þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended January 2, 2005 | ||
Or | ||
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from to |
Florida
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65-0043078 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
One Park Place, Suite 700, 621 Northwest
53rd Street
Boca Raton, Florida (Address of principal executive offices) |
33487-8242
(Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.01 Par Value
|
New York Stock Exchange |
Title of Each Class | Name of Each Exchange on Which Registered | |
None
|
None |
1
Item 1. | Business |
2
3
| a one time general revenue appropriation by the governmental agency for the cost of the new facility; | |
| general obligation bonds that are secured by either a limited or unlimited tax levy by the issuing governmental entity; or | |
| revenue bonds or certificates of participation secured by an annual lease payment that is subject to annual or bi-annual legislative appropriations. |
| funds from equity offerings of our stock; | |
| cash flows from operations; | |
| borrowings from banks or other institutions (which may or may not be subject to government guarantees in the event of contract termination); or | |
| lease arrangements with third parties. |
4
Regional Operating Structure |
Long Term Relationships with High-Quality Government Customers |
Full-Service Facility Developer |
Experienced, Proven Senior Management Team |
5
Provide High Quality, Essential Services at Lower Costs |
Maintain Disciplined Operating Approach |
Expand Into Complementary Government-Outsourced Services |
Pursue International Growth Opportunities |
Design | Security | Commencement | Renewal | Type of | ||||||||||||||||||||||||||
Facility Name & Location | Capacity | Customer | Facility Type | Level | of Current Term | Duration | Option | Ownership | ||||||||||||||||||||||
Domestic Contracts
|
||||||||||||||||||||||||||||||
Allen Correctional Center
Kinder, Louisiana |
1,538 | LA DPS&C | State Correctional Facility | Medium/ Maximum | September 2003 | 3 years | One, Two-year | Manage only | ||||||||||||||||||||||
Aurora ICE Processing Center Aurora, Colorado
|
356 | ICE | Federal Detention Facility | Minimum/ Medium | September 2004 | 1 year | Four, Six Months | Lease-CPV | ||||||||||||||||||||||
Bridgeport Correctional Center Bridgeport, Texas
|
520 | TDCJ | State Correctional Facility | Minimum | September 2004 | 1 Year | One, One- year | Manage only | ||||||||||||||||||||||
Broward Transition Center Deerfield Beach, Florida
|
300 | ICE/ Broward County | Federal & Local Detention Facility | Minimum | October 2004/ October 2004 | 1 year/ 1 year | Four, One-year/ Unlimited, One-Year | Lease-CPV |
6
Design
Security
Commencement
Renewal
Type of
Facility Name & Location
Capacity
Customer
Facility Type
Level
of Current Term
Duration
Option
Ownership
San Antonio, Texas(2)
643
Bexar County/ TDCJ
Federal & Local Detention Facility
All levels
January 2002
3 years
One, Two-year
Lease
McFarland, California
550
CDC
State Correctional Facility
Medium
December 1997
10 years
N/A
Lease-CPV
Cleveland, Texas
520
TDCJ
State Correctional Facility
Medium
January 2004
1 year
N/A
Manage only
Bronte, Texas
200
TYC
State Juvenile Correctional Facility
Medium/ Maximum
September 2004
2 year
Unlimited, Two-year
Lease
Adelanto, California
568
CDC
State Correctional Facility
Medium
December 1997
10 years
N/A
Lease-CPV
1,000
MDOC
State Correctional Facility
Mental Health
April 2003
2 years
One, Two-year
Manage only
1,851
Delaware County
Local Detention Facility
All levels
June 2003
3 years
Unlimited, Three- year
Manage only
McFarland, California
550
CDC
State Correctional Facility
Medium
December 1997
10 years
N/A
Lease-CPV
600
NMCD
State Correctional Facility
Medium
June 2004
1 year
Unlimited, 1-year
Own
Karnes City, Texas(2)
579
Karnes County
Federal & Local Detention Facility
All levels
January 1998
30 years
N/A
Lease-CPV
Kyle, Texas
520
TDCJ
State Correctional Facility
Minimum
September 2004
1 year
One, One- year
Manage only
1,536
VDOC
State Correctional Facility
Medium
March 2003
5 year
Ten, One- year
Manage only
1,918
ODOC
State Correctional Facility
Medium
July 2003
2 years
Four, One-year
Lease-CPV
1,200
NMCD
State Correctional Facility
All levels
June 2003
2 years
Unlimited, 1-year
Lease-CPV
1,000
TDCJ
State Correctional Facility
Minimum
January 2003
1 year
N/A
Manage only
1,000
MDOC
State Correctional Facility
Medium
January 2004
5 years
Two, One-year
Manage only
McFarland, California
224
CDC
State Correctional Facility
Minimum
January 2005
1 year
N/A
Lease-CPV
480
MIDOC
State Correctional Facility
Maximum
July 2003
4 years
N/A
Own
750
DMS
State Correctional Facility
Medium
July 2002
3 years
Unlimited, Two-year
Manage only
7
Design
Security
Commencement
Renewal
Type of
Facility Name & Location
Capacity
Customer
Facility Type
Level
of Current Term
Duration
Option
Ownership
Fort Worth, Texas
400
TDCJ
State Correctional Facility
Minimum
March 2004
3 years
Four, One-year
Lease
200
ICE
Federal Detention Facility Federal & State
Minimum/ Medium
April 2003
2 years
Three, One-year
Lease-CPV
3,064
Reeves County
Federal & State Correctional Facility
All levels
November 2003
10 years
N/A
Manage only
1,200
BOP
Federal Correctional Facility
Low
March 2001
4 years
Seven, One-year
Own
1,000
TDCJ
State Correctional Facility
Minimum
January 2004
3 years
Two, One-year
Manage only
1,318
DMS
State Correctional Facility Federal
Medium/ Close
June 2003
2 years
Unlimited, Two-year
Manage only
Taft, California
2,048
BOP
Correctional Facility
Low/ Minimum
August 2003
2 years
Three, One-year
Manage only
784
Val Verde County
Federal & Local Detention Facility
All levels
January 2001
20 years
Unlimited, Five-year
Own
700
USMS/ ICE
Federal Detention Facility
Maximum
July 2003
2 years
Two, One-year
Lease
710
QLD DCS
Reception & Remand Centre
All levels
December 2002
5 years
One, Five-year
Manage only
381
NZ DOC
National Jail
Maximum
July 2000
5 years
One, Two-year
Manage only
845
VIC MOC
State Prison
Minimum/ Medium
September 2003
3 years
Four, Three- year
Manage only
Junee, Australia
750
NSW
State Prison
Minimum/ Medium
April 2001
5 years
One, Three- year
Manage only
3,024
RSA DCS
National Prison
Maximum
July 1999
25 years
None
Manage only
67
VIC CC
State Jail
All levels
March 2003
2 years
One, One- year
Manage only
N/A
PNB
Province Juvenile Facility
All levels
October 1997
25 years
One, Ten- year
Manage only
Victoria, Australia(5)
N/A
VIC CV
Health Care Services
N/A
December 2003
3 years
Four, Six- months
Manage only
72
N/A
Private Psychiatric Hospital
Mental Health
N/A
N/A
N/A
Own
325
DCF
State Psychiatric Hospital
Mental Health
July 2003
5 years
Two, Five-year
Manage only
8
Abbreviation
Customer
Louisiana Department of Public Safety & Corrections
Bureau of Immigration & Customs Enforcement
Texas Department of Criminal Justice
California Department of Corrections
Texas Youth Commission
Mississippi Department of Corrections (East
Mississippi & Marshall County)
New Mexico Corrections Department
Virginia Department of Corrections
Oklahoma Department of Corrections
Michigan Department of Corrections (Michigan YCF)
Department of Management Services
Federal Bureau of Prisons
United States Marshals Service
Department of Corrective Services of the State of Queensland
The Chief Executive of the Department of Corrections
Minister of Corrections of the State of Victoria
Commissioner of Corrective Services for New South Wales
Republic of South Africa Department of Correctional Services
The Chief Commissioner of the Victoria Police
Province of New Brunswick
The State of Victoria represented by Corrections Victoria
Florida Department of Children & Families
(1) | GEO also leases a facility from CPV in Jena, LA that was not in use during fiscal year 2004. The Jena facility remains inactive. See Note 10 of the Financial Statements. |
(2) | GEO provides services at this facility through various Inter-Governmental Agreements, or IGAs, for the county, USMS, ICE, BOP, and other state jurisdictions. |
(3) | GEO has a five-year contract with four one-year options to operate this facility on behalf of the county. The county, in turn, has a one-year contract, subject to annual renewal, with the state to house state prisoners at the facility. |
(4) | The contract for this facility only requires GEO to provide maintenance services. |
(5) | GEO provides comprehensive healthcare services to 11 government-operated prisons under this contract. |
(6) | GEO purchased this facility and provides services on an individual patient basis. As a result, no contract specifying a term or renewal provisions exists for this facility. |
Year | Renewal | Re-bid | ||||||
2005
|
6 | 8 | ||||||
2006
|
1 | 1 | ||||||
2007
|
5 | 2 | ||||||
2008
|
2 | 3 | ||||||
2009
|
3 | 4 | ||||||
Thereafter
|
9 | 2 | ||||||
26 | 20 | |||||||
9
10
11
Customer | 2004 | 2003 | 2002 | |||||||||
Various agencies of the U.S. Federal Government
|
27 | % | 27 | % | 27 | % | ||||||
Various agencies of the State of Texas
|
9 | % | 12 | % | 13 | % | ||||||
Various agencies of the State of Florida
|
12 | % | 12 | % | 14 | % |
Item 2. | Properties |
Item 3. | Legal Proceedings |
12
Item 4. | Submission of Matters to a Vote of Security Holders |
Item 5. | Market for Registrants Common Equity and Related Stockholder Matters |
2004 | 2003 | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
First
|
$ | 24.23 | $ | 19.80 | $ | 11.32 | $ | 8.48 | ||||||||
Second
|
24.62 | 18.70 | 14.74 | 8.96 | ||||||||||||
Third
|
21.00 | 17.33 | 19.92 | 13.71 | ||||||||||||
Fourth
|
26.58 | 19.56 | 22.40 | 17.05 |
13
14
Item 6. | Selected Financial Data |
Fiscal Year Ended:(1) | 2004 | 2003 Restated | 2002 Restated | 2001 Restated | 2000 Restated | |||||||||||||||||||||||||||||||||||
Results of Continuing Operations:
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||||||||||||||||||||||||||||||||||||||||
Revenues
|
$ | 614,548 | 100.0 | % | $ | 567,441 | 100.0 | % | $ | 517,162 | 100.0 | % | $ | 502,733 | 100.0 | % | $ | 470,761 | 100.0 | % | ||||||||||||||||||||
Operating income from continuing operations
|
39,310 | 6.4 | % | 30,140 | 5.4 | % | 23,858 | 4.7 | % | 18,162 | 3.6 | % | 6,778 | 1.4 | % | |||||||||||||||||||||||||
Income from continuing operations
|
$ | 17,430 | 2.8 | % | $ | 41,563 | 7.3 | % | $ | 18,188 | 3.6 | % | $ | 15,243 | 3.1 | % | $ | 8,556 | 1.8 | % | ||||||||||||||||||||
Income from continuing operations per common share:
|
||||||||||||||||||||||||||||||||||||||||
Basic:
|
$ | 1.86 | $ | 2.67 | $ | 0.86 | $ | 0.72 | $ | 0.41 | ||||||||||||||||||||||||||||||
Diluted:
|
$ | 1.79 | $ | 2.63 | $ | 0.85 | $ | 0.72 | $ | 0.40 | ||||||||||||||||||||||||||||||
Weighted Average Shares Outstanding:
|
||||||||||||||||||||||||||||||||||||||||
Basic
|
9,384 | 15,618 | 21,148 | 21,028 | 21,110 | |||||||||||||||||||||||||||||||||||
Diluted
|
9,738 | 15,829 | 21,364 | 21,261 | 21,251 | |||||||||||||||||||||||||||||||||||
Financial Condition:
|
||||||||||||||||||||||||||||||||||||||||
Current assets
|
$ | 222,646 | $ | 191,691 | $ | 142,719 | $ | 141,003 | $ | 130,271 | ||||||||||||||||||||||||||||||
Current liabilities
|
117,696 | 118,542 | 79,060 | 74,441 | 75,233 | |||||||||||||||||||||||||||||||||||
Total assets
|
480,146 | 510,533 | 405,258 | 242,565 | 224,064 | |||||||||||||||||||||||||||||||||||
Long-term debt, including current portion (excluding
non-recourse debt)
|
198,204 | 245,086 | 125,000 | | 10,000 | |||||||||||||||||||||||||||||||||||
Shareholders equity
|
$ | 106,848 | $ | 84,074 | $ | 150,616 | $ | 128,708 | $ | 126,060 | ||||||||||||||||||||||||||||||
Operational Data:
|
||||||||||||||||||||||||||||||||||||||||
Contracts/awards
|
49 | 45 | 52 | 53 | 50 | |||||||||||||||||||||||||||||||||||
Facilities in operation
|
43 | 40 | 52 | 51 | 44 | |||||||||||||||||||||||||||||||||||
Design capacity of contracts
|
35,266 | 38,610 | 41,083 | 36,871 | 37,957 | |||||||||||||||||||||||||||||||||||
Compensated resident days(2)
|
12,599,290 | 11,513,955 | 10,708,786 | 10,050,909 | 9,528,942 |
(1) | Our fiscal year ends on the Sunday closest to the calendar year end. Fiscal year ended January 2, 2005 contained 53 weeks. Discontinued Operations have not been included with Selected Financial Data. Information related to Discontinued Operations is listed in Item 8. Financial Statements Note 3 Discontinued Operations. |
(2) | Compensated resident days are calculated as follows: (a) for per diem rate facilities the number of beds occupied by residents on a daily basis during the fiscal year; 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 fiscal year. Amounts exclude compensated resident days for United Kingdom for all of the above periods. |
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
15
16
17
18
Revenue Recognition |
Reserves for Insurance Losses |
Income Taxes |
19
Property and Equipment |
Idle Facilities |
20
Overview |
Fiscal Year | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Dollars in thousands, | ||||||||||||
except per share data) | ||||||||||||
Certain Items (before income taxes)
|
||||||||||||
Insurance reduction
|
$ | 4,150 | $ | | $ | | ||||||
Jena, Louisiana write-off
|
(3,000 | ) | (5,000 | ) | (1,100 | ) | ||||||
DIMIA insurance reserves
|
| (3,600 | ) | | ||||||||
Write-off of acquisition costs
|
(1,306 | ) | | | ||||||||
Gain on sale of UK joint venture
|
| 61,034 | | |||||||||
Write-off of deferred financing fees
|
(317 | ) | (1,989 | ) | | |||||||
Certain Items
|
$ | (473 | ) | $ | 50,445 | $ | (1,100 | ) | ||||
Amounts per diluted common share after-tax
|
$ | (0.03 | ) | $ | 1.87 | $ | (0.03 | ) |
21
Fiscal Year | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Dollars in thousands) | ||||||||||||
Certain Items represented in the various lines of the
Consolidated Statements of Income
|
||||||||||||
Operating Expenses
|
$ | 1,150 | $ | (8,000 | ) | $ | (1,100 | ) | ||||
General and Administrative Expenses
|
(1,306 | ) | | | ||||||||
Write-off of deferred financing fees
|
(317 | ) | (1,989 | ) | | |||||||
Gain on Sale of UK joint venture
|
| 61,034 | | |||||||||
Certain Items
|
$ | (473 | ) | $ | 50,445 | $ | (1,100 | ) |
2004 versus 2003 |
Facility Operations |
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Revenue
|
$ | 614,548 | 100.0 | % | $ | 567,441 | 100.0 | % | $ | 47,107 | 8.3 | % |
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Operating Expenses
|
$ | 514,908 | 83.8 | % | $ | 484,018 | 85.3 | % | $ | 30,890 | 6.4 | % |
22
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
General and Administrative Expenses
|
$ | 45,879 | 7.5 | % | $ | 39,379 | 6.9 | % | $ | 6,500 | 16.5 | % |
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest Income
|
$ | 9,598 | 1.6 | % | $ | 6,874 | 1.2 | % | $ | 2,724 | 39.6 | % | ||||||||||||
Interest Expense
|
$ | 22,138 | 3.6 | % | $ | 17,896 | 3.2 | % | $ | 4,242 | 23.7 | % |
23
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Income Taxes
|
$ | 8,313 | 1.4 | % | $ | 37,205 | 6.6 | % | $ | 28,892 | (77.7 | )% |
