other non-cash expenses of, a Restricted Subsidiary of the
Company shall be added to Consolidated Net Income to compute
Consolidated Cash Flow of the Company only to the extent that a
corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted
Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
Consolidated Net Income means, with respect to any
specified Person for any period, the aggregate of the Net Income
of such Person and its Restricted Subsidiaries for such period,
on a consolidated basis, determined in accordance with GAAP;
provided, that:
(1) the Net Income (but not loss) of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity
method of accounting will be included only to the extent of the
amount of dividends or distributions paid in cash to the
specified Person or a Restricted Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired during such
period for any period prior to the date of such acquisition
shall be excluded;
(4) the cumulative effect of a change in accounting
principles shall be excluded; and
(5) the Net Income or loss of any Unrestricted Subsidiary
will be excluded, whether or not distributed to the specified
Person or one of its Restricted Subsidiaries.
Consolidated Tangible Assets means the total assets,
less goodwill and other intangibles shown on the most recent
consolidated balance sheet of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance
with GAAP less all
write-ups
(other than
write-ups in
connection with acquisitions) subsequent to the date of the
Indenture in the book value of any asset (except any such
intangible assets) owned by the Company or any of the
Companys Restricted Subsidiaries.
Continuing Directors means, as of any date of
determination, any member of the Board of Directors of the
Company who:
(1) was a member of such Board of Directors on the date of
the Indenture; or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such
nomination or election.
70
Credit Agreement means that certain Third Amended
and Restated Credit Agreement dated as of January 24, 2007,
by and among the Company, BNP Paribas as administrative agent
for the lenders and as lead arranger and syndication agent and
the other lenders named therein, and other parties thereto,
including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and
in each case as amended (and/or amended and restated) as of the
date of the Indenture and as may be further amended (and/or
amended and restated), modified, renewed, refunded, replaced or
refinanced from time to time, in whole or in part, with the same
or different lenders (including, without limitation, any
amendment, amendment and restatement, modification, renewal,
refunding, replacement or refinancing that increases the maximum
amount of the loans made or to be made thereunder).
Credit Facilities means, one or more debt facilities
(including, without limitation, the Credit Agreement) or
commercial paper facilities, in each case with banks or other
institutional lenders providing for revolving credit loans, term
loans, project financings, receivables financing (including
through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended,
(and/or amended and restated) restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time
to time, but excluding, in each case any debt securities.
Default means any event that is, or with the passage
of time or the giving of notice or both would be, an Event of
Default.
Designated Asset means any facility used in a
Permitted Business owned or leased by the Company or any
Restricted Subsidiary that is subject to a Government
Authoritys option to purchase or right of reversion under
the related Designated Asset Contract.
Designated Asset Contract means (a) contracts
or arrangements in existence on the date of the Indenture with
respect to the following facilities under which a Governmental
Authority has the right to purchase such facility for the
Designated Asset Value of such facility, or with respect to
which there is a right of reversion of all or a portion of the
Companys or a Restricted Subsidiarys ownership or
leasehold interest in such facility: Western Region Detention
Facility at San Diego; Central Arizona Correctional
Facility; Arizona State Prison Phoenix; Robert A. Deyton
Detention Facility; Lawton Correctional Facility; Arizona State
Prison Florence; and Columbia Regional Care Center; and
(b) a contract that is acquired or entered into after the
date of the Indenture under which a Governmental Authority has
an option to purchase a Designated Asset from the Company or a
Restricted Subsidiary for a Designated Asset Value or a right of
reversion of all or a portion of the Companys or such
Restricted Subsidiarys ownership or leasehold interest in
such Designated Asset, provided that such contract is acquired
or entered into in the ordinary course of business and is
preceded by (i) a resolution of the Board of Directors of
the Company set forth in an Officers Certificate
certifying that the acquisition or entering into of such
contract has been approved by a majority of the members of the
Board of Directors or (ii) an Officers Certificate
certifying that the acquisition or entering into of such
contract has been approved by the Chief Executive Officer of the
Company and, in either case, the option to purchase or right of
reversion in such contract is on terms the Board of Directors,
or the Chief Executive Officer, as applicable, has determined to
be reasonable and in the best interest of the Company taking
into account the transaction contemplated thereby or by the
acquisition thereof.
Designated Asset Value means the aggregate
consideration to be received by the Company or a Restricted
Subsidiary as set forth in a Designated Asset Contract.
Designated Non-Cash Consideration means the fair
market value of total consideration received by the Company or a
Restricted Subsidiary in connection with an Asset Sale that is
so designated as Designated Non-Cash Consideration pursuant to
an Officers Certificate, setting forth the basis of such
valuation, executed by the Companys principal executive
officer or principal financial Officer, less the amount of cash
or Cash Equivalents received in connection with the Asset Sale.
Disqualified Stock means any Capital Stock that, by
its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at
the option of the holder of the Capital Stock), or upon the
happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund
71
obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to
the date that is 91 days after the date on which the Notes
mature. Notwithstanding the preceding sentence, any Capital
Stock that would constitute Disqualified Stock solely because
the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of
a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide
that the Company may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or
redemption complies with the covenant described above under the
subheading Certain Covenants
Restricted Payments.
Domestic Subsidiary means any Restricted Subsidiary
of the Company that was formed under the laws of the United
States or any state of the United States (but not the laws of
Puerto Rico) or the District of Columbia or that guarantees or
otherwise provides direct credit support for any Indebtedness of
the Company or any Guarantor.
Equity Interests means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
Equity Offering means an offering of Capital Stock
(other than Disqualified Stock or Capital Stock that by its
terms has a preference in liquidation or as to dividends over
any other Capital Stock) of the Company (other than (1) an
offering pursuant to a registration statement on
Form S-8
or otherwise relating to equity securities issuable under any
employee benefit plan of the Company and (2) an offering
with aggregate net proceeds to the Company of less than
$35.0 million).
Existing Indebtedness means the Indebtedness of the
Company and its Subsidiaries (other than Indebtedness under the
Credit Agreement) in existence on the date of the Indenture,
until such amounts are repaid.
Event of Default means any event that is described
under the subheading Events of Default and
Remedies.
Fixed Charges means, with respect to any specified
Person for any period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized, including, without
limitation, amortization of original issue discount, the
interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers acceptance
financings, and net of the effect of all payments made or
received pursuant to Hedging Obligations, net of Non-Recourse
Interest Payments received in cash by the Company or any
Restricted Subsidiary relating to any Non-Recourse Project
Financing Indebtedness up to the amount of interest expense for
such Non-Recourse Project Financing Indebtedness, but excluding
amortization of debt issuance costs and non-cash interest
expense imputed on convertible debt instruments pursuant to APB
No. 14-1;
plus
(2) any interest expense on Indebtedness of another Person
to the extent such indebtedness is Guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus
(3) the product of (a) all dividends, whether paid or
accrued and whether or not in cash, on any series of
Disqualified Stock or preferred stock of such Person or any of
its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of the Company
(other than Disqualified Stock), times (b) a fraction, the
numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local
effective cash tax rate of such Person, expressed as a decimal,
in each case, determined on a consolidated basis and in
accordance with GAAP.
Fixed Charge Coverage Ratio means with respect to
any specified Person for any period, the ratio of the
Consolidated Cash Flow of such Person for such period to the
Fixed Charges of such Person for such
72
period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, repays,
repurchases or redeems any indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems
preferred stock subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the
Calculation Date), then the Fixed Charge Coverage
Ratio will be calculated giving pro forma effect to such
incurrence, assumption, Guarantee, repayment, repurchase or
redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds
therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period, provided,
however, that interest expense, if any, attributable to
any Non-Recourse Project Financing Indebtedness computed on a
pro forma basis, shall be computed giving pro forma effect to
any Non-Recourse Interest Payments related to such Non-Recourse
Project Financing Indebtedness, provided, further,
that the obligation to make such Non-Recourse Interest Payments
commences with the incurrence of the corresponding Non-Recourse
Project Financing Indebtedness.
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(1) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the
Calculation Date will be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period will be
calculated on a pro forma basis in accordance with
Regulation S-X
under the Securities Act, but without giving effect to
clause (3) of the proviso set forth in the definition of
Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, will be excluded; and
(3) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date.
Foreign Subsidiary means any Restricted Subsidiary
of the Company that is not a Domestic Subsidiary.
GAAP means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of
the accounting profession as amended
and/or
modified from time to time. All ratios and computations
contained or referred to in the Indenture shall be computed in
conformity with GAAP applied on a consistent basis.
Governmental Authority means any nation, province,
state, municipality or political subdivision thereof, and any
government or any agency or instrumentality thereof exercising
executive, legislative, regulatory or administrative functions
of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership
or otherwise, by any of the foregoing.
Government Operating Agreement means any management
services contract, operating agreement, use agreement, lease or
similar agreement with a Governmental Authority relating to a
facility in a Permitted Business.
Guarantee means a guarantee other than by
endorsement of negotiable instruments for collection or deposit
in the ordinary course of business, direct or indirect, in any
manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements
in respect thereof, of all or any part of any Indebtedness,
provided that the pledge of any Government Operating Agreement
with respect to any facility to secure Non-Recourse Project
Financing Indebtedness related to such facility shall not be
deemed a Guarantee.
73
Guarantors means the Initial Guarantors and any
other Restricted Subsidiary that executes a Note Guarantee in
accordance with the provisions of the Indenture and its
respective successors and assigns until released in accordance
with the terms of the Indenture.
Hedging Obligations means, with respect to any
specified Person, the obligations of such Person under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements;
(2) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates; and
(3) foreign exchange contracts, currency swap agreements,
currency option agreements and other agreements or arrangements
with respect to foreign currency exchange rates.
Indebtedness means, with respect to any specified
Person, any indebtedness of such Person, whether or not
contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof);
(3) in respect of bankers acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the
purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than
letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared
in accordance with GAAP. In addition, the term
Indebtedness includes all Indebtedness of others
secured by a Lien on any asset of the specified Person (whether
or not such Indebtedness is assumed by the specified Person;
provided that the pledge of any Government Operating Agreement
to secure Non-Recourse Project Financing Indebtedness related to
the facility that is the subject of such Governmental Operating
Agreement shall not be deemed Indebtedness) and, to the extent
not otherwise included, the Guarantee by the specified Person of
any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will
be:
(1) the accreted value of the Indebtedness, in the case of
any Indebtedness issued with original issue discount; and
(2) the principal amount of the Indebtedness, together with
any interest on the Indebtedness that is more than 30 days
past due, in the case of any other Indebtedness.
