Attached files
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EX-99.1 - EX-99.1 - AMERICA SERVICE GROUP INC /DE | g22346exv99w1.htm |
EX-10.2 - EX-10.2 - AMERICA SERVICE GROUP INC /DE | g22346exv10w2.htm |
EX-10.1 - EX-10.1 - AMERICA SERVICE GROUP INC /DE | g22346exv10w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 1, 2010
March 1, 2010
America Service Group Inc.
(Exact name of registrant as specified in its charter)
Delaware | 0-19673 | 51-0332317 | ||
(State or other | (Commission | (IRS Employer | ||
jurisdiction | File Number) | Identification Number) | ||
of incorporation) |
105 Westpark Drive, Suite 200, Brentwood, Tennessee | 37027 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (615) 373-3100
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
2010 Incentive Compensation Plan
On March 1, 2010, based on the recommendation of the Incentive Stock and Compensation
Committee (the Committee) of the Board of Directors (the Board) of America Service Group Inc.
(the Company), the Board approved the Companys 2010 Incentive Compensation Plan (the 2010
Plan), which is designed to award lump-sum cash bonuses to the Companys executive officers,
including the named executive officers, and other eligible employees based on the financial
performance of the Company. The description of the material terms of the 2010 Plan included in
Item 5.02 of this Current Report on Form 8-K is incorporated by reference into this item.
Amendment No. 1 and Waiver to Revolving Credit and Security Agreement
On March 2, 2010, the Company entered into Amendment No. 1 and Waiver (First Amendment) to
its Revolving Credit and Security Agreement dated July 28, 2009 (Credit Agreement) with
CapitalSource Bank (CapitalSource). At December 31, 2009, the Company was not in compliance with
one of the financial covenant requirements in the Credit Agreement due primarily to the accrual of
expense associated with settlement of shareholders class action litigation pending against the
Company. The First Amendment includes a waiver of this covenant violation and an amendment to the
Credit Agreement that adjusts the definition of EBITDA, used in calculating the financial covenant,
to exclude a portion of the expense associated with the litigation. The Credit Agreement provided
for a $40.0 million revolving credit facility. The Amendment added a $20.0 million sublimit. At
December 31, 2009, the Company had no borrowings outstanding under the Credit Agreement and $16.6
million available for borrowing, based on the sublimit and the Companys collateral base on that
date less outstanding standby letters of credit totaling $3.4 million.
The foregoing description is a summary and is qualified in its entirety by reference to the
First Amendment which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
herein by reference.
Item 2.02. | Results of Operations and Financial Condition. |
On March 2, 2010, the Company issued a press release announcing its operating results for the
fourth quarter and year ended December 31, 2009. A copy of the press release is attached as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by this reference.
This information furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that section and shall not be deemed to
be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act except as shall be expressly set forth by specific reference in such filing.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information under Item 1.01 above related to the Companys First Amendment to its Credit
Agreement is incorporated by reference hereunder.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
The Companys 2010 Plan establishes the following 2010 targeted payouts as a percent of base
salary (Bones Target as a Percent of Base Salary):
Bonus Target as a Percent | ||||
Named Executive Officer Positions | of Base Salary | |||
President and Chief Executive Officer |
70 | % | ||
Executive Vice President and Chief Financial
Officer |
60 | % | ||
Chief Administrative Officer, Chief Medical
Officer and Chief Development Officer |
50 | % |
The 2010 Plan is composed of an Adjusted EBITDA Based Bonus (the EBITDA Bonus) and Other Key
Company Goals Based Bonus (the Key Goals Bonus), each of which account for one-half of the total
Bonus Target as a Percent of Base Salary for all named executive officers except the Chief Medical
Officer. As set forth in the 2010 Plan, 100% of the Chief Medical Officers Bonus Target as a
Percent of Base Salary is composed of a non-financial Key Goals Bonus.