2004 | % of Revenue | 2003 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Equity in Earnings of Affiliates
|
$ | | 0.0 | % | $ | 1,250 | 0.2 | % | $ | (1,250 | ) | (100.0 | )% |
24
Fiscal 2003 Compared with 2002 |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Revenue
|
$ | 567,441 | 100.0 | % | $ | 517,162 | 100.0 | % | $ | 50,279 | 9.7 | % |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Operating Expenses
|
$ | 484,018 | 85.3 | % | $ | 449,442 | 86.9 | % | $ | 34,576 | 7.7 | % |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
General and Administrative Expenses
|
$ | 39,379 | 6.9 | % | $ | 32,146 | 6.2 | % | $ | 7,233 | 22.5 | % |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest Income
|
$ | 6,874 | 1.2 | % | $ | 4,848 | 0.9 | % | $ | 2,026 | 41.8 | % | ||||||||||||
Interest Expense
|
$ | 17,896 | 3.2 | % | $ | 3,738 | 0.7 | % | $ | 14,158 | 378.8 | % |
25
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Income Taxes
|
$ | 37,205 | 6.6 | % | $ | 11,312 | 2.2 | % | $ | 25,893 | 228.9 | % |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Equity in Earnings of Affiliates
|
$ | 1,250 | 0.2 | % | $ | 4,958 | 1.0 | % | $ | (3,708 | ) | (74.8 | )% |
2003 | % of Revenue | 2002 | % of Revenue | $ Change | % Change | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Discontinued Operations
|
$ | 3,198 | 0.6 | % | $ | 2,932 | 0.6 | % | $ | 266 | 9.1 | % |
Liquidity and Capital Resources |
26
The Senior Credit Facility |
27
28
Senior 8 1 / 4 % Notes |
Guarantees |
29
Interest Rate Swaps |
Cash Flow |
30
Contractual Obligations and Off Balance Sheet Arrangements |
Payments Due by Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Long-Term Debt Obligations
|
$ | 201,521 | $ | 12,006 | $ | 6,922 | $ | 32,593 | $ | 150,000 | ||||||||||
Operating Lease Obligations
|
140,343 | 32,929 | 65,531 | 27,406 | 14,477 | |||||||||||||||
Non-Recourse Debt
|
44,683 | 1,730 | 4,066 | 5,086 | 33,801 | |||||||||||||||
Other Long-Term Liabilities
|
12,318 | 11,052 | 105 | 186 | 975 | |||||||||||||||
Total
|
$ | 398,865 | $ | 57,717 | $ | 76,624 | $ | 65,271 | $ | 199,253 |
31
32
Inflation |
| 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, New Zealand and South Africa, or other countries in which we may choose to conduct our business; | |
| our exposure to appropriations risk on the Michigan Youth Correctional Facility; | |
| our ability to renew the operating contract for the Queens Correctional Facility beyond June 30, 2005; | |
| an increase in unreimbursed labor rates; | |
| our ability to expand and diversify our correctional and mental health 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 reactivate our Jena, Louisiana facility, or to sublease or coordinate the sale of the facility with the owner of the property, Correctional Properties Trust, or CPV; | |
| our ability to accurately project the size and growth of the domestic and international privatized corrections industry; | |
| our ability to estimate the governments level of dependency on privatized correctional services; | |
| our ability to develop long-term earnings visibility; |
33
| our ability to obtain future financing at competitive rates; | |
| our exposure to rising general insurance costs; | |
| our exposure to claims for which we are uninsured; | |
| our exposure to rising 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; | |
| the ability of our government customers to secure budgetary appropriations to fund their payment obligations to us; and | |
| other factors contained in our filings with the Securities and Exchange Commission, or the SEC, including, but not limited to, those detailed in our annual report on Form 10-K, our Form 10-Qs and our Form 8-Ks filed with the SEC. |
Our significant level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt service obligations. |
| 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. |
34
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 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. |
35
Servicing our indebtedness will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. |
Because portions of our indebtedness have floating interest rates, a general increase in interest rates will adversely affect cash flows. |
We depend on distributions from our subsidiaries to make payments on our indebtedness. These distributions may not be made. |
36
The Notes are effectively subordinated to our senior secured indebtedness, which could impair our ability to pay amounts due under the Notes. |
Our subsidiaries have not guaranteed the Notes and therefore the Notes will be effectively subordinated in right of payment to any and all indebtedness and other liabilities, including trade payables, of our subsidiaries. |
We are subject to the termination or non-renewal of our government contracts, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers. |
37
38
We may not be able to secure financing for new facilities, which 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. |
A decrease in occupancy levels could cause a decrease in revenues and profitability. |
Competition for inmates may adversely affect the profitability of our business. |
39
We are dependent on government appropriations, which may not be made on a timely basis or at all. |
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. |
Adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts. Our business is subject to public scrutiny. |
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. |
40
Failure to comply with extensive government regulation and unique contractual requirements could have a material adverse effect on our business, financial condition or results of operations. |
We may face community opposition to facility location, which may adversely affect our ability to obtain new contracts. |
41
Our business operations expose us to various liabilities for which we may not have adequate insurance. |
We may not be able to obtain or maintain the insurance levels required by our government contracts. |
Our international operations expose us to risks which could materially adversely affect our financial condition and results of operations. |
42
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 are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel. |
Our profitability may be materially adversely affected by inflation. |
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. |
43
Risks related to facility construction and development activities may increase our costs related to such activities. |
The rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
44
45
Item 8. | Financial Statements and Supplementary Data |
George C. Zoley | |
Chairman and Chief Executive Officer | |
Wayne H. Calabrese | |
Vice Chairman, President | |
and Chief Operating Officer | |
John G. ORourke | |
Senior Vice President of Finance, | |
and Chief Financial Officer |
46
| The Company had insufficient controls over the determination and application of generally accepted accounting principles (GAAP) with respect to employee vacation expense. As a result, the Company underaccrued its liability for vacation expense under GAAP in fiscal years 2002 and 2003. Due to the materiality of this error, the Company has restated previously filed financial statements for 2002 and 2003 in order to reflect the proper accruals for employee vacation expense during those years; | |
| The Company had insufficient controls to properly evaluate voting control over its joint venture in South Africa (South Africa Custodial Management Pty. Limited, or SACM), which resulted in the Companys failure to consolidate SACM in its financial statements for fiscal years 2002 and 2003. Due to the materiality of this error, the Company has restated previously filed financial statements for 2002 and 2003 in order to consolidate SACM onto its financial statements for those years. | |
| The Company had insufficient controls in place to determine the appropriate amortization period for leasehold improvements related to certain leased facilities, which resulted in the Company understating depreciation expense in previously filed financial statements for fiscal years 2002 and 2003. Due to the materiality of this error, the Company has restated previously filed financial statements for 2002 and 2003 in order to reflect the proper depreciation expense related to leasehold improvements during those years. | |
| The Company had insufficient controls to adequately monitor and update the estimated reserve needed in connection with its inactive correctional facility in Jena, Louisiana (the Jena Facility) |
47
for fiscal year 2004. This material weakness resulted in an adjustment to increase operating expenses and the reserve for the facility because, subsequent to the financial close process, management revised its estimate of the potential income which could be derived by the Company from a sublease of the Jena Facility; and | ||
| The Company had insufficient controls to adequately prepare and review the reconciliation of differences between the income tax basis and book basis of each component of the deferred tax asset and liability accounts within the Companys balance sheet. Although no material misstatements were discovered related to this material weakness, until this deficiency is remediated, there is a more than remote likelihood that a material misstatement to the annual or interim consolidated financial statements could occur and not be prevented or detected by the Companys controls in a timely manner. |
Remediation Steps to Address Material Weaknesses |
| Accruals for Employee Vacation Expense- The Company has restated previously filed financial statements for fiscal years 2002 and 2003 in order to reflect the proper accruals for employee vacation expense during those years. The adjustments made as a result of this restatement are reflected in the financial statements filed with this Form 10-K. The Company believes that the restatement, together with the continued application of proper accounting principles to the Companys employee vacation accruals, will fully remediate this material weakness. Furthermore, the Company has developed payroll reports to help ensure the accurate recording of its employee vacation accrual on a quarterly basis. | |
| Evaluation of Voting Control Over SACM- The Company has restated previously filed financial statements for fiscal year 2002 and 2003 in order to consolidate SACM into its financial statements for those years. The adjustments made as a result of this restatement are reflected in the financial statements filed with this Form 10-K. The Company believes that the restatement, together with the continued application of proper accounting principles to SACM, will fully remediate this material weakness. | |
| Amortization of Leasehold Improvements- The Company has restated previously filed financial statements for fiscal years 2002 and 2003 in order to reflect the proper depreciation expense for those years. The Company believes that the restatement, together with the continued application of proper accounting principles to future leasehold improvements made by the Company will fully remediate this material weakness. | |
| Estimate of Reserve for Jena Facility- The Company has made an adjustment for fiscal year 2004 reflected in the financial statements filed with this Form 10-K to update the estimated reserve needed in connection with its inactive Jena Facility. In the future, the Company plans to strengthen its process with regard to monitoring reserves for loss by ensuring that the Companys disclosure committee more closely reviews all significant judgments on inactive facilities and reports any recommendations regarding changes to related reserves to the CEO and CFO prior to the completion of the financial statement close process. |
48
| Review of Income Tax Related Balance Sheet Items- The Company has made an adjustment for fiscal year 2004 reflected in the financial statements filed with this Form 10-K to properly reconcile the differences between the tax basis and book basis for its fixed assets. Beginning in fiscal year 2005, the Company intends to expand its review of its reconciliations of the tax basis to book basis for all fixed asset accounts. Management plans to implement any recommendations resulting from such review. |
Changes in Internal Control Over Financial Reporting |
49
/s/ Ernst & Young llp |
50
51
52
Table of Contents
/s/
Ernst & Young llp
Table of Contents
Restated | Restated | ||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Revenues
|
$ | 614,548 | $ | 567,441 | $ | 517,162 | |||||||
Operating Expenses
(including amounts related to
The Wackenhut Corporation (TWC) of $0, $0, and $17,973)
|
514,908 | 484,018 | 449,442 | ||||||||||
Depreciation and Amortization
|
14,451 | 13,904 | 11,716 | ||||||||||
General and Administrative Expenses
(including
amounts related to TWC of $0, $571, and $2,836)
|
45,879 | 39,379 | 32,146 | ||||||||||
Operating Income
|
39,310 | 30,140 | 23,858 | ||||||||||
Interest Income
|
9,598 | 6,874 | 4,848 | ||||||||||
Interest Expense
|
(22,138 | ) | (17,896 | ) | (3,738 | ) | |||||||
Write-off of Deferred Financing Fees from Extinguishment
of Debt
|
(317 | ) | (1,989 | ) | | ||||||||
Gain on Sale of UK Joint Venture
|
| 61,034 | | ||||||||||
Income Before Income Taxes, Equity in Earnings of
Affiliates, Discontinued Operations and Minority Interest
|
26,453 | 78,163 | 24,968 | ||||||||||
Provision for Income Taxes
|
8,313 | 37,205 | 11,312 | ||||||||||
Minority Interest
|
(710 | ) | (645 | ) | (426 | ) | |||||||
Equity in Earnings of Affiliates,
(net of income
tax provision of $0, $905, and $2,836)
|
| 1,250 | 4,958 | ||||||||||
Income from Continuing Operations
|
17,430 | 41,563 | 18,188 | ||||||||||
Income (loss) from discontinued operations, net of
tax (benefit) expense of $(263), $1,329, and $1,257
|
(615 | ) | 3,198 | 2,932 | |||||||||
Net Income
|
$ | 16,815 | $ | 44,761 | $ | 21,120 | |||||||
Weighted Average Common Shares Outstanding:
|
|||||||||||||
Basic
|
9,384 | 15,618 | 21,148 | ||||||||||
Diluted
|
9,738 | 15,829 | 21,364 | ||||||||||
Earnings per Common Share:
|
|||||||||||||
Basic:
|
|||||||||||||
Income from continuing operations
|
$ | 1.86 | $ | 2.67 | $ | 0.86 | |||||||
Income (loss) from discontinued operations
|
(0.07 | ) | 0.20 | 0.14 | |||||||||
Net income per share-basic
|
$ | 1.79 | $ | 2.87 | $ | 1.00 | |||||||
Diluted:
|
|||||||||||||
Income from continuing operations
|
$ | 1.79 | $ | 2.63 | $ | 0.85 | |||||||
Income (loss) from discontinued operations
|
(0.06 | ) | 0.20 | 0.14 | |||||||||
Net income per share-diluted
|
$ | 1.73 | $ | 2.83 | $ | 0.99 | |||||||
53
Restated | ||||||||||
2004 | 2003 | |||||||||
(In thousands, except per | ||||||||||
share data) | ||||||||||
ASSETS
|
||||||||||
Current Assets
|
||||||||||
Cash and cash equivalents
|
$ | 92,801 | $ | 52,187 | ||||||
Short-term investments
|
10,000 | 10,000 | ||||||||
Accounts receivable, less allowance for doubtful accounts of
$1,170 and $1,205
|