Initial Guarantors means the Restricted Subsidiaries
of the Company that Guarantee the Notes on the date the Notes
were originally issued, all of which are signatories to the
Indenture.
Investments means, with respect to any Person, all
direct or indirect investments by such Person in other Persons
(including Affiliates) in the forms of loans (including
Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP and including
the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of the Company, the
Company will be deemed to have made an Investment on the date of
any such sale or disposition equal to
74
the fair market value of all Investments in such Restricted
Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above
under the subheading Certain
Covenants Restricted Payments. The
acquisition by the Company or any Restricted Subsidiary of the
Company of a Person that holds an Investment in a third Person
will be deemed to be an Investment by the Company or such
Restricted Subsidiary in such third Person in an amount equal to
the fair market value of the Investment held by the acquired
Person in such third Person in an amount determined as provided
in the final paragraph of the covenant described above under the
subheading Certain Covenants
Restricted Payments.
Lien means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, including any
conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or
give a security interest in and any filing of or agreement to
give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction.
Moodys means Moodys Investors Service,
Inc.
Net Income means, with respect to any specified
Person for any period, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in
connection with: (a) any sale of assets outside the
ordinary course of business; or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries
or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries;
(2) any extraordinary gain or loss, together with any
related provision for taxes on such extraordinary gain or loss;
(3) any loss resulting from impairment of goodwill recorded
on the consolidated financial statements of such Person pursuant
to SFAS No., 142 Goodwill and Other Intangible
Assets;
(4) any loss resulting from the change in fair value of a
derivative financial instrument pursuant to
SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities; and
(5) amortization of debt issuance costs.
Net Proceeds means the aggregate cash proceeds
received by the Company or any of its Restricted Subsidiaries in
respect of any Asset Sale (including, without limitation, any
cash or Cash Equivalents received upon the sale or other
disposition of any non-cash consideration received in any Asset
Sale), net of the direct costs relating to such Asset Sale,
including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as
a result of the Asset Sale, in each case, after taking into
account any available tax credits or deductions and any tax
sharing arrangements, and amounts required to be applied to the
repayment of Indebtedness, secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP.
Non-Recourse Debt means Indebtedness:
(1) as to which neither the Company nor any of its
Restricted Subsidiaries (a) provides credit support of any
kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or
(c) constitutes the lender;
(2) no default with respect to which (including any rights
that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any
other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or
cause the payment of the Indebtedness to be accelerated or
payable prior to its stated maturity; and
75
(3) as to which the lenders have been notified in writing
that they will not have any recourse to the stock, property or
assets of the Company or any of its Restricted Subsidiaries.
Non-Recourse Project Financing Indebtedness means
any Indebtedness of a Subsidiary (the Project Financing
Subsidiary) incurred in connection with the acquisition,
construction or development of any facility:
(1) where either the Company, a Restricted Subsidiary or
such Project Financing Subsidiary operates or is responsible for
the operation of the facility pursuant to a Government Operating
Agreement;
(2) as to which neither the Company nor any of its
Restricted Subsidiaries, other than such Project Financing
Subsidiary, (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), it being understood that neither
(i) equity Investments funded at the time of or prior to
the incurrence of such Indebtedness, nor (ii) the pledge by
the Company or any Restricted Subsidiary of the Government
Operating Agreement relating to such facility shall be deemed
credit support or an Investment or (b) is directly or
indirectly liable as a guarantor or otherwise;
(3) where, upon the termination of the management services
contract with respect to such facility, neither the Company nor
any of its Restricted Subsidiaries, other than the Project
Financing Subsidiary, will be liable, directly or indirectly, to
make any payments with respect to such Indebtedness (or portion
thereof);
(4) the interest expense related to such Indebtedness is
fully serviced by a payment pursuant to a Government Operating
Agreement with respect to such facility (the Non-Recourse
Interest Payment); and
(5) such Project Financing Subsidiary has no assets other
than the assets, including working capital, reasonably related
to the design, construction, management and financing of the
facility.
Note Guarantee means a Guarantee of the Notes
pursuant to the Indenture.
Obligations means any principal, interest,
penalties, fees, indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any
Indebtedness.
Officer means, with respect to any Person, the
Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, an Assistant Secretary or any Vice-President of
such Person.
Officers Certificate means a certificate
signed on behalf of the Company by at least two Officers of the
Company, one of whom must be the principal executive officer,
the principal financial officer or the principal accounting
officer of the Company, that meets the requirements of the
Indenture.
Permitted Business means the business conducted by
the Company and its Restricted Subsidiaries on the date of the
Indenture and businesses reasonably related thereto or ancillary
or incidental thereto or a reasonable extension thereof,
including the privatization of governmental services.
Permitted Investments means:
(1) any Investment in the Company or in a Restricted
Subsidiary (other than a Project Financing Subsidiary);
(2) any Investment in cash or Cash Equivalents;
(3) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person (other than a Project
Financing Subsidiary), if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary (other than
a Project Financing Subsidiary); or
(b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, the Company or any Restricted
Subsidiary (other than a Project Financing Subsidiary);
76
(4) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the covenant described above under the
subheading Repurchase at the Option of
Holders Asset Sales;
(5) any Investments received in compromise of obligations
of trade creditors or customers that were incurred in the
ordinary course of business, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of any trade creditor or customer;
(6) Hedging Obligations entered into the ordinary course of
business and not for any speculative purpose;
(7) other Investments in any other Person having an
aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent
changes in value), when taken together with all other
Investments made pursuant to this clause (7) not to exceed:
(a) $40.0 million; plus (b) the net reductions in
Investments made pursuant to this clause (7) resulting from
distributions on or repayments of such Investments or from the
net cash proceeds from the sale or other disposition of any such
Investment; provided, that, the net reduction in any Investment
shall not exceed the amount of such Investment;
(8) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in
the ordinary course of business;
(9) loans or advances to employees made in the ordinary
course of business of the Company or any Restricted Subsidiary
not to exceed $5.0 million outstanding at any one time for
all loans or advances under this clause (9);
(10) stock, obligations or securities received in
settlement of debts created in the ordinary course of business
and owing to the Company or any Restricted Subsidiary or in
satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(11) Investments in existence on the date of the Indenture;
(12) Investments that are made or received in exchange for
Equity Interests (other than Disqualified Stock) of the Company;
(13) Investments in South African Services Pty Ltd. having
an aggregate fair market value, when taken together with all
other Investments made pursuant to this clause (13) not to
exceed $30.0 million;
(14) any Investments made or acquired with the net cash
proceeds of a substantially concurrent issuance or sale of
Equity Interests (other than Disqualified Stock) of the
Company; and
(15) any Investment in any Person that is not at the time
of such Investment, or does not thereby become, a Restricted
Subsidiary, in an aggregate amount (measured on the date such
Investment was made and without giving effect to subsequent
changes in value), when taken together with all other
Investments made pursuant to this clause (15) since the
date of first issuance of the Notes (but, to the extent that any
Investment made pursuant to this clause (15) since the date
of first issuance of the Notes is sold or otherwise liquidated
for cash, minus the lesser of (a) the cash return of
capital with respect to such Investment (less the cost of
disposition, if any) and (b) the initial amount of such
Investment) not to exceed 10% of Consolidated Tangible Assets;
provided that the Company or a Restricted Subsidiary of the
Company has entered, or concurrently with any such Investment,
enters into or assumes a Government Operating Agreement with
respect to assets of such Person that are used or useful in a
Permitted Business.
77
Permitted Liens means:
(1) Liens on any assets (including real or personal
property) of the Company and any Restricted Subsidiary securing
Indebtedness and other Obligations under Credit Facilities that
were permitted to be incurred by the terms of the Indenture;
(2) Liens in favor of the Company or the Guarantors;
(3) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company
or any Restricted Subsidiary of the Company; provided
that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with
the Company or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition
of the property by the Company or any Restricted Subsidiary of
the Company, provided that such Liens were in existence
prior to the contemplation of such acquisition and do not extend
to any property other than the property so acquired by the
Company or the Restricted Subsidiary;
(5) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business;
(6) Liens to secure Indebtedness (including Capital Lease
Obligations) incurred under clause (4) of the second
paragraph of the covenant described above under the
subheading Certain Covenants
Incurrence of Indebtedness and Issuance of Preferred
Stock covering only the assets acquired with such
Indebtedness;
(7) Liens existing on the date of the Indenture;
(8) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested
in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided, that, any reserve or
other appropriate provision as is required in conformity with
GAAP has been made therefor;
(9) Liens securing Permitted Refinancing Indebtedness;
provided that any such Lien does not extend to or cover
any property, Capital Stock or Indebtedness other than the
property, shares or debt securing the Indebtedness so refunded,
refinanced or extended;
(10) Attachment or judgment Liens not giving rise to a
Default or an Event of Default;
(11) Liens on the Capital Stock of Unrestricted
Subsidiaries securing Indebtedness of such Unrestricted
Subsidiaries;
(12) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $15.0 million at any one
time outstanding;
(13) pledges or deposits under workmens compensation
laws, unemployment insurance laws or similar legislation, or
good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which
the Company or any Restricted Subsidiary is a party, or deposits
to secure public or statutory obligations of the Company or any
Restricted Subsidiary or deposits or cash or Government
Securities to secure surety or appeal bonds to which the Company
or any Restricted Subsidiary is a party, or deposits as security
for contested taxes or import or customs duties or for the
payment of rent, in each case incurred in the ordinary course of
business;
(14) Liens imposed by law, including carriers,
warehousemens and mechanics Liens, in each case for
sums not yet due or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions; if
any, as shall be required by GAAP shall have been made in
respect thereof;
(15) encumbrances, easements or reservations of, or rights
of others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or
zoning or other
78
restrictions as to the use of real properties or liens
incidental to the conduct of the business of the Company or a
Restricted Subsidiary or to the ownership of its properties
which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the
operation of the business of the Company or such Restricted
Subsidiary;
(16) Liens securing Hedging Obligations so long as the
related Indebtedness is secured by a Lien on the same property
securing such Hedging Obligations;
(17) leases and subleases of real property which do not
materially interfere with the ordinary conduct of the business
of the Company or any of its Restricted Subsidiaries;
(18) normal customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;
(19) Liens on assets of a Project Financing Subsidiary
securing Non-Recourse Project Financing Indebtedness of such
Project Financing Subsidiary and Liens on any Government
Operating Agreement securing Non-Recourse Project Financing
Indebtedness related to the facility that is the subject of such
Government Operating Agreement; and
(20) any interest or title of a lessor, licensor or
sublicensor in the property subject to any lease, license or
sublicense (other than property that is the subject of a Sale
Leaseback Transaction).