Under the EBITDA Bonus, the financial performance measure is adjusted EBITDA. The Company
defines adjusted EBITDA as earnings before interest expense, income taxes, depreciation,
amortization and share-based compensation expense. The Company includes in adjusted EBITDA the
results of discontinued operations under the same definition. The adjusted EBITDA target as
defined in the 2010 Plan is $23.0 million (the EBITDA Target).
Under the EBITDA Bonus, no bonus is paid if adjusted EBITDA is 100% or less of the EBITDA
Target. The EBITDA Bonus is funded with 50% of the earnings generated above the EBITDA Target
after the other Key Goals Bonuses have been accrued, subject to the maximums set forth in the 2010
Plan. Under the EBITDA Bonus portion of the 2010 Plan, for executive management, including named
executive officers, other than the Chief Medical Officer, the maximum EBITDA Bonus award will be
150% of the Bonus Target as a Percent of Base Salary. Payout is subject to Board confirmation of
satisfactory balance sheet management.
The Key Goals Bonus uses pre-selected financial and non-financial objectives (the Key
Goals). Key Goals Bonuses are awarded at different levels of achievement, as described fully in
the 2010 Plan, up to a maximum award of 50% of the Bonus Target as a Percent of Base Salary. The
following are the Key Goals for executive management, including named executive officers, other
than the Chief Medical Officer:
Corporate net new revenue |
30% of target award | |
Company specific non-financial objectives |
20% of target award |
The Chief Medical Officer does not participate in the EBITDA Bonus portion of the 2010 Plan as
described above. As listed above, the Chief Medical Officers Bonus Target as a Percent of Base
Salary is 50%. The Key Goals Bonus for the Chief Medical Officer accounts for 100% of his Bonus
Target as a Percent of Base Salary awarded at different levels of achievement, as described fully
in the 2010 Plan, up to a maximum award of 200% of the Bonus Target as a Percent of Base Salary.
The following are the Key Goals for the Chief Medical Officer:
Company specific non-financial objectives |
90% of target award | |
Key individual non-financial objectives |
10% of target award |
Certain provisions of the 2010 Plan also applies to designated corporate managers, corporate
employees, division vice presidents, regional vice presidents, regional directors, and health
service administrators.
The foregoing description is a summary and is qualified in its entirety by reference to the
2010 Plan which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein
by reference.
Item 9.01. Financial Statements and Exhibits.
(a) | Not applicable. | ||
(b) | Not applicable. | ||
(c) | Not applicable. | ||
(d) | Exhibits: |
10.1 | Amendment No. 1 and Waiver to the Revolving Credit and Security Agreement, dated March 2, 2010 between America Service Group Inc., a Delaware corporation, Prison Health Services, Inc., a Delaware corporation, Prison Health Services of Indiana, LLC, an Indiana limited liability company, Secure Pharmacy Plus, LLC, a Tennessee limited liability company, Correctional Health Services, LLC, a New Jersey limited liability company, and CapitalSource Bank, a California industrial bank, as lender and collateral and administrative agent. | ||
10.2 | 2010 Incentive Compensation Plan of America Service Group Inc. | ||
99.1 | Press Release dated March 2, 2010. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICA SERVICE GROUP INC. |
||||
Date: March 2, 2010 | By: | /s/ Michael W. Taylor | ||
Michael W. Taylor | ||||
Executive Vice President and Chief Financial Officer |
||||
EXHIBIT INDEX
Exhibit | ||
Number | Description of Exhibits | |
10.1
|
Amendment No. 1 and Waiver to the Revolving Credit and Security Agreement, dated March 2, 2010 between America Service Group Inc., a Delaware corporation, Prison Health Services, Inc., a Delaware corporation, Prison Health Services of Indiana, LLC, an Indiana limited liability company, Secure Pharmacy Plus, LLC, a Tennessee limited liability company, Correctional Health Services, LLC, a New Jersey limited liability company, and CapitalSource Bank, a California industrial bank, as lender and collateral and administrative agent. | |
10.2
|
2010 Incentive Compensation Plan of America Service Group Inc. | |
99.1
|
Press release dated March 2, 2010. |