94,028 | 88,461 | ||||||||
Deferred income tax asset
|
12,771 | 13,099 | ||||||||
Other current assets
|
12,386 | 10,536 | ||||||||
Current assets of discontinued operations
|
660 | 17,408 | ||||||||
Total current assets
|
222,646 | 191,691 | ||||||||
Restricted Cash
|
3,908 | 55,794 | ||||||||
Property and Equipment, Net
|
196,744 | 200,554 | ||||||||
Deferred Income Tax Asset
|
| 5,372 | ||||||||
Direct Finance Lease Receivable
|
42,953 | 42,379 | ||||||||
Other Non Current Assets
|
13,895 | 14,567 | ||||||||
Other Assets of Discontinued Operations
|
| 176 | ||||||||
$ | 480,146 | $ | 510,533 | |||||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||||
Current Liabilities
|
||||||||||
Accounts payable
|
$ | 21,874 | $ | 21,116 | ||||||
Accrued payroll and related taxes
|
25,026 | 17,757 | ||||||||
Accrued expenses
|
53,607 | 62,973 | ||||||||
Current portion of deferred revenue
|
1,844 | 1,811 | ||||||||
Current portion of long-term debt and non-recourse debt
|
13,736 | 7,107 | ||||||||
Current liabilities of discontinued operations
|
1,609 | 7,778 | ||||||||
Total current liabilities
|
117,696 | 118,542 | ||||||||
Deferred Revenue
|
4,320 | 6,197 | ||||||||
Deferred Tax Liability
|
1,489 | | ||||||||
Minority Interest
|
1,194 | 1,025 | ||||||||
Other Non Current Liabilities
|
19,448 | 18,851 | ||||||||
Long-Term Debt
|
186,198 | 239,465 | ||||||||
Non-Recourse Debt
|
42,953 | 42,379 | ||||||||
Commitments and Contingencies
|
||||||||||
Shareholders Equity
|
||||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized,
none issued or outstanding
|
| | ||||||||
Common stock, $0.01 par value, 30,000,000 shares authorized,
9,507,391 and 9,332,552 shares issued and outstanding,
respectively
|
95 | 93 | ||||||||
Additional paid-in capital
|
67,005 | 64,605 | ||||||||
Retained earnings
|
170,879 | 154,064 | ||||||||
Accumulated other comprehensive income(loss)
|
749 | (2,808 | ) | |||||||
Treasury stock 12,000,000 shares
|
(131,880 | ) | (131,880 | ) | ||||||
Total shareholders equity
|
106,848 | 84,074 | ||||||||
$ | 480,146 | $ | 510,533 | |||||||
54
Restated | Restated | |||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands) | ||||||||||||||
Cash Flow from Operating Activities:
|
||||||||||||||
Income from continuing operations
|
$ | 17,430 | $ | 41,563 | $ | 18,188 | ||||||||
Adjustments to reconcile income from continuing operations to
net cash provided by operating activities
|
||||||||||||||
Depreciation and amortization expense
|
14,451 | 13,904 | 11,716 | |||||||||||
Amortization of debt issuance costs
|
303 | 607 | | |||||||||||
Deferred tax liability (benefit)
|
3,433 | 230 | (340 | ) | ||||||||||
Provision for doubtful accounts
|
1,296 | 1,025 | 2,368 | |||||||||||
Major maintenance reserve
|
465 | 296 | 100 | |||||||||||
Equity in earnings of affiliates, net of tax
|
| (1,250 | ) | (4,958 | ) | |||||||||
Minority interests in earnings of consolidated entity
|
710 | 645 | 560 | |||||||||||
Other non-cash charges
|
141 | | | |||||||||||
Tax benefit related to employee stock options
|
773 | 330 | 1,081 | |||||||||||
Gain on sale of UK joint venture
|
| (61,034 | ) | | ||||||||||
Write-off of deferred financing fees from extinguishment of debt
|
317 | 1,989 | | |||||||||||
Changes in assets and liabilities
|
||||||||||||||
Accounts receivable
|
(6,703 | ) | (11,385 | ) | (2,415 | ) | ||||||||
Other current assets
|
(1,309 | ) | 2,407 | (9,021 | ) | |||||||||
Other assets
|
1,336 | (2,333 | ) | 4,154 | ||||||||||
Accounts payable and accrued expenses
|
(9,581 | ) | 29,290 | 1,440 | ||||||||||
Accrued payroll and related taxes
|
6,820 | (2,860 | ) | 4,163 | ||||||||||
Deferred revenue
|
(1,844 | ) | (1,891 | ) | (2,673 | ) | ||||||||
Other liabilities
|
5,282 | 5,787 | 8,777 | |||||||||||
Net cash provided by operating activities of continuing
operations
|
33,320 | 17,320 | 33,140 | |||||||||||
Net cash provided by (used in) operating activities of
discontinued operations
|
7,091 | 4,869 | (5,420 | ) | ||||||||||
Net cash provided by operating activities
|
40,411 | 22,189 | 27,720 | |||||||||||
Cash Flow from Investing Activities:
|
||||||||||||||
Investments in and advances to affiliates
|
| 193 | (171 | ) | ||||||||||
Repayments of investments in and advances to affiliates
|
| | 1,617 | |||||||||||
Proceeds from the sale of UK joint venture
|
| 80,678 | | |||||||||||
Proceeds from sales of short-term investments
|
56,835 | 2,000 | 46,125 | |||||||||||
Purchases of short-term investments
|
(56,835 | ) | (12,000 | ) | (46,125 | ) | ||||||||
Change in restricted cash
|
52,000 | (55,794 | ) | | ||||||||||
Proceeds from sale of assets
|
315 | | | |||||||||||
Capital expenditures
|
(10,235 | ) | (6,791 | ) | (160,905 | ) | ||||||||
Net cash provided by (used in) investing activities
|
42,080 | 8,286 | (159,459 | ) | ||||||||||
Cash Flow from Financing Activities:
|
||||||||||||||
Proceeds from long-term debt and non-recourse debt
|
10,000 | 272,130 | 127,981 | |||||||||||
Debt issuance costs including original issue discount
|
| (11,857 | ) | (3,111 | ) | |||||||||
Payments on long-term debt
|
(58,704 | ) | (146,250 | ) | | |||||||||
Proceeds from the exercise of stock options
|
1,589 | 776 | 1,264 | |||||||||||
Purchase of common stock
|
| (132,000 | ) | | ||||||||||
Net cash (used in) provided by financing activities
|
(47,115 | ) | (17,201 | ) | 126,134 | |||||||||
Effect of Exchange Rate Changes on Cash and Cash
Equivalents
|
1,575 | 5,734 | (3,178 | ) | ||||||||||
Net Increase (Decrease) in Cash and Cash
Equivalents
|
36,951 | 19,008 | (8,783 | ) | ||||||||||
Cash and Cash Equivalents, beginning of period*
|
56,324 | 37,316 | 46,099 | |||||||||||
Cash and Cash Equivalents, end of period**
|
$ | 93,275 | $ | 56,324 | $ | 37,316 | ||||||||
Supplemental Disclosures:
|
||||||||||||||
Cash paid during the year for:
|
||||||||||||||
Income taxes
|
$ | 8,906 | $ | 32,517 | $ | 5,589 | ||||||||
Interest
|
$ | 20,158 | $ | 5,920 | $ | 525 | ||||||||
* | Includes cash and cash equivalents of discontinued operations of $4,137, $2,361, and $6,005 for the year ended January 2, 2005, December 28, 2003, and December 29, 2002, respectively. |
** | Includes cash and cash equivalents of discontinued operations of $474, $4,137, and $2,361 for the year ended January 2, 2005, December 28, 2003, and December 29, 2002, respectively. |
55
Accumulated | |||||||||||||||||||||||||||||||||
Common Stock | Other | Treasury Stock | |||||||||||||||||||||||||||||||
Additional | Comprehensive | Total | |||||||||||||||||||||||||||||||
Number | Paid-in | Retained | Income | Number | Shareholders | ||||||||||||||||||||||||||||
of Shares | Amount | Capital | Earnings | (Loss) | of Shares | Amount | Equity | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Balance, December 30, 2001
|
20,977 | $ | 210 | $ | 61,157 | $ | 89,836 | $ | (20,842 | ) | | $ | | $ | 130,361 | ||||||||||||||||||
Restatement Adjustment
|
(1,653 | ) | (1,653 | ) | |||||||||||||||||||||||||||||
Restated Balance, December 30, 2001
|
20,977 | $ | 210 | $ | 61,157 | $ | 88,183 | $ | (20,842 | ) | | $ | | $ | 128,708 | ||||||||||||||||||
Proceeds from stock options exercised
|
269 | 2 | 1,262 | | | | | 1,264 | |||||||||||||||||||||||||
Tax benefit related to employee stock options
|
| | 1,081 | | | | | 1,081 | |||||||||||||||||||||||||
Comprehensive income:
|
|||||||||||||||||||||||||||||||||
Net income
|
| | 21,120 | | | ||||||||||||||||||||||||||||
Change in foreign currency translation, net of income tax
benefit of $1,426
|
| | | 2,238 | | ||||||||||||||||||||||||||||
Minimum pension liability adjustment, net of income tax benefit
of $302
|
| | | (505 | ) | | |||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of income tax
benefit of $1,688
|
| | | (3,290 | ) | | |||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | | | 19,563 | |||||||||||||||||||||||||
Restated Balance, December 29, 2002
|
21,246 | 212 | 63,500 | 109,303 | (22,399 | ) | | | 150,616 | ||||||||||||||||||||||||
Proceeds from stock options exercised
|
87 | 1 | 775 | | | | | 776 | |||||||||||||||||||||||||
Purchase of common stock
|
(12,000 | ) | (120 | ) | | | | (12,000 | ) | (131,880 | ) | (132,000 | ) | ||||||||||||||||||||
Tax benefit related to employee stock options
|
| | 330 | | | | | 330 | |||||||||||||||||||||||||
Comprehensive income:
|
|||||||||||||||||||||||||||||||||
Net income
|
| | 44,761 | | | ||||||||||||||||||||||||||||
Change in foreign currency translation, net of income tax
expense of $4,902
|
| | | 7,668 | | ||||||||||||||||||||||||||||
Minimum pension liability adjustment, net of income tax benefit
of $116
|
| | | (263 | ) | | |||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of income tax
benefit of $476
|
| | | (1,112 | ) | | |||||||||||||||||||||||||||
Reclassification adjustment for losses on UK interest rate swaps
included in net income related to the sale of the UK joint
venture
|
| | | 13,298 | | ||||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | | | 64,352 | |||||||||||||||||||||||||
Restated Balance, December 28, 2003
|
9,333 | 93 | 64,605 | 154,064 | $ | (2,808 | ) | (12,000 | ) | (131,880 | ) | 84,074 | |||||||||||||||||||||
Proceeds from stock options exercised
|
174 | 2 | 1,589 | | | | | 1,591 | |||||||||||||||||||||||||
Tax benefit related to employee stock options
|
| | 773 | | | | | 773 | |||||||||||||||||||||||||
Acceleration of vesting on employee stock options
|
| | 38 | | | | | 38 | |||||||||||||||||||||||||
Comprehensive income:
|
|||||||||||||||||||||||||||||||||
Net income
|
| | 16,815 | | | ||||||||||||||||||||||||||||
Change in foreign currency translation, net of income tax
expense of $663
|
| | | 960 | | ||||||||||||||||||||||||||||
Minimum pension liability adjustment, net of income tax expense
of $480
|
| | | 661 | | ||||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of income tax
expense of $815
|
| | | 1,936 | | ||||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | | | 20,372 | |||||||||||||||||||||||||
Balance, January 2, 2005
|
9,507 | $ | 95 | $ | 67,005 | $ | 170,879 | $ | 749 | (12,000 | ) | $ | (131,880 | ) | $ | 106,848 | |||||||||||||||||
56
1. | Summary of Business Operations and Significant Accounting Policies |
Fiscal Year |
Basis of Presentation |
Use of Estimates |
57
Fair Value of Financial Instruments |
Cash and Cash Equivalents |
Short Term Investments |
Accounts Receivable |
Inventories |
Restricted Cash |
58
Costs of Acquisition Opportunities |
Property and Equipment |
Long-Lived Assets |
Idle Facilities |
59
Variable Interest Entities |
Deferred Revenue |
Revenue Recognition |
60
Income Taxes |
Earnings Per Share |
Direct Finance Leases |
Reserves for Insurance Losses |
61
Debt Issuance Costs |
Comprehensive Income |
Concentration of Credit Risk |
Foreign Currency Translation |
Financial Instruments |
62
Accounting for Stock-Based Compensation |
63
Restated
Restated
Pro Forma Disclosures
2004
2003
2002
(In thousands, except per share data)
$
16,815
$
44,761
$
21,120
$
(765
)
$
(935
)
$
(1,060
)
$
16,050
$
43,826
$
20,060
$
1.79
$
2.87
$
1.00
$
1.71
$
2.81
$
0.95
$
1.73
$
2.83
$
0.99
$
1.65
$
2.77
$
0.94
3.25
%
1.73%- 2.92
%
2.37%- 3.47
%
3-7 years
3-7 years
4-8 years
40
%
49
%
49
%
Recent Accounting Pronouncements |
64
2. | Restatements |
65
Year Ended 2003
Year Ended 2002
Statements of Income
Unadjusted
Restated
Change
Unadjusted
Restated
Change
(In thousands, except per share data)
$
554,817
$
567,441
$
12,624
$
509,228
$
517,162
$
7,934
474,724
484,018
9,294
442,043
449,442
7,399
13,485
13,904
419
11,352
11,716
364
39,379
39,379
32,146
32,146
27,229
30,140
2,911
23,687
23,858
171
6,651
6,874
223
4,794
4,848
54
(17,896
)
(17,896
)
(3,737
)
(3,738
)
(1
)
(1,989
)
(1,989
)
61,034
61,034
75,029
78,163
3,134
24,744
24,968
224
35,945
37,205
1,260
11,395
11,312
(83
)
(645
)
(645
)
(426
)
(426
)
2,986
1,250
(1,736
)
5,220
4,958
(262
)
42,070
41,563
(507
)
18,569
18,188
(381
)
3,198
3,198
2,932
2,932
$
45,268
$
44,761
$
(507
)
$
21,501
$
21,120
$
(381
)
$
2.70
$
2.67
$
(0.03
)
$
0.88
$
0.86
$
(0.02
)
$
0.20
$
0.20
$
$
0.14
$
0.14
$
$
2.90
$
2.87
$
(0.03
)
$
1.02
$
1.00
$
(0.02
)
$
2.66
$
2.63
$
(0.03
)
$
0.87
$
0.85
$
(0.02
)
$
0.20
$
0.20
$
$
0.14
$
0.14
$
2.86
$
2.83
$
(0.03
)
$
1.01
$
0.99
$
(0.02
)
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
3.
Discontinued Operations
Table of Contents
2004
2003
2002
(In thousands)
$
6,040
$
62,673
$
59,384
4.
Property and Equipment
Useful
Restated
Life
2004
2003
(Years)
(In thousands)
$
4,399
$
3,707
2 to 40
213,878
209,282
3 to 7
24,547
21,909
3 to 7
4,205
3,369
$
247,029
$
238,267
(50,285
)
(37,713
)
$
196,744
$
200,554
5.
Investment in Direct Finance Leases
Table of Contents
Annual
Fiscal Year
Repayment
(In thousands)
$
5,981
6,002
6,034
6,082
6,123
48,210
78,432
(33,749
)
(1,730
)
$
42,953
6.
Derivative Financial Instruments
Table of Contents
7.
Accrued Expenses
Restated
2004
2003
$
5,476
$
6,292
5,608
4,045
15,686
13,626
1,372
6,373
5,847
5,115
19,618
27,521
$
53,607
$
62,972
8.
Debt
Restated
2004
2003
$
51,521
$
98,750
$
150,000
$
150,000
(4,063
)
(4,367
)
746
703
$
146,683
$
146,336
44,683
43,865
$
242,887
$
288,951
(13,736
)
(7,107
)
(42,953
)
(42,379
)
$
186,198
$
239,465
Table of Contents
Table of Contents
Senior
8
1
/
4
% Notes
Table of Contents
Annual
Fiscal Year
Repayment
(In thousands)
$
12,006
3,461
3,461
10,095
22,498
150,000
$
201,521
(4,063
)
(12,006
)
746
$
186,198
Guarantees
Table of Contents
9.
Transactions with Correctional Properties Trust
(CPV)
Fiscal Year
Annual Rental
(In thousands)
$
25,000
25,082
25,168
16,866
2,432
$
94,548
10.
Commitments and Contingencies
Table of Contents
Table of Contents
Leases
Fiscal Year
Annual Rental
(In thousands)
$
7,929
7,641
7,640
4,040
4,068
14,477
$
45,795
Litigation, Claims and Assessments
Table of Contents
Collective Bargaining Agreements
11.
Share Purchase
Table of Contents
12.
Earnings Per Share
Restated
Restated
Fiscal Year
2004
2003
2002
(In thousands, except per share data)
$
16,815
$
44,761
$
21,120
9,384
15,618
21,148
$
1.79
$
2.87
$
1.00
9,384
15,618
21,148
354
211
216
9,738
15,829
21,364
$
1.73
$
2.83
$
0.99
13.
Stock Options
Table of Contents
2004
2003
2002
Wtd. Avg.
Wtd. Avg.
Wtd. Avg.
Exercise
Exercise
Exercise
Fiscal Year
Shares
Price
Shares
Price
Shares
Price
1,614,374
$
14.21
1,410,306
$
14.26
1,417,102
$
12.40
160,374
22.00
305,000
12.67
330,000
15.41
174,839
9.10
86,932
8.93
268,396
4.72
8,400
22.93
14,000
17.36
68,400
18.67
1,591,509
15.49
1,614,374
14.21
1,410,306
14.26
1,381,692
$
15.26
1,443,032
$
14.39
1,410,306
$
14.26
Options Outstanding
Options Exercisable
Wtd. Avg.
Wtd. Avg.
Wtd. Avg.
Number
Remaining
Exercise
Number
Exercise
Exercise Prices
Outstanding
Contractual Life
Price
Exercisable
Price
2,000
5.3
$
7.88
2,000
$
7.88
189,500
5.1
8.44
189,500
8.44
1,000
5.7
8.88
1,000
8.88
190,235
6.1
9.30
190,235
9.30
107,200
7.2
9.92
71,072
10.12
208,000
8.3
14.00
133,821
14.00
25,000
4.7
14.69
25,000
14.69
299,000
7.1
15.40
299,000
15.40
202,127
5.2
18.41
181,614
18.43
367,447
4.7
23.39
288,450
23.48
1,591,509
6.1
15.49
1,381,692
15.26
14.