Permitted Refinancing Indebtedness means any
Indebtedness of the Company or any of its Restricted
Subsidiaries issued in repayment of, exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace,
repay, defease or refund other Indebtedness of the Company or
any of its Restricted Subsidiaries (other than intercompany
Indebtedness and Disqualified Stock of the Company or a
Restricted Subsidiary); provided, that:
(1) the principal amount (or accreted value, if applicable)
of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, repaid,
defeased or refunded (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums
incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, repaid, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced,
renewed, replaced, repaid, defeased or refunded is subordinated
in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes
as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced,
repaid, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or
by any Restricted Subsidiary who is an obligor on the
Indebtedness being extended, refinanced, renewed, replaced,
repaid, defeased or refunded.
Person means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or
government or other entity.
Restricted Investment means an Investment other than
a Permitted Investment.
Restricted Subsidiary means any Subsidiary of the
Company that is not an Unrestricted Subsidiary.
Sale and Leaseback Transaction means any direct or
indirect arrangement relating to property now owned or hereafter
acquired whereby the Company or a Restricted Subsidiary
transfers such property to another Person and the Company or a
Restricted Subsidiary leases it from such Person other than a
lease properly characterized pursuant to GAAP as a Capital Lease
Obligation.
79
Significant Subsidiary means any Subsidiary that
would be a significant subsidiary as defined in
Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date of the Indenture.
Standard & Poors means
Standard & Poors Rating Services.
Stated Maturity means, with respect to any
installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or
principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment
thereof.
Subsidiary means, with respect to any specified
Person:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners
of which are that Person or one or more Subsidiaries of that
Person (or any combination thereof).
Treasury Rate means the yield to maturity at
the time of computation of United States Treasury securities
with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15 (519) which
has become publicly available at least two Business Days prior
to the date fixed for prepayment (or, if such Statistical
Release is no longer published, any publicly available source
for similar market data)) most nearly equal to the then
remaining term of the Notes to October 15, 2013;
provided, however, that if the then remaining term
of the Notes to October 15, 2013 is not equal to the
constant maturity of a United States Treasury security for which
a weekly average yield is given, the Treasury Rate will be
obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given,
except that if the then remaining term of the Notes to
October 15, 2013 is less than one year, the weekly average
yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year will be used.
Unoccupied Facility means any prison facility owned
by the Company or a Restricted Subsidiary which for the
fifty-two week period ending on the date of measurement has had
an average occupancy level of less than 15%.
Unrestricted Subsidiary means (a) CSC of
Tacoma, LLC, GEO International Holdings, Inc., WCC Financial,
Inc., WCC Development, Inc., WCC/FL/01, Inc., WCC/FL/02, Inc.,
GEO Design Services, Inc., FF&E, Inc., The GEO Group UK
Ltd., The GEO Group Ltd., Premier Custodial Development Ltd.,
South African Custodial Holdings Pty. Ltd., The GEO Group
Australasia Pty, Ltd., GEO Australasia Pty, Ltd., The GEO Group
Australia Pty, Ltd., Premier Employment Services Pty, Ltd.,
Australasian Correctional Investment Pty, Ltd., Pacific Rim
Employment Pty, Ltd., Strategic Healthcare Solutions Pty, Ltd.,
Wackenhut Corrections Corporation N.V., Canadian Correctional
Management, Inc., Miramichi Youth Center Management, Inc.,
Wackenhut Corrections Puerto Rico, Inc., GEO NZ Limited; and
(b) any other Subsidiary of the Company that is designated
by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the
extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt or
Non-Recourse Project Financing Indebtedness;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the
Company;
80
(3) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve such Persons
financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries; and
(c) any direct or indirect Subsidiary of any Subsidiary
described in clauses (a) or (b).
Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary will be evidenced to the trustee by
filing with the trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers
Certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described
above under the subheading Certain
Covenants Restricted Payments. If, at
any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes
of the Indenture and any Indebtedness of such Subsidiary shall
be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant
described under the subheading Certain
Covenants Incurrence of Indebtedness and Issuance
of Preferred Stock, the Company will be in default of
such covenant. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation will be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary
of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under the
covenant described under the subheading
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock,
calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period;
and (2) no Default or Event of Default would be in
existence following such designation.
Voting Stock of any Person as of any date means the
Capital Stock of such Person that is at the time entitled to
vote in the election of the Board of Directors of such Person.
Weighted Average Life to Maturity means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal,
or liquidation preference, as the case may be, including payment
at final maturity, in respect of the Indebtedness, by
(b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making
of such payment; by
(2) the then outstanding aggregate principal amount or
liquidation preference, as the case may be, of such Indebtedness.
Wholly Owned Restricted Subsidiary of any specified
Person means a Restricted Subsidiary of such Person all of the
outstanding Capital Stock or other ownership interests of which
(other than directors qualifying shares) shall at the time
be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly
Owned Restricted Subsidiaries of such Person.
Wholly Owned Subsidiary of any specified Person
means a Subsidiary of such Person all of the outstanding Capital
Stock or other ownership interest of which (other than
directors qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such
Person and one or more Wholly Owned Subsidiaries of such Person.
81
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain
U.S. federal income tax considerations relevant to a holder
with respect to the purchase, ownership and disposition of the
notes. This summary is generally limited to holders who will
hold the notes as capital assets within the meaning
of the Internal Revenue Code of 1986, as amended (the
Code) and does not deal with the U.S. federal
income tax considerations relevant to investors subject to
special treatment under the U.S. federal income tax laws,
such as financial institutions, regulated investment companies,
partnerships or other pass-through entities (or investors in
such entities), U.S. expatriates or former long-term
U.S. residents, persons subject to alternative minimum tax,
dealers in securities or foreign currency, tax-exempt entities,
banks, thrifts, insurance companies, persons that hold the notes
as part of a straddle, a hedge against
currency risk, a conversion transaction or other
integrated transaction, and persons that have a functional
currency other than the U.S. dollar, all within the
meaning of the Code. In addition, this discussion does not
describe any tax considerations arising out of the tax laws of
any state, local or foreign jurisdiction.
The federal income tax considerations set forth below are based
upon the Code, existing and proposed Treasury Regulations
thereunder, and current administrative rulings and court
decisions, all of which are subject to change. Prospective
investors should particularly note that any such change could
have retroactive application so as to result in federal income
tax considerations different from those discussed below.
Based on currently applicable authorities, we will treat the
notes as indebtedness for U.S. federal income tax purposes,
and the remainder of this discussion assumes that the notes will
constitute indebtedness for U.S. tax purposes. We have not
sought and will not seek any rulings from the Internal Revenue
Service (the IRS) with respect to the matters
discussed below. There can be no assurance that the IRS will not
take a different position concerning the tax consequences of the
purchase, ownership or disposition of the notes or that any such
position would not be sustained.
TO COMPLY WITH TREASURY DEPARTMENT CIRCULAR 230, INVESTORS
ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF
U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS
PROSPECTUS AND RELATED MATERIALS IS NOT INTENDED OR WRITTEN TO
BE USED, AND CANNOT BE USED BY INVESTORS, FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED ON INVESTORS UNDER THE
CODE; (B) ANY SUCH DISCUSSION IS BEING USED IN CONNECTION
WITH THE PROMOTION OR MARKETING BY THE COMPANY OF THE MATTERS
DESCRIBED HEREIN; AND (C) INVESTORS CONSIDERING THE
PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME
TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX LAWS
OR UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
U.S.
Federal Income Taxation of U.S. Holders
The following discussion is limited to the U.S. federal
income tax considerations relevant to U.S. Holders. As used
herein, U.S. Holders are beneficial owners of
the securities, that are, for U.S. federal income tax
purposes:
|
|
|
|
|
individuals who are citizens or residents of the United States;
|
|
|
|
corporations or other entities taxable as corporations created
or organized in, or under the laws of, the United States, any
state thereof or the District of Columbia;
|
|
|
|
estates, the income of which is subject to U.S. federal
income taxation regardless of its source; or
|
|
|
|
trusts if (i) a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust or (ii) a
valid election to be treated as a U.S. person, as defined
in the Code, is in effect with respect to such trust.
|
82
A
non-U.S. Holder
is a holder that is neither a U.S. Holder nor a partnership
for U.S. federal income tax purposes.
If an entity treated as a partnership for U.S. federal
income tax purposes holds notes, the tax treatment of a partner
in the partnership will generally depend upon the status of the
partner and the activities of the partnership. If you are a
partner of a partnership holding the notes, you should consult
your own tax advisor regarding the tax consequences of the
purchase, ownership and disposition of the notes.
Certain U.S. federal income tax considerations relevant to
a
non-U.S. Holder
are discussed separately below.
Payment
of Interest
U.S. Holders generally will be required to recognize as
ordinary income any stated interest paid or accrued on the notes
in accordance with their regular method of accounting for
U.S. federal income tax purposes.
Original
Issue Discount
The notes will be treated as being issued with
de minimus original issue discount (OID)
for U.S. federal income tax purposes because the difference
between the notes issue price and its stated redemption
price at maturity was less than a statutory de minimis
amount, as defined below. Generally, the issue
price of a note is the first price at which a substantial
amount of the issue is sold to purchasers other than bond
houses, brokers or similar persons acting in the capacity of
underwriters, placement agents or wholesalers. The stated
redemption price at maturity of a note is the total of all
payments to be made under the note other than qualified stated
interest (generally, stated interest that is unconditionally
payable in cash or property at least annually at a single fixed
rate). It is expected that the stated interest on the notes will
qualify as qualified stated interest and the stated redemption
price at maturity will equal the principal amount of the notes.
The amount of OID on the notes is de minimis because it
is less than 0.0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to
maturity. Because the amount of OID on the notes is de
minimis, a holder must include such discount in income as
gain, on a pro rata basis, as principal payments are made on the
note.