Retirement and Deferred Compensation Plans
Table of Contents
2004
2003
$
13,408
$
9,139
313
253
836
768
2,293
(102
)
1,025
(32
)
(70
)
$
14,423
$
13,408
$
$
32
70
(32
)
(70
)
$
$
$
(14,423
)
$
(13,408
)
1,141
2,220
2,719
3,226
$
(10,563
)
$
(7,962
)
(11,748
)
(11,442
)
1,141
2,220
44
1,260
$
(10,563
)
$
(7,962
)
Table of Contents
Fiscal 2004
Fiscal 2003
$
314
$
253
836
768
1,078
1,079
404
178
$
2,632
$
2,278
5.75
%
6.25
%
N/A
N/A
5.50
%
5.50
%
Pension
Fiscal Year
Benefits
(In thousands)
$
11,052
45
60
65
121
975
$
12,318
Table of Contents
15.
Business Segment and Geographic Information
Restated
Restated
Fiscal Year
2004
2003
2002
(In thousands)
$
510,603
$
482,754
$
451,465
88,887
72,063
57,763
15,058
12,624
7,934
$
614,548
$
567,441
$
517,162
$
28,641
$
21,313
$
20,417
6,945
5,675
3,072
3,724
3,152
369
$
39,310
$
30,140
$
23,858
$
189,355
$
193,472
$
199,496
7,095
6,872
5,802
294
210
207
$
196,744
$
200,554
$
205,505
Equity in Earnings of Affiliates
Table of Contents
2003
2002
$
104,080
$
153,533
(2,981
)
7,992
$
3,486
$
11,264
Fiscal Year
2004
2003
2002
(In thousands)
$
31,175
$
24,801
$
8,073
11,118
7,528
226
(817
)
226
14,250
8,154
74,648
61,342
5,094
2,896
83,474
69,749
330
(3,150
)
Business Concentration
Customer
2004
2003
2002
27
%
27
%
27
%
9
%
12
%
13
%
12
%
12
%
14
%
Table of Contents
16.
Income Taxes
Restated
Restated
2004
2003
2002
(In thousands)
$
9,395
$
66,184
$
19,367
17,058
11,979
5,601
26,453
78,163
24,968
(878
)
4,527
4,189
$
25,575
$
82,690
$
29,157
Restated
Restated
2004
2003
2002
(In thousands)
$
(147
)
$
29,378
$
8,354
2,050
1,790
(875
)
1,903
31,168
7,479
627
2,345
2,262
469
226
(51
)
1,096
2,571
2,211
4,399
5,252
1,036
915
(1,786
)
586
5,314
3,466
1,622
8,313
37,205
11,312
(263
)
1,329
1,257
$
8,050
$
38,534
$
12,569
Table of Contents
Restated
Restated
2004
2003
2002
(In thousands)
$
9,258
$
27,356
$
8,739
712
1,658
1,394
896
(3,351
)
7,048
(197
)
1,417
474
1,143
283
8,313
37,205
11,312
(263
)
1,329
1,257
$
8,050
$
38,534
$
12,569
Restated
2004
2003
(In thousands)
$
(207
)
$
(174
)
426
484
2,524
2,403
10,028
10,386
$
12,771
$
13,099
Restated
2004
2003
(In thousands)
$
(9,808
)
$
(10,994
)
2,886
5,718
5,231
5,340
(4,611
)
(2,119
)
4,700
7,474
113
(47
)
$
(1,489
)
$
5,372
Table of Contents
17.
Related Party Transactions with The Wackenhut Corporation
Fiscal Year
2003
2002
$
1,750
$
2,591
17,973
501
514
32
$
2,251
$
21,110
Table of Contents
18.
Selected Quarterly Financial Data (Unaudited)
First Quarter
Second Quarter
Unadjusted
Restated
Change
Unadjusted
Restated
Change
$
142,551
$
146,058
$
3,507
$
146,726
$
150,308
$
3,582
$
6,758
$
7,565
$
807
$
9,678
$
10,485
$
807
$
2,150
$
2,045
$
(105
)
$
4,093
$
3,986
$
(107
)
$
249
$
249
$
$
(354
)
$
(354
)
$
$
0.23
$
0.22
$
(0.01
)
$
0.44
$
0.43
$
(0.01
)
$
0.03
$
0.03
$
$
(0.04
)
$
(0.04
)
$
$
0.26
$
0.25
$
(0.01
)
$
0.40
$
0.39
$
(0.01
)
$
0.22
$
0.21
$
(0.01
)
$
0.42
$
0.41
$
(0.01
)
$
0.03
$
0.03
$
$
(0.04
)
$
(0.04
)
$
$
0.25
$
0.24
$
(0.01
)
$
0.38
$
0.37
$
(0.01
)
Table of Contents
Third Quarter
Fourth
Unadjusted
Restated
Change
Quarter(b)
$
148,279
$
152,035
$
3,756
$
166,148
$
13,018
$
14,045
$
1,027
$
7,215
$
5,981
(a)
$
5,874
(a)
$
(107
)
$
5,525
(c)
$
(240
)
$
(240
)
$
$
(270
)
$
0.64
$
0.63
$
(0.01
)
$
0.58
$
(0.03
)
$
(0.03
)
$
$
(0.03
)
$
0.61
$
0.60
$
(0.01
)
$
0.55
$
0.62
$
0.60
$
(0.01
)
$
0.57
$
(0.03
)
$
(0.02
)
$
$
(0.03
)
$
0.59
$
0.58
$
(0.01
)
$
0.54
First Quarter
Second Quarter
Unadjusted
Restated
Change
Unadjusted
Restated
Change
$
130,800
$
133,574
$
2,774
$
137,168
$
140,268
$
3,100
$
8,519
$
9,014
$
495
$
8,519
$
9,278
$
759
$
4,341
$
4,214
$
(127
)
$
5,300
$
5,174
$
(126
)
$
831
$
831
$
$
999
$
999
$
$
0.20
$
0.20
$
$
0.25
$
0.24
$
(0.01
)
$
0.04
$
0.04
$
$
0.05
$
0.05
$
$
0.24
$
0.24
$
$
0.30
$
0.29
$
(0.01
)
$
0.20
$
0.20
$
$
0.24
$
0.24
$
$
0.04
$
0.04
$
$
0.05
$
0.05
$
$
0.24
$
0.24
$
$
0.29
$
0.29
$
Table of Contents
Third Quarter
Fourth Quarter
Unadjusted
Restated
Change
Unadjusted
Restated
Change
$
141,778
$
144,757
$
2,979
$
145,071
$
148,842
$
3,771
$
2,099
$
2,764
$
665
$
8,093
$
9,082
$
989
$
29,651
(d)
$
29,524
(d)
$
(127
)
$
2,778
$
2,652
$
(126
)
$
717
$
717
$
$
651
$
651
$
$
2.79
$
2.78
$
(0.01
)
$
0.30
$
0.28
$
(0.02
)
$
0.07
$
0.07
$
$
0.07
$
0.07
$
$
2.86
$
2.85
$
(0.01
)
$
0.37
$
0.35
$
(0.02
)
$
2.72
$
2.71
$
(0.01
)
$
0.28
$
0.27
$
(0.01
)
$
0.07
$
0.07
$
$
0.07
$
0.07
$
$
2.79
(e)
$
2.78
(e)
$
(0.01
)(e)
$
0.35
(e)
$
0.34
(e)
$
(0.01
)(e)
(a)
Includes a $4.2 million pre-tax reduction in our general
liability, auto liability and workers compensation
insurance reserves.
(b)
Includes 14 weeks of operations.
(c)
Includes a $3.0 million write-off for our Jena, Louisiana
facility.
(d)
Includes a gain of approximately $61.0 million for the sale
of the UK joint venture (See Note 15), a pre-tax charge of
approximately $5.0 million related to the Jena, Louisiana
lease and a charge of approximately $2.0 million related to
the write-off of deferred financing fees from the extinguishment
of debt.
(e)
Earnings per share for the third and fourth quarter of 2003
reflect lower weighted average shares outstanding due to the
purchase of the 12,000,000 shares from Group 4 Falck in
July 2003 (See Note 11).
Table of Contents
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and procedures |
Disclosure Controls and Procedures |
Internal Control Over Financial Reporting |
Item 9B. | Other Information |
Item 1.01 | Entry into a Material Definitive Agreement |
90
91
Item 15. | Exhibits, and Financial Statement Schedules |
92
Exhibit | ||||||
Number | Description | |||||
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 | | Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Companys registration statement on Form S-1, filed on May 24, 1994) | |||
4 | .1 | | Indenture, dated July 9, 2003, by and between the Company and The Bank of New York, as Trustee, relating to 8 1 / 4 % Senior Notes Due 2013 (incorporated herein by reference to Exhibit 4.1 to the Companys report on Form 8-K, filed on July 29, 2003) | |||
4 | .2 | | Registration Rights Agreement, dated July 9, 2003, by and among the Company Corporation and BNP Paribas Securities Corp., Lehman Brothers Inc., First Analysis Securities Corporation, SouthTrust Securities, Inc. and Comerica Securities, Inc. (incorporated herein by reference to Exhibit 4.2 to the Companys report on Form 8-K, filed on July 29, 2003) | |||
4 | .3 | | Rights Agreement, dated as of October 9, 2003, between the Company and EquiServe Trust Company, N.A., as the Rights Agent (incorporated herein by reference to Exhibit 4.3 to the Companys report on Form 8-K, filed on July 29, 2003) | |||
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 * | |||
10 | .6 | | Director Deferral Plan (incorporated herein by reference to Exhibit 10.5 to the Companys registration statement on Form S-1/A, filed on December 22, 1995) | |||
10 | .7 | | Senior Officer Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Companys registration statement on Form S-1/A, filed on December 22, 1995) | |||
10 | .8 | | Form of Master Agreement to Lease between the Company and CPT Operating Partnership L.P. (incorporated herein by reference to Exhibit 10.2 to the Companys registration statement on Form S-11/A, filed on March 20, 1998) | |||
10 | .9 | | Form of Lease Agreement between CPT Operating Partnership L.P. and the Company (incorporated herein by reference to Exhibit 10.3 to the Companys registration statement on Form S-11/A, filed on March 20, 1998) | |||
10 | .10 | | Form of Right to Purchase Agreement between the Company and CPT Operating Partnership L.P. (incorporated herein by reference to Exhibit 10.4 to the Companys registration statement on Form S-11/A, filed on March 20, 1998) | |||
10 | .11 | | Form of Option Agreement between the Company and CPT Operating Partnership L.P (incorporated herein by reference to Exhibit 10.5 to the Companys registration statement on Form S-11/A, filed on March 20, 1998) |
93
Exhibit
Number
Description
10
.12
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
.13
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
.14
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
.15
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
.16
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
.17
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
.18
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
.19
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
.20
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
.21
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
.22
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and John J. Bulfin *
10
.23
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and Jorge A. Dominicis *
10
.24
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and John M. Hurley *
10
.25
Senior Officer Employment Agreement, dated March 23, 2005,
by and between the Company and Donald H. Keens *
10
.26
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
.27
Amended and Restated Credit Agreement, dated July 9, 2003,
by and among the Company, BNP Paribas, as Administrative Agent,
Syndication Agent and Lead Arranger, Bank of America, N.A. and
SouthTrust Bank, as Co- Syndication Agents, Comerica Bank, as
Co-Documentation 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 July 29, 2003)
94
Exhibit
Number
Description
10
.28
Amendment No. 1 to Amended and Restated Credit Agreement,
dated February 20, 2004, by and among the Company, BNP
Paribas, as Administrative Agent, Syndication Agent and Lead
Arranger, Bank of America, N.A. and Southtrust Bank, as
Co-Syndication Agents, Comerica Bank, as Co-Documentation Agent,
and the lenders who are, or may from time to time become, a
party thereto (incorporated by reference to Exhibit 10.25
to the Companys report on Form 10-K, filed on
March 10, 2004)
21
.1
Subsidiaries of the Company*
23
.1
Consent of Ernst & Young LLP, independent registered
certified public accountants*
31
.1
Rule 13a-14(a) Certification in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002.*
31
.2
Rule 13a-14(a) Certification in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002.*
32
.1
Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*
32
.2
Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*
* | Filed herewith. |
| Management contract or compensatory plan, contract or agreement as defined in Item 402(a)(3) of Regulation S-K. |
95
The GEO Group, Inc. | |
/s/ John G. ORourke | |
|
|
John G. ORourke | |
Senior Vice President of Finance & | |
Chief Financial Officer |
Signature | Title | Date | ||||
/s/
George C. Zoley
|
Chairman of the Board &
Chief Executive Officer (principal executive officer) |
March 23, 2005 | ||||
/s/
John G.
ORourke
|
Senior Vice President of Finance & Chief Financial Officer (principal financial officer) | March 23, 2005 | ||||
/s/
Brian R. Evans
|
Chief Accounting Officer & Controller (principal accounting officer) | March 23, 2005 | ||||
/s/
Wayne H. Calabrese
|
Vice Chairman of the Board & Director | March 23, 2005 | ||||
/s/
Norman A. Carlson
|
Director | March 23, 2005 | ||||
/s/
Anne N. Foreman
|
Director | March 23, 2005 |
96
Signature | Title | Date | ||||
/s/
William M. Murphy
|
Director | March 23, 2005 | ||||
/s/
Richard H. Glanton
|
Director | March 23, 2005 | ||||
/s/
John M. Perzel
|
Director | March 23, 2005 |
97
Balance at
Charged to
Charged
Deductions,
Balance at
Beginning
Cost and
to Other
Actual
End of
Description
of Period
Expenses
Accounts
Charge-Offs
Period
(In thousands)
$
1,205
$
1,296
$
$
(1,331
)
$
1,170
$
1,588
$
1,025
$
$
(1,408
)
$
1,205
$
2,511
$
2,368
$
$
(3,291
)
$
1,588
$
417
$
465
$
$
(268
)
$
614
$
418
$
296
$
$
(297
)
$
417
$
538
$
100
$
$
(220
)
$
418
98
Exhibit 10.5
AMENDMENT TO
WACKENHUT CORRECTIONS CORPORATION
SENIOR OFFICER RETIREMENT PLAN
WHEREAS, Wackenhut Corrections Corporation, n/k/a The Geo Group, Inc., a Florida corporation, (the Corporation) previously adopted the Wackenhut Corrections Corporation Senior Officer Retirement Plan (the Plan); and
WHEREAS , the Corporation reserved the right to amend the Plan at any time.
NOW, THEREFORE, the Plan is amended as follows:
1. Section 1.1 is hereby amended by deleting the text therein and replacing it with the following text:
1.1 GEO . The Geo Group, Inc., a Florida corporation. |
2. Section 1.2 is hereby amended by deleting the text therein and replacing it with the following text:
1.2 Employer . GEO. |
3. All references to WCC in the Plan not otherwise amended pursuant to 1 and 2 above, are hereby deleted and replaced with The Geo Group.
4. All references to Wackenhut Corrections Corporation in the Plan not otherwise amended pursuant to 1 and 2 above, are hereby deleted and replaced with The Geo Group, Inc.
5. Section 1.5 is hereby amended by deleting the first sentence and replacing it with the following text:
1.5. Disability . A situation where a Participant, by reason of a physical or mental impairment that can be expected to result in death or be expected to last for a continuous period of not less than 12 months: (a) is unable to engage in any substantial gainful activity, or (b) is receiving income replacement benefits for a period of not less than 3 months under an accident or health plan sponsored by the Employer. |
6. Section 4.2 is hereby amended by deleting the text therein in its entirety and replacing it with the following text:
4.2. Early Retirement . If a Participant (i) has at least twenty (20) years of service with the Employer and is at least age 55, he or she may elect to retire and commence the payment of Benefits at any time before age 65, but the amount of the Benefits otherwise payable to the Participant shall be reduced by a factor of |
1.8% x 22 x $200,000
|
= | $ | 79,200 | |||||
Less estimated Social Security
|
-144400 | |||||||
|
||||||||
Benefit that is payable at age 65
|
$ | 64,800 | ||||||
Early retirement factor 100% -3(4%)
|
= | x 88 | % | |||||
Annual Benefit payable at age 62
|
$ | 57,024 | ||||||
|
||||||||
Monthly payment for life
|
$ | 4,752 | ||||||
|
4.2.1. Terminated Vested. If a Participant is at least age 55 and has at least ten (10) years of service with the Employer, he or she may elect to terminate employment at any time before 65, and be eligible to commence the payment of Benefits at Normal Retirement Age based on his or her years of service at termination of employment and determined under the applicable Benefit Formula provided in either Section 3.1 or 3.3 and subject to the optional forms of payment in Sections 4.1.1, 4.1.2 and 4.1.3 above. |
7. Section 5.1 is hereby amended by deleting the text therein in its entirety and replacing it with the following text:
5.1 The Committee . The Plan will be administered by the GEO Corporate Retirement Committee (the Committee) comprised of the Chairman of the Board of Directors, the President, the Chief Financial Officer, the Vice President, Human Resources and the General Counsel of GEO. |
8. NOW, THEREFORE, officers of the Corporation are hereby authorized and empowered to make those additional changes necessary to the Plan to bring the Plan into compliance with the provisions of the American Jobs Creation Act of 2004 and new Code Section 409A.
IN WITNESS WHEREOF, this Amendment is executed as of the 10th day of February, 2005.
THE GEO GROUP, INC.
|
||||
By: | /s/ John J. Bulfin | |||
Name: | John J. Bulfin | |||
Title: |
Senior Vice President and
General Counsel |
|||
Exhibit 10.22
EXHIBIT A
SENIOR OFFICER EMPLOYMENT AGREEMENT
THIS SENIOR OFFICER EMPLOYMENT AGREEMENT (this Agreement) is entered into effective the 23rd day of March, 2005 by and between The GEO Group, Inc. (the Company) and John J. Bulfin (the Employee and, together with the Company, the Parties).
WHEREAS , the Employee and the Company wish to set forth the terms and conditions of the Employees employment with the Company in a formal agreement in order to facilitate the continued employment of the Employee as Senior Vice President, General Counsel and Secretary.
WHEREAS , the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company and the Board of Directors of the Company;
NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:
1. | Position and Duties . The Company hereby agrees to continue to employ the Employee and the Employee hereby accepts continued employment and agrees to continue to serve as Senior Vice President, General Counsel and Secretary of the Company. The Employee will perform all duties and responsibilities and will have all authority inherent in the position of Senior Vice President, General Counsel and Secretary. |
2. | Term of Agreement and Employment . The term of the Employees employment under this Agreement will be for an initial period of two (2) years, beginning on the effective date of this Agreement, and terminating two years thereafter. The term of employment under this Agreement will be automatically extended by one day every day such that it has a continuous rolling two-year term until the age of 67 years, unless otherwise terminated pursuant to Section 7 of this Agreement. |
3. | Definition Cause . | |||
For purposes of this Agreement, Cause for the termination of the Employees employment hereunder shall be deemed to exist if, in the reasonable judgment of the Companys Chief Executive Officer (CEO): (i) the Employee commits fraud, theft or embezzlement against the Company; (ii) the Employee commits a felony or a crime involving moral turpitude; (iii) the Employee breaches any non-competition, confidentiality or non-solicitation agreement with the Company or any subsidiary or affiliate thereof; (iv) the Employee breaches any of the terms of this Agreement and fails to cure such breach within 30 days after the receipt of written notice of such breach from the Company; or (v) the Employee engages in gross negligence or willful misconduct that |
causes harm to the business and operations of the Company or a subsidiary or affiliate thereof. |
4. | Compensation . |
A. | Annual Base Salary . Employee shall be paid his current annual base salary of $315,000.00 for the remainder of calendar year 2005 (as such may be amended from time to time, the Annual Base Salary). The Company may increase the Annual Base Salary paid to the Employee in an amount to be determined by the Chief Executive Officer of the Company. The Annual Base Salary shall be payable at such regular times and intervals as the Company customarily pays its Employees from time to time. |
B. | Annual Incentive Bonus . For each fiscal year of employment during which the Company employs the Employee, the Employee shall be entitled to receive a target annual incentive bonus in accordance with the Employee bonus plan established by the Board of Directors for determining the Employees annual bonus (the Annual Incentive Bonus). Such Annual Incentive Bonus shall be paid shortly after the 4 th Quarter Company Board meeting ordinarily held in February or March of the year following the year for which the Annual Incentive Bonus payment is due. |
5. | Employee Benefits . The Employee will be entitled to three (3) weeks of vacation per fiscal year during his/her first ten (10) years of service, and four (4) weeks of vacation per fiscal year thereafter. The Employee, the Employees spouse, and qualifying members of the Employees family will be eligible for and will participate in any benefits and perquisites available to Employee officers of the Company, including any group health, dental, life insurance, disability, or other form of Employee benefit plan or program of the Company now existing or that may be later adopted by the Company (collectively, the Employee Benefits). |
6. | Death or Disability . The Employees employment will terminate immediately upon the Employees death. If the Employee becomes physically or mentally disabled so as to become unable for a period of more than five consecutive months or for shorter periods aggregating at least five months during any twelve month period to perform the Employees duties hereunder on a substantially full-time basis, the Employees employment will terminate as of the end of such five-month or twelve-month period and this shall be considered a disability under this Agreement. Such termination shall not affect the Employees benefits under the Companys disability insurance program, if any, then in effect. |
7. | Termination . Either the Employee or the Company may terminate this Agreement for any reason upon not less than thirty (30) days written notice. |
A. | Termination of Employment Other Than by Resignation of Employee or Termination for Cause . Upon the termination of this Agreement for any reason |
2
(including termination by the Company without Cause or the death or disability of the Employee) other than by voluntary resignation by the Employee or a termination by the Company for Cause, the following shall apply: |
(i) | Termination Payment . The Employee shall be entitled to and paid a termination payment (the Termination Payment) equal to two (2) years Annual Base Salary as set forth in Section 4 based upon the then current salary level, together with any payments due under Section 7.A.(ii), below. The Termination Payment shall be made within 10 days of any termination pursuant to this Section 7(A). | |||
(ii) | Termination Benefits . The Company shall continue to provide the Employee (and if applicable, his beneficiaries) with the Employee Benefits (as described in Section 5), at no cost to the Employee in no less than the same amount and, on the same terms and conditions as in effect on the date on which the termination of employment occurs for a period of two (2) years after the date of termination of the Employees employment with the Company, or, alternatively, if the Employee (or his estate) elects at any time in a written notice delivered to the Company to waive any particular Employee Benefits, the Company shall make a cash payment to the Employee within 10 days after receipt of such election in an amount equal to the present value of the Companys cost of providing such Employee Benefits from the date of such election to the end of the foregoing two (2) year period, and such present value shall be determined by reference to the Companys then-current cost levels and a discount rate equal to 120 percent of the short-term applicable Federal rate provided for in Section 1274(d) of the Internal Revenue Code (the Code) for the month in which the Termination occurs. In addition, the Company shall pay to the Employee, within 10 days after said termination, an amount equal to the sum of (a) the dollar value of vacation time that would have been credited to the Employee pursuant to the Companys Vacation Policy (the Vacation Policy) if the Employee had remained employed by the Company through the Anniversary Date (as defined in the Vacation Policy) immediately following his termination of employment, multiplied by a fraction, the numerator of which is the number of days which elapsed from the Employees Anniversary Date immediately preceding the date of termination through the date of such termination, and the denominator of which is 365, plus (b) the dollar value of vacation time which the Employee was entitled to have taken immediately prior to the Employees termination, which was not in fact taken by the Employee; the dollar value of vacation time referred to above shall be equal to the amount which would have been paid to the Employee by the Company during such vacation time had the vacation time in fact been taken by the Employee immediately prior to the Employees termination. If the Employee dies during the two (2) year period following the termination of this Agreement |
3
for any reason (including termination of employment by the death or disability of Employee) other than by a termination by the Company for Cause, the Company shall provide the Employee Benefits, to the extent applicable, to the Employees estate, or make any applicable cash payments in lieu thereof to said estate. The Employee shall be deemed to be employed by the Company if the Employee is employed by the Company or any subsidiary of the Company in which the Company owns a majority of the subsidiarys voting securities; | ||||
(iii) | Termination Automobile . The Company shall transfer all of its interest in any automobile used by the Employee pursuant to the Companys Employee Automobile Policy (the Employee Automobile Policy) and shall pay the balance of any outstanding loans or leases on such automobile (whether such obligations are those of the Employee or the Company) so that the Employee owns the automobile outright (in the event such automobile is leased, the Company shall pay the residual cost of such lease). | |||
(iv) | Termination Stock Options . All of the unvested stock options granted to the Employee prior to termination will fully vest immediately upon termination. | |||
(v) | Tax Rates . The Employee shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Termination Payment is to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employees residence on the date of termination, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. | |||
(vi) | Calculation . Simultaneously with the Companys payment of the Termination Payment, the Company shall deliver to the Employee a written statement specifying the total amount of the Termination Payment, together with all supporting calculations. If the Employee disagrees with the Companys calculation of the payment, the Employee shall submit to the Company, no later than 30 days after receipt of the Companys calculations, a written notice advising the Company of the disagreement and setting forth his calculation of said payments. The Employees failure to submit such notice within such period shall be conclusively deemed to be an agreement by the Employee as to the amount of the Termination Payment. If the Company agrees with the Employees calculations, it shall pay any shortfall to the Employee within 20 days after receipt of such a notice form the Employee, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. If the Company does not agree with the Employees calculations, it shall provide the Employee with a written |
4
notice within 20 days after the receipt of the Employees calculations advising the Employee that the disagreement is to be referred to an independent accounting firm for resolution. Such disagreement shall be referred to an independent Big 4 accounting firm which is not the regular accounting firm of the Company and which is agreed to by the Company and the Employee within 10 days after issuance of the Companys notice of disagreement (if the Parties cannot agree on the identity of the accounting firm which is to resolve the dispute, the accounting firm shall be selected by means of a coin toss conducted in Palm Beach County, Florida by counsel to the Employee on the first business day after such 10 day period in such a manner as such counsel may specify). The accounting firm shall review all information provided to it by the Parties and submit a written report setting forth its calculation of the Termination Payment within 15 days after submission of the matter to it, and such decision shall be final and binding on all of the Parties. The fees and expenses charged by said accounting firm shall be paid by the Company. If the amount of the Termination Payment actually paid by the Company was less than the amount calculated by the accounting firm, the Company shall pay the shortfall to the Employee within 5 days after the accounting firm submits its written report, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. | ||||
(vii) | Interest on Unpaid Termination Payment . In the event that the Company does not pay the Termination Payment by the due dates specified in this Agreement, then any unpaid amount shall bear interest at the rate of 18 percent per annum, compounded monthly, until it is paid. |
B. | Termination of Employment by Resignation of Employee or by the Company With Cause . Upon the termination of Employees employment by the voluntary resignation of the Employee or by the Company with Cause, the Employee shall be due no further compensation under this Agreement related to Annual Base Salary, Annual Incentive Bonus, Employee Benefits, or Termination Payment than what is due and owing through the effective date of Employees resignation. Termination of this Agreement for any reason (whether by the resignation of the Employee or by the termination of the Company with or without Cause) shall not affect the Employees rights under the Companys retirement plan applicable to the Employee. |
8. | Restrictive Covenants . |
A. | General . The Company and the Employee hereby acknowledge and agree that (i) the Employee is in possession of trade secrets (as defined in Section 688.002(4) of the Florida Statutes) of the Company (the Trade Secrets), (ii) the restrictive covenants contained in this Section 8 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, |
5
in accordance with Section 542.335(1)(e) of the Florida Statutes, and (iii) the restrictive covenants contained in this Section 8 are reasonably necessary to protect such legitimate business interests of the Company. | ||||
B. | Non-Competition . During the period of the Employees employment with the Company and until two (2) years after the termination of the Employees employment with the Company, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, officer, director, trustee, Employee, agent, consultant or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with any business or activity conducted by Company or any of its majority-owned subsidiaries; provided, however, that the foregoing shall not be deemed to prevent the Employee from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Employee is not deemed to be the beneficial owner of more than 5% of the class of securities that are so publicly traded. During the period of the Employees employment and until two (2) years after the termination of the Employees employment, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, shareholder, officer, Employee, director, trustee, agent, consultant or member of any person, firm or corporation or otherwise, seek to employ or otherwise seek the services of any Employee of Company or any of its majority owned subsidiaries. | |||
C. | Confidentiality . During and following the period of the Employees employment with the Company, the Employee will not use for the Employees own benefit or for the benefit of others, or divulge to others, any information, Trade Secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its affiliates and which was acquired by the Employee at any time prior to or during the term of the Employees employment with the Company, except with the specific prior written consent of the Company. | |||
D. | Work Product . The Employee agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its affiliates, and all existing or future products or services, which are conceived, developed or made by the Employee (alone or with others) during the term of this Agreement (Work Product) belong to the Company. The Employee will cooperate fully in the establishment and maintenance of all rights of the Company and its affiliates in such Work Product. The provisions of this Section 8(C) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Employee after the termination of the Agreement with respect to Work Product created during the term of this Agreement. |
6
E. | Enforcement . The parties agree and acknowledge that the restrictions contained in this Section 8 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any covenant or agreement contained in this Section 8 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified. The Employee agrees and acknowledges that the breach of this Section 8 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 8, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however , that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages). |
9. | Representations . Employee hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Employee does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Employee is a party or any judgment, order or decree to which the Employee is subject; (ii) the Employee is not a party or bound by any employment agreement, consulting agreement, agreement not to compete, confidentiality agreement or similar agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement will be the Employees valid and binding obligation, enforceable in accordance with its terms. |
10. | Arbitration . In the event of any dispute between the Company and the Employee with respect to this Agreement (other than a dispute with respect to the calculation of the Employees Termination Payment under sub-Paragraph 7(A)(v) Calculation, which dispute shall be resolved in accordance with the provisions set forth in such sub-Paragraph), either party may, in its sole discretion by notice to the other, require such dispute to be submitted to arbitration. The arbitrator will be selected by agreement of the Parties or, if they cannot agree on arbitrator or arbitrators within 30 days after the giving of such notice, the arbitrator will be selected by the American Arbitration Association. The determination reached in such arbitration will be final and binding on both Parties without any right of appeal. Execution of the determination by such arbitrator may be sought in any court having jurisdiction. Unless otherwise agreed by the Parties, any such arbitration will take place in West Palm Beach, Florida and will be conducted in accordance with the rules of the American Arbitration Association. If the Employee is the prevailing party in any such arbitration, he will be entitled to reimbursement by the Company of all reasonable costs and expenses (including attorneys fees incurred in such arbitration). |
11. | Assignment . The Employee may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the |
7
Employee or any rights which the Employee may have under this Agreement. Neither the Employee nor the Employees beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement. This Agreement will inure to the benefit of and will be binding upon any successor to the Company and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, including the terms and conditions of the restrictive covenants contained in Section 8 hereof. As used in this Agreement, the term successor means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company. This Agreement may not otherwise be assigned by the Company. |
12. | Governing Law . This Agreement shall be governed by the laws of Florida without regard to the application of conflicts of laws. |
13. | Entire Agreement . This Agreement constitutes the only agreement between the Company and the Employee regarding the Employees employment by the Company. This Agreement supersedes any and all other agreements and understandings, written or oral, between the Company and the Employee regarding the subject matter hereof and thereof. A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision. This Agreement may be amended, modified or changed only by further written agreement between the Company and the Employee, duly executed by both Parties. |
14. | Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Section 8 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Employees relationship with the Company. |
15. | Notices . Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid. Any notice to be given by the Employee hereunder will be addressed to the Company to the attention of its General Counsel at its main offices, One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487. Any notice to be given to the Employee will be addressed to the Employee at the Employees residence address last provided by the Employee to Company. Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section. |
16. | Headings . Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions. |
8
IN WITNESS WHEREOF , the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.