A U.S. Holder may elect to include in gross income all
interest that accrues on a note using the constant-yield method.
For purposes of this election, interest will include stated
interest and acquisition discount, de minimis OID, market
discount and de minimis market discount, as adjusted by
any amortizable bond premium or acquisition premium.. Generally,
this election will apply only to the note for which a holder
makes it. Once made, such an election is irrevocable without the
consent of the IRS.
Disposition
of Notes
Upon the disposition of a note by sale, exchange (other than an
exchange for registered notes as described below) or redemption,
a U.S. Holder will generally recognize taxable gain or loss
equal to the difference between (1) the sum of cash plus
the fair market value of other property received on such
disposition, except to the extent such cash or property is
attributable to accrued but unpaid interest on the note, which
is treated as ordinary interest income, and (2) such
holders adjusted tax basis in the note. A
U.S. Holders adjusted tax basis in a note generally
will equal the cost of the note to such U.S. Holder, less
any payments on the note other than a payment of qualified
stated interest received by such holder.
Gain or loss from the taxable disposition of a note generally
will be capital gain or loss and will be long-term capital gain
or loss if the note was held by the U.S. Holder for more
than one year at the time of the disposition. For non-corporate
holders, certain preferential tax rates may apply to gain
recognized as long-term capital gain. The deductibility of
capital losses is subject to significant limitations.
83
Market
Discount and Amortizable Bond Premium
An exception to the capital gain treatment described above may
apply to a U.S. Holder that purchased a note at a market
discount. Subject to a statutory de minimis exception,
market discount is the excess of the adjusted issue price of
such note over the U.S. Holders tax basis in such
note immediately after its acquisition by such U.S. Holder.
The adjusted issue price of a note as of a particular date is
the issue price of the note and decreased by the amount of any
payments previously made on the note other than payments of
qualified stated interest. In general, unless the
U.S. Holder has elected to include market discount in
income currently as it accrues, any gain realized by a
U.S. Holder on the sale of a note having market discount in
excess of the specified de minimis amount will be treated
as ordinary income to the extent of the market discount that has
accrued (on a straight line basis or, at the election of the
U.S. Holder, on a constant interest basis) while such note
was held by the U.S. Holder. A U.S. holder who
purchases a note at a premium may elect to amortize and deduct
this premium over the remaining term of the note in accordance
with rules relating to amortizable bond premium. If applicable,
a U.S. Holders tax basis in a note also will be
increased by any market discount previously included in income
by such U.S. Holder pursuant to an election to include
market discount in gross income currently as it accrues, and
reduced by any amortizable bond premium which the
U.S. Holder has previously deducted.
Exchange
of Notes
The exchange of notes for registered notes in the exchange offer
will not constitute a taxable event for U.S. Holders.
Consequently, U.S. Holders will not recognize gain or loss
upon receipt of a registered note in exchange for notes in the
exchange offer, each U.S. Holders basis in the
registered note received in the exchange offer will be the same
as such holders basis in the corresponding note
immediately before the exchange and each U.S. Holders
holding period in the registered note will include such
holders holding period in the original note.
Backup
Withholding and Information Reporting
Where required, information will be reported to both
U.S. Holders of notes and the IRS regarding the amount of
interest and principal paid on the notes in each calendar year
as well as the corresponding amount of tax withheld, if any. A
U.S. Holder will be subject to U.S. backup withholding
on these payments if the U.S. Holder fails to provide its
taxpayer identification number to the paying agent and comply
with certain certification procedures or otherwise establish an
exemption from backup withholding.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against such holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that all required information is
timely furnished to the IRS.
U.S.
Federal Income Taxation of
Non-U.S.
Holders
The following discussion is limited to the U.S. federal
income and estate tax considerations relevant to the
acquisition, ownership and disposition of the notes by an
initial purchaser of the notes that is not a U.S. Holder,
as defined above. The rules governing the U.S. federal
income taxation of a
non-U.S. Holder
of notes are complex and no attempt will be made herein to
provide more than a summary of such rules. Special rules may
apply to certain
non-U.S. Holders
such as controlled foreign corporations and
passive foreign investment companies, certain
U.S. expatriates and foreign persons eligible for benefits
under an applicable income tax treaty with the United States.
Non-U.S. Holders
should consult with their own tax advisors to determine the
effect of federal, state, local and foreign income tax laws, as
well as treaties with regard to an investment in the notes,
including any reporting requirements.
Payment
of Interest
Generally, interest income of a
non-U.S. Holder
that is not effectively connected with a U.S. trade or
business is subject to U.S. federal withholding tax at a
rate of 30% (or, a lower tax rate specified in an applicable
income tax treaty). However, interest income earned on a note by
a
non-U.S. Holder
will qualify
84
for the portfolio interest exemption, and therefore
will not be subject to U.S. federal income tax or
withholding tax, if:
|
|
|
|
|
the
non-U.S. Holder
does not, directly or indirectly, actually or constructively own
10% or more of the total combined voting power of the
Companys stock entitled to vote;
|
|
|
|
the
non-U.S. Holder
is not, for U.S. federal income tax purposes, a controlled
foreign corporation that is related to the Company through stock
ownership;
|
|
|
|
the
non-U.S. Holder
is not a bank receiving interest on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course
of its trade or business; and
|
|
|
|
the
non-U.S. Holder
certifies, under penalties of perjury, on a properly executed
Form W-8BEN
that it is not a U.S. person, as defined in the Code.
|
If a
non-U.S. Holder
of a note is engaged in a U.S. trade or business, and if
interest on the note is effectively connected with the conduct
of this trade or business, the
non-U.S. Holder,
although exempt from the withholding tax discussed above, will
generally be taxed in the same manner as a U.S. Holder (see
U.S. Federal Income Taxation of
U.S. Holders above), subject to an applicable income
tax treaty providing otherwise. In order to claim an exemption
from withholding because the income is U.S. trade or
business income, a
non-U.S. Holder
must provide a properly executed
Form W-8
ECI.
Disposition
of Notes
Generally, a
non-U.S. Holder
will not be subject to U.S. federal income tax or
withholding tax on any gain realized on the sale, exchange or
redemption of a note unless:
|
|
|
|
|
the gain is effectively connected with a U.S. trade or
business; or
|
|
|
|
the
non-U.S. Holder
is an individual who is present in the U.S. for
183 days or more during the taxable year in which the
disposition of the note is made and certain other requirements
are met, or is subject to tax pursuant to the provisions of
U.S. federal income tax law applicable to certain former
citizens and residents of the United States.
|
The exchange of notes for registered notes in the exchange offer
will not constitute a taxable event for
non-U.S. Holders.
Information
Reporting and Backup Withholding
Where required, information will be reported to each
non-U.S. Holder
as well as the IRS regarding any interest that is either subject
to U.S. federal withholding tax or exempt from withholding
pursuant to an applicable income tax treaty or to the portfolio
interest exemption. Copies of these information returns may also
be made available to the tax authorities of the country in which
the
non-U.S. Holder
is treated as a resident under the provisions of a specific
treaty or agreement.
Unless the
non-U.S. Holder
complies with certification procedures to establish that it is
not a U.S. person, information returns may be filed with
the IRS in connection with the proceeds from a sale or other
disposition of the notes and the
non-U.S. Holder
may be subject to U.S. backup withholding tax on payments
on the notes or on the proceeds from a sale or other disposition
of the notes. The certification procedures required to claim the
exemption from withholding tax on interest described above will
satisfy the certification requirements necessary to avoid backup
withholding as well.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules from a payment to a
non-U.S. holder
will be allowed as a credit against such holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that all required information is
timely furnished to the IRS.
Non-U.S. Holders
should consult their own tax advisors regarding the filing of a
U.S. tax return and the claiming of a credit or refund of
such backup withholding.
85
U.S.
Federal Estate Tax
The U.S. federal estate tax will not apply to notes owned
by an individual who is not a U.S. citizen or resident (as
determined for estate tax purposes) at the time of his or her
death provided that (1) such individual does not actually
or constructively own 10% or more of the total combined voting
power of the Companys stock entitled to vote and
(2) interest on the note would not have been, if received
at the time of death, effectively connected with the conduct of
a U.S. trade or business of such holder.
The preceding discussion of certain U.S. federal income tax
considerations is for general information only and is not tax
advice. Each prospective investor should consult its own tax
advisor as to the particular tax consequences of purchasing,
holding and disposing of the notes, including the applicability
and effect of any state, local or foreign tax laws, and of any
proposed changes in applicable laws.
PLAN OF
DISTRIBUTION
Based on interpretations by the staff of the Commission in no
action letters issued to third parties, we believe that you may
transfer new notes issued under the exchange offer in exchange
for the old notes if:
|
|
|
|
|
you acquire the new notes in the ordinary course of your
business; and
|
|
|
|
you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding with any person to participate
in, a distribution of such new notes.
|
You may not participate in the exchange offer if you are:
|
|
|
|
|
our affiliate within the meaning of Rule 405
under the Securities Act of 1933; or
|
|
|
|
a broker-dealer that acquired old notes directly from us.
|
Each broker-dealer that receives new notes for its own account
pursuant to the exchange offer must acknowledge that it will
deliver a prospectus in connection with any resale of such new
notes. To date, the staff of the Commission has taken the
position that broker-dealers may fulfill their prospectus
delivery requirements with respect to transactions involving an
exchange of securities such as this exchange offer, other than a
resale of an unsold allotment from the original sale of the old
notes, with the prospectus contained in this registration
statement. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes
where such old notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for
a period of up to 180 days after the effective date of this
registration statement, we will make this prospectus, as amended
or supplemented, available to any broker-dealer for use in
connection with any such resale. In addition, until such date,
all dealers effecting transactions in new notes may be required
to deliver a prospectus.
If you wish to exchange new notes for your old notes in the
exchange offer, you will be required to make representations to
us as described in Exchange Offer Purpose and
Effect of the Exchange Offer and
Procedures for Tendering Your
Representations to Us in this prospectus and in the letter
of transmittal. In addition, if you are a broker-dealer who
receives new notes for your own account in exchange for old
notes that were acquired by you as a result of market-making
activities or other trading activities, you will be required to
acknowledge that you will deliver a prospectus in connection
with any resale by you of such new notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their
own account pursuant to the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter
market:
|
|
|
|
|
in negotiated transactions;
|
|
|
|
through the writing of options on the new notes or a combination
of such methods of resale;
|
86
|
|
|
|
|
at market prices prevailing at the time of resale; and
|
|
|
|
at prices related to such prevailing market prices or negotiated
prices.
|
Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer
or the purchasers of any such new notes. Any broker-dealer that
resells new notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed
to be an underwriter within the meaning of the
Securities Act of 1933. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the
Securities Act of 1933.
For a period of 180 days after the effective date of this
registration statement, we will promptly send additional copies
of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in
the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer (including the expenses of one
counsel for the holders of the old notes) other than commissions
or concessions of any broker-dealers and will indemnify the
holders of the old notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities
Act of 1933.
LEGAL
MATTERS
Certain legal matters in connection with the offering of the
notes will be passed upon for us by Akerman Senterfitt, Miami,
Florida.
EXPERTS
The consolidated financial statements, schedule and
managements assessment of the effectiveness of internal
control over financial reporting incorporated by reference in
this registration statement from our Annual Report on
Form 10-K
filed with the SEC on February 22, 2010, have been
incorporated by reference herein, in reliance upon the reports
of Grant Thornton LLP, independent registered public
accountants, upon the authority of said firm as experts in
accounting and auditing in giving said reports.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the Commission. Our Commission
filings are available to the public over the Internet at the
SECs web site at
http://www.sec.gov.
You also may read and copy any document we file at the
SECs public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our common
stock is listed and traded on the New York Stock Exchange under
the trading symbol GEO. You also may inspect and
copy our reports, proxy statements and other information filed
with the Commission at the New York Stock Exchange,
20 Broad Street, New York, New York.
We have elected to incorporate by reference information into
this prospectus. By incorporating by reference, we can disclose
important information to you by referring to another document we
have filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus, except as
described in the following sentence. Any statement in this
prospectus or in any document that is incorporated or deemed to
be incorporated by reference in this prospectus will be deemed
to have been modified or superseded to the extent that a
statement contained in this prospectus or any document that we
subsequently file or have filed with the SEC that is
incorporated or deemed to be incorporated by reference in this
prospectus, modifies or supersedes that statement. Any statement
so modified or superseded will not be deemed to be a part of
this prospectus, except as so modified or superseded.
87
We are incorporating by reference the following documents that
we have filed with the SEC and our future filings with the SEC
(other than information furnished under Item 2.02 or 7.01
in current reports on
Form 8-K)
under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until this offering is completed:
|
|
|
|
|
our annual report on
Form 10-K
for the fiscal year ended January 3, 2010 filed with the
SEC on February 22, 2010;
|
|
|
|
|
|
our current reports on
Form 8-K,
filed with the SEC on February 5, 2010 and
February 26, 2010; and
|
|
|
|
|
|
all subsequent documents filed by us after the date of this
prospectus and prior to the termination of this offering under
Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, other than any information furnished
pursuant to Item 2.02 or Item 7.01 of
Form 8-K,
or as otherwise permitted by the SECs rules and
regulations.
|
We will provide without charge to each person to whom this
prospectus is delivered a copy of any of the documents that we
have incorporated by reference into this prospectus, other than
exhibits unless the exhibits are specifically incorporated by
reference in those documents. To receive a copy of any of the
documents incorporated by reference in this prospectus, other
than exhibits unless they are specifically incorporated by
reference in those documents, call or write to The GEO Group,
Inc., 621 NW 53rd Street, Suite 700, Boca Raton,
Florida 33487, Attention: Investor Relations, Telephone:
(561) 893-0101.
The information relating to us contained in this prospectus is
not complete and should be read together with the information
contained in the documents incorporated and deemed to be
incorporated by reference in this prospectus.
88
THE GEO GROUP, INC.
Offer to Exchange
Up to $250,000,000 aggregate
principal amount
of our
73/4%
Senior Notes Due 2017
and the guaranties thereof
which have been registered
under the Securities Act of
1933, as amended,
for a like amount of our
outstanding
73/4%
Senior Notes Due 2017
and the guaranties
thereof
PROSPECTUS
, 2010
PART II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification
of Directors and Officers.
Registrants
incorporated in Florida
Florida Business Corporation
Act. Section 607.0850(1) of the Florida
Business Corporation Act, referred to as the FBCA, provides that
a Florida corporation, such as GEO, GEO Care, Inc. and GEO
Transport, Inc., shall have the power to indemnify any person
who was or is a party to any proceeding (other than an action
by, or in the right of, the corporation), by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise against liability incurred in connection with such
proceeding, including any appeal thereof, if he or she acted in
good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
Section 607.0850(2) of the FBCA provides that a Florida
corporation shall have the power to indemnify any person, who
was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense
or settlement of such proceeding, including any appeal thereof.
Such indemnification shall be authorized if such person acted in
good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which
such person shall have been adjudged to be liable unless, and
only to the extent that, the court in which such proceeding was
brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
Section 607.0850 of the FBCA further provides that:
(i) to the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in
subsection (1) or subsection (2), or in defense of any
proceeding referred to in subsection (1) or subsection (2),
or in defense of any claim, issue, or matter therein, he or she
shall be indemnified against expenses actually and reasonably
incurred by him or her in connection therewith;
(ii) indemnification provided pursuant to
Section 607.0850 is not exclusive; and (iii) the
corporation shall have the power to purchase and maintain
insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or
her or incurred by him or her in any such capacity or arising
out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such
liabilities under Section 607.0850.
Notwithstanding the foregoing, Section 607.0850(7) of the
FBCA provides that indemnification or advancement of expenses
shall not be made to or on behalf of any director, officer,
employee or agent if a judgment or other final adjudication
establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute:
(i) a violation of the criminal law, unless the director,
officer employee or agent had reasonable cause to believe his or
her conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful; (ii) a transaction from which
the director, officer, employee or agent derived an improper
personal benefit; (iii) in the case of a director, a
circumstance under which the liability provisions regarding
unlawful distributions are applicable; or (iv) willful
misconduct or a conscious disregard for the best interests of
the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a
proceeding by or in the right of a shareholder.
Section 607.0831 of the FBCA provides that a director of a
Florida corporation is not personally liable for monetary
damages to the corporation or any other person for any
statement, vote, decision, or failure to act,
II-1
regarding corporate management or policy, by a director, unless:
(i) the director breached or failed to perform his or her
duties as a director; and (ii) the directors breach
of, or failure to perform, those duties constitutes: (A) a
violation of criminal law, unless the director had reasonable
cause to believe his or her conduct was lawful or had no
reasonable cause to believe his conduct was unlawful; (B) a
transaction from which the director derived an improper personal
benefit, either directly or indirectly; (C) a circumstance
under which the liability provisions regarding unlawful
distributions are applicable; (D) in a proceeding by or in
the right of the corporation to procure a judgment in its favor
or by or in the right of a shareholder, conscious disregard for
the best interest of the corporation, or willful misconduct; or
(E) in a proceeding by or in the right of someone other
than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious
purpose or in a manner exhibiting wanton and willful disregard
of human rights, safety, or property.
Bylaws. GEOs bylaws provide that GEO
shall indemnify every person who was or is a party or is or was
threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative by
reason of the fact he is or was a director, officer, employee,
or agent, or is or was serving at the request of GEO as a
director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding (except in such
cases involving gross negligence or willful misconduct), in the
performance of their duties to the full extent permitted by
applicable law. Such indemnification may, in the discretion of
GEOs board of directors, include advances of his expenses
in advance of final disposition subject to the provisions of
applicable law. GEOs bylaws further provide that such
right of indemnification shall not be exclusive of any right to
which any director, officer, employee, agent or controlling
shareholder of GEO may be entitled as a matter of law.
GEO Care, Inc.s bylaws provide that GEO Care, Inc. shall
indemnify every person who was or is a party or is or was
threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative by
reason of the fact he is or was a director, officer, employee,
or agent, or is or was serving at the request of GEO Care, Inc.
as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in
connection with such action, suit or proceedings, (except in
such cases involving gross negligence or willful misconduct) in
the performance of their duties to the full extent permitted by
applicable law. Such indemnification may, in the discretion of
GEO Care, Inc.s board of directors, include advances of
his expenses in advance of final disposition subject to the
provisions of applicable law. GEO Care, Inc.s bylaws
further provide that such right of indemnification shall not be
exclusive of any right to which any director, officer, employee,
agent or controlling stockholder of GEO Care, Inc. may be
entitled as a matter of law.
GEO Transport, Inc.s bylaws provide that any person made,
or threatened to be made, a party to any threatened, pending, or
contemplated action or proceeding, whether civil, criminal,
administrative, or investigative, arising out of or related to
such persons service as a director, officer, employee, or
agent of GEO Transport, Inc. (or arising out of or related to
such persons service with respect to any other corporation
or other enterprise in any such capacity at the request of GEO
Transport, Inc.), shall be indemnified by GEO Transport, Inc.,
and GEO Transport, Inc. may advance to such person related
expenses incurred in defense of such action, to the fullest
extent permitted by applicable law. For purposes of this
paragraph, person shall include such persons
heirs and personal representatives.
Registrants
incorporated as corporations in Delaware
Delaware General Corporation
Law. Section 145(a) of the Delaware General
Corporation Law (the DGCL) provides that a Delaware
corporation, such as Correctional Services Corporation, GEO
Acquisition II, Inc., GEO Holdings I, Inc. and Just Care,
Inc., may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in
the right of the corporation, by reason of the fact that such
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably
II-2
incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the
persons conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above,
against expenses (including attorneys fees) actually and
reasonably incurred by such person in connection with the
defense or settlement of such action or suit if the person acted
in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation, unless and only to the
extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Further subsections of DGCL Section 145 provide that:
|
|
|
|
|
to the extent a present or former director or officer of a
corporation has been successful on the merits or otherwise in
the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 or in the
defense of any claim, issue or matter therein, such person shall
be indemnified against expenses, including attorneys fees,
actually and reasonably incurred by such person in connection
therewith;
|
|
|
|
the indemnification and advancement of expenses provided for
pursuant to Section 145 shall not be deemed exclusive of
any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise; and
|
|
|
|
the corporation shall have the power to purchase and maintain
insurance of behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of such persons status as
such, whether or not the corporation would have the power to
indemnify such person against such liability under Section 145.
|
As used in this Item 20, the term proceeding
means any threatened, pending, or completed action, suit, or
proceeding, whether or not by or in the right of Registrant, and
whether civil, criminal, administrative, investigative or
otherwise.