THE GEO GROUP, INC.
|
||||
By: | /s/ George C. Zoley | |||
Name: | George C. Zoley | |||
Title: | Chairman & Chief Executive Officer | |||
EMPLOYEE
|
||||
By: | /s/ John J. Bulfin | |||
Name: | John J. Bulfin | |||
Title: |
Senior Vice President, General Counsel
The GEO Group, Inc. |
|||
9
Exhibit 10.23
EXHIBIT A
SENIOR OFFICER EMPLOYMENT AGREEMENT
THIS SENIOR OFFICER EMPLOYMENT AGREEMENT (this Agreement) is entered into effective the 23rd day of March, 2005 by and between The GEO Group, Inc. (the Company) and Jorge A. Dominicis (the Employee and, together with the Company, the Parties).
WHEREAS , the Employee and the Company wish to set forth the terms and conditions of the Employees employment with the Company in a formal agreement in order to facilitate the continued employment of the Employee as Senior Vice President, Mental Health and President of Atlantic Shores Healthcare, Inc.; and
WHEREAS , the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company and the Board of Directors of the Company;
NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:
1. | Position and Duties . The Company hereby agrees to continue to employ the Employee and the Employee hereby accepts continued employment and agrees to continue to serve as Senior Vice President, Mental Health and President of Atlantic Shores Healthcare, of the Company. The Employee will perform all duties and responsibilities and will have all authority inherent in the position of Senior Vice President, Mental Health and President of Atlantic Shores Healthcare. |
2. | Term of Agreement and Employment . The term of the Employees employment under this Agreement will be for an initial period of two (2) years, beginning on the effective date of this Agreement, and terminating two years thereafter. The term of employment under this Agreement will be automatically extended by one day every day such that it has a continuous rolling two-year term until the age of 67 years, unless otherwise terminated pursuant to Section 7 of this Agreement. |
3. | Definition Cause . | |||
For purposes of this Agreement, Cause for the termination of the Employees employment hereunder shall be deemed to exist if, in the reasonable judgment of the Companys Chief Executive Officer (CEO): (i) the Employee commits fraud, theft or embezzlement against the Company; (ii) the Employee commits a felony or a crime involving moral turpitude; (iii) the Employee breaches any non-competition, confidentiality or non-solicitation agreement with the Company or any subsidiary or affiliate thereof; (iv) the Employee breaches any of the terms of this Agreement and fails to cure such breach within 30 days after the receipt of written notice of such breach from |
the Company; or (v) the Employee engages in gross negligence or willful misconduct that causes harm to the business and operations of the Company or a subsidiary or affiliate thereof. | ||||
4. | Compensation . |
A. | Annual Base Salary . Employee shall be paid his current annual base salary of $290,000 for the remainder of calendar year 2005 (as such may be amended from time to time, the Annual Base Salary). The Company may increase the Annual Base Salary paid to the Employee in an amount to be determined by the Chief Executive Officer of the Company. The Annual Base Salary shall be payable at such regular times and intervals as the Company customarily pays its Employees from time to time. | |||
B. | Annual Incentive Bonus . For each fiscal year of employment during which the Company employs the Employee, the Employee shall be entitled to receive a target annual incentive bonus in accordance with the Employee bonus plan established by the Board of Directors for determining the Employees annual bonus (the Annual Incentive Bonus). Such Annual Incentive Bonus shall be paid shortly after the 4 th Quarter Company Board meeting ordinarily held in February or March of the year following the year for which the Annual Incentive Bonus payment is due. |
5. | Employee Benefits . The Employee will be entitled to three (3) weeks of vacation per fiscal year during his/her first ten (10) years of service, and four (4) weeks of vacation per fiscal year thereafter. The Employee, the Employees spouse, and qualifying members of the Employees family will be eligible for and will participate in any benefits and perquisites available to Employee officers of the Company, including any group health, dental, life insurance, disability, or other form of Employee benefit plan or program of the Company now existing or that may be later adopted by the Company (collectively, the Employee Benefits). |
6. | Death or Disability . The Employees employment will terminate immediately upon the Employees death. If the Employee becomes physically or mentally disabled so as to become unable for a period of more than five consecutive months or for shorter periods aggregating at least five months during any twelve month period to perform the Employees duties hereunder on a substantially full-time basis, the Employees employment will terminate as of the end of such five-month or twelve-month period and this shall be considered a disability under this Agreement. Such termination shall not affect the Employees benefits under the Companys disability insurance program, if any, then in effect. |
7. | Termination . Either the Employee or the Company may terminate this Agreement for any reason upon not less than thirty (30) days written notice. |
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A. | Termination of Employment Other Than by Resignation of Employee or Termination for Cause . Upon the termination of this Agreement for any reason (including termination by the Company without Cause or the death or disability of the Employee) other than by voluntary resignation by the Employee or a termination by the Company for Cause, the following shall apply: |
(i) | Termination Payment . The Employee shall be entitled to and paid a termination payment (the Termination Payment) equal to two (2) years Annual Base Salary as set forth in Section 4 based upon the then current salary level, together with any payments due under Section 7.A.(ii), below. The Termination Payment shall be made within 10 days of any termination pursuant to this Section 7(A). | |||
(ii) | Termination Benefits . The Company shall continue to provide the Employee (and if applicable, his beneficiaries) with the Employee Benefits (as described in Section 5), at no cost to the Employee in no less than the same amount and, on the same terms and conditions as in effect on the date on which the termination of employment occurs for a period of two (2) years after the date of termination of the Employees employment with the Company, or, alternatively, if the Employee (or his estate) elects at any time in a written notice delivered to the Company to waive any particular Employee Benefits, the Company shall make a cash payment to the Employee within 10 days after receipt of such election in an amount equal to the present value of the Companys cost of providing such Employee Benefits from the date of such election to the end of the foregoing two (2) year period, and such present value shall be determined by reference to the Companys then-current cost levels and a discount rate equal to 120 percent of the short-term applicable Federal rate provided for in Section 1274(d) of the Internal Revenue Code (the Code) for the month in which the Termination occurs. In addition, the Company shall pay to the Employee, within 10 days after said termination, an amount equal to the sum of (a) the dollar value of vacation time that would have been credited to the Employee pursuant to the Companys Vacation Policy (the Vacation Policy) if the Employee had remained employed by the Company through the Anniversary Date (as defined in the Vacation Policy) immediately following his termination of employment, multiplied by a fraction, the numerator of which is the number of days which elapsed from the Employees Anniversary Date immediately preceding the date of termination through the date of such termination, and the denominator of which is 365, plus (b) the dollar value of vacation time which the Employee was entitled to have taken immediately prior to the Employees termination, which was not in fact taken by the Employee; the dollar value of vacation time referred to above shall be equal to the amount which would have been paid to the Employee by the Company during such vacation time had the vacation time in fact been taken by the Employee |
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immediately prior to the Employees termination. If the Employee dies during the two (2) year period following the termination of this Agreement for any reason (including termination of employment by the death or disability of Employee) other than by a termination by the Company for Cause, the Company shall provide the Employee Benefits, to the extent applicable, to the Employees estate, or make any applicable cash payments in lieu thereof to said estate. The Employee shall be deemed to be employed by the Company if the Employee is employed by the Company or any subsidiary of the Company in which the Company owns a majority of the subsidiarys voting securities; | ||||
(iii) | Termination Automobile . The Company shall transfer all of its interest in any automobile used by the Employee pursuant to the Companys Employee Automobile Policy (the Employee Automobile Policy) and shall pay the balance of any outstanding loans or leases on such automobile (whether such obligations are those of the Employee or the Company) so that the Employee owns the automobile outright (in the event such automobile is leased, the Company shall pay the residual cost of such lease). | |||
(iv) | Termination Stock Options . All of the unvested stock options granted to the Employee prior to termination will fully vest immediately upon termination. | |||
(v) | Tax Rates . The Employee shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Termination Payment is to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employees residence on the date of termination, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. | |||
(vi) | Calculation . Simultaneously with the Companys payment of the Termination Payment, the Company shall deliver to the Employee a written statement specifying the total amount of the Termination Payment, together with all supporting calculations. If the Employee disagrees with the Companys calculation of the payment, the Employee shall submit to the Company, no later than 30 days after receipt of the Companys calculations, a written notice advising the Company of the disagreement and setting forth his calculation of said payments. The Employees failure to submit such notice within such period shall be conclusively deemed to be an agreement by the Employee as to the amount of the Termination Payment. If the Company agrees with the Employees calculations, it shall pay any shortfall to the Employee within 20 days after receipt of such a notice form the Employee, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of |
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payment of said shortfall. If the Company does not agree with the Employees calculations, it shall provide the Employee with a written notice within 20 days after the receipt of the Employees calculations advising the Employee that the disagreement is to be referred to an independent accounting firm for resolution. Such disagreement shall be referred to an independent Big 4 accounting firm which is not the regular accounting firm of the Company and which is agreed to by the Company and the Employee within 10 days after issuance of the Companys notice of disagreement (if the Parties cannot agree on the identity of the accounting firm which is to resolve the dispute, the accounting firm shall be selected by means of a coin toss conducted in Palm Beach County, Florida by counsel to the Employee on the first business day after such 10 day period in such a manner as such counsel may specify). The accounting firm shall review all information provided to it by the Parties and submit a written report setting forth its calculation of the Termination Payment within 15 days after submission of the matter to it, and such decision shall be final and binding on all of the Parties. The fees and expenses charged by said accounting firm shall be paid by the Company. If the amount of the Termination Payment actually paid by the Company was less than the amount calculated by the accounting firm, the Company shall pay the shortfall to the Employee within 5 days after the accounting firm submits its written report, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. | ||||
(vii) | Interest on Unpaid Termination Payment . In the event that the Company does not pay the Termination Payment by the due dates specified in this Agreement, then any unpaid amount shall bear interest at the rate of 18 percent per annum, compounded monthly, until it is paid. |
B. | Termination of Employment by Resignation of Employee or by the Company With Cause . Upon the termination of Employees employment by the voluntary resignation of the Employee or by the Company with Cause, the Employee shall be due no further compensation under this Agreement related to Annual Base Salary, Annual Incentive Bonus, Employee Benefits, or Termination Payment than what is due and owing through the effective date of Employees resignation. Termination of this Agreement for any reason (whether by the resignation of the Employee or by the termination of the Company with or without Cause) shall not affect the Employees rights under the Companys retirement plan applicable to the Employee. |
8. | Restrictive Covenants . |
A. | General . The Company and the Employee hereby acknowledge and agree that (i) the Employee is in possession of trade secrets (as defined in Section 688.002(4) of the Florida Statutes) of the Company (the Trade Secrets), (ii) the restrictive |
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covenants contained in this Section 8 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, in accordance with Section 542.335(1)(e) of the Florida Statutes, and (iii) the restrictive covenants contained in this Section 8 are reasonably necessary to protect such legitimate business interests of the Company. | ||||
B. | Non-Competition . During the period of the Employees employment with the Company and until two (2) years after the termination of the Employees employment with the Company, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, officer, director, trustee, Employee, agent, consultant or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with any business or activity conducted by Company or any of its majority-owned subsidiaries; provided, however, that the foregoing shall not be deemed to prevent the Employee from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Employee is not deemed to be the beneficial owner of more than 5% of the class of securities that are so publicly traded. During the period of the Employees employment and until two (2) years after the termination of the Employees employment, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, shareholder, officer, Employee, director, trustee, agent, consultant or member of any person, firm or corporation or otherwise, seek to employ or otherwise seek the services of any Employee of Company or any of its majority owned subsidiaries. | |||
C. | Confidentiality . During and following the period of the Employees employment with the Company, the Employee will not use for the Employees own benefit or for the benefit of others, or divulge to others, any information, Trade Secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its affiliates and which was acquired by the Employee at any time prior to or during the term of the Employees employment with the Company, except with the specific prior written consent of the Company. | |||
D. | Work Product . The Employee agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its affiliates, and all existing or future products or services, which are conceived, developed or made by the Employee (alone or with others) during the term of this Agreement (Work Product) belong to the Company. The Employee will cooperate fully in the establishment and maintenance of all rights of the Company and its affiliates in such Work Product. The provisions of this Section 8(C) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Employee after the termination of the |
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Agreement with respect to Work Product created during the term of this Agreement. | ||||
E. | Enforcement . The parties agree and acknowledge that the restrictions contained in this Section 8 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any covenant or agreement contained in this Section 8 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified. The Employee agrees and acknowledges that the breach of this Section 8 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 8, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however , that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages). |
9. | Representations . Employee hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Employee does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Employee is a party or any judgment, order or decree to which the Employee is subject; (ii) the Employee is not a party or bound by any employment agreement, consulting agreement, agreement not to compete, confidentiality agreement or similar agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement will be the Employees valid and binding obligation, enforceable in accordance with its terms. |
10. | Arbitration . In the event of any dispute between the Company and the Employee with respect to this Agreement (other than a dispute with respect to the calculation of the Employees Termination Payment under sub-Paragraph 7(A)(v) Calculation, which dispute shall be resolved in accordance with the provisions set forth in such sub-Paragraph), either party may, in its sole discretion by notice to the other, require such dispute to be submitted to arbitration. The arbitrator will be selected by agreement of the Parties or, if they cannot agree on arbitrator or arbitrators within 30 days after the giving of such notice, the arbitrator will be selected by the American Arbitration Association. The determination reached in such arbitration will be final and binding on both Parties without any right of appeal. Execution of the determination by such arbitrator may be sought in any court having jurisdiction. Unless otherwise agreed by the Parties, any such arbitration will take place in West Palm Beach, Florida and will be conducted in accordance with the rules of the American Arbitration Association. If the Employee is the prevailing party in any such arbitration, he will be entitled to reimbursement by the Company of all reasonable costs and expenses (including attorneys fees incurred in such arbitration). |
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11. | Assignment . The Employee may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the Employee or any rights which the Employee may have under this Agreement. Neither the Employee nor the Employees beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement. This Agreement will inure to the benefit of and will be binding upon any successor to the Company and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, including the terms and conditions of the restrictive covenants contained in Section 8 hereof. As used in this Agreement, the term successor means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company. This Agreement may not otherwise be assigned by the Company. |
12. | Governing Law . This Agreement shall be governed by the laws of Florida without regard to the application of conflicts of laws. |
13. | Entire Agreement . This Agreement constitutes the only agreement between the Company and the Employee regarding the Employees employment by the Company. This Agreement supersedes any and all other agreements and understandings, written or oral, between the Company and the Employee regarding the subject matter hereof and thereof. A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision. This Agreement may be amended, modified or changed only by further written agreement between the Company and the Employee, duly executed by both Parties. |
14. | Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Section 8 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Employees relationship with the Company. |
15. | Notices . Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid. Any notice to be given by the Employee hereunder will be addressed to the Company to the attention of its General Counsel at its main offices, One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487. Any notice to be given to the Employee will be addressed to the Employee at the Employees residence address last provided by the Employee to Company. Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section. |
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16. | Headings . Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions. |
IN WITNESS WHEREOF , the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.
THE GEO GROUP, INC.
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By: | /s/ George C. Zoley | |||
Name: | George C. Zoley | |||
Title: | Chairman & Chief Executive Officer | |||
EMPLOYEE
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By: | /s/ Jorge A. Dominicis | |||
Name: | Jorge A. Dominicis | |||
Title: |
Senior Vice President, Mental Health and
President of Atlantic Shores Healthcare
The GEO Group, Inc. |
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EXHIBIT 10.24
EXHIBIT A
SENIOR OFFICER EMPLOYMENT AGREEMENT
THIS SENIOR OFFICER EMPLOYMENT AGREEMENT (this Agreement) is entered into effective the 23rd day of March, 2005 by and between The GEO Group, Inc. (the Company) and John M. Hurley (the Employee and, together with the Company, the Parties).