Section 145 of the DGCL makes provision for the
indemnification of officers and directors in terms sufficiently
broad to indemnify officers and directors of each of the
registrants incorporated in Delaware under certain circumstances
from liabilities (including reimbursement for expenses incurred)
arising under the Securities Act of 1933, as amended (the
Act). Each of the registrants incorporated in
Delaware may, in their discretion, similarly indemnify their
employees and agents. The Bylaws of each of the registrants
incorporated in Delaware provide, in effect, that, to the
fullest extent and under the circumstances permitted by
Section 145 of the DGCL, each of the registrants
incorporated in Delaware will indemnify any and all of its
officers, directors, employees and agents. In addition, the
Certificate of Incorporation of each of the registrants
incorporated in Delaware relieves its directors from monetary
damages to it or its stockholders for breach of such
directors fiduciary duty as a director to the fullest
extent permitted by the DGCL. Under Section 102(b)(7) of
the DGCL, a corporation may relieve its directors from personal
liability to such corporation or its stockholders for monetary
damages for any breach of their fiduciary duty as directors
except (i) for a breach of the duty of loyalty,
(ii) for failure to act in good faith, (iii) for
intentional misconduct or knowing violation of law,
(iv) for willful or negligent violations of certain
provisions in the DGCL imposing certain requirements with
respect to stock repurchases, redemptions and dividends, or
(v) for any transactions from which the director derived an
improper personal benefit.
Bylaws. Correctional Services
Corporations bylaws provide that Correctional Services
Corporation shall indemnify and hold harmless, to the fullest
extent permitted by applicable law, any person who was or is
made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal,
II-3
administrative or investigative, by reason of the fact that such
person, or a person for whom such person is the legal
representative, is or was a director or officer of Correctional
Services Corporation or, while a director or officer of
Correctional Services Corporation, is or was serving at the
written request of Correctional Services Corporation as a
director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit
plans, against all liability and loss suffered and expenses
(including attorneys fees) reasonably incurred by such
person. Correctional Services Corporation shall pay the expenses
(including attorneys fees) incurred by such person in
defending any proceeding in advance of its final disposition,
provided, however, that, to the extent required by law, such
payment of expenses in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by
such person to repay all amounts advanced if it should be
ultimately determine that such person is not entitled to be
indemnified. Correctional Services Corporations bylaws
further provide that such right of indemnification shall not be
exclusive of any right to which any such person may be entitled
as a matter of law.
GEO Acquisition II, Inc.s bylaws provide that GEO
Acquisition II, Inc. shall indemnify and hold harmless, to the
fullest extent permitted by applicable law, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that such person, or a person for whom such person is the legal
representative, is or was a director or officer of GEO
Acquisition II, Inc. or, while a director or officer of GEO
Acquisition II, Inc., is or was serving at the written request
of GEO Acquisition II, Inc. as a director, officer, employee or
agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and
loss suffered and expenses (including attorneys fees)
reasonably incurred by such person. GEO Acquisition II, Inc.
shall pay the expenses (including attorneys fees) incurred
by such person in defending any proceeding in advance of its
final disposition, provided, however, that, to the extent
required by law, such payment of expenses in advance of the
final disposition of the proceeding shall be made only upon
receipt of an undertaking by such person to repay all amounts
advanced if it should be ultimately determine that such person
is not entitled to be indemnified. GEO Acquisition II,
Inc.s bylaws further provide that such right of
indemnification shall not be exclusive of any right to which any
such person may be entitled as a matter of law.
GEO Holdings I, Inc.s bylaws provide that it shall
indemnify and hold harmless, to the fullest extent permitted by
applicable law, any person who was or is made or is threatened
to be made a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she, or a person
for whom he or she is the legal representative, id or was a
director or officer of GEO Holdings I, Inc. or, while a
director or officer of GEO Holdings I, Inc., is or was
serving at the request of GEO Holdings I, Inc. as a
director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit
plans, against all liability and loss suffered and expenses
(including attorneys fees) reasonably incurred by such
person. GEO Holdings I, Inc. shall to the fullest extent
not prohibited by applicable law pay the expenses (including
attorneys fees) incurred by such person in defending any
proceeding in advance of its final disposition, provided
however, that, to the extent required by law, such payment of
expenses in advance of the final disposition on the proceeding
shall be made only upon receipt of an undertaking by such person
to repay all amounts advanced if it should be ultimately
determined that such person is not entitled to be indemnified.
GEO Holding I, Inc.s bylaws further provide that such
right of indemnification shall not be exclusive of any right to
which any such person may be entitled as a matter of law.
Just Care, Inc.s bylaws provide that each person who was
or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that he or she, or a person of whom he or she is the legal
representative, is or was a director, officer or employee of
Just Care, Inc. or is or was serving at the request of Just
Care, Inc. as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including services with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or (if
serving for another corporation at the request of Just Care,
Inc.) agent or in any other capacity while serving as a
director, officer, employee or (if serving for another
corporation at the request of Just Care, Inc.) agent shall be
indemnified and held harmless by Just Care, Inc. to the fullest
extent authorized by the DGCL against all expense, liability and
loss reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer,
II-4
employee or (if serving for another corporation at the request
of Just Care, Inc.) agent and shall inure to the benefit of his
or her heirs, executors and administrators. Such right to
indemnification shall be a contract right and shall include the
right to be paid by Just Care, Inc. the expenses incurred in
defending any such proceeding in advance of its final
disposition, provided however, that, if the DGCL requires, the
payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such
person while a director or officer, including without
limitation, service to an employee benefit plan) in advance of
the final disposition of the proceeding shall be made only upon
delivery to Just Care, inc. of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if
it shall ultimately be determined that such director or officer
is not entitled to be indemnified. Just Care, Inc.s bylaws
further provide that such right of indemnification shall not be
exclusive of any right to which any such person may be entitled
as a matter of law.
Registrants
formed as limited liability companies in Delaware
Section 18-108
of the Delaware Limited Liability Company Act provides that,
subject to such standards and restrictions, if any, as are set
forth in its limited liability company agreement, a Delaware
limited liability company, such as Correctional Properties
Prison Finance LLC, CPT Limited Partner, LLC, Public Properties
Development & Leasing LLC and GEO RE Holdings LLC,
may, and has the power to, indemnify and hold harmless any
member or manager or other person from and against any and all
claims and demands whatsoever.
Correctional Properties Prison Finance LLCs operating
agreement provides that, to the fullest extent provided by
applicable law, a member, special member, officer, director,
employee or agent of Correctional Properties Prison Finance LLC
and any employee, representative, agent or affiliate of the
member or special member shall be entitled to indemnification
for any loss, damage or claim incurred by such person by reason
of any act or omission performed or omitted by such person in
good faith on behalf of Correctional Properties Prison Finance
LLC and in a manner reasonably believed to be within the scope
of the authority conferred on such person, except for any loss,
damage or claim incurred by such person by reason of such
persons gross negligence or willful misconduct with
respect to such acts or omissions. To the fullest extent
permitted by applicable law, expenses (including reasonable
legal fees) incurred by such person defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced
by Correctional Properties Prison Finance LLC prior to the final
disposition of such claim, demand, action, suit or proceeding
upon receipt by Correctional Properties Prison Finance of an
undertaking by or on behalf of such person to repay such amount
if it shall be determined that such person is not entitled to be
indemnified.
CPT Limited Partner, LLCs operating agreement provides
that CPT Limited Partner, LLC shall indemnify and hold harmless
its member, officers and employees, an the affiliates of each of
the foregoing, to the fullest extent permitted by law against
losses, judgments, liabilities, expenses and amounts incurred or
paid, including attorneys fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities, by
such person in connection with any claim, action suit or
proceeding in which such person becomes involved as a party or
otherwise, or with which such person shall be threatened, in
connection with the conduct of CPT Limited Partner, LLCs
affairs. Expenses incurred by any such person in connection with
the preparation and presentation of a defense or response to any
claims covered hereby shall be paid by CPT Limited Partner, LLC.
Such right of indemnity shall apply with respect to all actions
taken by such person which they believe to be in the best
interest of CPT Limited Partner, LLC in accordance with the
business judgment rule, other than actions which constitute
willful misconduct or gross negligence.
Public Properties Development & Leasing LLCs
operating agreement provides that Public Properties
Development & Leasing LLC shall indemnify and hold
harmless its member, officers and employees, an the affiliates
of each of the foregoing, to the fullest extent permitted by law
against losses, judgments, liabilities, expenses and amounts
incurred or paid, including attorneys fees, costs,
judgments, amounts paid in settlement, fines, penalties and
other liabilities, by such person in connection with any claim,
action suit or proceeding in which such person becomes involved
as a party or otherwise, or with which such person shall be
threatened, in connection with the conduct of Public Properties
Development & Leasing LLC s affairs. Expenses
incurred by any such person in connection with the preparation
and presentation of a defense or response to any claims covered
hereby shall be paid by Public Properties
Development & Leasing LLC. Such right of indemnity
shall apply with respect to all
II-5
actions taken by such person which they believe to be in the
best interest of CPT Limited Partner, LLC in accordance with the
business judgment rule, other than actions which constitute
willful misconduct or gross negligence.
GEO RE Holdings LLCs operating agreement is silent with
respect to indemnification. However, see the discussion
regarding indemnification provisions in the Delaware Limited
Liability Company Act.
Registrant
organized as a limited partnership in Delaware
Section 17-107
of the Delaware Revised Uniform Limited Partnership Act provides
that, subject to such standards and restrictions, if any, as are
set forth in its partnership agreement, a limited partnership,
such as CPT Operating Partnership LP, may, and has the power to,
indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.
CPT Operating Partnership LPs limited partnership
agreement provides that, to the fullest extent permitted by
Delaware law, CPT Operating Partnership LP shall indemnify the
general partner and its affiliates and any person acting on
their behalf from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including,
without limitation, reasonable attorneys fees and other
legal fees and expenses), judgments, fines settlements and other
amounts arising from any and all claims, demands, actions, suite
or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of CPT Operating
Partnership LP in which such person may be involved, or is
threatened to be involved, as a party or otherwise, except to
the extent it is finally determined by a court of competent
jurisdiction, from which no further appeal may be taken, that
such persons action constituted intentional acts or
omissions constituting willful misconduct or fraud. Reasonable
expenses incurred by such person who is a party to a proceeding
shall be paid or reimbursed by CPT Operating Partnership LP in
advance of the final disposition of the proceeding. Such right
of indemnification shall not be exclusive of any right to which
any such person may be entitled as a matter of law.
|
|
Item 21.
|
Exhibits
and Financial Statement Schedules.
|
(a) Exhibits Required by Item 601 of
Regulation S-K.