WHEREAS , the Employee and the Company wish to set forth the terms and conditions of the Employees employment with the Company in a formal agreement in order to facilitate the continued employment of the Employee as Senior Vice President, North American Services; and
WHEREAS , the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company and the Board of Directors of the Company;
NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:
1. | Position and Duties . The Company hereby agrees to continue to employ the Employee and the Employee hereby accepts continued employment and agrees to continue to serve as Senior Vice President, North American Services, of the Company. The Employee will perform all duties and responsibilities and will have all authority inherent in the position of Senior Vice President, North American Services. |
2. | Term of Agreement and Employment . The term of the Employees employment under this Agreement will be for an initial period of two (2) years, beginning on the effective date of this Agreement, and terminating two years thereafter. The term of employment under this Agreement will be automatically extended by one day every day such that it has a continuous rolling two-year term until the age of 67 years, unless otherwise terminated pursuant to Section 7 of this Agreement. |
3. | Definition Cause . | |||
For purposes of this Agreement, Cause for the termination of the Employees employment hereunder shall be deemed to exist if, in the reasonable judgment of the Companys Chief Executive Officer (CEO): (i) the Employee commits fraud, theft or embezzlement against the Company; (ii) the Employee commits a felony or a crime involving moral turpitude; (iii) the Employee breaches any non-competition, confidentiality or non-solicitation agreement with the Company or any subsidiary or affiliate thereof; (iv) the Employee breaches any of the terms of this Agreement and fails to cure such breach within 30 days after the receipt of written notice of such breach from the Company; or (v) the Employee engages in gross negligence or willful misconduct that |
causes harm to the business and operations of the Company or a subsidiary or affiliate thereof. | ||||
4. | Compensation . |
A. | Annual Base Salary . Employee shall be paid his current annual base salary of $315,000 for the remainder of calendar year 2005 (as such may be amended from time to time, the Annual Base Salary). The Company may increase the Annual Base Salary paid to the Employee in an amount to be determined by the Chief Executive Officer of the Company. The Annual Base Salary shall be payable at such regular times and intervals as the Company customarily pays its Employees from time to time. | |||
B. | Annual Incentive Bonus . For each fiscal year of employment during which the Company employs the Employee, the Employee shall be entitled to receive a target annual incentive bonus in accordance with the Employee bonus plan established by the Board of Directors for determining the Employees annual bonus (the Annual Incentive Bonus). Such Annual Incentive Bonus shall be paid shortly after the 4 th Quarter Company Board meeting ordinarily held in February or March of the year following the year for which the Annual Incentive Bonus payment is due. |
5. | Employee Benefits . The Employee will be entitled to three (3) weeks of vacation per fiscal year during his/her first ten (10) years of service, and four (4) weeks of vacation per fiscal year thereafter. The Employee, the Employees spouse, and qualifying members of the Employees family will be eligible for and will participate in any benefits and perquisites available to Employee officers of the Company, including any group health, dental, life insurance, disability, or other form of Employee benefit plan or program of the Company now existing or that may be later adopted by the Company (collectively, the Employee Benefits). |
6. | Death or Disability . The Employees employment will terminate immediately upon the Employees death. If the Employee becomes physically or mentally disabled so as to become unable for a period of more than five consecutive months or for shorter periods aggregating at least five months during any twelve month period to perform the Employees duties hereunder on a substantially full-time basis, the Employees employment will terminate as of the end of such five-month or twelve-month period and this shall be considered a disability under this Agreement. Such termination shall not affect the Employees benefits under the Companys disability insurance program, if any, then in effect. |
7. | Termination . Either the Employee or the Company may terminate this Agreement for any reason upon not less than thirty (30) days written notice. |
A. | Termination of Employment Other Than by Resignation of Employee or Termination for Cause . Upon the termination of this Agreement for any reason |
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(including termination by the Company without Cause or the death or disability of the Employee) other than by voluntary resignation by the Employee or a termination by the Company for Cause, the following shall apply: |
(i) | Termination Payment . The Employee shall be entitled to and paid a termination payment (the Termination Payment) equal to two (2) years Annual Base Salary as set forth in Section 4 based upon the then current salary level, together with any payments due under Section 7.A.(ii), below. The Termination Payment shall be made within 10 days of any termination pursuant to this Section 7(A). | |||
(ii) | Termination Benefits . The Company shall continue to provide the Employee (and if applicable, his beneficiaries) with the Employee Benefits (as described in Section 5), at no cost to the Employee in no less than the same amount and, on the same terms and conditions as in effect on the date on which the termination of employment occurs for a period of two (2) years after the date of termination of the Employees employment with the Company, or, alternatively, if the Employee (or his estate) elects at any time in a written notice delivered to the Company to waive any particular Employee Benefits, the Company shall make a cash payment to the Employee within 10 days after receipt of such election in an amount equal to the present value of the Companys cost of providing such Employee Benefits from the date of such election to the end of the foregoing two (2) year period, and such present value shall be determined by reference to the Companys then-current cost levels and a discount rate equal to 120 percent of the short-term applicable Federal rate provided for in Section 1274(d) of the Internal Revenue Code (the Code) for the month in which the Termination occurs. In addition, the Company shall pay to the Employee, within 10 days after said termination, an amount equal to the sum of (a) the dollar value of vacation time that would have been credited to the Employee pursuant to the Companys Vacation Policy (the Vacation Policy) if the Employee had remained employed by the Company through the Anniversary Date (as defined in the Vacation Policy) immediately following his termination of employment, multiplied by a fraction, the numerator of which is the number of days which elapsed from the Employees Anniversary Date immediately preceding the date of termination through the date of such termination, and the denominator of which is 365, plus (b) the dollar value of vacation time which the Employee was entitled to have taken immediately prior to the Employees termination, which was not in fact taken by the Employee; the dollar value of vacation time referred to above shall be equal to the amount which would have been paid to the Employee by the Company during such vacation time had the vacation time in fact been taken by the Employee immediately prior to the Employees termination. If the Employee dies during the two (2) year period following the termination of this Agreement |
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for any reason (including termination of employment by the death or disability of Employee) other than by a termination by the Company for Cause, the Company shall provide the Employee Benefits, to the extent applicable, to the Employees estate, or make any applicable cash payments in lieu thereof to said estate. The Employee shall be deemed to be employed by the Company if the Employee is employed by the Company or any subsidiary of the Company in which the Company owns a majority of the subsidiarys voting securities; | ||||
(iii) | Termination Automobile . The Company shall transfer all of its interest in any automobile used by the Employee pursuant to the Companys Employee Automobile Policy (the Employee Automobile Policy) and shall pay the balance of any outstanding loans or leases on such automobile (whether such obligations are those of the Employee or the Company) so that the Employee owns the automobile outright (in the event such automobile is leased, the Company shall pay the residual cost of such lease). | |||
(iv) | Termination Stock Options . All of the unvested stock options granted to the Employee prior to termination will fully vest immediately upon termination. | |||
(v) | Tax Rates . The Employee shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Termination Payment is to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employees residence on the date of termination, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. | |||
(vi) | Calculation . Simultaneously with the Companys payment of the Termination Payment, the Company shall deliver to the Employee a written statement specifying the total amount of the Termination Payment, together with all supporting calculations. If the Employee disagrees with the Companys calculation of the payment, the Employee shall submit to the Company, no later than 30 days after receipt of the Companys calculations, a written notice advising the Company of the disagreement and setting forth his calculation of said payments. The Employees failure to submit such notice within such period shall be conclusively deemed to be an agreement by the Employee as to the amount of the Termination Payment. If the Company agrees with the Employees calculations, it shall pay any shortfall to the Employee within 20 days after receipt of such a notice form the Employee, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. If the Company does not agree with the Employees calculations, it shall provide the Employee with a written |
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notice within 20 days after the receipt of the Employees calculations advising the Employee that the disagreement is to be referred to an independent accounting firm for resolution. Such disagreement shall be referred to an independent Big 4 accounting firm which is not the regular accounting firm of the Company and which is agreed to by the Company and the Employee within 10 days after issuance of the Companys notice of disagreement (if the Parties cannot agree on the identity of the accounting firm which is to resolve the dispute, the accounting firm shall be selected by means of a coin toss conducted in Palm Beach County, Florida by counsel to the Employee on the first business day after such 10 day period in such a manner as such counsel may specify). The accounting firm shall review all information provided to it by the Parties and submit a written report setting forth its calculation of the Termination Payment within 15 days after submission of the matter to it, and such decision shall be final and binding on all of the Parties. The fees and expenses charged by said accounting firm shall be paid by the Company. If the amount of the Termination Payment actually paid by the Company was less than the amount calculated by the accounting firm, the Company shall pay the shortfall to the Employee within 5 days after the accounting firm submits its written report, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. | ||||
(vii) | Interest on Unpaid Termination Payment . In the event that the Company does not pay the Termination Payment by the due dates specified in this Agreement, then any unpaid amount shall bear interest at the rate of 18 percent per annum, compounded monthly, until it is paid. |
B. | Termination of Employment by Resignation of Employee or by the Company With Cause . Upon the termination of Employees employment by the voluntary resignation of the Employee or by the Company with Cause, the Employee shall be due no further compensation under this Agreement related to Annual Base Salary, Annual Incentive Bonus, Employee Benefits, or Termination Payment than what is due and owing through the effective date of Employees resignation. Termination of this Agreement for any reason (whether by the resignation of the Employee or by the termination of the Company with or without Cause) shall not affect the Employees rights under the Companys retirement plan applicable to the Employee. |
8. Restrictive Covenants .
A. | General . The Company and the Employee hereby acknowledge and agree that (i) the Employee is in possession of trade secrets (as defined in Section 688.002(4) of the Florida Statutes) of the Company (the Trade Secrets), (ii) the restrictive covenants contained in this Section 8 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, |
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in accordance with Section 542.335(1)(e) of the Florida Statutes, and (iii) the restrictive covenants contained in this Section 8 are reasonably necessary to protect such legitimate business interests of the Company. | ||||
B. | Non-Competition . During the period of the Employees employment with the Company and until two (2) years after the termination of the Employees employment with the Company, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, officer, director, trustee, Employee, agent, consultant or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with any business or activity conducted by Company or any of its majority-owned subsidiaries; provided, however, that the foregoing shall not be deemed to prevent the Employee from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Employee is not deemed to be the beneficial owner of more than 5% of the class of securities that are so publicly traded. During the period of the Employees employment and until two (2) years after the termination of the Employees employment, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, shareholder, officer, Employee, director, trustee, agent, consultant or member of any person, firm or corporation or otherwise, seek to employ or otherwise seek the services of any Employee of Company or any of its majority owned subsidiaries. | |||
C. | Confidentiality . During and following the period of the Employees employment with the Company, the Employee will not use for the Employees own benefit or for the benefit of others, or divulge to others, any information, Trade Secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its affiliates and which was acquired by the Employee at any time prior to or during the term of the Employees employment with the Company, except with the specific prior written consent of the Company. | |||
D. | Work Product . The Employee agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its affiliates, and all existing or future products or services, which are conceived, developed or made by the Employee (alone or with others) during the term of this Agreement (Work Product) belong to the Company. The Employee will cooperate fully in the establishment and maintenance of all rights of the Company and its affiliates in such Work Product. The provisions of this Section 8(C) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Employee after the termination of the Agreement with respect to Work Product created during the term of this Agreement. |
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E. | Enforcement . The parties agree and acknowledge that the restrictions contained in this Section 8 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any covenant or agreement contained in this Section 8 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified. The Employee agrees and acknowledges that the breach of this Section 8 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 8, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however , that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages). |
9. | Representations . Employee hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Employee does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Employee is a party or any judgment, order or decree to which the Employee is subject; (ii) the Employee is not a party or bound by any employment agreement, consulting agreement, agreement not to compete, confidentiality agreement or similar agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement will be the Employees valid and binding obligation, enforceable in accordance with its terms. |
10. | Arbitration . In the event of any dispute between the Company and the Employee with respect to this Agreement (other than a dispute with respect to the calculation of the Employees Termination Payment under sub-Paragraph 7(A)(v) Calculation, which dispute shall be resolved in accordance with the provisions set forth in such sub-Paragraph), either party may, in its sole discretion by notice to the other, require such dispute to be submitted to arbitration. The arbitrator will be selected by agreement of the Parties or, if they cannot agree on arbitrator or arbitrators within 30 days after the giving of such notice, the arbitrator will be selected by the American Arbitration Association. The determination reached in such arbitration will be final and binding on both Parties without any right of appeal. Execution of the determination by such arbitrator may be sought in any court having jurisdiction. Unless otherwise agreed by the Parties, any such arbitration will take place in West Palm Beach, Florida and will be conducted in accordance with the rules of the American Arbitration Association. If the Employee is the prevailing party in any such arbitration, he will be entitled to reimbursement by the Company of all reasonable costs and expenses (including attorneys fees incurred in such arbitration). |
11. | Assignment . The Employee may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the |
7
Employee or any rights which the Employee may have under this Agreement. Neither the Employee nor the Employees beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement. This Agreement will inure to the benefit of and will be binding upon any successor to the Company and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, including the terms and conditions of the restrictive covenants contained in Section 8 hereof. As used in this Agreement, the term successor means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company. This Agreement may not otherwise be assigned by the Company. |
12. | Governing Law . This Agreement shall be governed by the laws of Florida without regard to the application of conflicts of laws. |
13. | Entire Agreement . This Agreement constitutes the only agreement between the Company and the Employee regarding the Employees employment by the Company. This Agreement supersedes any and all other agreements and understandings, written or oral, between the Company and the Employee regarding the subject matter hereof and thereof. A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision. This Agreement may be amended, modified or changed only by further written agreement between the Company and the Employee, duly executed by both Parties. |
14. | Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Section 8 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Employees relationship with the Company. |
15. | Notices . Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid. Any notice to be given by the Employee hereunder will be addressed to the Company to the attention of its General Counsel at its main offices, One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487. Any notice to be given to the Employee will be addressed to the Employee at the Employees residence address last provided by the Employee to Company. Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section. |
16. | Headings . Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions. |
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IN WITNESS WHEREOF , the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.
THE GEO GROUP, INC.
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||||
By: | /s/ George C. Zoley | |||
Name: | George C. Zoley | |||
Title: | Chairman & Chief Executive Officer | |||
EMPLOYEE
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||||
By: | /s/ John M. Hurley | |||
Name: | John M. Hurley | |||
Title: |
Senior Vice President, North American Services
The GEO Group, Inc. |
|||
9
Exhibit 10.25
EXHIBIT A
SENIOR OFFICER EMPLOYMENT AGREEMENT
THIS SENIOR OFFICER EMPLOYMENT AGREEMENT (this Agreement) is entered into effective the 23rd day of March, 2005 by and between The GEO Group, Inc. (the Company) and Donald Herbert Keens (the Employee and, together with the Company, the Parties). | ||||
WHEREAS , the Employee and the Company wish to set forth the terms and conditions of the Employees employment with the Company in a formal agreement in order to facilitate the continued employment of the Employee as Senior Vice President International Services; and | ||||
WHEREAS , the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company and the Board of Directors of the Company; | ||||
NOW THEREFORE , in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows: |
1. | Position and Duties . The Company hereby agrees to continue to employ the Employee and the Employee hereby accepts continued employment and agrees to continue to serve as Senior Vice President International Services, of the Company. The Employee will perform all duties and responsibilities and will have all authority inherent in the position of Senior Vice President International Services. |
2. | Term of Agreement and Employment . The term of the Employees employment under this Agreement will be for an initial period of two (2) years, beginning on the effective date of this Agreement, and terminating two years thereafter. The term of employment under this Agreement will be automatically extended by one day every day such that it has a continuous rolling two-year term until the age of 67 years, unless otherwise terminated pursuant to Section 7 of this Agreement. |
3. | Definition Cause . | |||
For purposes of this Agreement, Cause for the termination of the Employees employment hereunder shall be deemed to exist if, in the reasonable judgment of the Companys Chief Executive Officer (CEO): (i) the Employee commits fraud, theft or embezzlement against the Company; (ii) the Employee commits a felony or a crime involving moral turpitude; (iii) the Employee breaches any non-competition, confidentiality or non-solicitation agreement with the Company or any subsidiary or affiliate thereof; (iv) the Employee breaches any of the terms of this Agreement and fails to cure such breach within 30 days after the receipt of written notice of such breach from the Company; or (v) the Employee engages in gross negligence or willful misconduct that |
1
causes harm to the business and operations of the Company or a subsidiary or affiliate thereof. | ||||
4. | Compensation . |
A. | Annual Base Salary . Employee shall be paid his current annual base salary of $315,000 for the remainder of calendar year 2005 (as such may be amended from time to time, the Annual Base Salary). The Company may increase the Annual Base Salary paid to the Employee in an amount to be determined by the Chief Executive Officer of the Company. The Annual Base Salary shall be payable at such regular times and intervals as the Company customarily pays its Employees from time to time. | |||
B. | Annual Incentive Bonus . For each fiscal year of employment during which the Company employs the Employee, the Employee shall be entitled to receive a target annual incentive bonus in accordance with the Employee bonus plan established by the Board of Directors for determining the Employees annual bonus (the Annual Incentive Bonus). Such Annual Incentive Bonus shall be paid shortly after the 4 th Quarter Company Board meeting ordinarily held in February or March of the year following the year for which the Annual Incentive Bonus payment is due. |
5. | Employee Benefits . The Employee will be entitled to three (3) weeks of vacation per fiscal year during his/her first ten (10) years of service, and four (4) weeks of vacation per fiscal year thereafter. The Employee, the Employees spouse, and qualifying members of the Employees family will be eligible for and will participate in any benefits and perquisites available to Employee officers of the Company, including any group health, dental, life insurance, disability, or other form of Employee benefit plan or program of the Company now existing or that may be later adopted by the Company (collectively, the Employee Benefits). |
6. | Death or Disability . The Employees employment will terminate immediately upon the Employees death. If the Employee becomes physically or mentally disabled so as to become unable for a period of more than five consecutive months or for shorter periods aggregating at least five months during any twelve month period to perform the Employees duties hereunder on a substantially full-time basis, the Employees employment will terminate as of the end of such five-month or twelve-month period and this shall be considered a disability under this Agreement. Such termination shall not affect the Employees benefits under the Companys disability insurance program, if any, then in effect. |
7. | Termination . Either the Employee or the Company may terminate this Agreement for any reason upon not less than thirty (30) days written notice. |
A. | Termination of Employment Other Than by Resignation of Employee or Termination for Cause . Upon the termination of this Agreement for any reason |
2
(including termination by the Company without Cause or the death or disability of the Employee) other than by voluntary resignation by the Employee or a termination by the Company for Cause, the following shall apply: |
(i) | Termination Payment . The Employee shall be entitled to and paid a termination payment (the Termination Payment) equal to two (2) years Annual Base Salary as set forth in Section 4 based upon the then current salary level, together with any payments due under Section 7.A.(ii), below. The Termination Payment shall be made within 10 days of any termination pursuant to this Section 7(A). | |||
(ii) | Termination Benefits . The Company shall continue to provide the Employee (and if applicable, his beneficiaries) with the Employee Benefits (as described in Section 5), at no cost to the Employee in no less than the same amount and, on the same terms and conditions as in effect on the date on which the termination of employment occurs for a period of two (2) years after the date of termination of the Employees employment with the Company, or, alternatively, if the Employee (or his estate) elects at any time in a written notice delivered to the Company to waive any particular Employee Benefits, the Company shall make a cash payment to the Employee within 10 days after receipt of such election in an amount equal to the present value of the Companys cost of providing such Employee Benefits from the date of such election to the end of the foregoing two (2) year period, and such present value shall be determined by reference to the Companys then-current cost levels and a discount rate equal to 120 percent of the short-term applicable Federal rate provided for in Section 1274(d) of the Internal Revenue Code (the Code) for the month in which the Termination occurs. In addition, the Company shall pay to the Employee, within 10 days after said termination, an amount equal to the sum of (a) the dollar value of vacation time that would have been credited to the Employee pursuant to the Companys Vacation Policy (the Vacation Policy) if the Employee had remained employed by the Company through the Anniversary Date (as defined in the Vacation Policy) immediately following his termination of employment, multiplied by a fraction, the numerator of which is the number of days which elapsed from the Employees Anniversary Date immediately preceding the date of termination through the date of such termination, and the denominator of which is 365, plus (b) the dollar value of vacation time which the Employee was entitled to have taken immediately prior to the Employees termination, which was not in fact taken by the Employee; the dollar value of vacation time referred to above shall be equal to the amount which would have been paid to the Employee by the Company during such vacation time had the vacation time in fact been taken by the Employee immediately prior to the Employees termination. If the Employee dies during the two (2) year period following the termination of this Agreement |
3
for any reason (including termination of employment by the death or disability of Employee) other than by a termination by the Company for Cause, the Company shall provide the Employee Benefits, to the extent applicable, to the Employees estate, or make any applicable cash payments in lieu thereof to said estate. The Employee shall be deemed to be employed by the Company if the Employee is employed by the Company or any subsidiary of the Company in which the Company owns a majority of the subsidiarys voting securities; | ||||
(iii) | Termination Automobile . The Company shall transfer all of its interest in any automobile used by the Employee pursuant to the Companys Employee Automobile Policy (the Employee Automobile Policy) and shall pay the balance of any outstanding loans or leases on such automobile (whether such obligations are those of the Employee or the Company) so that the Employee owns the automobile outright (in the event such automobile is leased, the Company shall pay the residual cost of such lease). | |||
(iv) | Termination Stock Options . All of the unvested stock options granted to the Employee prior to termination will fully vest immediately upon termination. | |||
(v) | Tax Rates . The Employee shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Termination Payment is to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employees residence on the date of termination, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. | |||
(vi) | Calculation . Simultaneously with the Companys payment of the Termination Payment, the Company shall deliver to the Employee a written statement specifying the total amount of the Termination Payment, together with all supporting calculations. If the Employee disagrees with the Companys calculation of the payment, the Employee shall submit to the Company, no later than 30 days after receipt of the Companys calculations, a written notice advising the Company of the disagreement and setting forth his calculation of said payments. The Employees failure to submit such notice within such period shall be conclusively deemed to be an agreement by the Employee as to the amount of the Termination Payment. If the Company agrees with the Employees calculations, it shall pay any shortfall to the Employee within 20 days after receipt of such a notice form the Employee, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. If the Company does not agree with the Employees calculations, it shall provide the Employee with a written |
4
notice within 20 days after the receipt of the Employees calculations advising the Employee that the disagreement is to be referred to an independent accounting firm for resolution. Such disagreement shall be referred to an independent Big 4 accounting firm which is not the regular accounting firm of the Company and which is agreed to by the Company and the Employee within 10 days after issuance of the Companys notice of disagreement (if the Parties cannot agree on the identity of the accounting firm which is to resolve the dispute, the accounting firm shall be selected by means of a coin toss conducted in Palm Beach County, Florida by counsel to the Employee on the first business day after such 10 day period in such a manner as such counsel may specify). The accounting firm shall review all information provided to it by the Parties and submit a written report setting forth its calculation of the Termination Payment within 15 days after submission of the matter to it, and such decision shall be final and binding on all of the Parties. The fees and expenses charged by said accounting firm shall be paid by the Company. If the amount of the Termination Payment actually paid by the Company was less than the amount calculated by the accounting firm, the Company shall pay the shortfall to the Employee within 5 days after the accounting firm submits its written report, together with interest thereon accruing at the rate of 18 percent per annum, compounded monthly, from the original due date of the Termination Payment through the actual date of payment of said shortfall. | ||||
(vii) | Interest on Unpaid Termination Payment . In the event that the Company does not pay the Termination Payment by the due dates specified in this Agreement, then any unpaid amount shall bear interest at the rate of 18 percent per annum, compounded monthly, until it is paid. |
B. | Termination of Employment by Resignation of Employee or by the Company With Cause . Upon the termination of Employees employment by the voluntary resignation of the Employee or by the Company with Cause, the Employee shall be due no further compensation under this Agreement related to Annual Base Salary, Annual Incentive Bonus, Employee Benefits, or Termination Payment than what is due and owing through the effective date of Employees resignation. Termination of this Agreement for any reason (whether by the resignation of the Employee or by the termination of the Company with or without Cause) shall not affect the Employees rights under the Companys retirement plan applicable to the Employee. |
8. | Restrictive Covenants . |
A. | General . The Company and the Employee hereby acknowledge and agree that (i) the Employee is in possession of trade secrets (as defined in Section 688.002(4) of the Florida Statutes) of the Company (the Trade Secrets), (ii) the restrictive covenants contained in this Section 8 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, |
5
in accordance with Section 542.335(1)(e) of the Florida Statutes, and (iii) the restrictive covenants contained in this Section 8 are reasonably necessary to protect such legitimate business interests of the Company. | ||||
B. | Non-Competition . During the period of the Employees employment with the Company and until two (2) years after the termination of the Employees employment with the Company, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, officer, director, trustee, Employee, agent, consultant or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with any business or activity conducted by Company or any of its majority-owned subsidiaries; provided, however, that the foregoing shall not be deemed to prevent the Employee from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Employee is not deemed to be the beneficial owner of more than 5% of the class of securities that are so publicly traded. During the period of the Employees employment and until two (2) years after the termination of the Employees employment, the Employee will not, directly or indirectly, on the Employees own behalf or as a partner, shareholder, officer, Employee, director, trustee, agent, consultant or member of any person, firm or corporation or otherwise, seek to employ or otherwise seek the services of any Employee of Company or any of its majority owned subsidiaries. | |||
C. | Confidentiality . During and following the period of the Employees employment with the Company, the Employee will not use for the Employees own benefit or for the benefit of others, or divulge to others, any information, Trade Secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its affiliates and which was acquired by the Employee at any time prior to or during the term of the Employees employment with the Company, except with the specific prior written consent of the Company. | |||
D. | Work Product . The Employee agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its affiliates, and all existing or future products or services, which are conceived, developed or made by the Employee (alone or with others) during the term of this Agreement (Work Product) belong to the Company. The Employee will cooperate fully in the establishment and maintenance of all rights of the Company and its affiliates in such Work Product. The provisions of this Section 8(C) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Employee after the termination of the Agreement with respect to Work Product created during the term of this Agreement. |
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E. | Enforcement . The parties agree and acknowledge that the restrictions contained in this Section 8 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any covenant or agreement contained in this Section 8 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified. The Employee agrees and acknowledges that the breach of this Section 8 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 8, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however , that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages). |
9. | Representations . Employee hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Employee does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Employee is a party or any judgment, order or decree to which the Employee is subject; (ii) the Employee is not a party or bound by any employment agreement, consulting agreement, agreement not to compete, confidentiality agreement or similar agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement will be the Employees valid and binding obligation, enforceable in accordance with its terms. |
10. | Arbitration . In the event of any dispute between the Company and the Employee with respect to this Agreement (other than a dispute with respect to the calculation of the Employees Termination Payment under sub-Paragraph 7(A)(v) Calculation, which dispute shall be resolved in accordance with the provisions set forth in such sub-Paragraph), either party may, in its sole discretion by notice to the other, require such dispute to be submitted to arbitration. The arbitrator will be selected by agreement of the Parties or, if they cannot agree on arbitrator or arbitrators within 30 days after the giving of such notice, the arbitrator will be selected by the American Arbitration Association. The determination reached in such arbitration will be final and binding on both Parties without any right of appeal. Execution of the determination by such arbitrator may be sought in any court having jurisdiction. Unless otherwise agreed by the Parties, any such arbitration will take place in West Palm Beach, Florida and will be conducted in accordance with the rules of the American Arbitration Association. If the Employee is the prevailing party in any such arbitration, he will be entitled to reimbursement by the Company of all reasonable costs and expenses (including attorneys fees incurred in such arbitration). |
11. | Assignment . The Employee may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the |
7
Employee or any rights which the Employee may have under this Agreement. Neither the Employee nor the Employees beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement. This Agreement will inure to the benefit of and will be binding upon any successor to the Company and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, including the terms and conditions of the restrictive covenants contained in Section 8 hereof. As used in this Agreement, the term successor means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company. This Agreement may not otherwise be assigned by the Company. |
12. | Governing Law . This Agreement shall be governed by the laws of Florida without regard to the application of conflicts of laws. |
13. | Entire Agreement . This Agreement constitutes the only agreement between the Company and the Employee regarding the Employees employment by the Company. This Agreement supersedes any and all other agreements and understandings, written or oral, between the Company and the Employee regarding the subject matter hereof and thereof. A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision. This Agreement may be amended, modified or changed only by further written agreement between the Company and the Employee, duly executed by both Parties. |
14. | Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Section 8 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Employees relationship with the Company. |
15. | Notices . Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid. Any notice to be given by the Employee hereunder will be addressed to the Company to the attention of its General Counsel at its main offices, One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487. Any notice to be given to the Employee will be addressed to the Employee at the Employees residence address last provided by the Employee to Company. Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section. |
16. | Headings . Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions. |
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IN WITNESS WHEREOF , the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.
THE GEO GROUP, INC.
|
||||
By: | /s/ George C. Zoley | |||
Name: | George C. Zoley | |||
Title: | Chairman & Chief Executive Officer | |||
EMPLOYEE
|
||||
By: | /s/ Donald Herbert Keens | |||
Name: | Donald Herbert Keens | |||
Title: | Senior Vice President International Services The GEO Group, Inc. | |||
9
EXHIBIT 21.1
SUBSIDIARIES OF THE GEO GROUP, INC.
WCC Financial, Inc.
WCC/FL/01, Inc.
WCC/FL/02, Inc.
Atlantic Shores Healthcare, Inc.
WCC Development, Inc.
GEO Design Services, Inc.
GEO International Holdings, Inc.
GEO RE Holdings, LLC
The GEO Group Australasia Pty Limited
Australasian Correctional Investments Limited
Australasian Correction Services Pty Limited
GEO Australasia Pty Limited
The GEO Group Australia Pty Limited
Pacific Rim Employment Pty Limited
Premier Employment Services Limited
Strategic Healthcare Solutions Pty Limited
The GEO Group UK Limited
South African Custodial Holdings, Ltd.
South African Custodial Management (Pty) Limited
GEO NZ Limited
Wackenhut Corrections Corporation N.V.
Miramichi Youth Centre Management, Inc.
Canadian Correctional Management, Inc.
Premier Custodial Development Limited
Wackenhut Corrections Puerto Rico, Inc.
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement (Form S-4 No.
333-107709) of The GEO Group, Inc. and the related Prospectus, the Registration Statement (Form S-3
No. 333-111003) and in the related Prospectus, the Registration Statement (Form S-8 No. 333-79817)
pertaining to the 1999 Stock Option Plan, the Registration Statement (Form S-8 No. 333-17265)
pertaining to the Employees 401 (k) and Retirement Plan, the Registration Statement (Form S-8 No.
333-09977) pertaining to the Wackenhut Corrections Corporation Stock Option Plan, and the
Registration Statement (Form S-8 No. 333-09981) pertaining to the Nonemployee Director Stock Option
Plan of Wackenhut Corrections Corporation of our reports dated March 22, 2005, with respect to the
consolidated financial statements and schedule of The GEO Group, Inc. (formerly Wackenhut
Corrections Corporation), GEO Group, Inc. managements assessment of the effectiveness of internal
control over financial reporting, and the effectiveness of internal control over financial
reporting of The GEO Group, Inc. included in this Annual Report (Form 10-K) for the year ended
January 2, 2005.
/s/ Ernst & Young LLP
Fort Lauderdale, Florida
March 22, 2005
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; | |
b) evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and | |
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and | |
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and |
/s/ George C. Zoley | |
|
George C. Zoley | |
Chief Executive Officer |
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; | |
b) evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and | |
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and | |
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and |
/s/ John G. ORourke | |
|
|
John G. ORourke | |
Chief Financial Officer |
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ George C. Zoley | |
|
|
George C. Zoley | |
Chief Executive Officer |
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John G. ORourke | |
|
|
John G. ORourke | |
Chief Financial Officer |