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
2
|
.1
|
|
|
|
Agreement and Plan of Merger, dated as of September 19,
2006, among the Company, GEO Acquisition II, Inc. and CentraCore
Properties Trust (incorporated herein by reference to
Exhibit 2.1 of the Companys report on
Form 8-K,
filed on September 21, 2006)
|
|
2
|
.2
|
|
|
|
Agreement and Plan of Merger, dated August 28, 2009, by and
among GEO Care, Merger Sub and Just Care (incorporated herein by
reference to Exhibit 2.1 of the Companys report on
Form 8-K,
filed on September 3, 2009)
|
|
3
|
.1
|
|
|
|
Amended and Restated Articles of Incorporation of the Company,
dated May 16, 1994 (incorporated herein by reference to
Exhibit 3.1 to the Companys registration statement on
Form S-1,
filed on May 24, 1994)
|
|
3
|
.2
|
|
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation, dated October 30, 2003 (incorporated herein
by reference to Exhibit 3.2 to the Companys report on
Form 10-K,
filed on February 15, 2008)
|
|
3
|
.3
|
|
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation, dated November 25, 2003 (incorporated herein
by reference to Exhibit 3.3 to the Companys report on
Form 10-K,
filed on February 15, 2008)
|
|
3
|
.4
|
|
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation, dated September 29, 2006 (incorporated
herein by reference to Exhibit 3.4 to the Companys
report on
Form 10-K,
filed on February 15, 2008)
|
|
3
|
.5
|
|
|
|
Articles of Amendment to the Amended and Restated Articles of
Incorporation, dated May 30, 2007 (incorporated herein by
reference to Exhibit 3.5 to the Companys report on
Form 10-K,
filed on February 15, 2008)
|
|
3
|
.6
|
|
|
|
Amended and Restated Bylaws of the Company (incorporated herein
by reference to Exhibit 3.1 to the Companys report on
Form 8-K,
filed on April 2, 2008)
|
II-6
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
4
|
.1
|
|
|
|
Indenture, dated October 20, 2009, among GEO, the
Guarantors party thereto and Wells Fargo Bank, N.A., as trustee
(incorporated by reference to Exhibit 4.1 to the
Companys report on
Form 8-K,
filed on October 20, 2009)
|
|
4
|
.2
|
|
|
|
Registration Rights Agreement dated as of October 20, 2009
among GEO, the Guarantors party thereto and Banc of America
Securities LLC, on behalf of itself and the other Initial
Purchasers party thereto (incorporated by reference to
Exhibit 10.1 to the Companys report on
Form 8-K,
filed on October 20, 2009)
|
|
5
|
.1
|
|
|
|
Opinion of Akerman Senterfitt***
|
|
10
|
.1
|
|
|
|
Stock Option Plan (incorporated herein by reference to
Exhibit 10.1 to the Companys registration statement
on
Form S-1,
filed on May 24, 1994)
|
|
10
|
.2
|
|
|
|
1994 Stock Option Plan (incorporated herein by reference to
Exhibit 10.2 to the Companys registration statement
on
Form S-1,
filed on May 24, 1994)
|
|
10
|
.3
|
|
|
|
Form of Indemnification Agreement between the Company and its
Officers and Directors (incorporated herein by reference to
Exhibit 10.3 to the Companys registration statement
on
Form S-1,
filed on May 24, 1994)
|
|
10
|
.4
|
|
|
|
Senior Officer Retirement Plan (incorporated herein by reference
to Exhibit 10.4 to the Companys registration
statement on
Form S-1/A,
filed on December 22, 1995)
|
|
10
|
.5
|
|
|
|
Amendment to the Companys Senior Officer Retirement Plan
(incorporated herein by reference to Exhibit 10.5 to the
Companys report on
Form 10-K,
filed on March 23, 2005)
|
|
10
|
.6
|
|
|
|
1999 Stock Option Plan (incorporated herein by reference to
Exhibit 10.12 to the Companys report on
Form 10-K,
filed on March 30, 2000)
|
|
10
|
.7
|
|
|
|
Amended and Restated Employment Agreement, dated
November 4, 2004, between the Company and Dr. George
C. Zoley (incorporated herein by reference to Exhibit 10.1
to the Companys report on
Form 10-Q,
filed on November 4, 2004)
|
|
10
|
.8
|
|
|
|
Amended and Restated Employment Agreement, dated
November 4, 2004, between the Company and Wayne H.
Calabrese (incorporated herein by reference to Exhibit 10.2
to the Companys report on
Form 10-Q,
filed on November 5, 2004)
|
|
10
|
.9
|
|
|
|
Executive Employment Agreement, dated March 7, 2002,
between the Company and John G. ORourke (incorporated
herein by reference to Exhibit 10.17 to the Companys
report on
Form 10-Q,
filed on May 15, 2002)
|
|
10
|
.10
|
|
|
|
Executive Retirement Agreement, dated March 7, 2002,
between the Company and Dr. George C. Zoley (incorporated
herein by reference to Exhibit 10.18 to the Companys
report on
Form 10-Q,
filed on May 15, 2002)
|
|
10
|
.11
|
|
|
|
Executive Retirement Agreement, dated March 7, 2002,
between the Company and Wayne H. Calabrese (incorporated herein
by reference to Exhibit 10.19 to the Companys report
on
Form 10-Q,
filed on May 15, 2002)
|
|
10
|
.12
|
|
|
|
Executive Retirement Agreement, dated March 7, 2002,
between the Company and John G. ORourke (incorporated
herein by reference to Exhibit 10.20 to the Companys
report on
Form 10-Q,
filed on May 15, 2002)
|
|
10
|
.13
|
|
|
|
Amended Executive Retirement Agreement, dated January 17,
2003, by and between the Company and George C. Zoley
(incorporated herein by reference to Exhibit 10.18 to the
Companys report on
Form 10-K,
filed on March 20, 2003)
|
|
10
|
.14
|
|
|
|
Amended Executive Retirement Agreement, dated January 17,
2003, by and between the Company and Wayne H. Calabrese
(incorporated herein by reference to Exhibit 10.19 to the
Companys report on
Form 10-K,
filed on March 20, 2003)
|
|
10
|
.15
|
|
|
|
Amended Executive Retirement Agreement, dated January 17,
2003, by and between the Company and John G. ORourke
(incorporated herein by reference to Exhibit 10.20 to the
Companys report on
Form 10-K,
filed on March 20, 2003)
|
|
10
|
.16
|
|
|
|
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and John J. Bulfin (incorporated
herein by reference to Exhibit 10.22 to the Companys
report on
Form 10-K,
filed on March 23, 2005)
|
II-7
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
10
|
.17
|
|
|
|
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and Jorge A. Dominicis (incorporated
herein by reference to Exhibit 10.23 to the Companys
report on
Form 10-K,
filed on March 23, 2005)
|
|
10
|
.18
|
|
|
|
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and John M. Hurley (incorporated
herein by reference to Exhibit 10.24 to the Companys
report on
Form 10-K,
filed on March 23, 2005)
|
|
10
|
.19
|
|
|
|
Senior Officer Employment Agreement, effective August 3,
2009, by and between the Company and Brian R. Evans
(incorporated by reference to Exhibit 10.1 to the
Companys report on
Form 10-Q,
filed August 3, 2009)
|
|
10
|
.20
|
|
|
|
Office Lease, dated September 12, 2002, by and between the
Company and Canpro Investments Ltd. (incorporated herein by
reference to Exhibit 10.22 to the Companys report on
Form 10-K,
filed on March 20, 2003)
|
|
10
|
.21
|
|
|
|
The Geo Group, Inc. Senior Management Performance Award Plan
(incorporated herein by reference to Exhibit 10.1 to the
Companys report on
Form 10-Q,
filed on May 13, 2005)
|
|
10
|
.22
|
|
|
|
Amended and Restated The GEO Group, Inc. 2006 Stock Incentive
Plan (incorporated herein by reference to Exhibit 10.1 to
the Companys report on
Form 8-K,
filed on May 5, 2009)
|
|
10
|
.23
|
|
|
|
Amendment to The Geo Group, Inc. 2006 Stock Incentive Plan
(incorporated herein by reference to the Companys report
on
Form 10-Q,
filed on August 9, 2007)
|
|
10
|
.24
|
|
|
|
Third Amended and Restated Credit Agreement, dated as of
January 24, 2007, by and among The GEO Group, Inc., as
Borrower, BNP Paribas, as Administrative Agent, BNP Paribas
Securities Corp. as Lead Arranger and Syndication Agent, and the
lenders who are, or may from time to time become, a party
thereto (incorporated herein by reference to Exhibit 10.1
to the Companys report on
Form 8-K,
filed on January 30, 2007)
|
|
10
|
.25
|
|
|
|
Amendment No. 1 to the Third Amended and Restated Credit
Agreement, dated as of January 31, 2007, between The GEO
Group, Inc., as Borrower, and BNP Paribas, as Lender and as
Administrative Agent (incorporated herein by reference to
Exhibit 10.1 to the Companys report on
Form 8-K,
filed on February 6, 2007)
|
|
10
|
.26
|
|
|
|
Amendment No. 2 to the Third Amended and Restated Credit
Agreement, dated as of January 31, 2007, between The GEO
Group, Inc., as Borrower, and BNP Paribas, as Lender and as
Administrative Agent (incorporated herein by reference to
Exhibit 10.1 to the Companys report on
Form 8-K,
filed on February 20, 2007)
|
|
10
|
.27
|
|
|
|
Amendment No. 3 to the Third Amended and Restated Credit
Agreement dated as of May 2, 2007, between The Geo Group,
Inc., as Borrower, and BNP Paribas, as Lender and as
Administrative Agent (incorporated herein by reference to
Exhibit 10.1 to the Companys report on
Form 8-K,
dated May 8, 2007)
|
|
10
|
.28
|
|
|
|
Amendment No. 4 to the Third Amended and Restated Credit
Agreement, dated effective as of August 26, 2008, between
The GEO Group Inc., as Borrower, certain of GEOs
subsidiaries, as Grantors, and BNP Paribas, as Lender and as
Administrative Agent (incorporated by reference to
Exhibit 10.1 of the Companys report on
Form 8-K,
filed on September 2, 2008)
|
|
10
|
.29
|
|
|
|
Amendment No. 5 to the Third Amended and Restated Credit
Agreement dated as of October 5, 2009 between GEO, as
Borrower, and BNP Paribas, as Lender and as Administrative Agent
(incorporated by reference to Exhibit 10.2 to the
Companys report on
Form 8-K,
filed on October 20, 2009)
|
|
10
|
.30
|
|
|
|
Amendment No. 6 to the Third Amended and Restated Credit
Agreement dated as of October 14, 2009 between GEO, as
Borrower, and BNP Paribas, as Lender and as Administrative Agent
(incorporated by reference to Exhibit 10.3 to the
Companys report on
Form 8-K,
filed on October 20, 2009)
|
|
10
|
.31
|
|
|
|
Amendment No. 7 to the Third Amended and Restated Credit
Agreement dated as of December 4, 2009, between GEO, as
Borrower, and BNP Paribas, as Lender and as Administrative Agent
(incorporated by reference to Exhibit 10.1 to the
Companys report on
Form 8-K,
filed on December 10, 2009)
|
|
10
|
.32
|
|
|
|
Form of Lender Addendum, dated as of October 29, 2008, by
and among The GEO Group, Inc. as Borrower, BNP Paribas as
Administrative Agent and the Lender parties thereto
(incorporated by reference to Exhibit 10.2 to the
Companys report on
Form 10-Q,
filed November 5, 2008)
|
II-8
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
10
|
.33
|
|
|
|
Second Amended and Restated Executive Employment Agreement,
effective December 31, 2008, by and between The GEO Group,
Inc. and George C. Zoley (incorporated by reference to
Exhibit 10.1 to the Companys report on
Form 8-K
January 7, 2009)
|
|
10
|
.34
|
|
|
|
Second Amended and Restated Executive Employment Agreement,
effective December 31, 2008, by and between The GEO Group,
Inc. and Wayne H. Calabrese (incorporated by reference to
Exhibit 10.2 to the Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.35
|
|
|
|
Amended and Restated Executive Employment Agreement, effective
December 31, 2008, by and between The GEO Group, Inc. and
John G. ORourke (incorporated by reference to
Exhibit 10.3 to the Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.36
|
|
|
|
Amended and Restated Senior Officer Employment Agreement,
effective December 31, 2008, by and between The GEO Group,
Inc. and John J. Bulfin (incorporated by reference to
Exhibit 10.4 to the Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.37
|
|
|
|
Amended and Restated Senior Officer Employment Agreement,
effective December 31, 2008, by and between The GEO Group,
Inc. and Jorge A. Dominicis (incorporated by reference to
Exhibit 10.5 to the Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.38
|
|
|
|
Amended and Restated Senior Officer Employment Agreement,
effective December 31, 2008, by and between The GEO Group,
Inc. and Thomas M. Wierdsma (incorporated by reference to
Exhibit 10.6 to the Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.39
|
|
|
|
Senior Officer Employment Agreement, effective August 3,
2009, by and between The GEO Group, Inc. and Brian R. Evans
(incorporated by reference to Exhibit 10.1 to the Companys
Report on Form 10-Q filed on August 3, 2009)
|
|
10
|
.40
|
|
|
|
Amended and Restated The GEO Group, Inc. Senior Management
Performance Award Plan, effective December 31, 2008
(incorporated by reference to Exhibit 10.7 to the
Companys report on
Form 8-K
filed on January 7, 2009)
|
|
10
|
.41
|
|
|
|
Amended and Restated The GEO Group, Inc. Senior Officer
Retirement Plan, effective December 31, 2008 (incorporated
by reference to Exhibit 10.8 to the Companys report
on
Form 8-K
January 7, 2009)
|
|
12
|
.1
|
|
|
|
Statement re Computation of Ratios**
|
|
21
|
.1
|
|
|
|
Subsidiaries of the Company**
|
|
23
|
.1
|
|
|
|
Consent of Grant Thornton LLP*
|
|
23
|
.2
|
|
|
|
Consent of Akerman Senterfitt (included in Exhibit 5.1)***
|
|
24
|
.1
|
|
|
|
Powers of Attorney (included on signature pages)**
|
|
25
|
.1
|
|
|
|
Statement of Eligibility of Trustee**
|
|
99
|
.1
|
|
|
|
Form of Letter of Transmittal**
|
|
99
|
.2
|
|
|
|
Form of Notice of Guaranteed Delivery for Notes**
|
|
99
|
.3
|
|
|
|
Form of Letter to Broker**
|
|
99
|
.4
|
|
|
|
Form of Letter to Clients**
|
|
99
|
.5
|
|
|
|
Guidelines for Certification of Taxpayer Identification Number
of Substitution
Form W-9**
|
|
|
|
** |
|
Incorporated herein by reference to exhibit of the same number
filed with the Registrants Registration Statement on Form
S-4 filed on
December 22, 2009. |
|
|
|
*** |
|
Incorporated herein by reference to exhibit of the same number
filed with the Registrants Amendment No. 1 to the
Registration Statement on Form S-4 filed on February 22,
2010. |
|
|
|
|
|
Management contract or compensatory plan, contract or agreement
as defined in Item 402 (a)(3) of
Regulation S-K. |
(b) Financial Statement Schedules required by
Regulation S-X
and Item 14(e), Item 17(a) or Item 17(b)(9).
(c) Not applicable.
II-9
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate
offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser, if the registrant
is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to
an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in
the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such date of first use.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities:
Each undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to
this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any
of the following communications, the undersigned registrant will
be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
II-10
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv)Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser.
Each undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrants annual report pursuant to
section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to
section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the
requirements of
Rule 14a-3
or
Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3
of
Regulation S-X
are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Each undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11, or 13 of
this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the
registration statement through the date of responding to the
request.
Each undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2
to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
THE GEO GROUP, INC.
Name: Brian R. Evans
|
|
|
|
Title:
|
Senior Vice President & Chief Financial Officer
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
Chairman of the Board and Chief Executive Officer (Principal
Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Senior Vice President & Chief Financial Officer
(Principal Financial Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Ronald
A. Brack
|
|
Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Wayne
H. Calabrese
|
|
Vice Chairman of the Board, President and Chief Operating Officer
|
|
April 16, 2010
|
|
|
|
|
|
*
Norman
A. Carlson
|
|
Director
|
|
April 16, 2010
|
|
|
|
|
|
*
Anne
N. Foreman
|
|
Director
|
|
April 16, 2010
|
|
|
|
|
|
*
Richard
H. Glanton
|
|
Director
|
|
April 16, 2010
|
|
|
|
|
|
*
John
M. Palms
|
|
Director
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-12
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2
to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
GEO CARE, INC.
Name: Brian R. Evans
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
Chairman of the Board
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Treasurer
(Principal Financial and Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Jorge
A. Dominicis
|
|
President and Director
(Principal Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Wayne
H. Calabrese
|
|
Director
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-13
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2
to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
GEO RE HOLDINGS LLC
Name: Brian R. Evans
|
|
|
|
Title:
|
Senior Vice President & Treasurer
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
President (Principal Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Senior Vice President & Treasurer (Principal Financial
and Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
By: The GEO Group, Inc.
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Senior Vice President & Chief Financial Officer of The
GEO Group, Inc., the Sole Manager of GEO RE Holdings LLC
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-14
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2
to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
Correctional Services Corporation
Name: Brian R. Evans
|
|
|
|
Title:
|
Vice President & Treasurer
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
President & Director
(Principal Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Vice President & Treasurer
(Principal Financial Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Ronald
A. Brack
|
|
Vice President Accounting
(Principal Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
John
J. Bulfin
|
|
Vice President, Secretary and Director
|
|
April 16, 2010
|
|
|
|
|
|
*
Wayne
H. Calabrese
|
|
Vice President and Director
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-15
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2
to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
GEO Transport, Inc.
Name: Brian R. Evans
|
|
|
|
Title:
|
Vice President & Treasurer
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
President & Director
(Principal Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Vice President & Treasurer
(Principal Financial Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
Ronald
A. Brack
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
John
J. Bulfin
|
|
Vice President, Secretary and Director
|
|
April 16, 2010
|
|
|
|
|
|
*
Wayne
H. Calabrese
|
|
Vice President and Director
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-16
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2 to
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
Public Properties Development & Leasing LLC
Name: Brian R. Evans
|
|
|
|
Title:
|
Vice President Finance
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
*
George
C. Zoley
|
|
President & Director
(Principal Executive Officer)
|
|
April 16, 2010
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Vice President Finance
(Principal Financial and Accounting Officer)
|
|
April 16, 2010
|
*
John
J. Bulfin
|
|
Vice President, Secretary and Director
|
|
April 16, 2010
|
*
Wayne
H. Calabrese
|
|
Vice President and Director
|
|
April 16, 2010
|
By:
|
|
CPT Operating Partnership L.P.
|
|
Vice President Finance of GEO Acquisition II, Inc.,
|
|
April 16, 2010
|
By:
|
|
GEO Acquisition II, Inc., its General Partner
|
|
the General Partner of CPT Operating Partnership L.P.,
the Sole Member of Public Properties Development & Leasing
LLC
|
|
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
|
|
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-17
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2 to
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
Correctional Properties Prison Finance LLC
Name: Brian R. Evans
|
|
|
|
Title:
|
Vice President Finance
|
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
George
C. Zoley
|
|
President & Director
(Principal Executive Officer)
|
|
April 16, 2010
|
|
|
|
|
|
/s/ Brian
R. Evans
Brian
R. Evans
|
|
Vice President Finance
(Principal Financial and Accounting Officer)
|
|
April 16, 2010
|
|
|
|
|
|
*
John
J. Bulfin
|
|
Vice President, Secretary and Director
|
|
April 16, 2010
|
|
|
|
|
|
*
Wayne
H. Calabrese
|
|
Vice President and Director
|
|
April 16, 2010
|
|
|
|
|
|
|
|
*By:
|
|
/s/ Brian
R. Evans
Brian
R. Evans
Attorney-in-fact
|
|
|
|
|
II-18
Pursuant to the requirements of the Securities Act, the
undersigned registrant has duly caused this Amendment No. 2 to
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca
Raton, State of Florida, on April 16, 2010.
CPT Operating Partnership L.P.
Name: