SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No.: 0-23038
CORRECTIONAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11-3182580
_______________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1819 Main Street, Suite 1000, Sarasota, Florida 34236
(Address of principal executive offices)
Issuer's telephone number: (941) 953-9199
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [x] No []
The number of shares outstanding of the issuer's Common Stock, par
value $.0l per share, as of July 30, 1998, was 7,791,142.
<PAGE>
CORRECTIONAL SERVICES CORPORATION
INDEX
Page No.
-------
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets - December 31, 1997
and June 30, 1998.....................................3
Condensed Consolidated Statements
of Income - for the Six Months
Ended June 30, 1998 and 1997
and the Three Months Ended June 30, 1998 and 1997......4
Condensed Consolidated Statement
of Cash Flows - for the Six Months
Ended June 30, 1998.and June 30, 1997..................6
Notes to Financial Statements..........................7
Item 2. Management's Discussion and Analysis of
Financial Condition and
Results of Operations............................9
Part II. Other Information..................................15
Signature.............................................19
<PAGE>
<TABLE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
ASSETS June 30, December 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 538,959 $ 5,216,106
Restricted cash 63,224 60,626
Accounts receivable 16,285,756 10,672,018
Receivable from sale of equipment
and leasehold improvements 1,380,000 1,380,000
Prepaid expenses and other current assets 1,561,600 964,576
----------- -----------
Total current assets 19,829,539 18,293,326
EQUIPMENT AND LEASEHOLD IMPROVEMENTS AT COST, NET 25,789,032 23,717,172
LONG-TERM RECEIVABLE FROM SALE OF EQUIPMENT
AND LEASEHOLD IMPROVEMENTS 419,082 879,082
OTHER ASSETS
Deferred development and start-up costs, net 14,125,693 8,043,380
Other 4,926,604 4,933,327
----------- -----------
$65,089,950 $55,866,287
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 9,685,365 $ 7,539,062
Subordinated promissory notes 3,979,711 3,935,760
Deferred tax liability 125,000 125,000
Current portion of mortgage payable 1,800 1,800
----------- -----------
Total current liabilities 13,791,876 11,601,622
LONG-TERM DEBT 4,500,000 -
LONG-TERM MORTGAGE PAYABLE 320,572 321,491
LONG-TERM PORTION OF ACCRUED CLOSURE COSTS 487,000 755,000
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 1,000,000
shares authorized, none issued & outstanding - -
Common Stock, $.01 par value, 30,000,000
shares authorized, 7,789,982 and 7,693,854
shares issued and outstanding 77,899 76,938
Additional paid-in capital 43,002,391 42,260,247
Retained earnings 2,910,212 850,989
----------- -----------
Total stockholders' equity 45,990,502 43,188,174
----------- -----------
$65,089,950 $55,866,287
----------- -----------
----------- -----------
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenues $39,266,519 $26,267,952
----------- -----------
Expenses:
Operating 28,217,540 19,124,850
General and administrative 7,390,066 5,594,681
----------- -----------
35,607,606 24,719,531
----------- -----------
Operating income 3,658,913 1,548,421
Interest income (expense), net (254,690) 171,269
----------- -----------
Income before income taxes 3,404,223 1,719,690
Income tax provision 1,345,000 671,000
----------- -----------
Net earnings $ 2,059,223 $ 1,048,690
----------- -----------
----------- -----------
Net earnings per share:
Basic $0.27 $0.14
Diluted $0.25 $0.13
Number of shares used to compute EPS:
Basic 7,730,687 7,668,687
Diluted 8,278,458 8,123,506
The accompanying notes are an integral part of these statements.
<PAGE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Continued)
<CAPTION>
Three Months Ended
June 30,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenues $20,156,477 $14,668,966
----------- -----------
Expenses:
Operating 14,497,279 10,640,607
General and administrative 3,767,162 2,872,585
----------- -----------
18,264,441 13,513,192
----------- -----------
Operating income 1,892,036 1,155,774
Interest income (expense), net (153,803) 42,976
----------- -----------
Income before income taxes 1,738,233 1,198,750
Income tax provision 687,000 476,000
----------- -----------
Net earnings $ 1,051,233 $ 722,750
----------- -----------
----------- -----------
Net earnings per share:
Basic $0.14 $0.09
Diluted $0.13 $0.09
Number of shares used to compute EPS:
Basic 7,767,116 7,671,023
Diluted 8,315,331 8,127,295
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,059,223 $ 1,048,690
Adjustments to reconcile net earnings
to net cash provided by (used in) operating
activities:
Depreciation and amortization 1,649,062 1,164,280
Deferred income tax - 100,000
Changes in operating assets and liabilities:
Accounts receivable (5,613,738) (4,594,032)
Prepaid expenses and other current assets (597,024) 100,902
Accounts payable and accrued liabilities 2,337,723 989,983
Reserve for Fort Worth and NYCC facilities
carrying costs (459,420) (298,921)
----------- -----------
Net cash used in operating activities (624,174) (1,489,098)
----------- -----------
Cash flows from investing activities:
Capital expenditures (2,819,876) (5,016,555)
Development and start-up costs (6,883,301) (2,009,745)
Decrease in restricted cash - maintenance funds (2,598) -
----------- -----------
Net cash (used in) investing activities (9,705,775) (7,026,300)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term borrowing 4,500,000 325,000
Payment on long-term borrowings (919) (834)
Proceeds from sale of equipment and
leasehold improvements 460,000 443,800
Debt issuance costs (38,566) -
Net proceeds from exercise of stock options
and warrants 743,105 90,223
Other assets (10,818) (145,703)
----------- -----------
Net cash provided by financing activities: 5,652,802 712,486
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,677,147) (7,802,912)
Cash and cash equivalents at beginning of period 5,216,106 20,932,309
----------- -----------
Cash and cash equivalents at end of period $ 538,959 $13,129,397
----------- -----------
----------- -----------
Supplemental disclosures of cash flows information:
Cash paid during the period for:
Interest $ 161,599 $ 210,559
----------- -----------
----------- -----------
Income taxes $ 84,766 $ 434,649
----------- -----------
----------- -----------
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
CORRECTIONAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management of Correctional Services Corporation
and subsidiaries (the "Company"), the accompanying unaudited
condensed consolidated financial statements as of June 30, 1998 and
1997, and for the three and six months ended June 30, 1998 and 1997,
include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation. The statements
should be read in conjunction with the consolidated financial
statements and the related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
The results of operations for the three and six months ended June
30, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2 - DEFERRED DEVELOPMENT AND STARTUP COSTS
In April 1998, the Financial Accounting Standards Board issued
Statement of Position 98-5 ("SOP 98-5") on Accounting for the
Costs of Start-up Activities effective for fiscal years beginning
after December 15, 1998. If adopted in 1998, the standard would
require the Company to expense start-up and deferred development
costs as incurred. In addition, the standard would require that
all previously capitalized start-up costs meeting the requirements
of SOP 98-5 be expensed and reported as a cumulative effect of a
change in accounting principle at the time of the adoption. As of
June 30, 1998, unamortized startup costs and deferred development
totaled $14,126,000.
NOTE 3 - EARNINGS PER SHARE
The Company adopted SFAS No. 128, "Earnings Per Share" effective
December 31, 1997. The following table sets forth the computation
<PAGE>
of basic and diluted earnings per share in accordance with the new
standard:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income $1,051,233 $722,750 $2,059,223 $1,048,690
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Denominator:
Basic earnings per share:
Weighted average shares
outstanding 7,767,116 7,671,023 7,730,687 7,668,687
Effect of dilutive securities -
stock options and warrants 548,215 456,272 547,771 454,819
---------- ---------- ---------- ----------
Denominator for diluted
earnings per share 8,315,331 8,127,295 8,278,458 8,123,506
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per common share -
Basic $0.14 $0.09 $0.27 $0.14
----- ----- ----- -----
----- ----- ----- -----
Net income per common share -
Diluted $0.13 $0.09 $0.25 $0.13
----- ----- ----- -----
----- ----- ----- -----
NOTE 4 - COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, "Reporting Comprehensive
Income", effective January 1, 1998. This statement establishes
standards for reporting and display of comprehensive income and
its components in a full set of general purpose financial
statements. The requirements of this statement include: (a)
classifying items of other comprehensive income by their nature in
a financial statement and (b) displaying the accumulated balance
of other comprehensive income separately from retained earnings
and additional paid-in capital in the equity section of the
balance sheet. The Company's comprehensive income is
substantially equivalent to net income for the three and six
months ended June 30, 1998 and 1997.
NOTE 5 - SUBSEQUENT EVENTS
As of July 1, 1998 the Company's subordinated promissory notes of
$3,980,000 became payable. Management granted note holders the
option to extend their notes through December 31, 1998. A total
$1,150,000 was extended and the balance was repaid.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
The Company's primary source of revenue is generated from the
management of correctional and detention facilities under federal,
state and local governmental agency contracts. The majority of
the Company's contracts are based on a daily rate per offender,
some of which have guaranteed minimum payments; others provide for
fixed monthly payments irrespective of the number of offenders
housed.
The Company typically pays all facility operating expenses, except
rent in the case of certain government-provided facilities. The
Company's primary expenses are categorized as either operating or
general and administrative. Operating expenses consist of payroll
(corporate and facility employee salaries, wages and fringe
benefits, and payroll taxes) and resident expenses which include
food, medical services, supplies and clothing. General and
administrative expenses consist of rent, utilities, insurance,
professional fees, travel and lodging and depreciation and
amortization.
The Company usually incurs development costs, which may range from
$50,000 to $200,000, in responding to a governmental agency RFP.
Such costs include planning and developing the project, preparing
the bid proposal, travel and legal expenses and consulting fees.
If management believes the recovery of such costs is probable, the
costs are deferred until the anticipated contract has been
awarded, at which time the deferred costs are amortized on a
straight-line basis over the term of the contract (including
option periods not to exceed five years). Development costs of
unsuccessful or abandoned bids are expensed. The time period from
incurring initial development costs on a project to the
commencement of operations ranges from six to eighteen months.
After a contract has been awarded, the Company incurs start-up
costs from the date of the award until commencement of operations.
Start-up costs include recruitment, training and travel of
personnel and certain legal costs, and are capitalized until
operations commence, at which time such costs are amortized on a
straight-line basis over the term of the contract (including
option periods not to exceed five years). Revenues generated
during this initial period under per diem contracts increase as
the offender population increases. Upon adoption of SOP 98-5
certain costs which meet the requirements of the SOP will be
expensed as incurred.
<PAGE>
In anticipation of the millennium, management has completed a
corporate program which has prepared all Company computer systems
and applications for the year 2000. The Company expects no
material incremental infrastructure costs to be incurred as a
result of these enhancements.
FINANCIAL CONDITION
In April 1998 the Company finalized a new credit facility with a
syndicate of banks led by NationsBank N.A. The syndicated
facility provides for up to $30 million in borrowings for working
capital, construction and acquisition of correctional facilities,
and general corporate purposes. The line is comprised of two
components, a $10 million revolving credit and $20 million
operating lease facility for the construction, ownership and
acquisition of correctional facilities. Borrowings under the line
are subject to compliance with financial covenants and borrowing
base criteria. As of June 30, 1998 the total amount outstanding
on the revolver was $4,500,000 and the total amount outstanding on
the operating lease facility was $2,600,000.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED
JUNE 30, 1997
Revenue increased 49.5% from $26,267,952 for the six months ended
June 30, 1997 to $39,266,519 for the six months ended June 30,
1998. The net increase in revenues for the 1998 period as
compared to the 1997 period resulted principally from the full six
month operations of the Company's Frio County, Texas facility,
Milam County, Texas facility and the juvenile detention facilities
and related educational programs in Polk and Pahokee, Florida. In
addition, revenues were generated in the first six months of 1998
by six newly opened facilities subsequent to June 30, 1997
(Florence, Arizona; Gallup, New Mexico; Grenada, Mississippi;
Martin Hall, Washington; Dickens County, Texas; Bayamon, Puerto
Rico). Per diem rate and occupancy level increases in several
ongoing contracts also contributed to the increased revenues for
the six months ended June 30, 1998.
<PAGE>
Operating expenses increased 47.5% from $19,124,850 for the six
months ended June 30, 1997 to $28,217,540 for the six months ended
June 30, 1998. The opening of the facilities noted above and the
addition of management personnel in the corporate office accounted
for the increase in operating expenses. As a percentage of
revenues, operating expenses decreased from 72.8% for the six
months ended June 30, 1997 to 71.9% for the six months ended June
30, 1998 due primarily to the contribution from new facilities,
and lower corporate compensation as a percentage of revenue.
General and administrative expenses increased 32.1% from
$5,594,681 for the six months ended June 30, 1997 to $7,390,066
for the six months ended June 30, 1998. The increase in general
and administrative expenses was primarily attributable to the full
six month operations of the Company's Frio County, Texas facility,
Milam County, Texas facility, and the juvenile detention facilities
and related educational programs in Polk and Pahokee, Florida and
the opening of the new facilities noted above. As a percentage of
revenues, general and administrative expenses were 21.3% and 18.8%
for the six months ended June 30, 1997 and 1998, respectively. The
decrease in general and administrative expenses as a percentage of
revenue is a direct result of the increase in revenues and the
Company's continuing efforts in controlling fixed costs.
Operating income increased 136.3% to $3,658,913 in the first six
months of 1998 from $1,548,421 in the first six months of 1997.
Improved occupancy levels, the opening of six new facilities, and
the full six months of operations of the Company's Frio County
Texas, Milam County Texas, Polk and Pahokee, Florida facilities
primarily accounts for the increase in the operating income.
The Company had interest income, net of interest expense of
$171,269 for the six months ended June 30, 1997, while for the
same 1998 period the Company had interest expense, net of interest
income of $254,690. During the first six months of 1997 a
substantial portion of the net proceeds received from the
September 1996 public offering of common stock were invested in
cash equivalents which resulted in net interest income. During
the remainder of 1997 and the first six months of 1998 the company
used the balance of these proceeds and bank financing for the
construction and start up of the new facilities.
The provision for income taxes increased to $1,345,000
representing an effective tax rate of 39.5% for the six months
ended June 30, 1998 from $671,000 representing an effective tax
rate of 39% for the six months ended June 30, 1997. The increase
is due to higher taxable income and an estimated increase in the
Company's effective tax rate.
<PAGE>
Net income was $2,059,223 or $0.25 per share on a diluted basis
for the six months ended June 30, 1998 compared to net income of
$1,048,690 or $0.13 per share for the six months ended June 30,
1997.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1997
Revenue increased 37.4% from $14,668,966 for the three months
ended June 30, 1997 to $20,156,477 for the three months ended
June 30, 1998. The net increase in revenues for the 1998 period
as compared to the 1997 period resulted principally from the full
quarter operations of the Company's Milam County, Texas facility.
In addition, revenues were generated in the second quarter of 1998
by the opening of six facilities subsequent to June 30, 1997
(Florence, Arizona; Gallup, New Mexico; Grenada, Mississippi;
Martin Hall, Washington; Dickens County, Texas; Bayamon, Puerto
Rico). Per diem rate and occupancy level increases in several
ongoing contracts also contributed to the increased revenues in
the second quarter of 1998.
Operating expenses increased 36.2% from $10,640,607 for the three
months ended June 30, 1997 to $14,497,279 for the three months
ended June 30, 1998. The opening of the facilities noted above and
the addition of management personnel in the corporate office
accounted for the increase in operating expenses. As a percentage
of revenues, operating expenses decreased from 72.5% for the three
months ended June 30, 1997 to 71.9% for the three months ended
June 30, 1998. The percentage decrease was due primarily to the
contribution from new facilities, and lower corporate compensation
as a percentage of revenue.
General and administrative expenses increased 31.1% from
$2,872,585 for the three months ended June 30, 1997 to $3,767,162
for the three months ended June 30, 1998. The increase in general
and administrative expenses was primarily attributable to the full
quarter's operations of the detention facility in Milam County,
Texas and the opening of six new facilities subsequent to June 30,
1997. As a percentage of revenues, general and administrative
expenses were 19.6% and 18.7% for the three months ended June 30,
1997 and 1998, respectively. The decrease in general and
administrative expenses as a percentage of revenue is a direct
result of the increase in revenues and the Company's continuing
efforts in controlling fixed costs.
Operating income increased 63.7% to $1,892,036 in the first
quarter of 1998 from $1,155,774 in the first quarter of 1997.
<PAGE>
Improved occupancy levels, the opening of six new facilities, and
the full quarter of operations of the Company's Milam County, Texas
facility primarily accounts for the increase in the operating
income.
The Company had interest income, net of interest expense of
$42,976 for the three months ended June 30, 1997 while for the
same period for 1998 the Company had interest expense, net of
interest income of $153,803. During the three months ended June
30, 1997 a portion of the net proceeds received from the September
1996 public offering of common stock were invested in cash
equivalents which resulted in net interest income. During the
remainder of 1997 and the first six months of 1998 the company
used the balance of these proceeds and bank financing for the
construction and start up of the new facilities.
The provision for income taxes increased to $687,000 representing
an effective tax rate of 39.5% for the three months ended June 30,
1998 from $476,000 representing an effective tax rate of 39.7% for
the three months ended June 30, 1997. The increase is due to
higher taxable income.
Net income was $1,051,233 or $0.13 per share on a diluted basis
for the three months ended June 30, 1998 compared to net income of
$722,750 or $0.09 per share for the three months ended June 30,
1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through
private placements and public sales of its securities, cash
generated from operations and borrowings from banks.
The Company had working capital at June 30, 1998 of $6,037,663, as
compared to working capital of $6,691,704 at December 31, 1997.
The Company's current ratio was 1.44 to 1 at June 30, 1998 as
compared to 1.58 to 1 at December 31, 1997.
Net cash of $624,174 was used in operating activities for the six
months ended June 30, 1998 as compared to $1,489,098 of cash used
by operations for the six months ended June 30, 1997. The change
was attributed primarily to increases in net income, depreciation
and amortization, and accounts payable and offset by an increase
in accounts receivable and prepaid expenses.
<PAGE>
Net cash of $9,705,775 was used in investing activities during the
six months ended June 30, 1998 as compared to $7,026,300 being
used in the first six months of 1997. In the 1998 period such
cash was used principally for the startup of seven new facilities.
In the comparable period for 1997, the principal investing
activities of the Company were the construction of the Company's
Florence, Arizona facility, and fixed asset and start-up costs
associated with the Polk and Pahokee Florida, Frio County and
Milam County, Texas facilities.
Net cash of $5,652,802 was provided by financing activities for
the six months ended June 30, 1998 as compared to financing
activities of $712,486 during the first six months of 1997. The
primary sources of funding during 1998 were $4,500,000 in proceeds
from the Company's revolving credit agreement, proceeds from
installment payments received from the sale of equipment and
leasehold improvements and proceeds from the exercise of stock
warrants and options. During the first six months of 1997
financing activities resulted primarily from a $325,000 mortgage
for the acquisition of land for the Florence, Arizona facility and
proceeds from installment payments received from the sale of
equipment and leasehold improvements. The Company received
$743,105 and $90,223 from the exercise of stock options and
warrants during the six months ended June 30, 1998 and 1997,
respectively.
The Company continues to make cash investments in the acquisition
and construction of new facilities and the expansion of existing
facilities. In addition, the Company expects to continue to have
cash needs as it relates to financing startup costs in connection
with new contracts. The Company is currently in discussions with
its bank to address these cash needs. These discussions include,
among other items, the possible expansion of its existing credit
facility. Management believes these discussions will be
successful in securing the needed funding for the Company's
capital requirements for the foreseeable future. The Company
believes that its cash flow from operations, and amounts available
under its anticipated expanded credit and operating lease
agreement will be sufficient to meet its capital requirements for
the foreseeable future. However, the Company is continuing to
evaluate opportunities, which could require significant outlays of
cash. If such opportunities are pursued the Company would require
additional financing resources. Management believes these
additional resources may be available through alternative
financing methods.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The nature of the Company's business results in numerous claims
or litigation against the Company for damages arising from the
conduct of its employees or others. Under the rules of the
Securities and Exchange Commission, the Company is obligated to
disclose lawsuits which involve a claim for damages in excess of
10% of its current assets notwithstanding the Company's belief as
to the merit of the lawsuit and the existence of adequate
insurance coverage.
In May 1993, a former employee of the Company filed suit in the
United States District Court, Southern District of New York,
claiming he was intentionally assaulted by employees of the
Company and claiming $5,000,000 in damages on each of six causes
of action. A motion to dismiss is pending. In January 1996, a
lawsuit was filed with the Supreme Court of New York, County of
Kings, by a former employee alleging sexual harassment and
discrimination, physical assault, rape and negligent screening of
employees and claiming damages of $4,000,000 plus attorney fees.
This case was dismissed in July 1998.
In March 1996, former inmates at one of the Company's facilities
filed suit in the Supreme Court of the State of New York, County
of Bronx on behalf of themselves and others similarly situated,
alleging personal injuries and property damage purportedly caused
by negligence and intentional acts of the Company and claiming
$500,000,000 for each compensatory and punitive damages, which
suit was transferred to the United States District Court,
Southern District of New York, in April 1996. In July 1996,
seven detainees at one of the Company's facilities (and certain
of their spouses) filed suit in the Superior Court of New Jersey,
County of Union, seeking $10,000,000 each in damages arising from
alleged mistreatment of the detainees, which suit was transferred
to the United States District Court, District of New Jersey, in
August 1996. In July 1997 former detainees of the Company's
Elizabeth, New Jersey Facility filed suit in the United States
District Court for the District of New Jersey. The suit claims
violations of civil rights, personal injury and property damage
allegedly caused by the negligent and intentional acts of the
Company. No monetary damages have been stated.
The Company believes the claims made in each of the foregoing
actions to be without merit and will vigorously defend such
<PAGE>
actions. The Company further believes the outcome of these
actions and all other current legal proceedings to which it is a
party will not have a material adverse effect upon its results of
operations, financial condition or liquidity. However, there is
an inherent risk in any litigation and a decision adverse to the
Company could be rendered.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Stockholders of Correctional
Services Corporation was held on June 18, 1998.
At the meeting, Stuart M. Gerson, Shimmie Horn, James F. Slattery,
Aaron Speisman, Richard P. Staley and Melvin T. Stith were elected
directors to serve for a term ending at the 1999 Annual Meeting of
Stockholders. The results of the vote were as follows:
ABSTEN- BROKERS
NAME VOTES FOR WITHHELD TIONS NON-VOTES
---- --------- -------- ------ ---------
Stuart M. Gerson 6,978,026 3,825 14,075 0
Shimmie Horn 6,978,026 3,825 14,075 0
James F. Slattery 6,978,026 3,825 14,075 0
Aaron Speisman 6,978,026 3,825 14,075 0
Richard P. Staley 6,978,026 3,825 14,075 0
Melvin T. Stith 6,978,026 3,825 14,075 0
Item 5. Other Information
On May 28, 1998, the Company announced execution of an agreement
to operate and manage the Jefferson County Detention Facility in
Beaumont, Texas. The facility which has a capacity of 500 beds
will be used to house inmates from the State of Texas and possibly
other jurisdictions. The Company is operating the facility under
a five (5) year agreement with the County.
On June 8, 1998, the Company finalized an agreement to manage a
facility in Oklahoma. Upon its opening, the Central Oklahoma
<PAGE>
Correctional Facility will be one of the largest privately run
female facilities in the United States, housing up to 850 females.
The Company will manage the facility under an operating agreement
with the Dominion Group. It is expected that the facility will
have up to 500 inmates from the State of Oklahoma and 350 beds
will be filled by various other jurisdictions. The facility is
expected to open in the third quarter of 1998.
On June 22, 1998, the Company announced it had signed a contract
to operate and 872 bed facility in Newton County, Texas. The
Company had taken over the management of the facility from a
previous operator. The Newton County facility currently houses
inmates from the State of Texas as well as other jurisdictions.
CSC has finalized a five (5) year management for this facility
with the County.
On July 1, 1998, CSC announced a contract to operate a 196 bed
jail in South Fulton County, Georgia. The contract with South
Fulton Municipal Regional Jail Authority is for a base term of
three (3) years and is expected to become operational in the
fourth quarter of 1998. The facility is expected to be utilized
by the cities of Union City and Palmetto as well as other
jurisdictions.
On July 21, 1998, the Company announced completion of the
acquisition of the 480 bed Dickens County Correction Facility.
The acquisition included 40 acres of land which can be utilized
for expansion purposes. The majority of the inmates currently
held at this facility are from the State of Texas.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This document contains forward looking statements involving risks
and uncertainties. Actual results could differ materially from
those projected due to factors which may include population
fluctuations, acquisition risks, market conditions, government
funding and availability of financing. These and other risk
factors are outlined in the reports filed by the Company with the
Securities and Exchange Commission.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.5.1 Amended Employment Agreement between James F.
Slattery and the Company dated 2/17/98
10.21.3 Amended Contract between the Company and
Travis County, TX dated 5/6/98 for the
Operation and Management of the Travis County
Substance Abuse Treatment Center
10.62 License Agreement dated 6/98 between the
Company, Dallas County, TX and the Dallas
County Juvenile Board for the Operation and
Management of the Dallas County Secure Post-
Adjudication Residential Facility
10.63 Management Services Agreement 5/26/98 between
the Company and Jefferson County, Texas for
the Operation and Management of the Jefferson
County Detention Facility in Beaumont, TX
10.64 Management Agreement between the Company and
Dominion Management, Inc. dated 6/5/98 for
the Operation of the Central Oklahoma
Correctional Facility
10.65 Operations and Management Agreement between
the Company and South Fulton Municipal
Regional Jail Authority dated 6/23/98 for
Operation and Management of the South Fulton
Municipal Regional Jail Facility
10.66 Operations and Management Agreement between
the Company and Newton County, TX dated
6/12/98 for the Operation and Management of
the Newton County Correctional Center
10.67 Asset Purchase Agreement between the Company
and the County of Dickens, TX dated 7/14/98
for the purchase of the Dickens County
Correctional Facility
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CORRECTIONAL SERVICES CORPORATION
Registrant
By: \s\ Debra Dawn
_______________________________________
Debra Dawn, Secretary
By: \s\ Ira M. Cotler
______________________________________
Ira M. Cotler, Chief Financial Officer
Dated: August 14, 1998
</TABLE>
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 17th day of
February, 1998, by and between Correctional Services Corporation ("CSC")
located at 1819 Main Street, Suite 1000, Sarasota, Florida 34236 and James F.
Slattery residing at 8150 Perry Maxwell Circle, Sarasota, Florida 34233.
1. CSC hereby employs you and you hereby accept employment and agree
to serve as the President and Chief Executive Officer of CSC. You will
perform all duties and responsibilities and will have all authority inherent
in the position of President and Chief Executive Officer, subject to the power
of the Board of Directors to modify, expand and limit such duties,
responsibilities and authorities.
2. The period of your employment under this Agreement will be three
(3) years. Following the first anniversary of this Agreement, the period of
employment under this Agreement will be extended by successive additional one-
year terms, unless terminated prior to any anniversary of this Agreement by
written notice by either party to the other no less than ninety (90) days
prior to the end of any anniversary. In that case, the Agreement will
terminate two years from the anniversary of this Agreement immediately prior
to which a notice of termination was given.
3. As full compensation for all services to be rendered by the
Executive to the Company pursuant to the terms of this Agreement, commencing
on the 17th day of February, 1998, the Company shall pay you a base salary
(the "Base Salary") of $270,000 per annum. For each year of the Term
thereafter, the Company shall pay to you a cost of living increase. The
amount shall be determined by multiplying the Base Compensation by a
percentage equal to the excess, if any, of the United States Department of
Labor Consumer Price Index -- New York Metropolitan area -- all items (the
"CPI") on the last day of the year preceding the year for which the
calculation is being made above the CPA on the Commencement Date. However,
under no circumstances shall the cost of living increase be less than 3.5% per
annum. The Base Salary shall be payable at such regular times and intervals
as the Company customarily pays its employees from time to time.
4. For each year during which you are employed by the Company, you
shall be entitled to receive a bonus equal to five (5%) percent of the
Company's earnings before income tax provision ("pre-tax profits") in excess
of $1,000,000, which bonus shall not exceed $200,000. Payment of the bonus,
if any, shall be made within thirty (30) days from receipt of the audited
financial statement for each fiscal year of the Company. Each bonus payment
shall be accompanied by the Company's financial statement for the requisite
period and a schedule calculating such bonus. Pre-tax profits determined by
the Company and audited by the Company's independent auditors shall be final
and binding. For purposes hereof, pre-tax profits shall not include
extraordinary gains and losses and shall be determined in accordance with
generally accepted accounting principles consistently applied. In the event
the Executive works for less than a full year, his bonus for that year shall
be pro-rated.
5. You will be granted an Incentive Stock Option to purchase 150,000
shares of CSC common stock at 100% of the fair market value of the shares of
CSC common stock on the date of this Agreement. 75,000 of the options which
are subject to this grant will vest on the date which is six months from the
date that the parties execute this Agreement. An additional 75,000 will vest
on the date that is 18 months from the date of this Agreement. The options
will have a five-year term and must be exercised by the close of business on
the fifth anniversary of the date of this Agreement.
6. CSC will provide you with the full-time use of a Company
automobile. The Company shall purchase all relevant insurance and pay for all
fuel and repairs.
7. You will be entitled to three weeks of vacation during CSC's
fiscal year ending December 31, 1998. You will be entitled to four weeks of
vacation during each fiscal year thereafter. Unused vacation may not be
carried over from one fiscal year to the next.
8. You will have additional benefits for which you, without action by
the Board of Directors of CSC or any committee thereof, may be or become
eligible under any group health, life insurance, disability, or other form of
employee benefit plan or program of CSC now existing or that may be later
adopted by CSC. This includes the health, dental and life insurance programs
CSC provides currently to its executives.
9. In the event that you resign, retire or otherwise terminate this
Agreement, your salary and benefits will be payable through your date of
termination.
10 Your employment will terminate immediately upon your death and in
that event your base salary will be paid to your estate or legally appointed
representative through the end of the month in which your death occurs. If
you become physically or mentally disabled so as to become unable for a period
of more than four consecutive months or for shorter periods aggregating at
least four months during any twelve-month period to perform your duties
hereunder on a substantially full-time basis, your employment will terminate
with no further payments of base salary or incentive compensation as of the
end of such four-month or twelve-month period. Such termination will not
affect your benefits under CSC's disability insurance program, if any, then in
effect.
11. In the event the Company merges into, consolidates with or
otherwise reorganizes or combines (the "Merger") with another company, wherein
immediately following such Merger, the shareholders of the Company prior to
the Merger own either (a) less than 50% of the outstanding voting stock of the
Company (if they Company is the survivor of the Merger), or (b) less than
fifty (50%) of the outstanding voting stock of the surviving entity, you will
receive a sum equal to three (3) years Base Salary plus three (3) times the
most recent year end bonus paid. Payment will be made in one lump sum within
thirty (30) days of closing of the transaction giving rise to a change of
control. In addition to the monies set forth above, all stock options shall
immediately vest and become exercisable.
12. (a) During the period of your employment with CSC, you will not,
directly or indirectly, on your 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 CSC or any of its affiliates. During
the two-year period following the termination of your employment, you will not
directly or indirectly, in any such manner, enter into the employ of, render
any service to, or engage in a business or activity which is the same as,
similar to, or competitive with any business or activity of CSC or any of its
affiliates. During the period of your employment and until two years after
the termination of your employment, you will not, directly or indirectly, on
your own behalf or as a partner, shareholder, officer, employee, director,
trustee, agent, consultant or member of any person, firm or corporation or
otherwise, employ, seek to employ or otherwise obtain or seek the services of
any employee of CSC or any of its affiliates.
(b) During and following the period of your employment with CSC,
you will not use for your own benefit or for the benefit of others, or divulge
to others, any information, trade secrets, knowledge or data of secret or
confidential nature and otherwise not available to members of the general
public that concerns the business or affairs of CSC or its affiliates and
which was acquired by you at any time prior to or during the term of your
employment with CSC, except with the specific prior written consent of CSC.
(c) If any covenant or agreement contained in this paragraph 12
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.
13. You hereby represent and warrant to CSC that (i) the execution,
delivery and full performance of this Agreement by you does not and will not
conflict with, breach, violate or cause a default under any agreement,
contract or instrument to which you are a party or any judgment, order or
decree to which you are subject; (ii) you are 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 CSC,
this Agreement will be your valid and binding obligation, enforceable in
accordance with its terms.
14. In the event of any dispute between CSC and you with respect to
this Agreement, 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 Sarasota
County, Florida and will be conducted in accordance with the rules of the
American Arbitration Association.
15. You may not assign, transfer, convey, mortgage, hypothecate,
pledge or in any way encumber the compensation or other benefits payable to
you or any rights which you may have under this Agreement. Neither you nor
your 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 CSC. 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 CSC. This Agreement may not be otherwise assigned by CSC.
16. This Agreement constitutes the only agreement between CSC and you
regarding your employment by CSC. This Agreement supersedes any and all other
agreements and understandings, written or oral, between CSC and you. A waiver
by either party of any provision of this Agreement of any breach of such
provision in any 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 CSC and you, duly executed by both parties.
17. 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 you hereunder will be addressed to CSC to the attention of its
General Counsel at its main offices, 1819 Main Street, Suite 1000, Sarasota,
Florida 34236. Any notice to be given to you will be addressed to you at your
residence address last provided by you to CSC. 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 paragraph.
CORRECTIONAL SERVICES JAMES F. SLATTERY
CORPORATION
By: Debra Dawn By: James F. Slattery
Title: Secretary & Authorized Officer Title: Employee
Date: June, 1998 Date: June, 1998
Approved by Compensation Committee:
By: Stuart Gerson
Title: Director
Date: June, 1998
By: Melvin T. Stith
Title: Director
Date: June, 1998
AMENDED
COMMUNITY CORRECTIONAL FACILITY
CONTRACT FOR SERVICES
FOR
TRAVIS COUNTY COMMUNITY SUPERVISION AND
CORRECTIONS DEPARTMENT
This Operations Amended Agreement (the Amended Agreement), made and
entered into by and between the Travis County Supervision and
Corrections Department, ("DEPARTMENT"), a governmental entity and
Correctional Services Corporation
Contact Person: James F. Slattery
1819 Main Street
Sarasota, Florida 34236
Office #: (941)953-9199
Fax #: (941)953-9198
hereinafter called "VENDOR" on this sixth day of May 1998.
ARTICLE I. CONTRACT TERM AND SERVICE PROCEDURES
1.1 Appointment of VENDOR. In accordance with the terms and
conditions set forth herein, and in consideration of the Payments
hereinafter provided, VENDOR is hereby appointed to provide DEPARTMENT,
and VENDOR hereby agrees to furnish to DEPARTMENT, the Services provided
for herein.
1.2 Term. This Amended Agreement provides the basis under which
the DEPARTMENT and the VENDOR may carry out their interrelated
activities. The purpose of this Amended Agreement is to provide for the
operation of the Travis County DWI Substance Abuse Treatment Facility
(SMART), hereinafter referred to as "Facility," by the VENDOR. The
DEPARTMENT shall have the option to renew and extend this Amended
Agreement. The VENDOR will provide residential community correctional
supervision services for up to seventy-six (76) offenders, male and
female, hereinafter referred to as "Residents."
<PAGE>
1.3 DEPARTMENT Obligations
a) DEPARTMENT to Provide Facility
The DEPARTMENT will provide the Facility. The Facility is on a
single campus and in such a manner as to allow the utilization of resources
(e.g., kitchen, dining hall, transportation vehicles, etc.) while allowing the
operation of the program.
b) Compliance With Codes and Standards
At the time of construction, the facility was constructed to
meet all state, local and generally recognized building and construction codes.
The facility currently meets all standards promulgated by the Community Justice
Assistance Division (CJAD) of the Texas Department of Criminal Justice (TDCJ).
The Department shall obtain all permits and licenses required by any
governmental entity having power to control or regulate the operation of the
Facility unless VENDOR is authorized by the DEPARTMENT to obtain permits and
licenses.
1.4 Fixtures and Equipment The DEPARTMENT shall provide a complete
facility with all major essential components and systems functioning and in good
repair, such as heating, air conditioning, electrical, plumbing, door,
window and fire alarm systems, internal fixtures, exterior security
lighting, interior emergency lighting, interior security system,
telephone system, all connections to utilities, including water, sewer,
electricity, refuse collection, gas, telephone, etc., entry ways,
parking areas, walkways, Challenge Course grounds, fences, etc.
1.5 Repairs and Maintenance. The DEPARTMENT shall cause the Facility,
as defined above, including all materials and equipment owned and/or supplied by
the DEPARTMENT, to be of a size, quantity, and quality typical of minimum
security correctional institutions and of a sufficient quality to withstand the
wear and tear normally associated with a community correctional facility.
a) The DEPARTMENT shall ensure that all necessary repairs to the
Facility's foundation, exterior and load bearing walls, roof, and the heating,
cooling, ventilating, plumbing, and electrical systems are made when said
repairs are properly reported by the VENDOR to the DEPARTMENT as a result of
routine preventative maintenance checks conducted by the VENDOR and are not
caused by negligent or willful act(s) or other activities of residents, or
VENDOR staff, or resulting from a failure to properly supervise and/or manage
VENDOR staff and/or provide appropriate supervision of the resident population
assigned to the Facility. The VENDOR's Facility Administrator will coordinate
all Facility maintenance activity. The DEPARTMENT is not responsible for the
replacement, betterment, and/or improvements to the Facility, as defined above,
or the equipment provided by the DEPARTMENT.
<PAGE>
b) The VENDOR shall perform or provide for the performance of all
preventative maintenance on all Facility property and equipment provided for
and/or associated directly with the correctional custody, control, and
supervision of the residents and the supervision and management of VENDOR staff.
Additionally, the VENDOR shall maintain all furnishings, equipment and facility
structures in good operating order.
c) The VENDOR shall perform or provide for the performance of all
maintenance and make all repairs to the Facility and its fixtures and equipment
except those repairs and non-operator maintenance to the Facility's foundation,
exterior and load bearing walls, roof, and components of the Facility's heating,
cooling, ventilating, plumbing, and electrical systems that are not caused by,
negligent or willful act(s) or other activities of residents, or VENDOR staff,
or resulting from a failure to provide appropriate supervision of the resident
population assigned to the Facility.
d) The VENDOR shall maintain, repair, and replace as necessary all
interior doors, locking devices, all windows, exterior lighting, and all
equipment required, used for, and/or intended to surveillance, and the
appropriate supervision of the resident population assigned to the Facility.
Additionally, the VENDOR shall maintain, repair, and replace as necessary all
facilities, fixtures, and equipment that are provided by and the property of the
DEPARTMENT, used exclusively by VENDOR staff.
e) The VENDOR shall maintain and repair both storage buildings at
their cost. The VENDOR shall be responsible for all grounds maintenance
including upkeep of all landscaped areas, Challenge Course area and future
landscaping/grounds projects at their cost.
f) The VENDOR shall refer to the DEPARTMENT the need for any goods
or services which the DEPARTMENT is responsible for providing. If the VENDOR
incurs costs for such goods or services directly, then the VENDOR will pay those
costs.
1.6 Destruction or Damage to Facility.
a) In the event of the destruction of or damage to the Facility or
any portion thereof to the extent that there is substantial reduction of the
intended operation of the Facility or any component program in the Facility, the
DEPARTMENT shall have the option upon thirty (30) days written notice from the
DEPARTMENT to the VENDOR to suspend VENDOR's operations and compensation which
are set forth in this Amended Agreement or to negotiate a reduction in services
<PAGE>
provided by the VENDOR and compensation to the VENDOR for such a period of time
required to restore the Facility to the capability of its intended operation.
In the event of such destruction or substantial damage to the Facility, either
party shall have the option to terminate this Amended Agreement upon thirty (30)
days written notice to the other party.
1.7 Utilities. The DEPARTMENT shall pay for the use of all utilities
necessary and/or required for the Facility such as electricity, gas, water,
DEPARTMENT telephone service, sewer, waste removal, etc.
1.8 Operation, Management and Supervision Services. VENDOR shall
operate the Facility under the terms and conditions as more fully set forth
below:
a) Compliance.
VENDOR shall use all reasonable efforts to cause its operation
of the Facility to conform with the laws of the State of Texas and with
applicable standards promulgated by the TDCJ-CJAD, and in all material respects
to applicable American Correctional Association (ACA) Standards for Adult
Community Residential Services to the extent VENDOR has the ability to control
such compliance and applicable building and safety codes, regulations and
sanitary and health codes governing like facilities. A full-time employee of
VENDOR will be designated to inspect the Facility semi-annually for the
compliance with applicable codes and regulations. DEPARTMENT and VENDOR will
develop a quarterly contract compliance checklist. In addition, a quarterly
inspection and quarterly compliance report detailing preventative maintenance
activities, staffing levels and staff training hours and other contractual
obligations will be completed. Such inspections and actions taken, if any, to
comply with inspections findings will be kept on file at the facility and at
VENDOR's headquarters, and a copy shall be promptly sent, subsequent to each
inspection, to the DEPARTMENT Facility Director and DEPARTMENT Manager of
Planning and Community Resources. VENDOR will cooperate fully with the
DEPARTMENT to maintain ACA standards, prepare for ACA accreditation and to
comply with CJAD standards. VENDOR will submit to the DEPARTMENT an ACA
accreditation timeline by the end of FY 1998.
b) Resident Housing Services.
VENDOR shall operate all housing program and work release
services. Work Release verification procedures will be a VENDOR function.
c) Securing Points of Facility Access
VENDOR shall operate and control all points of facility ingress
and egress.
<PAGE>
d) Resident Supervision
VENDOR shall provide such supervision as is required by CJAD
standards and Texas Commission on Alcohol and Drug Abuse (TCADA) standards,
recognized community corrections substance abuse treatment standards to maintain
the safety and order of the facility and to protect the safety and well-being of
the Residents, staff, visitors and surrounding community. All residential
supervisors shall wear designated VENDOR attire while on duty.
(i) VENDOR shall ensure that male and female Residents have
separate sleeping quarters, including toilet and shower facilities.
(ii) VENDOR shall ensure an adequate number of female Residents
supervisors to properly supervise female populations. There shall be at least
one female resident supervisor per shift.
(iii) VENDOR shall ensure an adequate number of both female and
male resident supervisors to ensure that Residents shall not be supervised or
escorted by only members of the opposite sex.
(iv) Access to and means for communication by Residents with
their supervision officers, attorney, judge, or the TDCJ-CJAD shall not be
hindered by VENDOR Facility staff.
(v) A permanent log containing information regarding the
transportation of Residents from the Facility to all outside destinations shall
be maintained in written form by VENDOR including (A) name(s) of resident(s) and
driver(s), (B) other staff members accompanying,(C) destination, (D) vehicle,
(E) time of departure, (F) time of return, (G) purpose of the trip, and (I) any
other pertinent information.
(vi) VENDOR will immediately notify the DEPARTMENT's designee
of all incidents or unusual occurrences (including but not limited to use of
force or isolation as a means of controlling Residents) as defined by the
DEPARTMENT and will within 24 hours, furnish written notification to include
documentation of the facts of such incident or occurrence.
(vii) In the event of a disturbance caused by Residents,
including a resident strike, should occur within the facility or on its
premises, the VENDOR shall notify the DEPARTMENT Facility Director or Designee
immediately.
<PAGE>
The VENDOR will develop and implement written policies and
procedures and train staff to the standards of said policies and procedures
concerning the use of force. Under no circumstances is the VENDOR to initiate
or participate in the use or application of deadly force.
Reportable incidents shall include, but not be limited to, the
following listed items:
(aa) Fire;
(bb) Damage to the Facility;
(cc) Injury of a resident requiring emergency room treatment;
(dd) Injury of a resident by another resident;
(ee) Injury of a resident by a member of the Facility Staff;
(ff) Injury of a resident by a visitor or volunteer;
(gg) Catastrophic failure of key environmental, plumbing,
sanitation, or other vital systems;
(hh) Walk-off, Absconding, or Escape of resident from the
Facility or work detail;
(ii) Any incident requiring the use of force by Facility Staff;
(jj) Placement of a resident in restraints and/or pre-hearing
detention and/or seclusion;
(kk) Any incident deemed reportable by the on-duty supervisor
or any member of his chain of supervision;
(ll) Death of a resident;
(mm) Collision or other damage involving a DEPARTMENT-owned
motor vehicle and any injury(ies) associated therewith.
<PAGE>
(viii) In the event of any such occurrence, VENDOR will, as
requested, cooperate with the DEPARTMENT and any appropriate law enforcement
authorities in restoring order to the Facility.
(ix) The VENDOR shall notify the DEPARTMENT of any act or
omission by a VENDOR employee or agent, which comes to VENDOR's attention, that
violates the law, is unethical, violates the terms of this Amended Agreement, or
in any way adversely impacts or threatens program goals or integrity of the
well-being, program progress or standing, or community supervision and
corrections status of any resident.
e) Food Service.
VENDOR will provide all Residents assigned to the facility with
three (3) meals per day with lunch containing fresh fruit. The VENDOR will make
available sack lunches containing a minimum of 2 sandwiches, condiments, snack,
fruit, and chips for off site CSR Residents and Work Release Residents. The
meal plan will be approved by a registered dietician and will be prepared under
sanitary conditions and in compliance with applicable state and local
regulations and ACA Standards. All food service employees shall be in
designated VENDOR attire while on duty.
f) Clothing and Laundry Services.
VENDOR shall provide uniformed clothing for all facility
Residents based on direction by DEPARTMENT. Work release Residents will only
wear the designated uniformed clothing while at the facility. Non-work release
Residents will wear VENDOR supplied clothing at all times unless otherwise
designated by the DEPARTMENT. VENDOR shall provide on-site laundry services in
accordance with ACA standards for Adult Community Residential Services.
g) Equipment, Material and Supplies.
In addition to other requirements specified in this Amended
Agreement for VENDOR provided equipment, materials, and supplies, VENDOR shall
provide the equipment, materials, and supplies indicated in Exhibit B. VENDOR
shall provide an institutional grade washer and dryer for the on-site laundry.
The washer and dryer equipment, upon installation, will become property of the
DEPARTMENT. The VENDOR may lease coin-operated washers and dryers for resident
use and telephones for resident and public use, as well as vending machines for
food stuffs for VENDOR and DEPARTMENT staff and Offenders participating in the
<PAGE>
Continuing Care phase of the program. Any profits derived from the leased
equipment mentioned above, shall be designated for a facility equipment/supply
and/or resident recreational fund. Monthly/quarterly reports detailing the
amount of funds deposited/used into/from the Resident Recreational fund will be
forwarded to the DEPARTMENT Facility Director and Manager for Planning and
Community Resources. Any taxes associated with the aforementioned leased
equipment will be the sole responsibility of the VENDOR. VENDOR will initiate
written contracts with any subcontractor and will forward copies of all
contracts to the DEPARTMENT Manager of Planning and Community Resources.
h) Safety and Sanitation
VENDOR shall operate the Facility in a safe and sanitary
manner, in compliance with all applicable health and safety requirements,
subject to the DEPARTMENT's responsibility to maintain the Facility as set forth
above.
i) Rehabilitation and Counseling Services
The VENDOR and the DEPARTMENT jointly shall be responsible for
the orientation of new Residents. The DEPARTMENT shall be responsible for any
and all treatment and counseling services, except to the extent as expressly
provided for below.
j) Facility Rules, Policies and Operational Guidelines.
(i) VENDOR shall establish written policies, procedures and
operation manuals in regard to the facility operation and resident supervision
for which it is responsible pursuant to the terms of this Amended Agreement and
in compliance with state laws and CJAD and ACA standards. Said written policies
will be submitted to the DEPARTMENT for review and approval prior to
implementation. Said written policies, procedures and operation manuals shall
be the property of VENDOR, and shall continue to be the property of VENDOR.
(ii) The VENDOR will submit proposed policies and procedures
and operations manuals to the DEPARTMENT. In consultation with the DEPARTMENT,
these policies, procedures and operations manuals will be reviewed annually, by
the end of the second quarter of each fiscal year. The VENDOR and the
DEPARTMENT will make a good faith effort to resolve any questions or issues
concerning proposed policies and procedures and when necessary, will develop
acceptable alternatives to any proposed policies and procedures.
<PAGE>
(iii) The VENDOR will provide all residents with a copy of a
DEPARTMENT approved Resident Handbook (English and Spanish version) at new
resident orientation.
k) Medical Care
VENDOR shall provide on a consulting basis a licensed
practicing physician in the State of Texas to review, at least quarterly, the
medical and health care policies, procedures, and practices of VENDOR. A report
from the reviewing physician shall be provided to the DEPARTMENT's Manager of
Planning and Community Resources on a quarterly basis. VENDOR shall provide a
registered nurse to provide on-site coverage at least five days per week
(preferably Monday through Friday) as well as 24 hour on-call availability. The
nurse shall be in uniform while on duty. The nursing staff shall meet the
licensing and certification requirements of the state of Texas. VENDOR will
provide an initial routine physical exam by a physician, physician's assistant
or an advanced registered nurse practitioner for all Residents within 72 hours
of admission to include a TB test. This physical exam can occur either at the
facility or off-site. VENDOR shall provide annual TB testing for DEPARTMENT
staff. HIV test screening/ counseling will be offered bi-monthly. VENDOR will
provide transportation for Residents to medical appointments or for the purpose
of obtaining medical treatment not available at the facility, outside of the
facility but only within Travis County, Texas, except, in any case of medical
emergency, upon which VENDOR will provide transportation of Residents to the
nearest point of medical care. Neither the VENDOR nor the DEPARTMENT will
assume responsibility for provision of or payment for any resident's
medical/dental expenses past the initial physical. Neither the DEPARTMENT nor
the VENDOR shall provide payment for prescription drugs, medications, medical
care, hospitalization or institutionalization. As used herein, "medical care"
means all types of health related services, including but not limited to dental,
psychological, psychiatric, optical, chiropractic, laboratory, and diagnostic,
as well as the services traditionally rendered by medical doctors. VENDOR shall
develop a written policy to detail security procedures for dispensing and
storing approved medication.
l) Personnel Recruitment and Training
(i) VENDOR's recruitment selection and employment of all
personnel shall conform to the rules and regulations of the Equal Employment
Opportunity Commission and as prescribed in Article II, 2.2. The VENDOR shall
make every effort to employ personnel to approximate Residents' ethnic
distribution. VENDOR shall provide access to the DEPARTMENT for records
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required by law to be maintained of such non-discriminatory action upon request
by the DEPARTMENT. A notice evidencing VENDOR's adoption and commitment to this
policy shall be posted in a conspicuous location at the Facility.
(ii) VENDOR shall provide copies of the applications of all
prospective employees to a designated representative of the DEPARTMENT.
Information shall include name, driver's license number, date of birth and
social security number, of all prospective employees. The VENDOR shall conduct
a criminal record background investigation on all employees prior to their
employment. VENDOR will perform a routine reference check independently on all
employees prior to their employment. Results of VENDOR's routine reference
check shall be made available to the DEPARTMENT. DEPARTMENT may reject a
proposed employee based on information available. Due to confidentiality of
records, the DEPARTMENT may accept or reject a proposed employee without
discussion of cause. VENDOR employees must hold confidential all
information/data accessed in performance of job duties. As an independent
contractor, VENDOR assumes all responsibility for payment of its employee wages,
salaries and benefits, including medical insurance, worker's compensation
insurance, and other benefits.
(iii) The DEPARTMENT reserves the right to have the VENDOR re-
assign any existing employee, considered by the DEPARTMENT to be inappropriate
for the facility.
(iv) VENDOR will appoint an on-site administrator to manage
VENDOR's day-to-day operation of the Facility. The administrator's position
shall be staffed by an experienced and trained professional in the
administration of correctional facilities. Such appointment shall be subject to
DEPARTMENT approval. The VENDOR will schedule staff coverage for both the
residential wing and aftercare wing of Facility. The residential wing will
require 24 hour coverage, seven days per week. Minimum staffing requirements
will be as follows: First Shift, 3 staff; Second Shift, Monday through Friday,
2:00 p.m. to 10:00 p.m., 4 staff; Third Shift, 3 staff. The aftercare wing will
require at least one staff member between the hours of 5:00 p.m. to 10:00 p.m.,
Monday through Friday, with hours on Saturday and Sunday to be determined by
programming needs. VENDOR will notify DEPARTMENT Facility Director regarding
staff schedule changes due to reduction in staff or change in staffing pattern
as a result of resignations, shift changes or terminations.
(v) Training of VENDOR employees and adequate staffing
requirements of the facility shall be the responsibility of VENDOR. To the
extent necessary, VENDOR shall train VENDOR employees to assure their ability to
comply with applicable policies, ACA standards, procedures and operation manuals
as specified by VENDOR and approved by the DEPARTMENT and any additional
quarterly training agreed upon by the VENDOR and DEPARTMENT. Training shall
include, but not be limited to, substance abuse issues, specific treatment
modalities utilized at the facility, facility operations, client-centered
resident supervision, emergency procedures, etc. VENDOR shall be responsible
for providing and scheduling CPR and first aid training to all Facility staff
(VENDOR and DEPARTMENT) on an annual basis. VENDOR shall provide on-going
training to ensure that all employees are knowledgeable of and adhere to
appropriate policies, procedures and operations manuals. VENDOR shall ensure
that all VENDOR staff meet all TDCJ-CJAD training standards including, but not
limited to, Re-integration Model Training.
(vi) All of VENDOR's personnel records shall be the property
of VENDOR, and shall continue to be the property of VENDOR and shall be provided
to the DEPARTMENT upon request for review and/or reproduction.
(vii) Volunteers to the facility program shall be approved by
the DEPARTMENT. The VENDOR shall allow access to the Facility for the
DEPARTMENT-approved volunteers.
m) Community Service Restitution.
The DEPARTMENT shall be responsible for developing Community
Service Restitution (CSR) programs. VENDOR will be responsible for tracking and
implementing the CSR supervision of CSR residents. This includes all work
details in the Facility, on the Facility grounds and in the community. The
VENDOR shall be responsible for providing appropriate instruction to Residents
so that work projects and CSR can be successfully completed. VENDOR shall
ensure that appropriate administrative staff conduct monthly, unannounced
inspections of CSR to ensure that appropriate safety, security and supervision
policies and procedures are maintained. VENDOR shall, when necessary, provide
drivers for Residents to CSR programs anywhere within Travis County, Texas.
VENDOR shall be responsible for equipment maintenance necessary to complete work
details and CSR.
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VENDOR's CSR supervision ratio shall be no less than one (1)
staff person for every twelve (12) Residents and shall comply with Article I,
1.8, c., of this Amended Agreement. Each resident participating in the CSR
program must have demonstrated satisfactory performance in the facility program.
DEPARTMENT staff and VENDOR staff must agree that each (I) CSR assignment
location does not pose an undue risk or hazard to the health and/or safety of
Residents or supervising staff, (ii) CSR assignment locations allow for adequate
control and supervision of Residents at all times, and (iii) CSR materials and
equipment supplied to perform assigned tasks do not pose undue risks to the
health and/or safety of Residents or supervising staff.
n) Utilities
The VENDOR shall make every effort to provide energy
conservation at the facility.
o) Transportation
The DEPARTMENT will provide two (2) DEPARTMENT-owned vans which
VENDOR will operate for the purpose of transporting Residents to and from CSR,
to medical appointments, court appearances and for support of facility
operations. Drivers shall be in VENDOR designated attire while on duty. VENDOR
will schedule appointments, when necessary, and deliver the DEPARTMENT-owned
vans to the Travis County Garage, or other facility that DEPARTMENT may
designate, for all necessary vehicle maintenance and repairs at the cost of the
VENDOR. VENDOR will be responsible for all insurance and costs for operating
the two DEPARTMENT-owned vehicles (vans), excluding fuel, which will be at
DEPARTMENT cost. The VENDOR will be responsible for taking the vans to be
fueled. VENDOR will be responsible for any VENDOR employee misuse of Travis
County issued gasoline fuel card(s). VENDOR will also maintain and monitor
daily trip and mileage logs for each DEPARTMENT van. These records are to be
made available to the DEPARTMENT upon request for review and/or photocopying.
The VENDOR will insure that all staff whose job descriptions include
transportation duties will have completed an approved defensive driving course
annually.
p) Urinalysis Testing/Breathalyzer Testing
The VENDOR, in coordination with the DEPARTMENT, shall
establish a procedure for taking specimens from Residents. The VENDOR shall be
responsible and shall administer a breathalyzer test and/or urinalysis test to
all work release Residents or Residents returning from furlough upon their
return to the Facility. VENDOR and DEPARTMENT personnel will be responsible for
urinalysis testing for all Continuing Care clients. The DEPARTMENT will
<PAGE>
determine the type of urinalysis supplies required and shall purchase all
supplies. The VENDOR will maintain all urinalysis supplies and will test
residents and continuing care participants as directed by DEPARTMENT. The
VENDOR shall be responsible for all costs associated with the safe disposal of
all used urinalysis supplies.
q) Bio-Hazard Disposal
The DEPARTMENT provides acupuncture treatment to Residents as a
voluntary treatment modality. The VENDOR shall provide for timely disposal of
used acupuncture supplies utilizing bio-hazard containers for disposal. Ultimate
disposal must occur off-site and shall meet all applicable health and safety
disposal standards. The VENDOR shall be responsible for all costs associated
with bio-hazard disposal for used acupuncture and urinalysis supplies.
r) Recreation
The VENDOR shall supervise all resident recreation activities
both in the facility and on the grounds. The DEPARTMENT shall supply basic
recreational supplies. The VENDOR shall be responsible for replacement of basic
recreational supplies. The DEPARTMENT and VENDOR will determine a minimum
number of recreational hours to be provided to residents weekly and/or monthly
based on treatment schedule.
s) Interagency Relationships
The VENDOR shall establish cooperative relationships with area
law enforcement and mental health agencies to facilitate procedures for arrest
of assaultive Residents and/or appropriate removal from the Facility of
psychotic Residents. VENDOR shall also establish cooperative relationships with
other appropriate agencies and businesses to meet the needs of Residents.
1.9 ADMISSION AND DISCHARGE OF RESIDENTS
a) Admission
VENDOR shall accept for admission to the facility, Residents
presented by the DEPARTMENT to the VENDOR. The DEPARTMENT will present for
admission to the facility only Residents who are placed in the facility by court
order.
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b) To Deliver Resident Records.
The DEPARTMENT will deliver to the VENDOR each resident's data
sheet, court order and medical files (where applicable) upon the resident's
admission to the facility, or as soon thereafter as is reasonably possible, but
in no event later than seventy-two (72) hours following the resident's admission
to the Facility.
c) Inappropriate Referrals.
(i) VENDOR shall inform the DEPARTMENT when a resident who
meets the following criteria is inappropriate for admission:
(aa) Those Residents whose behavior presents a threat to
other Residents, facility staff, or the security of the Facility or
(bb) Residents who pose a threat or risk of transmitting
an airborne or bloodborne pathogen disease to other Residents or staff.
(ii) VENDOR shall furnish the DEPARTMENT with written
notification to include documentation of facts supporting its recommendation to
return the resident and the DEPARTMENT shall forward VENDOR's written
notification to the court for its consideration.
d) Non-Assignment
In performing their obligations under this Amended Agreement,
the parties agree that VENDOR's authority shall be limited by applicable law as
well as the express limitation that this Amended Agreement does not authorize,
allow or imply an assignment of authority by the DEPARTMENT to VENDOR of the
following:
(i) Calculating resident release and release eligibility
dates;
(ii) Calculating and assigning bed dates from waiting lists.
e) Discharge
VENDOR shall discharge Residents from the facility only upon
expressed written direction from the DEPARTMENT.
1.10 VENDOR Records.
Any and all records developed, created and maintained by VENDOR,
pursuant to its operation and management of the Facility shall comply with all
applicable standards and statutes, including but not limited to resident
<PAGE>
records, Facility rules, Facility policies, operational guidelines, and
personnel records, shall be the property of VENDOR, and shall continue to be the
property of VENDOR and shall be made available for review and/or reproduction
upon request of the DEPARTMENT and TDCJ-CJAD per Article IV, 4.7.
a) Individual resident records which include, but are not limited
to, personal data, personal inventory receipts, disciplinary action reports,
incident reports, intake and release information, and progress information
generated by VENDOR personnel, and health/medical records,
waiver/confidentiality release forms and any other records VENDOR shall be
required by the DEPARTMENT to keep.
b) Monthly statistical reports of incidents, resident disciplinary
actions, resident program participation, intakes and releases, resident
grievances, meals, menus, medical attention, recreational activity (number of
hours), skills development and training participation, work release
participation, off-site CSR hours and sites, etc. VENDOR personnel will use
VENDOR computer equipment to maintain and compile data for the aforementioned
reports. All reports shall be compatible with DEPARTMENT tracking and data
collection software and procedures.
c) VENDOR shall make all record entries in a timely manner. All
resident information maintained by VENDOR shall be considered confidential and
subject to release or disclosure only (I) as required by law, (ii) in compliance
with the order of any court having jurisdiction, (iii) in defense of any
proceeding to which VENDOR or its employees or agents are a party with
permission of the DEPARTMENT, (iv) to the DEPARTMENT for its review and/or
reproduction, or (v) to physicians or other health care providers for use in
treatment.
d) VENDOR shall maintain records related to the operation of the
Facility. These Facility records shall all be available for review and/or
reproduction by DEPARTMENT and/or TDCJ-CJAD. Said records shall be the property
of VENDOR, and shall continue to be the property of VENDOR.
e) The VENDOR in coordination with the DEPARTMENT, develop
procedures to share all resident incident reports with the DEPARTMENT Facility
Director or Designee and Senior Community Supervision Officer or other
DEPARTMENT designee.
The VENDOR shall adhere to the following requirements regarding
the DEPARTMENT's program information and records of any resident:
<PAGE>
f) VENDOR's staff shall have custody of or access to records on a
need to know basis only after receiving approval from DEPARTMENT treatment staff
person or DEPARTMENT supervisor.
g) VENDOR's staff shall understand and comply with all program
confidentiality requirements.
h) VENDOR shall notify the DEPARTMENT immediately upon receipt of
any request or requirement for program records or disclosure of program
information.
Upon request from the DEPARTMENT, VENDOR shall appear and provide
information or testimony at any administrative or legal proceeding.
1.11 Loss or Damage Caused by Resident or Aftercare Participant
The DEPARTMENT shall not be responsible for loss or damage to
VENDOR's property, including loss or damage resulting from the action(s) of any
Residents or aftercare participants. VENDOR holds the DEPARTMENT harmless for
any damage to or loss of its property. However, in the event a defendant
willfully damages or causes a loss to VENDOR's property, the DEPARTMENT to the
extent practicable will endeavor to cooperate with VENDOR's efforts to recover
from the resident or aftercare participant compensation for such damage or loss.
1.12 Charges, Fees and Cost to Residents
VENDOR shall not impose any charges, fees or costs on Residents for
goods or services except those charges, fees, or costs which the VENDOR
specifically has been authorized in writing by the DEPARTMENT to impose.
Installation of coin-operated washers/dryers for resident use will be an
exception to this provision. In addition, the VENDOR may collect a
reimbursement fee from residents who lose any article of clothing or supply
regularly issued at intake by the VENDOR. The resident will be apprised of this
"lost article reimbursement policy" during intake procedures and residents will
sign an acknowledgment of this policy. The reimbursement fee/policy will be
established jointly between the VENDOR and the DEPARTMENT. Funds which are
authorized by the DEPARTMENT for the VENDOR to collect, shall be used solely for
those purposes approved by the DEPARTMENT.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 Use of Payments. No part of the Payments made to VENDOR will be
expended for any consultant fees or honorariums to any employee of DEPARTMENT or
for unallowable costs. VENDOR shall expend Payments made hereunder solely for
providing direct services and for reasonable and allowable expenses directly
related to the provision of Services. VENDOR may not collect defendant fees
from any individual who receives Services hereunder.
<PAGE>
2.2 Non-Discrimination. In the performance hereof, VENDOR warrants that
it shall not discriminate against any employee, subvendor, or Defendant on
account of race, color, handicap, religion, sex, national origin, or age. In
addition, VENDOR shall not discriminate against employees, subvendors, or
Defendants who have or are perceived to have a handicap because of AIDS or HIV
infection, antibodies to HIV, or infection with any other probable causative
agent of AIDS.
ARTICLE III. GENERAL CONDITIONS
3.1 No SUBVENDORS. No SUBVENDOR may be utilized by VENDOR unless
DEPARTMENT has furnished prior written approval thereof.
3.2 Payment to Employees or Agents of the CSCD VENDOR warrants that no
employee or agent of DEPARTMENT has been retained to solicit or secure this
Amended Agreement and that VENDOR has not paid or agreed to pay any employee of
DEPARTMENT any fee, commission, percentage, brokerage fee, gift, or any other
consideration, contingent upon the making of this Amended Agreement or as an
inducement for entering into this Amended Agreement. The unauthorized offering
or receipt of such payments may result in the immediate termination of this
Amended Agreement by DEPARTMENT.
3.3 Payments to VENDOR. VENDOR shall submit Monthly Invoices as
required herein and shall receive Payments from DEPARTMENT based thereon,
subject to the provisions of Section 6.7. Provided, however, that VENDOR shall
not, under any circumstances, bill DEPARTMENT for peer or group meetings and
such meetings shall not be counted toward the minimum contract requirements set
forth herein.
3.4 Availability of Funds. This amended agreement is subject to the
availability of state funds as appropriated by the State Legislature and as made
available by TDCJ-CJAD.
3.5 Misspent Funds. Any funds deemed inappropriate based on approved
budgets, the Financial Management Manual for TDCJ-CJAD Funding or the Contract
Management Manual for TDCJ-CJAD Funding by TDCJ-CJAD staff, CSCD Staff or any
CSCD or state designee will be subject to refund by the VENDOR.
3.6 Visitation by State Employees. VENDOR shall at all times allow
employees/agents of the Governor, members of the Legislature and all other
members of the Executive and Judicial branches of the State of Texas, the
Contract Monitor, and any other persons designated by the DEPARTMENT and the
Texas Board of Criminal Justice to monitor the delivery of Services.
3.7 Non-Collusion. VENDOR warrants that no Person, other than a bona
fide employee, has been employed to solicit or secure this Amended Agreement
with DEPARTMENT, and VENDOR has not paid or agreed to pay any Person, other
than a bona fide employee, any fee, commission, percentage, or brokerage fee,
gift, or any other consideration, contingent upon or resulting from the
execution hereof. For breach or violation of this provision, DEPARTMENT shall
have the right to terminate this Amended Agreement without liability, or in its
discretion to deduct from Payments, or otherwise recover, the full amount of
such fee, commission, brokerage fee, gift, or contingency fee.
<PAGE>
3.8 Termination at Will. Either party may terminate this Amended
Agreement for any reason whatsoever, without cause and at any time, by
furnishing to the other party thirty (30) days prior written notice.
DEPARTMENT'S only obligation for terminating this Amended Agreement pursuant to
this section shall be the payment to VENDOR of Payments earned hereunder up to
the date of termination. VENDOR'S only obligation for terminating this Amended
Agreement pursuant to this section shall be to provide Services until the date
of termination. Neither VENDOR nor DEPARTMENT shall thereafter be entitled to
any other bonus, damage, settlement or compensation for expected or lost profits
or otherwise.
ARTICLE IV. ADMINISTRATION AND FISCAL SYSTEM
4.1 Administrative Controls. VENDOR shall establish, document and
maintain adequate administrative and internal controls to ensure that only
allowable costs are billed hereunder in accordance with the Program Budget.
4.2 Conflict of Interest. VENDOR shall establish safeguards to prohibit
members of the governing board, contractual personnel, consultants, volunteers,
and employees from using their positions for a purpose that is or gives the
appearance of being motivated by a desire for private gain for themselves or
others, particularly those with whom they have family or business relationships.
4.3 Remuneration. Staff of VENDOR shall not pay or receive any
commission, consideration, or benefit or any kind related to the referral of a
Defendant for treatment or engage in fee-splitting with other professionals.
4.4 Disclosure. VENDOR is required to immediately or timely, as the
case may be, disclose to DEPARTMENT and TDCJ-CJAD the following:
a) If any Person who is an employee or director of VENDOR is
required to register as a lobbyist under Texas Government Code Chapter 304, at
any time during the term hereof, VENDOR shall provide to DEPARTMENT and TDCJ-
CJAD timely copies of all reports filed with the Texas Ethics Commission as
required by Chapter 305;
b) If any Person who is an employee, SUBVENDOR, or director of
VENDOR is or becomes an elected official (i.e., an elected or appointed state
official or member of the judiciary, or a United States congressman or senator),
during the term hereof;
c) The receipt by VENDOR of funds other than, or in addition to,
those paid by DEPARTMENT for Services hereunder, it being agreed that in such
event, DEPARTMENT shall be entitled to reimbursement of such portion of such
funds as it is attributed to the provision of Services hereunder. As used in
<PAGE>
this subparagraph, the term "funds" means any amounts received by VENDOR on
behalf of any Defendant who is receiving Services at Facility.
d) Report any actions or citations by Federal, State, or local
governmental agencies that may affect VENDOR'S licensure status or its ability
to provide Services hereunder.
4.5 Withhold Payments. The DEPARTMENT may withhold Payments for any
ineligible claims including inadequate or untimely monthly invoices until such
time as the ineligible, inadequate or untimely claim is resubmitted and/or
corrected by VENDOR. DEPARTMENT reserves the right to suspend Defendant
placements, withhold Payments, or require the return of Payments in the case of
noncompliance with DEPARTMENT Policies, including, but not limited to, recurring
acts of noncompliance and expenditures for unallowable costs.
4.6 Accounting Records The VENDOR agrees to maintain a program
specific accounting or bookkeeping system in accordance with line item
categorization as outlined in the Program Budget negotiated between the VENDOR
and DEPARTMENT.
4.7 Audit of Records. VENDOR agrees to furnish to DEPARTMENT and/or
Texas Department of Criminal Justice - Community Justice Assistance Division
(TDCJ-CJAD) and/or their designees such information as may be requested which
relates to the services described in this Amended Agreement. VENDOR shall
permit DEPARTMENT and/or TDCJ-CJAD and or their designee to audit/inspect
records and reports, review services, and/or evaluate the performance of
services at any time. VENDOR shall provide reasonable access to all the
records, books, reports and other necessary data and information requested by
DEPARTMENT and/or TDCJ-CJAD for the purpose of accomplishing reviews,
inspections, and/or audits of program activities, services and expenditures.
4.8 AIDS and HIV Infection VENDOR agrees that it shall adopt and
implement workplace guidelines concerning persons with AIDS and HIV infection
and shall also develop and implement guidelines regarding confidentiality of
AIDS and HIV-related medical information for employees of said (VENDOR) and for
clients, inmates, patients and residents served by VENDOR in accordance with the
provisions found in V.T.C.A., Health and Safety Code, Section 85.113 and TCADA
Licensure Standards.
4.9 Confidentiality. When applicable, records of identity, diagnosis,
prognosis, or treatment of any Defendant through this contract shall be
confidential and may be disclosed only in accordance with applicable laws. No
information may be released without the Defendant's written consent as
documented by a signed information release form that complies with the
requirements of 42 CFR, Part 2, or a proper court order that conforms with the
requirements of 42 CFR, Part 2. All records shall be the property of VENDOR.
<PAGE>
4.10 Governing Board Responsibility. The appropriate governing board or
entity of VENDOR shall bear full responsibility for the integrity of the Program
Budget, including accountability for all Payments, compliance with DEPARTMENT
policies, and applicable federal and state laws and regulations, and the Texas
Department of Criminal Justice-Community Justice Assistance Division (TDCJ-
CJAD). Ignorance of any contract provisions or other requirements contained
herein shall not constitute a defense or basis for waiving or appealing such
provisions or requirements.
ARTICLE V. INSURANCE AND INDEMNIFICATION
5.1 Insurance. VENDOR shall provide an adequate plan of insurance that
provides: (l) coverage to protect DEPARTMENT and the State against all claims,
including claims based on violations of civil rights arising and from the
Services performed by VENDOR; (2) coverage to protect the State from actions by
a third party against VENDOR or any SUBVENDOR of VENDOR as a result hereof, and
(3) coverage to protect the State from actions by officers, employees, or agents
of VENDOR or any SUBVENDOR(s). VENDOR shall maintain the following insurance
coverage in full force and effect for the mutual protection and benefit of
DEPARTMENT, the State and VENDOR with the amounts and coverages as required by
law, in accordance with the following:
a) Claims that may arise out of or result from VENDOR'S
actions/operations hereunder, whether such actions/operations are by VENDOR or
by a SUBVENDOR of VENDOR , or by anyone directly or indirectly employed by or
acting on behalf of VENDOR or a SUBVENDOR where liability may arise for:
(i) Claims under workers compensation disability benefit, and
other similar employee benefit actions;
(ii) Claims for damages because of bodily injury, occupational
sickness or disease, or death of any VENDOR employees;
(iii) Claims for damages because of bodily injury, sickness or
disease or death of any Person other than VENDOR'S employees;
(iv) Claims for damages insured by usual personal liability
coverage that are sustained by (a) any Person as a result of an act directly or
indirectly related to the employment of such Person by VENDOR, or by (b) any
other Person;
(v) Claims for damages because of injury to or destruction of
tangible property, including loss of use resulting therefrom;
<PAGE>
(vi) Claims for damages based on violations of civil rights;
(vii) Claims for damages arising from fire and lightning and
other casualties.
b) The insurance required by this section shall be written for not
less than any limits of liability specified by DEPARTMENT or required by law,
whichever is greater, and shall include contractual liability insurance as
applicable to VENDOR'S obligations hereunder.
c) Certifications/policies of insurance shall be filed with
DEPARTMENT prior to execution hereof. These certificates/policies shall contain
a provision that coverage afforded under the policies shall not be canceled
until at least thirty (30) days prior written notice has been given to
DEPARTMENT.
d) Compliance with the foregoing insurance requirements shall not
relieve VENDOR from any liability under the indemnity provisions.
5.2 Indemnification. VENDOR shall indemnify and save the DEPARTMENT, the
Board of Criminal Justice, the Texas Department of Criminal Justice, the State
of Texas, and its officers, agents and employees (hereinafter, collectively
referred to as the "State") harmless from and against any and all claims arising
from the conduct, management or performance hereof, including, without
limitation, any and all claims arising from any condition herein or arising from
any breach or default on the part of VENDOR in the performance of any covenant
or agreement on its part to be performed, or arising from any act of negligence
of VENDOR, or licensees or arising from any accident, injury or damage
whatsoever caused to any person, firm or corporation and from and against all
costs, reasonable attorney's fees, expenses and liabilities incurred in or about
any such claim, action or proceeding brought against the State by reason of any
such claim. In any such action brought against the State, VENDOR, upon notice
from the State, shall defend against such action or proceeding by counsel
satisfactory to the State, unless such action or proceeding is defended against
by counsel for any carrier of liability insurance provided for herein. The
aforementioned indemnification shall not be affected by a claim that negligence
of DEPARTMENT, the State, or their respective agents, VENDORS, employees or
licensees contributed in part to the loss or damage indemnified against.
ARTICLE VI. INDEPENDENT VENDOR
VENDOR is associated with DEPARTMENT only for the purposes and to the
extent set forth herein, and with respect to the performance of Services
hereunder, VENDOR is and shall be an independent VENDOR and shall have the sole
right to supervise, manage, operate, control, and direct the performance of the
details incident to its duties hereunder. Nothing contained herein shall be
deemed or construed to create a partnership or joint venture, to create the
relationships of an employer-employee or principal-agent, or to otherwise create
any liability for DEPARTMENT whatsoever with respect to the indebtedness,
<PAGE>
liabilities, and obligations of VENDOR or any other party. VENDOR shall be
solely responsible for (and DEPARTMENT shall have no obligation with respect to)
payment of all Federal Income, F.I.C.A., and other taxes owed or claimed to be
owed by VENDOR, arising out of VENDOR'S association with DEPARTMENT pursuant
hereto, and VENDOR shall indemnity and hold DEPARTMENT harmless from and against
any and all liability from all losses, damages, claims, costs, penalties,
liabilities, and expenses howsoever arising or incurred because of, incident to,
or otherwise with respect to any such taxes.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Inconsistencies. Where there exists any inconsistency between this
Amended Agreement and other provisions of collateral contractual agreements that
are made a part hereof by reference or otherwise, the provisions of this Amended
Agreement shall control.
7.2 Severability. Each paragraph and provision hereof is severable from
the entire Agreement and if any provision is declared invalid, the remaining
provisions shall nevertheless remain in effect.
7.3 Prohibition Against Assignment. There shall be no assignment or
transfer of this Amended Agreement without the prior written consent of both
parties.
7.4 Law of Texas. This Amended Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and shall be
enforced in the primary County of the applicable judicial district.
7.5 Notices. All notices called for or contemplated hereunder shall be
in writing and shall be deemed to have been duly given when personally delivered
or forty-eight (48) hours after mailed to each party by certified mail, return
receipt requested, postage prepaid.
7.6 Entire. This Amended Agreement incorporates all the agreements,
covenants, and understandings between the parties hereto concerning the subject
matter hereof, and all such covenants, agreements, and understandings have been
merged into this written Amended Agreement. No other prior agreement or
understandings, verbal or otherwise, of the parties or their agents shall be
valid or enforceable unless attached hereto and/or embodies herein.
7.7 Amendment. No changes to this Amended Agreement shall be made
except upon written agreement of both parties.
7.8 Confidentiality. Any confidential information provided to or
developed by VENDOR in the performance of this Amended Agreement shall be kept
confidential, unless otherwise provided by law, and shall not be made available
to any individual or organization by VENDOR or DEPARTMENT without prior
approval of the other party.
<PAGE>
7.9 Headings. The headings used herein are for convenience of reference
only and shall not constitute a part hereof or effect the construction or
interpretation hereof.
7.10 Waiver. The failure on the part of any party to exercise or to
delay in exercising, and no course of dealing with respect to any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law or in equity, except as
expressly set forth herein.
7.11 Counterparts. This Amended Agreement may be executed in any number
of and by the different parties hereto on separate counterparts, each of which
when so executed shall be deemed to be an original, and such counterparts shall
together constitute but on and the same instrument.
7.12 Terminology and Definitions. All personal pronouns used herein,
whether used in the masculine, feminine, or neutral, shall include all other
genders; the singular shall include the plural and the plural shall include the
singular. Entered into on the last date signed below.
By: JIM RUST, Director Date: 5/18/98
Travis County Community Supervision
and Corrections Department
By: JAMES F. SLATTERY, President Date: 5/12/98
Correctional Services Corporation
APPROVED:
By: MIKE LYNCH, Presiding Judge Date: 5/20/98
167th Judicial District Court
COURT ORDER
ORDER NO: 98 1287
DATE: JUNE 23, 1998
STATE OF TEXAS
COUNTY OF DALLAS
BE IT REMEMBERED, at a regular meeting of the Commissioners Court of Dallas
County, Texas, held on the 23rd day of June, 1998, on motion made by Kenneth A.
Mayfield, Commissioner of District No. 4, and seconded by Mike Cantrell,
Commissioner of District No. 2,the following order was adopted:
WHEREAS, this matter was briefed to the Commissioners Court on June 23, 1998;
and
WHEREAS, the Dallas County Commissioners Court and the Dallas County Juvenile
Board entered into a contract with the Correctional Services Corporation for the
implementation and operation of the Dallas County Secure Post-Adjudication
Residential Facility located at 1508-A East Langdon Road, Dallas, Texas;
and
WHEREAS, the contract is to begin June 29, 1998, and end September 30, 1999 with
the option of two annual renewals; and
WHEREAS, under the terms of the contract Dallas County is required to provide a
facility to be located on the campus of the Dallas County Youth Village, located
at 1508-A East Langdon Road, Dallas, Texas; and
WHEREAS, the facility consists of 30,668 square feet of building space and is
located on a 7.673 acre tract of land; and
WHEREAS, the Contractor will be responsible for providing services in the
implementation and operation of a 96 bed facility; and
WHEREAS, the Contractor will manage, supervise and operate the facility and
receive, supervise and care for each juvenile that is assigned to and enrolled
in the facility by a Court of competent jurisdiction; and
WHEREAS, Dallas County is responsible for the staff, maintenance of the
building, utilities, operating expense including electricity, water, sewage,
pest control, trash collection and local telephone services; and
<PAGE>
WHEREAS, the Assistant Director of Facilities Management and the Assistant
District Attorney, Civil Section have reviewed the terms of the License
Agreement and concur.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED by the Commissioners Court of
Dallas County, Texas that the County Judge is hereby authorized and directed to
execute a License Agreement with the Correctional Services Corporation for
approximately 30,668 square feet of building space on a 7.673 acre tract of land
designated for use as a Secure Post-Adjudication Residential Facility, on the
campus of the Dallas County Youth Village, for a one year, three month term
commencing on June 29, 1998, ending September 30, 1999, with two one year
renewal options; with Dallas County providing maintenance staff, maintenance,
utility operating services to include electricity, water, sewage, pest control,
trash collection and local telephone.
services.
DONE IN OPEN COURT this the 23rd day of June, 1998.
By: Lee F. Jackson By: Jim Jackson By: Mike Cantrell
County Judge Commissioner District #1 Commissioner District #2
By: John Wiley Pride By: Kenneth A. Mayfield
Commissioner District #3 Commissioner District #4
Recommended by: Dan Savage
Assistant Administrator for Operations
<PAGE>
CONTRACT
EXHIBIT "C"
SUBJECT TO DALLAS COUNTY COMMISSIONERS' COURT APPROVAL
LICENSE AGREEMENT
DALLAS COUNTY YOUTH VILLAGE
1508-A EAST LANGDON ROAD
DALLAS COUNTY, TEXAS AND THE DALLAS COUNTY
JUVENILE BOARD (DCJB)
and
CORRECTIONAL SERVICES CORPORATION
DATE: JUNE 1998
<PAGE>
LICENSE AGREEMENT
This Agreement is entered into to be effective the ____ day of June, 1998,
between Dallas County, Texas, (County), the Dallas County Juvenile Board (DCJB),
and Correctional Services Corporation, hereinafter referred to as ("CSC").
RECITALS:
WHEREAS, CSC, Dallas County and Dallas County Juvenile Board have entered into a
Contract that will provide services for Dallas County and Dallas County Juvenile
Board for the purpose of implementation and operation of the Dallas County
Secure Post-Adjudication Residential Facility, as provided for by the Contract,
pursuant to the minimum standards promulgated in administrative law by the Texas
Juvenile Probation Commission (TJPC), Texas Administrative Code Title 37,
Chapter 344; all legal requirements in Section 51.12 of the Texas Family Code;
and the standards by the Texas Commission on Alcoholism and Drug Abuse (TCADA)
for operations of a substance abuse treatment facility (hereinafter the
"Contract"); and
WHEREAS, County has agreed to furnish the real and personal property as
described in the Request for Proposal 98-052 and the Contract for the use of
Correctional Services Corporation for the limited purpose of implementing and
operating the Dallas County Secure Post-Adjudication Residential Facility
(hereinafter referred to as "Facility", to be located on the campus of the
Dallas County Youth Village, 1508-A East Langdon Road, Dallas, Texas); and
WHEREAS, The Dallas County Juvenile Department(hereinafter referred to as
"Juvenile Department") will serve as the designated County agency to oversee and
manage operations on behalf of Dallas County; and
WHEREAS, the Dallas County Commissioners Court has agreed to license the
Facility located at the Dallas County Youth Village as requested by CSC and
DCJB.
NOW THEREFORE, subject to the mutual covenants contained herein, County does
hereby grant a license to CSC, including the right for CSC to permit the use of
the property by its agents, employees, invites, licensees and assigned Juveniles
and CSC does hereby take such License from County, on and subject to the terms
and conditions set forth, for the hereinafter described property as follows:
<PAGE>
I.
BASIC TERMS
(A) Definitions:
"County" means Dallas County acting through the Dallas County Commissioners
Court. As used in this License only, it does =t include the Dallas County
Juvenile Board.
"CSC" means Correctional Services Corporation, and their officers, agents,
employees, invites, licensees, Juveniles, or visitors.
"DCJB" means the Dallas County Juvenile Board, its officers, department heads,
employees, invitees, contractors, sub-contracts and vendors.
"Essential Services" means heating, ventilating, air conditioning, and
furnishing of water, and utility connections reasonably necessary for occupancy
of the Premises for the use stated herein.
"Facility" means the 7.673 acres, more or less, of land and all improvements
(including, but not limited to, the Premises) located on the campus of the
Dallas County Youth Village, 1508-A East Langdon Road, Dallas, Texas, as more
particularly described by metes and bounds description attached hereto as
Exhibit "A" and incorporated as if reproduced herein word for word.
"Operating Expenses" means all expenses that County shall reasonably pay in
connection with the ownership, and maintenance of the building;
"Premises" means approximately 30,668 square feet of building, more or less,
known as the Dallas County Secure Post-Adjudication Residential Facility located
at, 1508-A East Langdon, County of Dallas, Texas, as marked in Exhibit "B" which
is attached hereto and incorporated herein by reference as if fully reproduced
herein.
"Juveniles" shall mean those persons delivered into the possession and control
of CSC for residential treatment services as described in RFP 98-052 and the
Contract.
"Facility Operation Hours" means twenty four (24) hours per day, seven (7) days
per week.
(B) Address of County:
County Dallas County Facilities Management Department
600 Commerce Street Phone - (214)653-6776
9th Floor Fax - (214)653-6822
Dallas, Texas 75202
or other such address as may from time to time be designated by County in
writing.
(C) Address of CSC:
Correctional Services Corporation
James F. Slattery
1819 Main Street
Suite 1000
Sarasota, Florida 34236
or other such address as may from time to time be designated by CSC in writing.
II.
LICENSE
(A) The County hereby grants a license to CSC to enter and use the Facility and
Premises for the sole purpose of providing residential treatment services as
described in Request for Proposals No. 98-052 and Addenda One, Two, and Three
issued by Dallas County, as described in the original proposal submitted by
Contractor in response to Request for Proposals No. 98-052, and as described
in the Contract with the County and DCJB for providing those services, each
of which are incorporated herein as if fully reproduced word for word
(hereinafter the "Permitted Use"). It is agreed by all parties that the
provisions of the Contract supersede the provisions of the Request for
Proposals No. 98052 (Exhibit A to the Contract) and Contractor's proposal
(Exhibit B to the Contract), to the extent that there is conflict between
provisions of the documents.
(B) CSC is hereby granted, delegated and assigned the right to, and CSC hereby
agrees to independently manage, supervise and operate the Facility and is
solely responsible to receive, supervise and care for each Juvenile that is
assigned to and enrolled in the Facility by a Court of competent jurisdiction
pursuant to applicable law.
(C) This License shall permit the use of the Facility by CSC 24 hours a day, 365
days a year, until such right is terminated as hereinafter provided.
III.
LICENSE DURATION
The right of CSC to use the Facility shall, after execution of this agreement by
all parties, commence on the date specified in the Contract (the "Commencement
Date") and shall terminate, without further action or notice, upon the
termination of the Contract between CSC, County and DCJB and any renewal or
extension there of, for the services for which the Permitted Use is being
granted, unless terminated earlier as provided in the RFP, the Contract or
herein.
IV.
SECURITY DEPOSIT
CSC will deposit with the County Treasurer's Office a Security Deposit in the
amount of $10,000.00 in the form of a cashier's check or a performance bond.
Upon termination of this license and if the Facility and County personally is
surrendered to County in strict accordance with Paragraph XVII (SURRENDER OF
REAL AND PERSONAL PROPERTY) the security deposit shall be returned to CSC or
notification will be given to the Bonding Company that the terms and conditions
of such bond have been complied with. If, in the sole determination of County,
the Facility and/or personally has not been surrendered in accordance with
Paragraph XVII, County shall notify CSC of the cost required to restore the
Facility and the personally except for ordinary wear and tear, to good order,
condition and repair any damage. CSC agrees to pay to County such cost within
ten (10) days of the deposit of notice of such cost into the U. S. Mail,
certified or registered, return receipt requested. In the event that County has
not received payment in full by 4:00 P.M. on the tenth (lot day after such
notice is deposited in the U. S. Mail, County is hereby authorized by CSC to
apply all or any part of the security deposit held by the County in payment of
all or a portion of said cost. In the event that the cost is less than the
amount of the security deposit, the remainder will be returned to CSC. In the
event that the cost is more than the security deposit County shall bill CSC for
the difference, such amount CSC agrees to pay upon receipt of such billing.
In the event that CSC has supplied a performance bond in lieu of a cash security
deposit, failure of CSC to timely pay the cost as billed to CSC by County shall
be an act of default and such default shall comply with any and all provisions
of the performance bond to permit County to make a valid claim on such bond.
V.
USE OF PREMISES
(A) Specific Use. The Premises shall be occupied and used exclusively for the
Permitted Use of implementing and operating the Dallas County Secure Post-
Adjudication Residential Facility and shall not be used for any other purposes.
(B) Covenants Regarding Use. County and CSC agree that the use of the Facilities
is conditioned upon strict compliance with the terms and conditions of the RFP,
the Contract and this License. Failure to comply with such provisions shall,
at the election of County, be a breach of the Contract and County shall have
the right, but not the obligation, of termination of the Contract between the
Parties. Failure of County to enforce or require compliance with any occurrence
or failure of CSC to comply with such provisions shall not operate or be
construed as a waiver of any future occurrence.
In connection with its use of the Facility, CSC covenants and agrees to do the
following:
(1) CSC shall use the Facility only for the Permitted Use and shall
conduct its business thereon in a safe, careful, reputable and lawful manner and
shall keep and maintain the Facility and all County personally in as good a
condition as they were when CSC first took possession thereof other than normal
wear and tear.
(2) CSC shall not commit, nor allow to be committed, in, on or about the
Facility any act of civil disturbance or riot, harassment of any nature, or any
action or conduct actionable in State or Federal civil or criminal law; any act
of waste including any act which might deface, damage or destroy the Facility or
any part thereof; use or permit to be used on the Facility any equipment or
other thing which might cause injury to person or property or increase the
danger of fire or other casualty in, on or about the Facility; permit any
objectionable or offensive noise or odors to be emitted from the Facility; or do
anything, or permit anything to be done, except for ordinary wear and tear,
which would, in County's opinion, disturb or tend to disturb County.
(3) Throughout the term of this License, CSC shall prevent the presence,
use, generation, release, discharge, storage, disposal, or transportation of any
Hazardous Materials (as hereinafter defined) on, under, in, above, to, or from
the Facility, other than in strict compliance with all applicable federal,
state, and local laws, rules, regulations, and orders. For purposes of this
provision, the term "Hazardous Materials" shall mean and refer to any wastes,
materials, or other substances which require special handling or treatment,
under any applicable local, state, or federal law, rule, regulation, or order.
CSC covenants and agrees that it will cause to be abated or shall abate, at no
cost to County, any nuisances, health, environmental or safety dangers and shall
remediate or cause to be remediated all materials that may be in violation of
any laws pertaining to health or the environment, including without limitation,
the Comprehensive Environmental Response Compensation and Liability Act
(CERCLA), the Resource Conservation and Recovery Act (RCRA), the Texas Water
Code and the Texas Solid Waste Disposal Act, all as amended, caused by the
presence, use, generation, release, discharge, storage, disposal, or
transportation of any material by or at the direction of CSC.
(4) CSC shall not overload the floors of the Premises beyond their
designed weight-bearing capacity. County reserves the right, but no obligation,
to direct the positioning of all heavy equipment, furniture, fixtures which CSC
desires to place in the Premises so as to properly distribute the weight
thereof, and to require the removal of any equipment or furniture which exceeds
the weight limit specified by County.
(5) CSC shall not use the Facility, nor allow the Facility to be used for
any purpose, or in any manner which would, in County's sole opinion, increase
the risk of damage, partial destruction or destruction of the Facility, or any
portion thereof, invalidate any policy of insurance now or hereafter carried on
the Facility or increase the rate of premiums payable on any such insurance
policy. Should CSC fail to comply with this covenant, County may, at its option,
require CSC to stop engaging in such activity. Failure to comply with such
requirement constitutes a breach of this License and County may terminate this
License if such requirement is not met after thirty (30) days written notice to
CSC from County.
(6) CSC shall operate and manage the facility in such a manner to provide
a clean, safe and sanitary Facility and shall maintain sufficient discipline and
control of the Juveniles to prevent any injury (including death) to any person
or damage to the real or personal property of County by the Juveniles,
Juveniles' family, or other invitees.
(7) CSC will comply with all County Policies regarding the use of County
buildings, including but not limited to the Rules and Regulation attached hereto
as Exhibit "C", incorporated herein as if fully reproduced, word for word.
(8) CSC shall give immediate oral notice to County Facilities Department,
confirmed by Fax or written notice immediately, of any failure or problem with
any security or fire device or system, any failure or problems with any utility
or sewer, dumpster capacity or pick up schedule, vandalism or other damage to or
destruction of the Facility, or any portion thereof, or personal property of
County, any injury to or death of any person, or any litigation or claim by any
party involving CSC, and the Facility, County or DCJB.
(9) In the event of any fire or police emergency, CSC shall first notify
the appropriate emergency response agency (911) and immediately thereafter shall
orally notify County of such occurrence and immediately confirm such notice by
Fax.
(C) Compliance with Laws. CSC shall comply with all laws, statutes, ordinances,
rules, regulations and orders of any federal, state, county, municipal or
other government agency thereof having jurisdiction over and relating to the
use of the facility, janitorial and custodial care, maintenance, condition or
occupancy of the Facility, inclusive of all fire, emergency, environmental,
health, safety and any construction. CSC shall not be responsible for or
required to make structural repairs to the Facility unless such repairs are
the result of CSC's particular use of the Facility, CSC's intentional acts or
negligence or Juvenile's intentional acts or negligence while in the care,
custody and control of CSC.
(D) Compliance with Zoning. It being understood that applicable zoning
ordinances and regulations are of public record and that CSC knows the character
of its operation on the Premises, CSC shall have sole responsibility for its
compliance therewith, and CSC's inability to comply shall not be cause for
CSC to terminate this License.
(E) Parking. CSC shall have the right to park employee and private passenger
vehicles on the parking lot during business hours. No vehicle will be
abandoned on the Facility. Sufficient parking will be designated to comply
with the American with Disabilities Act and to provide sufficient parking for
guests and visitors.
VI.
UTILITIES AND OTHER BUILDING SERVICES
(A) Services to be provided.
(1) Services to be provided by the County. County shall furnish CSC with
the following utilities and other building services in an amount considered by
County to be reasonably necessary for CSC's comfortable use and occupancy of the
Premises or as may be required by law or directed by governmental authority:
(a) Essential Services;
(b) Electricity, water and lighting for operating business machines
and equipment in the Premises;
(c) Water for lavatory and drinking purposes;
(d) The washing of exterior windows at intervals established by County;
(e) Repair and maintenance of the Premises and such personally or
fixtures as provided by County to CSC, including, but not limited to, kitchen
and other food preparation and serving equipment furnished by County, heating
and air conditioning systems, and utility and sewer facilities supporting the
Premises.
(f) Dumpster facilities for trash collection.
(g) Sewage system.
(h) Installation of Telephone System and instruments and payment of Phone
expense for Local (Non-Long Distance) Telephone Service
(i) Assign adequate staff, and/or contracted services to the Facility to
meet maintenance needs.
(k) Provide and maintain security and fire alarm systems at County's
expense.
(2) Services to be provided by CSC at its sole cost and expense.
(a) Janitorial and custodial care of the Facility.
(b) Responsible for all expenses for long-distance telephone services;
(c) Repair of all damages to County's property, real or personal, caused by
CSC or its agents, employees, contractors, subcontractors, licensees, invitees
or by Juveniles while in the care, custody, and control of CSC; and
(d) Disposal of all trash and garbage from the Facility by placing same
in the dumpster provided by County. All wet garbage shall be transported in
water tight containers without leakage or spill onto the Facility or within
the Premises. In the event of any leakage or spill same shall be immediately
cleaned up. All garbage resulting from the preparation or serving of meals will
be placed in the dumpster within three (3) hours of the completion of any meal.
All trash shall be deposited into the dumpster daily. No trash or garbage, not
contained within the dumpster, will remain on the Facility or within the
Premises overnight. It the event that the dumpster facility is not adequate to
contain the trash and garbage for the period between the time the dumpster is
emptied, CSC shall notify County Facilities Management, orally and confirm such
notice in writing within two (2) days.
(B) Additional Services. If CSC requests any other utilities or building
services in addition to those identified above or any of the above utilities or
Facility services in frequency, scope, quality or quantities greater than that
which County determines are normally required, County at its sole discretion
will determine if it will furnish CSC with such additional utilities or Facility
services. In the event County is able to and does furnish such additional
utilities or Facility services, the cost thereof shall be borne by CSC, who
shall reimburse County monthly for the same as provided in Paragraph VI (D)
(Payment for Utilities and Services) hereof. If CSC requests or installs any
lights, machines or equipment (including but not limited to computers),
permission for which CSC shall request in writing prior to installation, that
materially affect the temperature otherwise maintained by the Premises' air
conditioning system or generate substantially more heat in the Premises than
that which would normally be generated by the lights, business machines and
equipment typically used in the Premises, County shall have the right to
install any machinery or equipment which County considers reasonably necessary
in order to restore the temperature balance in the Premises, including that
which modifies the air conditioning system. County shall notify CSC in writing
of such need prior to County's installation of equipment that may materially
affect the temperature for equipment or HVAC upgrade and CSC shall agree to
such changes prior to installation of same.
All costs expended by County to install any such machinery and equipment and
any additional cost of operation and maintenance occasioned thereby shall be
borne by CSC, who shall reimburse County for the same as provided in Paragraph
VI (D) hereof. All such items become the property of County after installation
and acceptance. All warranties, if any, shall be issued in the name of the
County for its use and benefit. CSC shall not install nor connect any electrical
machinery or equipment other than the business machines and equipment typically
used for general office use by CSC in office buildings comparable to the
Premises, nor any water cooled machinery or equipment without County's prior
written consent. If County determines that the machinery or equipment to be so
installed or connected exceeds the designed load capacity of the Premises'
electrical system or is in any way incompatible therewith or will materially
affect utility costs, County shall have the right, as a condition to granting
this consent, to make such modifications to any utility system or other parts of
the Premises, or to require CSC to make such modification to the equipment to be
installed or connected. The cost of any such metering or modifications shall be
borne by CSC, who shall reimburse County for the same (or any portion thereof
paid by County) as provided in Paragraph VI (D) hereof.
(C) Interruption of Services. CSC understands, acknowledges and agrees that any
one or more of the utilities or other services may be interrupted by reason
of accident, emergency or other causes beyond County's control, or may be
discontinued or diminished temporarily by County or other persons until
certain repairs, alterations or improvements can be made; that County does
not represent or warrant the uninterrupted availability of such utilities or
services; and that any such interruption shall not be deemed as an eviction
or disturbance of CSC's right to possession, occupancy and use of the
Facility or any part thereof, or render County liable to CSC in damages, or
relieve CSC from the obligation to comply with the terms and conditions of
RFP 98-052, the Contract between CSC, County and DCJB or perform its
covenants under this License.
(D) Payment for Utilities and Services. The cost of additional utilities and
other services furnished by County at the request of CSC or as a result of CSC
activities as provided in Paragraph VI (B)(Additional Services) hereof shall
be paid by CSC, who shall be separately billed thereof and who shall reimburse
and pay County monthly for the same.
VII.
POSSESSION
Possession. Possession of the Property shall be in accordance with the
Contract Section 6 (Facility) Paragraphs (B) and (C).
VIII.
REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES
(A) Repair and Maintenance of Premises. County shall keep and maintain in good
order, condition and repair the roof, exterior and interior load-bearing
walls (including any plate glass windows comprising a part thereof),
foundation, basement, the common areas and facilities of the Premises and
electrical, plumbing, heating, ventilation and air conditioning systems
serving the Premises. Such maintenance services will be available Monday
through Friday, 7:00 A.M. to 3:30 P.M. and thereafter on an emergency basis
by calling (214)653-6776.
(B) Alterations. Installation or Improvements. In the event that CSC shall
determine that any alteration or improvement to the Facility or installation of
any system or equipment is required, CSC shall notify County of any
installation, alteration or improvement requested. County, at its sole
discretion, shall determine if such alteration, installation or improvement will
be permitted. CSC shall not make, nor permit to be made, any installation,
alterations or improvements to the Facility without the prior written consent of
the County. If County permits any installation, alterations or improvements,
County, at its sole election, may make such installation, alterations or
improvements with County forces or County contractor, or may allow CSC to make
such installation, alterations or improvements. In the event that CSC shall be
permitted to make such installation, alterations or improvements CSC shall
make the same in accordance with all applicable laws and building codes, in
a good workmanlike manner and in quality equal to or better than the
original construction of the Facility and shall comply with such
requirements as the County considers necessary or desirable including,
without limitation, requirements as to the manner in which and the times at
which such work shall be done and the contractor or subcontractors to be
selected to perform such work. CSC shall promptly pay all costs attributable
to such installation, alteration and improvements and shall not allow any
lien to attach to such property. CSC shall promptly repair any damage to the
Facility caused by any such alteration or improvements. Any installation,
alteration or improvements to the Facility, except CSC owned movable office
furniture and equipment, shall become part of the realty and title to the
property shall be in the County and shall not be removed by CSC.
(C) Trade fixtures. All trade fixtures installed on the Facility shall become
the property of Dallas County and shall not be removed by CSC at the expiration
or earlier termination of the License.
IX.
SIGNS
CSC shall not inscribe, paint, affix or display any signs, advertisements or
notices on the premises and visible from outside except for such CSC
identification information as County permits to be included or shown on the
directory board in the main lobby and on CSC access doors to the premises, with
prior approval by County of the type, kind, content and method of attachment.
X.
FIRE OR OTHER CASUALTY
For the purposes of this section the term "Destruction of the Premises" shall
mean the destruction of or damage to the building, equipment therein and
attachments thereto by fire or other casualty that would prevent the housing of
any Juveniles in such a manner as to be in compliance with the Contract. The
term "Partial Destruction of the Premises" shall mean the destruction of or
damage to the building, equipment therein and attachments thereto by fire or
other casualty that will allow the housing of part or all of any Juveniles in
such a manner as to be in compliance with the Contract.
(A) Destruction of the Premises. If there should be a Destruction of the
Premises, as hereinabove defined ,CSC and County shall make such arrangements as
are necessary for the safety and well being of such Juveniles. Upon request by
the County or DCJB, CSC shall transfer all Juveniles, including all records and
information, to either County or DCJB or their assignee's custody who shall
thereafter be responsible for their custody and control and payment to CSC
shall or shall not be made in conformity with the Contract.
County shall have the right and option, at its sole determination, to be
exercised within sixty (60) days following the date of the occurrence, to
give CSC written notice that either (1) County will reconstruct and restore
the Premises to a condition sufficient to allow CSC to provide the services
listed in RFP 98-052 and/or the Contract for all or a portion of the
Juveniles. In this event County and its contractors and subcontractors will
have the unrestricted right to enter upon the Facility for such
reconstruction or restoration. In this event this License agreement shall
remain in full force and effect for the duration of the License upon the same
terms, conditions and covenants contain here with such adjustment in cost as
may be contained in the Contract or (2) terminate this license as of the date
of the casualty.
(B) Partial Destruction of the Premises. If there should be a Partial
Destruction of the Premises, as hereinabove defined, CSC, County and DCJB shall
make such arrangements as are necessary for the safety and well being of such
Juveniles. CSC shall notify County and the DCJB, in writing, the number of
Juveniles that can be retained within the Facility. CSC and County and DCJB
shall agree on the number of Juveniles, if any, that requires transfer from the
Facility. Upon request by the County or DCJB, CSC shall transfer the Juveniles,
as agreed upon, including all records and information, to either County or DCJB
or their assignee's custody who shall thereafter be responsible for their
custody and control and payment to CSC shall or shall not be made in conformity
with the Contract.
County shall have the right and option to either (l) repair or reconstruct
such damages to part of the Premises to substantially the same condition as it
was prior to the casualty and this license shall continue in full force and
effect for the duration of the License or (2) terminate this license as of the
date of the casualty.
(C) County Diligence. In the event County shall repair or reconstruct the
Premises, County shall use reasonable diligence in completing such
reconstruction repairs.
(D) Condition Precedent County's obligation to repair or reconstruct all or any
part of the Facility is conditioned upon the receipt of any and all insurance
proceeds, budget and fiscal requirements and restrictions, compliance with the
Constitution and Laws of the State of Texas and any and all grant or other
contractual matters affecting the Facility.
(E) County's Reconstruction. County's exercise of its option to reconstruct and
restore the Premises shall be limited to the repair and restoration of the
Premises in the same condition as was tendered to CSC at the Commencement
date of this License.
(F) Election of Remedies. Notwithstanding anything contained herein to the
contrary, in the event that any damage to the building or premises shall be
the result of the negligence or acts of CSC or Juveniles while in the care,
custody and control of CSC, County does not waive and specifically hereby
reserves all rights and remedies as provided by law.
XI.
INSURANCE AND INDEMNIFICATION
(A) Property Insurance. CSC shall, at all times during the term of this License
and at CSC's own expense, insure the Facility, (including Premises) against all
risk of loss or damage of whatever kind and nature by providing a Standard
All-Risk insurance policy (including coverage against vandalism and malicious
mischief) insuring the Facility (including Premises) against all loss, damage
or destruction in the minimum sum of FOUR MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($4,500,000.00). The Juvenile Board of Dallas County and
Dallas County shall be the named insureds on such policy. In addition to the
insurance covering the Facility, CSC, shall, at all times during the term of
this License and at CSC's own expense, provide, as either a separate policy
or jointly with the Facility policy, an additional Standard All-Risk
insurance policy (including coverage against vandalism and malicious
mischief) insuring the full replacement value of County's improvements,
alterations, modifications, trade fixtures, furniture, supplies, and all
items of personal property of County located on or within the Facility. The
Juvenile Board of Dallas County and Dallas County shall be the named insureds
on such insurance policy.
(B) Liability Insurance. CSC shall, at all times during the License term and at
its own expense, keep in full force and effect comprehensive general liability
insurance with "personal injury" coverage; commercial or business auto liability
insurance; and contractual liability coverage, with minimum limits of
$5,000,000.00 on account of bodily injuries to, or death of one person and an
aggregate of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) for any one
occurrence. The Juvenile Board of Dallas County and Dallas County shall be named
additional insureds on said policy.
(C) Workers' Compensation Insurance. CSC shall, at all times during the term of
this License and at its own expense, provide and keep in full force and
effect a policy of workers' compensation insurance for coverage in Texas with an
Employer's liability limit of:
Bodily Injury by accident - $500,000.00 each employee
Bodily Injury by disease - $500,000.00 policy limit
Bodily Injury by disease - $500,000.00 each employee
The Juvenile Board of Dallas County and Dallas County shall be named additional
insureds on such policy.
(D) CSC Property Insurance. CSC, at its sole cost and expense, shall, at all
times during the License term, keep in full force and effect such insurance as
required to fully insure the full replacement value of all personal property,
including but not limited to intellectual property that CSC shall have or
maintain on or within the Facility. CSC covenants and agrees that in the
event of any damage or destruction of such property that CSC will look solely
to such insurance for recovery of any and all cost or expense of, damage to
or damages resulting from the damage or destruction of such property without
cost or contribution from County or DCJB.
(E) Insurance Certificates. All insurance policies or duly executed certificates
for the same required to be carried by CSC under this License, together with
satisfactory evidence of the payment of the premium thereof, shall be deposited
with County within (10) days after execution of this License and upon renewals
of such policies not less than fifteen (15) days prior to the expiration of the
term of such coverage. All insurance required to be carried by CSC under this
License shall be in form and content, and written by insurers authorized to do
business in the State of Texas and acceptable to County, in its sole discretion.
If CSC shall fail to comply with any of the requirements relating to insurance,
County may obtain such insurance and CSC shall pay to County, the costs of said
premiums on demand or may be withheld by County from any sum payable by County
or DCJB to CSC.
(F) Premiums and Deductibles. All cost of insurance and any deductible shall be
paid in full by CSC without claim against or contribution of County or
DCJB.
(G) Indemnity. Neither County, Dallas County Judge, Dallas County Commissioners,
its Department Heads, officers, employees, agents, invitees, contractors and
subcontractors nor DCJB, its members, Department Heads, offices, employees,
agents, invitees, contractors and subcontracts shall be liable to CSC or to
CSC's employees, agents, invitee, licensees, or to any other person
whomsoever, for any injury to person or damage to property, on or about the
Facility, including but not limited to, consequential damage, (1) caused by
any act or omission of CSC, its of officers, employees, agents, sublicensees,
licensees and concessionaires or of any other person entering the Facility by
express or implied invitation of CSC, or (2) arising out of the use of the
Facility by CSC, its officers, employees, agents, licensees, or invite, or (3)
arising out of any breach or default by CSC its officers, employees, agents,
licensees, or invitees, in the performance of its obligations as shown RFP 98-
052, the Contract or this License or (4) caused by the improvements located in
the Facility being out of repair or by defect in or failure of equipment, pipes,
or wiring, or by broken glass, or by backing up of drains, or by gas, water,
steam, electricity or oil leaking, escaping or flowing into the Facility, or (5)
arising out of the failure or cessation of any service provided by County.
Neither County, Dallas County Judge, Dallas County Commissioners, its
Department Heads, officers, employees, agents, invitees, contractors and
subcontractors nor DCJB, its members, Department Heads, office's, employees,
agents, invitees, contractors and subcontractors shall be liable to CSC for
any loss or damage that may be occasioned by or through the acts or omissions
of CSC on the Facility or of any other persons whomsoever. Further, neither
County, Dallas County Judge, Dallas County Commissioners, its employees,
agents, invitees, contractors and subcontractors nor DCJB, its members,
employees, agents, invitees, contractors and subcontracts shall be liable to
CSC for any inconvenience or loss to CSC in connection with any of the repair,
alteration, installation, maintenance, damage, destruction, restoration, or
replacement referred to in this License.
To the fullest extent allowed by law, CSC agrees to indemnify and hold harmless
County, Dallas County Judge, Dallas County Commissioners, its Department Heads,
officers, employees, agents, representatives, invitees, contractors and
subcontractors and DCJB, its members, employees, agents, invitees, contractors
and subcontractors against all claims, demands, actions, suits, losses, damages,
liabilities, costs and/or expenses of every kind and nature (including, but not
limited to, court costs, litigation expenses and attorneys fees) and all
recoverable interest thereon, incurred by or sought to be imposed on County,
Dallas County Judge, Dallas County Commissioners, its Department Heads,
officers, employees, agents, representatives, invitees, contractors and
subcontractors and DCJB, its members, employees, agents, invitees, contractors
and subcontractors because of injury (including death) or damage to property
(whether real, personal or inchoate), arising out of or in any way related
(whether directly or indirectly, causally or otherwise) to: (1) the performance
of, attempted performance of, or failure to perform, operations or work under
the Contract by CSC, its subcontractors and/or any other person or entity; (2)
the use or condition of the Facility, including the Premises, (3) the selection,
provision, use or failure to use, by any person or entity, of any tools,
supplies, materials, equipment or vehicles (whether owned or supplied by County,
Contractor, or any other person or entity) in connection with said work or
operations; (4) the presence on the Facility of CSC, its officers,
subcontractors employees, suppliers, vendors, invitees, Juveniles and their
invitees, or any other person entering onto the Facility on in the Premises
whether or not such person is acting by or on behalf of CSC; or (5) the actions
or inactions, intentional or otherwise of CSC, its officers, employees, agents,
representatives, subcontractors, vendors, material persons, the Juveniles and
their invitees or any other person present in the Facility or the Premises or
performing any act or service on CSC's behalf or at its request; (6) the actions
or inactions of Juveniles while in the care, custody and control of CSC. This
indemnity shall apply, whether or not any such injury or damage has been, or is
alleged to have been, caused in whole or in part by the negligence or fault of
County, Dallas County Judge, Dallas County Commissioners, its Department Heads,
officers, employees, agents, representatives, invitees, contractors and
subcontractors and DCJB, its members, employees, agents, invitees, contractors
and subcontractors or on any other theory of liability, including negligence,
intentional wrongdoing, strict products liability or the breach of non-delegable
duty. CSC further agrees to defend (at the election of County) against any
claim, demand, action or suit for which indemnification is provided hereunder at
its sole cost and expense, paying same as they shall become due.
Without in any way limiting or restricting the indemnification and defense
agreements stated above, CSC agrees that it is the intention of the parties
hereto that CSC and its insurers bear the entire risk of loss or injury to
any of CSC's employees, officers, "borrowed servants," agents, representatives,
subcontractors, vendors, materialmen, Juveniles or their invitees, or any other
person present on the Facility or performing any other act or service on CSC's
behalf or at its request, or receiving services from CSC, whether or not any
such loss or injury is caused in whole or in part by any negligence or fault of
County, Dallas County Judge, Dallas County Commissioners, its Department Heads,
officers, employees, agents, representatives, invitees, contractors and
subcontractors and DCJB, its members, employees, agents, invitees, contractors
and subcontracts and without claim against or seeking any contribution therefor
from County, the Dallas County Judge, Dallas County Commissioners, Department
Heads, officers, employees, agents, representatives, invitees, contractors and
subcontractors and DCJB, its members, employees, agents, representatives,
invitees, contractors and subcontractors or their insurers.
XII.
LICENSE ASSIGNMENT OR SUBLETTING
This agreement, being a license, grants the right of use to CSC individually
and is not transferable by CSC. CSC shall neither assign this License nor
sublet all or any part of the Facility without a formal order of the Dallas
County Commissioners Court approving such assignment or sublicense.
XIII.
DEFAULT BY CSC
In the event CSC shall breach its covenants or obligations hereunder, and shall
be and remain in default for a period of thirty (30) days after written notice
from County of such default, County shall have the right and privilege of
terminating this License and declaring the same at an end, and of entering upon
and taking possession of said Facility, and shall have the remedies now or
hereafter provided by law for repossession of the Facility and damages
occasioned by such default.
XIV.
DEFAULT BY COUNTY
In the event County shall breach or be in default in the performance of any of
the covenants or obligations imposed upon County by this License, and shall
remain in default for a period of thirty (30) days after written notice from CSC
to County of such default, CSC shall have, as CSC's sole remedy, the right and
privilege of terminating this License after furnishing 30 days written notice to
County.
XV.
ACCESS TO FACILITY
County, its employees and agents shall have the right to enter any part of the
Facility at all reasonable times for the purpose of examining or inspecting the
same, showing the same to prospective purchasers, mortgagees or Lessees and for
making such repairs, alterations or improvements to the Facility as County may
deem necessary or desirable.
If representatives of CSC shall not be present to open and permit such entry
into the Facility at any time when such entry is necessary or permitted
hereunder, County and its employees and agents may enter the Facility by means
of a master key or otherwise. County shall incur no liability to CSC for such
entry, nor shall such entry constitute an eviction of CSC or a termination of
the License.
XVI.
TERMINATION
Subject to the repair, replacement or reproduction of the Facility or any
portion thereof, including but not limited to the Premises, due to fire or other
casualties, this License may be terminated as follows: (1) without further
action or notice, upon the termination or breach of the terms of RFP 98-052 or
the Contract between CSC, County and DCJB and any renewal or extension there of,
for the services for which the use is being granted or (2) either CSC or County
shall have the right, without cause, to terminate the License by giving thirty
(30) days written notice in advance to the other party or (3) County is in
default or is in violation of any term of the License, or (4) CSC is in default
or is in violation of any term of the License, or(5) as otherwise provided in
this license agreement.
XVII.
SURVIVAL
All Indemnification provisions, including but limited to section XI
(f)(Indemnity) of this agreement; all insurance provisions, including but not
limited to sections XI (a) (Property Insurance), (b)(Liability Insurance),
(c)(Worker' Compensation Insurance), (c)(Insurance); and (c)(Premiums and
Deductibles), section IV(Security Deposit); section XVII (Surrender of Facility
and Personal Property); all of section X (Fire and Casualty), and section V (B)
(3) (Hazardous Materials), shall not be extinguished by the termination of this
License, but shall survive the termination until (1) final payment made, and/or
(2) completion of any and all litigation until final and unappealable order or
judgment has been entered, and/or (3) all insurance claims settled and paid,
and/or (4) such item has been fully complied with or (5) the expiration of ten
(10) years, whichever shall first occur, and shall bind and benefit the
respective parties and their Legal successors and assigns.
XVIII.
SURRENDER OF FACILITY
Upon the expiration or earlier termination of the License, CSC shall surrender
the Facility and all County personally to County, together with all alterations,
improvements and other property as provided elsewhere herein, in broom-clean
condition and in good order, condition and repair, except for ordinary wear and
tear. CSC shall promptly repair any damage caused by removal of its personal
property and shall restore the Facility to the condition existing prior to the
installation of the items so removed.
XIX.
CONDEMNATION
(A) If the Facility cannot be used for the purpose contemplated by this License
because of condemnation or purchase in lieu of condemnation, this License will
terminate.
(B) CSC will have no claim to the condemnation award or proceeds in lieu of
condemnation.
XX.
LIMITATION OF WARRANTIES
There are no implied warranties of merchantability, of fitness for the
particular purpose, or of any other kind arising out of this License, and there
are no warranties that extend beyond those expressly stated in this License,
including any statutory warranty.
XXI.
NOTICES
Except as otherwise stated herein, any notice, demand or request required or
permitted to be given under this License or any law shall be deemed to have been
given if reduced to writing and delivered in person or mailed by overnight or
Registered Mail, postage paid, to the party who is to receive such notice,
demand or request at the addresses set forth at paragraph I(B) or I(C) and
below, as applicable, or at such other address as County or CSC may specify from
time to time by written notice. Such notice, demand or request, except as
otherwise stated herein, shall be deemed to have been given three (3) days
subsequent to the date it was so delivered or mailed.
COUNTY: CSC:
County of Dallas Correctional Services Corporation
Facilities Management Department James F. Slattery
600 Commerce Street, 9th Floor President and CEO
Dallas, Texas 75202 1819 Main Street, Suite 1000
Sarasota, Florida 34236
XII.
RELATIONSHIP OF THE PARTIES
CSC is an independent contractor and not an agent, servant or employee of Dallas
County. CSC represents and warrants that it has sole control over the Facility
and is solely responsible for the day to day condition, operation and use of the
Facility, independently making all decisions regarding the condition and each
operation or use thereof.
XXIII.
MISCELLANEOUS GENERAL PROVISIONS
(A) Applicable Law: This License and all matters pertinent thereto shall be
construed and enforced in accordance with the Constitution and laws of the
State of Texas and venue shall be in Dallas County, Texas. Notwithstanding
anything herein to the Contrary, this License is expressly made subject to
County's Sovereign Immunity, Title 5, TEXAS CIVIL REMEDIES CODE, and all
applicable State of Texas and Federal Laws.
(B) Entire License: This License, including all Exhibits, and Addendum,
constitutes the entire License between the parties hereto and may not be
modified except by an instrument in writing executed by the parties hereto.
(C) Binding Effect: This License and the respective rights and obligations of
the parties hereto shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto as well as the parties themselves;
provided, however, that County, its successors and assigns shall be obligated to
perform County's covenants under this License only during the term of this
License.
(D) Severability: If any provision of this license shall be held invalid, void
or unenforceable, the remaining provisions hereof shall not be affected or
impaired, and such remaining provisions shall remain in full force and effect.
(E) Default/Waiver/Mitigation: It is not a waiver of default if the non-
defaulting party fails to declare immediately a default or delays in taking any
action. Pursuit of any remedies set forth in this License does not preclude
pursuit of other remedies in this License or provided by law. CSC has a duty to
mitigate damages.
(F) Rights and Remedies Cumulative: The rights and remedies provided by this
License are cumulative, and either party's using any right or remedy will not
preclude or waive its right to use any other remedy. These rights and remedies
are in addition to any other rights the parties may have by law, statute,
ordinance, or otherwise.
(G) Binding Agreement/Parties Bound CSC certifies that the person executing this
License has full authority and is authorized to execute License on behalf of
CSC. A corporate resolution, duly passed by CSC, evidencing such authority
shall be furnished to County on the date of execution of this License and
constitutes a legal and binding obligation of the parties, their successors
and permitted assignees.
(H) Amendment. This License may not be amended except in a written instrument
specifically referring to this Agreement, approved by formal Order of Dallas
County Commissioners Court, and signed by the parties hereto.
(I) Counterparts. This License may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
XXIV.
SPECIAL CONDITIONS
(A) Neither County, Dallas County Judge, Dallas County Commissioners, it
employees, agents, invitees, contractors and subcontractors nor DCJB, its
members, employees, agents, invitees, contractors and subcontracts shall be
liable to CSC or to CSC's employees, patrons, visitors, invites, or any other
person for any injury to such persons or any damage to personal property
occurring on the Facility or in the Premises caused by the negligence or
misconduct of CSC, its employees, or Juveniles while in the care, custody and
control of CSC.
COUNTY OF DALLAS CORRECTIONAL SERVICES
CORPORATION
BY: Lee F. Jackson By: James F. Slattery
Presiding County Judge Title: President and CEO
Date: 6/23/98 Date: 6/29/98
APPROVED AS TO FORM:
By: John Dahill
District Attorney, Civil Section
MANAGEMENT SERVICES AGREEMENT
FOR THE JEFFERSON COUNTY DOWNTOWN JAIL
THIS MANAGEMENT SERVICES AGREEMENT (hereinafter "Agreement") for the jail
facility located in the Jefferson County Courthouse in downtown Beaumont,
Texas, and any improvement, modification or expansion thereof (hereinafter the
"Facility"), is made and entered into as of May 26, 1998, by and between the
COUNTY OF JEFFERSON, TEXAS (the "County"), a political subdivision of the State
of Texas, and CORRECTIONAL SERVICES CORPORATION ("Manager").
RECITALS:
WHEREAS, the County is a political subdivision of the State of Texas
governed by a duly elected Commissioners' Court; and
WHEREAS, Subchapter F of Chapter 351 of the Texas Local Government Code
grants authority for the County to enter into contracts with private vendors to
provide for the financing, design, construction, leasing, operation, purchase,
maintenance, or management of a jail, detention center, work camp or related
facility; and
WHEREAS, the County and Manager have entered into an Operation,
Management and Maintenance Agreement dated February 23, 1998 (the "Operating
Agreement") to operate, manage and maintain the Facility; and
WHEREAS, the Operating Agreement and the term thereof are subject to the
County receiving a favorable ruling from the Internal Revenue Service (the "IRS
Ruling") that the Operating Agreement will not affect the tax-exempt status of
the County's outstanding bonds, including but not limited to the County's
Refunding Bonds, Series 1993; and
WHEREAS, the County has applied to the Internal Revenue Service for the
IRS Ruling and is currently awaiting a favorable ruling under the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, during the pendency of the IRS Ruling, the County and Manager
desire to enter into this Agreement pursuant to which the County contracts with
the Manager to provide management services for operation of the Facility in its
entirety; and
WHEREAS, Revenue Procedure 97-13 authorizes the County to enter into a
qualified management contract for the management of the Facility without
resulting in a private use of the Facility under Section 141(b) of the Code;
and
WHEREAS, the County and the Manager intend and agree that this Agreement
shall constitute a qualified management contract made pursuant to and in
accordance with Revenue Procedure 97-13, and any term or provision in this
Agreement in conflict with Revenue Procedure 97-13 shall be modified and
amended to the extent necessary so as to comply therewith.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and subject to the conditions hereinafter set forth, the
County and Manager hereby agree as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 1.01. Representations. Covenants and Warranties of the County.
The County represents, covenants and warrants as follows:
(a) The County is a duly formed and validly existing political
subdivision of the State of Texas, and is governed by the laws of the State of
Texas.
(b) To the best of its knowledge, the laws of the State of Texas
authorize the County to establish, acquire, construct, operate and maintain the
Facility, to enter into this Agreement and the transactions contemplated
hereby, and to carry out its obligations under this Agreement.
(c) The officers of the County executing this Agreement have been duly
authorized to execute and deliver this Agreement under the terms and provisions
of a resolution of the County's governing body or by other appropriate official
action.
(d) To the best of its knowledge, the County has complied with all open
meetings laws, all public contracting laws and all other state and federal laws
applicable to this Agreement.
(e) The Facility is required by the County solely for a public purpose
and public use to house inmates detained or incarcerated by the County or the
State of Texas, the political subdivisions thereof, or any other Governmental
entity (whether inside or outside of the State of Texas). Preference will be
given to requests from the Texas Commission on Jail Standards (the
"Commission") for the housing of prisoners from Texas to the greatest extent
possible. In no event, however, shall this provision be interpreted to limit
the housing of prisoners from other Governmental entities in the Facility,
including but not limited to other states.
(f) The County shall reasonably assist Manager which shall diligently
process and seek to enter into all lawful and appropriate agreements
in the name and on behalf of the County with such prisoner transfer sources as
may be necessary so as to facilitate the receipt and incarceration of eligible
non-maximum security prisoners in the Facility.
(g) No member of the governing body of the County is now or will be an
owner, shareholder, employee, officer or director of Manager.
(h) The County shall use its best efforts to make all submissions to the
Commission required by (i) Section 511.092(b) of the Texas Local Government
Code so as to enable the County to obtain a determination from the Commission
that the Facility is a proper facility to house out-of-state prisoners and (ii)
Section 511.092(h) of the Texas Local Government Code so as to obtain
Commission approval of this Agreement.
SECTION 1.02. Representations, Covenants and Warranties of Manager.
Manager represents, covenants and warrants as follows:
(a) Manager is in good standing under the laws of the State of Texas, is
duly qualified to transact business and hold property in the State of Texas and
in every jurisdiction in which the nature of its activities requires it to be
so qualified, has full and complete power to enter into this Agreement and to
enter into and carry out the transactions contemplated hereby, and to carry out
its obligations under this Agreement, and has duly authorized the execution and
delivery of this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
fulfillment of or compliance with the terms and conditions hereof nor the
consummation of the transactions contemplated hereby conflicts with or results
in a breach of the terms, conditions or provisions of any restriction or any
agreement or instrument to which Manager is now a party or by which Manager or
its property is bound, or constitutes a default under any of the foregoing, or
results in the creation of imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of Manager.
(c) No officer, member of the Board of Directors, shareholder, owner or
employee of Manager is now or will be an employee or member of the governing
body of the County.
(d) The Facility is required by the County solely for a public purpose
and public use to house inmates detained or incarcerated by the County or the
State of Texas, the political subdivisions thereof, or any other Governmental
entity (whether inside or outside of the State of Texas). Preference will be
given to requests from the Commission for the housing of prisoners from Texas to
the greatest extent possible. In no event, however, shall this provision be
interpreted to limit the housing of prisoners from other Governmental entities,
including but not limited to other states.
(e) Manager shall make all submissions to the Commission required by
Section 541.092(h) of the Texas Local Government Code so as to obtain and
maintain the approval by the Commission for Manager to provide services
pursuant to this Agreement.
SECTION 1.03. Joint Covenants of the County and the Manager
The County and the Manager agree that this Agreement shall constitute a
qualified management contract made pursuant to and in accordance with Revenue
Procedure 97-13, and any term or provision in this Agreement in conflict with
Revenue Procedure 97-13 shall be modified and amended to the extent necessary
so as to comply therewith.
ARTICLE II
OPERATIONS
SECTION 2.01. Operation, Management, Maintenance and Repair of Facility.
(a) Manager shall provide all management services necessary to operate
and maintain the Facility in compliance with minimum standards adopted by the
Commission, in accordance with a commercially reasonable manner and in
accordance with the minimum standards of any Prisoner Transfer Source (as
defined in Section 3.01(b) hereof) from which prisoners are placed in the
Facility. Additionally, Manager shall receive and retain a Certification of
Compliance from the Commission and shall take all steps necessary for the
Commission to review and approve the Manager's qualifications pursuant to
Section 511.0092(h) of the Texas Local Government Code. In connection with the
its management of the Facility as described herein, Manager shall, at its sole
cost and expense, provide the following management goods and services of a
commercially reasonable quality and in a good and workmanlike manner in order to
provide for operation and maintenance of the Facility in its entirety:
(1) Intake procedures and prisoner accounting which shall encompass
prisoner intake, recordings, billing, systems of control, identification systems
and records, and such other statistical records as may be required by law or are
generally accepted prisoner-locator practices;
(2) Adequate staffing in accordance with applicable federal, state and
Prisoner Transfer Source requirements necessary to maintain the requisite level
of security within the Facility and sufficient to monitor the activities of the
prisoners confined within the Facility, and to control ingress and egress at the
Facility;
(3) Food and beverage services;
(4) Clothing and uniforms for inmates and Manager's employees which
shall be distinctive from clothing and uniforms of County inmates and employees;
(5) Procurement and purchasing;
(6) Bookkeeping and financial accounting;
(7) Medical Care as set forth in greater detail in Article V;
(8) Training of all personnel to be employed at the Facility;
(9) Recreational, vocational, educational, counseling and exercise
services, and activities;
(10) All routine upkeep and maintenance for the Facility provided on a
regular basis. For purposes of this subsection, the term "upkeep and
maintenance" shall be defined as all scheduled (anticipated and designated to
occur within a given time period or production level) and periodically provided
(ongoing and continual or at least occurring at intervals of time or production
which are generally predictable) work on operational and functioning
improvements to real property necessary to sustain or support safe, efficient,
continuous operations or to prevent the decline, failure, lapse or deterioration
of the improvement. The purpose of this Subsection is to provide for
preventative maintenance. Examples without limitation are: routine cleaning,
periodic testing and cleaning of the HVAC systems, replacement of HVAC filters,
changing lightbulbs, periodic testing and maintenance of security, fire and
smoke removal systems, and interior painting;
(11) All non-structural, non-capital repairs and restoration, as required
to keep the Facility in its current condition. For purposes of this subsection,
the term "repairs and restoration" means to mend or bring back to current
working order (with or without complete replacement), property which was broken,
damaged, worn out, or defective. The purpose of this Subsection is to provide
for corrective work. Examples without limitation are: replacement of the air
conditioner compressor motor, replacement of electrical switches in kitchen
appliances, repairing kitchen appliances, fixing broken pipes, replacing
solenoids in electric locks, and painting;
(12) Facility commissary;
(13) All telephone facilities;
(14) All vending machines;
(15) A comprehensive plan for allowing for and responding to prisoner
grievances regarding their conditions of confinement;
(16) A written procedure for the County's review and approval outlining the
coordination of law enforcement activities in the case of riot, rebellion,
escape, or other situations requiring assistance from city, county or state law
enforcement agencies. Manager shall assist the County in soliciting the approval
of such procedures by other law enforcement agencies. Upon approval by the
Sheriff (as defined in Section 2.02), chief of police and the written
concurrence from the assistant director of the Texas Department of Public
Safety, the County and Manager agree to submit such procedures to the Commission
for approval; and
(17) Unless otherwise provided herein, all other, goods or services
incidental to the housing, care, or treatment of inmates and the operation of
the Facility, including transportation of inmates and personnel.
(b) No ad valorem taxes are currently assessed against the Facility. The
parties hereto acknowledge that Manager is, by this Agreement, managing the
Facility for the County and as such the Facility is used for a public purpose
and is not subject to ad valorem tax assessment. The parties hereto do not
anticipate or foresee any assessment of ad valorem taxes against the Facility.
County agrees that it will not impose taxes, levies, fees or other impositions
upon Manager which are for the County's benefit and are not either (a) mandated
by State law, or (b) generally applicable to citizens or businesses within
Jefferson County and able to be passed back to Manager's clients through higher
per diem rates.
(c) Pursuant to Manager's obligations under this Section 2.01 to manage the
Facility at its sole cost and expense, and in connection with all of Manager's
obligations pursuant to this Agreement, during the term of this Agreement
Manager shall have the sole and exclusive right, in its sole discretion and at
its own expense, to install items of movable machinery and equipment in or upon
the Facility, which items shall be identified by tags or other symbols affixed
thereto as property of Manager not included within the Facility and not
considered or deemed to be property belonging to the County or any other entity.
All such items so identified shall remain the sole property of Manager, in which
County and any other party shall have no interest, and all such items may be
modified or removed by Manager at any time, provided that Manager shall repair
and restore any and all damage to the Facility resulting from the installation,
modification or removal of any such items. Manager warrants that none of the
property brought to the Facility pursuant to this Subsection 2.01 (c) will be
permanently affixed to the realty or any improvements which form part of the
Facility and agrees to provide the County with a listing of such property every
ninety (90) days. Nothing in this Agreement shall prevent Manager from
purchasing or leasing items to be installed pursuant to this Subsection 2.01(c)
under a conditional sale or lease with option to purchase contract, or subject
to a vendor's lien or security agreement as security for the unpaid portion of
the purchase price thereof, provided that no such lien or security interest
shall attach to any part of the Facility.
(d) The County shall be responsible for all structural and capital repairs,
restorations and replacements to the Facility, including those required to
maintain compliance with all Texas Jail Commission and other applicable
standards. Subject to (i) approval of the County Judge and the Commissioners
Court and (ii) compliance with budget and appropriation limitations imposed by
applicable law, the County agrees to undertake and complete any necessary
structural and capital repairs, restorations or replacements to cause the
Facility to remain in its present condition. The County shall not be responsible
for any non-structural, non-capital repairs, restorations and replacements to
the Facility, all of which shall be the sole responsibility of Manager.
(e) Upon execution of this Agreement, the County and Manager agree to
inspect the Facility and to prepare a video tape showing the present condition
of the Facility. In addition, upon completion of the items of maintenance,
cleaning, painting, construction and improvement contemplated by Section 12.16
hereof, the County and the Manager agree to re-inspect the Facility and to
prepare a second video tape showing the condition of the Facility. During the
term of this Agreement, Manager agrees to maintain the Facility in its
condition after the items of maintenance, cleaning, painting, construction and
improvement have been completed at the Facility pursuant to Section 12.16
hereof and Manager shall return the Facility to the County in such condition
upon termination of this Agreement for any reason, normal wear and tear
excepted.
SECTION 2.02. Independent Contractor.
Manager is and shall be an independent contractor, and subject to the
terms of this Agreement, shall have the sole right to supervise, manage,
operate, control, and direct the performance of the details incident to its
management duties and obligations under this Agreement. Nothing contained in
this Agreement shall be deemed or construed to create a partnership or joint
venture, to create the relationships of an employer/employee or principal/agent,
or to otherwise create any liability for the County whatsoever with respect to
the indebtedness, liabilities, and obligations of Manager or any other party.
Manager shall be solely responsible for (and neither the County nor the
Jefferson County Sheriff ["Sheriff"]) shall have any obligation with respect to
the interviewing, hiring, training, assignment, control, management,
compensation, promotion, or termination of Manager's employees which constitute
the Facility's administration and staff. However, all activities of Manager
shall be subject to regular, on-site monitoring by the Sheriff or his designee
at such times and in such manner as the Sheriff, in his sole discretion, shall
choose to do so, and Manager shall furnish reports on such matters in form and
content acceptable to the Sheriff when so requested.
SECTION 2.03. Acceptance of Prisoners.
Subject to the provisions of Sections 3.03 and 3.04, Manager shall
accept and properly incarcerate all eligible non-maximum security prisoners
assigned to the Facility for whom there is space available within the statutory
and regulatory limits of the Facility. Manager shall review, inspect and check
all appropriate inmate records, including but not limited to medical records,
and shall make such inquiries as are necessary to insure that any maximum
security prisoners are identified and excluded. The Manager shall provide
copies of such records to the Sheriff for review and approval at least five (5)
business days prior to the acceptance of an inmate. No maximum security
prisoners shall be incarcerated at the Facility. For purposes of this
Agreement, "maximum security prisoners" shall mean and be the same as maximum
security inmates as defined by the Jail Commission's Primary Security Level
Assignment system, along with inmates who have a prior record of any aggravated
sex crime as defined by the Texas Penal Code, including crimes of other states
satisfying the same general elements of the relevant Texas statutes.
SECTION 2.04. Certification of Facility.
Manager shall obtain, and thereafter maintain, certification of
compliance from the Commission as well as any other certifications necessary
to incarcerate at the Facility non-maximum security prisoners of whatever
source, whether local, state, federal, or, to the extent allowed by state
laws, prisoners from outside the State of Texas.
SECTION 2.05. Subcontractors.
(a) Manager may subcontract any portion of the management services to be
performed hereunder to provide for operation and maintenance of the Facility,
but shall not thereby be relieved of any of its obligations set forth herein.
Manager shall bind each subcontractor to the terms hereof as far as applicable
to such subcontractor's work, and shall require that each subcontractor perform
its work in conformance with the terms and conditions of this Agreement. In the
event Manager subcontracts as provided for in this Subsection, then any such
subcontractor shall be subject to the provisions of insurance pursuant to
Sections 9.01 through 9.03 hereof and indemnification pursuant to Section 10.02
hereof.
(b) Manager shall not enter into any subcontract pursuant to Subsection
2.05(a) hereof without the approval of the County. The approval of the County
required by this Subsection 2.05(b) shall not be unreasonably withheld. Manager
will provide the County copies of any such subcontracts sufficiently in advance
of any deadline for signing same to allow for the effective review and approval
by the County.
SECTION 2.06. Non-Assumption of Existing Agreements.
Manager is not, by the execution of this Agreement, accepting or assuming
any liability, obligation, responsibility, or duty required by any contract,
lease or other agreement entered into, executed or agreed to by the County or
any prior Manager of the Facility. As an example only, and without limitation,
Manager does not assume, and hereby specifically rejects, any liability,
obligation, responsibility, or duty required by any existing contract, lease or
other agreement relating to the following matters regarding the Facility:
(a) Food Service,
(b) Inmate Programming Services,
(c) Telephone Equipment or Services,
(d) Equipment Leases or Contracts,
(e) Commissary Services,
(f) Utility Services, and
(g) Supplies, Furniture or Fixtures
SECTION 2.07. Preparation of Reports.
Manager shall prepare and furnish such reports as may be required by law
to be submitted to the County with respect to the operation of the Facility or
the prisoners detained therein and, in addition, such other reports as may be
required by any Prisoner Transfer Source which has assigned inmates to the
Facility.
SECTION 2.08. Acceptance of Inmates.
Manager will properly incarcerate all non-maximum security inmates
assigned by the County to the Facility for whom there is space available at
the Facility within the statutory and regulatory limits of the Facility. Manager
will review, inspect and check all appropriate records and make such appropriate
inquiries to insure that any maximum security prisoners are identified. Neither
Manager nor the County will accept any maximum security prisoners at the
Facility.
SECTION 2.09. County Inmates Awaiting Court Proceedings.
The parties acknowledge and agree that prior to execution of this
Agreement, the Facility has been used by the County to hold County maximum
security and non-maximum security inmates on the second floor of the Facility
for temporary periods of limited duration for purposes of providing
accessibility to the District Courtrooms which are adjacent thereto. At all
times during the term of this Agreement, the County reserves the right to
maintain, and Manager agrees to accept without charge, all County Prisoners
(defined in Section 4.01) on the second floor of the Facility for such
temporary purposes not to exceed twelve (12) hours per day per inmate. For
this purpose and without charge, the County shall have access to the jail
cells and areas adjacent to the District Courtrooms on the second floor of the
Facility, as well as to the holding cell or tank at the "book in" area.
ARTICLE III
PRISONERS
SECTION 3.01. Transfer of Prisoners.
(a) Before the County enters into any contract with any Prisoner
Transfer Source, each such proposed contract shall be reviewed and approved by
Manager and the Sheriff and at that time the County and the Manger shall agree
on the management fee to be paid by the County to the Manager for each inmate
in accordance with Section 4.03 hereof. All such proposed contracts shall be
in the name of the County and shall provide for payments to be made to and
received by the County. Manager and the Sheriff shall be provided with copies
of any such proposed contracts sufficiently in advance of any deadline for
signing same to allow effective review and approval by such party. Manager
shall not be obligated to accept any prisoner at the Facility, nor provide any
services of any nature required by any contract with any Prisoner Transfer
Source which was not reviewed and approved by Manager prior to execution by
the County and the Sheriff. After Manager has reviewed and approved a contract
with a Prisoner Transfer Source prior to execution by County and the Sheriff,
then Manager shall perform any and all obligations and duties which the County
is required to perform pursuant to such contract. Both the Sheriff and Manager
have the right to reject any proposed contract with a Prisoner Transfer
Source.
(b) On March 19, 1998, the County and the Texas Department of Criminal
Justice ("TDCJ") have entered into that certain Inmate Housing Payment
Agreement in the form attached hereto as Exhibit "A" (the "TDCJ Agreement"). By
execution hereof, the Manager approves the TDCJ Agreement as required by this
Section and agrees that the management fee payable to the Manager for TDCK
prisoners shall be the amount set forth in Section 4.03 hereof.
(c) Possible prisoner transfer sources (each a "Prisoner Transfer Source")
include, but are not limited to, the following:
(1) The County Sheriff of Jefferson County;
(2) The County Sheriff of any other Texas County pursuant to any
inter-local cooperation contract with the County;
(3) The Texas Department of Criminal Justice ("TDCJ") pursuant to
an agreement between the County and the TDCJ;
(4) Any County Probation Department pursuant to any inter-local
cooperation contract with the County;
(5) Subject to the limitations set forth herein, any other state
(including the District of Columbia) or political subdivision thereof which may
lawfully assign prisoners to the County pursuant to an agreement between the
County and the other state or political subdivision; and
(6) Subject to the limitations set forth herein, the United States
Government or any department or agency thereof, pursuant to an agreement between
such governmental entity and the County.
(c) To the extent allowable by law or contract and subject to the
requirements of this Agreement, Manager shall be responsible for identifying
and procuring prisoners from other jurisdictions to be housed at the Facility
pursuant to written contracts with the County. To the extent required by law or
contract and consistent with the rights and obligations of the County as set
forth in this Agreement, the County will assist Manager in its efforts to
identify and procure such prisoners.
SECTION 3.02. Jefferson County Jail Prisoners.
The County and the Sheriff shall be solely responsible for the housing,
care and control of prisoners incarcerated in the new and principal Jefferson
County Jail facility located several miles from downtown Beaumont, Texas.
SECTION 3.03. Designation and Transfer of Prisoners.
Prior to transfer of any prisoner to the Facility, the designation of
such prisoner as a "maximum security" or "non-maximum security" prisoner (or
other appropriate classification levels established by the County and Manager)
shall be agreed by Manager and the Sheriff, and such designation shall be made
in accordance with the classification plan approved by the Commission for the
Facility, as well as the provisions of this Agreement, applicable state law,
the rules and regulations of the Prisoner Transfer Source from which the
prisoner has been sent and the procedures and standards promulgated by the
Commission and the Prisoner Transfer Source which are incorporated herein by
reference. No maximum security prisoners shall be incarcerated at the Facility,
but the County expressly reserves the right to reject any prisoner from
incarceration at the Facility regardless of any assigned classification.
SECTION 3.04. Reclassification and Reassignment of Prisoners.
If at any time Manager finds that the capacity of the Facility, the
demonstrated behavior of any prisoner or group of prisoners, or the mix of
prisoners incarcerated in the Facility requires or warrants reassignment or
re-classification of any prisoners, Manager will notify the Sheriff and make a
reasonable recommendation concerning reassignment or reclassification of said
prisoner or prisoners which is subject to the final approval of the County. At
its sole cost and expense, Manager shall be responsible for the transfer of any
reassigned or re-classified prisoner or prisoners to the appropriate
responsible party. This determination shall be made by Manager in accordance
with applicable law and the rules, regulations and procedures promulgated by
the Commission, or by the applicable Prisoner Transfer Source.
SECTION 3.05. Communication and Cooperation.
The County and the Sheriff shall cooperate with Manager in all matters of
law enforcement, security and communications. The County and the Sheriff shall
(at Manager's sole cost and expense) reasonably assist Manager at the request
of Manager in the training of Manager's employees hired to operate the
Facility. The Sheriff shall reasonably assist and cooperate with Manager for
purposes of obtain licensing as may be required by State or federal law for
employees. The County and the Sheriff shall reasonably assist and cooperate
with Manager in providing information requested by Manager in the screening of
candidates for employment to the extent such information may be lawfully
obtained or released under federal or State law. The County and the Sheriff
will verify that all Manager employees undertaking jailer duties are certified,
as required by the Commission.
SECTION 3.06. Maximum Utilization of Facility.
The County and Manager agree that it shall be to their mutual benefit
and interest for the Facility to be fully utilized by maintaining the maximum
prisoner population within statutory and regulatory limits, and Manager hereby
warrants to use its best efforts to do so. The County understands and agrees
that the actions to be performed by Manager to seek maximum utilization of the
Facility are not intended by Manager, and will not be construed by the County,
as any type of warranty or guarantee by Manager that its best efforts to
promote the maximum utilization of the Facility will result in any specified
level of utilization of the Facility or in any specified amount of prisoner
population being incarcerated at the Facility. The County agrees to reasonably
support the efforts of Manager in seeking out and thereafter contracting with
Prisoner Transfer Sources in the name of the County upon terms reasonably
acceptable to Manager and the County, so as to efficiently maximize the
utilization of the Facility.
SECTION 3.07. Prisoner Escape.
In the event a prisoner confined in the Facility escapes from the
Facility, Manager will immediately notify appropriate public law enforcement
officers, including the Sheriff, of such prisoner's escape. The public
officers so notified will be responsible for the capture and return of the
escaped prisoner pursuant to the written procedures described in Section 2.01
(a)(16) above, provided that Manager will expend all reasonable efforts in
assisting in the capture and return of any escaped prisoners and shall
reimburse the County and other law enforcement agencies for all costs and
out-of-pocket expenses incurred in connection therewith.
SECTION 3.08. Out-of-State Prisoners.
It is expressly agreed and understood that all contracts to house
out-of-state prisoners in the Facility shall be in the name of the County and
shall contain the provisions required by Section 511.092(d) of the Texas Local
Government Code and any implementing regulations of the Commission thereunder,
as the same may be in effect from time to time. These provisions shall include
without limitation the following:
(a) the Facility shall at all times meet the minimum standards
established by the Commission;
(b) each inmate to be released from custody must be released only within
the jurisdiction of the sending state;
(c) before transferring an inmate, the Facility (acting through Manager on
behalf of the County) shall review for compliance with the Commission's
classification standards, all classification and conduct records concerning the
sending state's classification of the inmate and all appropriate medical
information concerning the inmate, including certification of tuberculosis
screening and treatment prior to transfer;
(d) except with the prior and express waiver of the Commission, the sending
state shall not transfer and the Facility shall not accept an inmate with a
record of institutional violence involving use of a deadly weapon, a pattern or
history of repeated violence while in custody, or escape or attempted escape
from secure custody;
(e) Manager shall determine the custody level of each inmate in accordance
with Commission rules so to ensure that custody level assignments for the
Facility as a whole do not exceed the construction security level availability
in the Facility; and
(f) the County shall be entitled to terminate the contract at will by
providing the sending state with ninety (90) days' notice of intent to terminate
the contract.
The County and Manager shall take all actions necessary for operations
of the Facility to meet the continuing requirements of the Commission. In
recognition of the foregoing, the County and Manager agree as follows:
(i) The County shall provide the Commission with available custody level
capacity at the Facility as in effect from time to time;
(ii) The Manager shall provide the Commission with copies of all contracts
for housing out-of-state prisoners together with any addendums;
(iii) The Commission shall approve prior to implementation all operational
and contractual requirements for the Facility as meeting or exceeding Commission
requirements;
(iv) The Commission shall approve written procedures developed by the
County and Manager for coordination of law enforcement activities in case of
riot, rebellion, escape or other situations requiring assistance from city,
county or state law enforcement agencies;
(v) The Commission shall be notified of any major incidents, including
riot, rebellion, escape, or other situations requiring assistance from city,
county or state law enforcement agencies;
(vi) All employees at the Facility shall be certified by the Commission
on Law Enforcement Officer Standards and Education; and
(vii) A tuberculosis screening plan for the Facility shall be approved by
the Texas Department of Public Health.
ARTICLE IV
MANAGEMENT FEE, UTILITIES, ETC.
SECTION 4.01. County Prisoners.
For purposes of this Agreement, the term "County Prisoners" shall mean
all prisoners assigned and transferred to the Facility by the Sheriff (including
County Prisoners temporarily at the Facility awaiting court proceedings as
contemplated by Section 2.09), other than those prisoners received and
incarcerated by the County pursuant to agreements with the Prisoner Transfer
Sources set forth in Sections 3.01 (b) hereof and any other Prisoner Transfer
Sources not now specifically set forth in Section 3.01.
SECTION 4.02. Calculation of Prisoner Days.
For the purposes of this Agreement, a "Prisoner Day" shall mean a
twenty-four (24) hour time period beginning with twelve (1 2)o'clock midnight
and ending twenty-four (24) hours later. A prisoner assigned to the Facility
for any portion of a day (other than a County Prisoner temporarily incarcerated
for less than twelve (12) hours as contemplated by Section 2.09) shall be
deemed to be included in that day's prisoner population for purposes of
calculating the amounts payable pursuant to this Agreement.
SECTION 4.03. Management Fee Payable to Manager.
As consideration for the management services to be provided by Manager
under this Agreement, on a monthly basis the Manager shall be paid a Fixed
Management Fee by the County on a per inmate per Prisoner Day basis for each
inmate and prisoner housed at the Facility in accordance with the following
schedule:
County Prisoners: $31.00 per inmate per Prisoner Day
State Prisoners from TDJC: $31.00 per inmate per Prisoner Day
Other Prisoners: At a per inmate per Prisoner Day rate to be agreed upon
between the County and the Manager at the time any other prisoner is assigned
to the Facility.
The County and the Manager acknowledge that the management fee set forth
above has been agreed upon based on the expectation that the Facility will have
a maximum of 411 inmates. The County and the Manager agree that if the number
of inmates ever exceeds 411, then the County and the Manager shall in good
faith renegotiate the Fixed Management Fee payable to the Manager to take into
account the additional costs and expenses the Manager will incur as a result of
the additional inmates.
SECTION 4.04. Utilities.
All utilities provided to the Facility shall be paid for by County.
SECTION 4.05. Transportation Services.
The transportation of inmates (other than County Prisoners) shall be the
responsibility of Manager and the County shall have no obligation to provide
any transportation services for inmates other than County Prisoners.
SECTION 4.06. Billing Services.
Billing services shall be provided by Manager to the County for all
contracts to house prisoners in the Facility. Each contract will be billed on a
monthly basis in the name of the County. Manager shall note on all invoices
under the contract that payment should be made directly to the County by wire
transfer or other direct payment to the County. Manager shall mail or otherwise
deliver copies of all invoices to the County concurrently with the mailing of
such invoices to the party being invoiced. In the event that a person or entity
invoiced by Manager fails to make timely payment to the County, then Manager at
its sole cost and expense shall take all steps (including litigation) to
recover such invoiced amounts for the County.
SECTION 4.07. Telephone Revenues.
In addition to any other fees or funds to be paid to the County or Manager
hereunder, the County and Manager agree that all proceeds received by Manager or
the County for inmate telephone services, including any telephone services
advanced, unless otherwise directed by law shall be distributed as follows:
(i) 100% to the County; and
(ii) -0-% to Manager.
ARTICLE V
FACILITY MEDICAL CARE
SECTION 5.01. Basic Medical Care.
Basic medical care will be provided by Manager at its expense to all
prisoners detained at the Facility. This shall be limited to any condition
which can be "self-treated" by the prisoners or which may be treated by a lay
technician acting under guidelines provided by a medical doctor, including
first aid for emergencies. This shall also include the dispensing of
"over-the-counter" type medications which have been approved for inventory by
the medical consultant to the Facility.
SECTION 5.02. Other Medical Care.
(a) The cost of hospitalization, prescription drugs, surgical and dental
care (and transportation to obtain such care) for a prisoner shall be the
obligation of the Prisoner Transfer Source or the jurisdiction from which the
prisoner was assigned to the Facility, including prisoners from the County.
(b) However, regardless of any other Section of this Agreement, Manager
shall be obligated to provide all medical services required to be provided
pursuant to any Agreement between the County and any Prisoner Transfer Source
where Manager has reviewed and approved such agreement prior to execution by
the County. If requested by Manager and at Manager's sole cost and expense, the
County shall reasonably assist Manager in requesting reimbursement from any
appropriate entity for any medical services provided to any inmate. The County
shall not, however, be obligated to pay or bear any cost of any medical or
health care (or transportation to obtain such care) for any prisoner, other
than County prisoners.
ARTICLE VI
COMPLIANCE WITH STANDARDS
SECTION 6.01. Procedures Manual.
Manager shall prepare and adopt a procedures manual for the operation of
the Facility so as to insure that the Facility is operated in compliance with
applicable law, and those rules and procedures promulgated by the Commission or
any other Prisoner Transfer Source. Manager shall make such modifications and
corrections in said procedures manual as are necessary to keep the Facility in
compliance with all applicable laws and the rules and procedures promulgated by
the Commission and any other Prisoner Transfer Source.
SECTION 6.02. Training of Employees.
Manager, at its sole cost and expense, shall ensure that all employees at
the Facility are adequately trained to perform at the requisite levels and
standards required by all applicable laws and the rules and procedures
promulgated by the Commission and any applicable Prisoner Transfer Source.
ARTICLE VII
TERM OF AGREEMENT
This Agreement shall be on a month to month basis and may be terminated
at any time by the County or the Manager upon giving sixty (60) days' prior
written notice to the other party hereto.
ARTICLE VIII
TERMINATION
This Agreement may be terminated by either party if the other party is in
default hereunder and fails to cure such default within ten (10) days after
giving written notice of default.
ARTICLE IX
INSURANCE
SECTION 9.01. Liability Insurance.
(a) Manager shall obtain and maintain in force a policy or policies of
liability insurance in an aggregate amount of not less than One Million and
No/100 Dollars ($1,000,000.00) in coverage for any single claim thereunder.
Such insurance shall insure against all claims, including claims based upon
violations of civil rights arising from services performed by Manager pursuant
to this Agreement. In addition, Manager further agrees to cause contractual
liability insurance endorsements or policies to be issued to (i) insure
Manager's contractual obligations hereunder, (ii) indemnify the County as an
additional insured thereunder against liability costs, expenses, attorneys' fees
and costs of court for and with respect to any claims which may be asserted with
regard to, resulting from or in connection with Manager's performance or
nonperformance of this Agreement, including the obligations of Manager under
Section 10.02, and (iii ) obtain a waiver of subrogation in favor of the County
which shall be stated on the certificates described in Section 9.03. Manager
shall be liable to the County for all damages incurred by the County resulting
from Manager's failure to procure and maintain the insurance and certificates
required by this Agreement.
(b) Manager shall obtain and maintain in force, at its sole cost, risk
and expense during the term of this Agreement, a policy or policies of fire,
casualty, and building insurance in an aggregate amount of not less than Five
Million and No/100 Dollars ($5,000,000.00) in coverage for any single claim
thereunder. Such insurance shall cover all contents, structures, and fixtures
at replacement cost values of the Facility.
(c) Each company issuing an insurance policy pursuant to this Section 9.01
shall be authorized to transact business in the State of Texas and such company
shall be subject to the prior approval of the County (which approval shall not
be unreasonably withheld).
SECTION 9.02. Additional Insureds.
The policy or policies of insurance described in Section 9.01 shall name
the County, the County Judge, the County Commissioners and the Sheriff, as
additional insureds or joint loss payees, as their interests appear.
SECTION 9.03. Proof of Insurance.
Manager shall provide to the County insurance certificates as proof of
the insurance policies to be obtained and maintained in accordance with this
Article IX. Manager shall notify the County of any changes in any of its
policies of insurance within ten (10) days after the circumstance giving rise to
the change.
SECTION 9.04. Health Care Benefits.
Manager shall provide to its employees health care benefits at least
comparable to those provided by the County to its employees.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnification of Manager.
To the extent permitted by State law and except as otherwise provided in
the second sentence of Section 10.02 below, the County agrees to and hereby
does defend, hold harmless, and indemnify Manager and its officers, directors,
employees, agents, and representatives from and against any and all claims,
damages, demands, losses, costs and expenses including attorney's fees, arising
solely out of the gross negligence or willful misconduct of the County, its
agents, employees, and representatives, involving a prisoner housed at the
Facility prior to such prisoner being released from the Facility, including but
not limited to all claims, damages or losses arising or alleged to have arisen
from false arrest, false imprisonment, wrongful detention, violation of civil
rights and all other claims of a similar nature in connection with County
Prisoners originating in Jefferson County.
SECTION 10.02. Indemnification of County.
MANAGER AGREES TO AND HEREBY DOES DEFEND, HOLD HARMLESS AND INDEMNIFY THE
COUNTY, ITS EMPLOYEES, AGENTS, AND REPRESENTATIVES (INCLUDING THE COUNTY JUDGE,
THE COUNTY COMMISSIONERS, AND THE SHERIFF), FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, DEMANDS, LOSSES, COSTS AND EXPENSES, INCLUDING ATTORNEYS'
FEES, INCURRED OR SUFFERED BY THE COUNTY, ITS EMPLOYEES, AGENTS, OR
REPRESENTATIVES, ARISING OUT OF, IN WHOLE OR IN PART, OR RESULTING FROM, IN
WHOLE OR IN PART, ANY NEGLIGENT OR WRONGFUL ACT OR FAILURE TO ACT BY MANAGER OR
ITS AGENTS, EMPLOYEES, OFFICERS OR REPRESENTATIVES. IT IS THE EXPRESSED
INTENTION OF THE PARTIES HERETO THAT THE INDEMNITY PROVIDED FOR IN THIS SECTION
IS INDEMNITY BY MANAGER TO INDEMNIFY AND PROTECT THE COUNTY FROM THE
CONSEQUENCES OF THE COUNTY'S OWN NEGLIGENCE, WHERE THAT NEGLIGENCE IS A SOLE
CAUSE OR A CONCURRING CAUSE OF THE INJURY OR DEATH OR DAMAGE. IT IS FURTHER THE
EXPRESSED INTENTION OF THE PARTIES HERETO THAT MANAGER DOES HEREBY ASSUME
LIABILITY FOR ALL CLAIM ARISING FROM THE SERVICES PERFORMED UNDER THIS
AGREEMENT BY MANAGER.
ARTICLE XI
APPROVAL AND MONITORING
SECTION 11.01. Approval of Sheriff.
The Sheriff has executed this Agreement in the space provided herein to
evidence his written approval of this Agreement as required by Section 351.102
of the Texas Local Government Code.
SECTION 11.02. Approval of Conditions of Confinement.
Within two (2) months of the execution of this Agreement, Manager shall
provide the County and the Sheriff with written comprehensive standards for
conditions of confinement, if the same has not already been provided. The
Sheriff shall review and approve the comprehensive standards for conditions of
confinement to be developed and implemented by Manager for the operation,
management and maintenance of the Facility. Such approval shall not be
unreasonably withheld. The acceptance and approval of said written standards
are an express condition precedent to the County's continued obligations under
this Agreement. Said standard shall be incorporated as an addendum to this
Agreement in compliance with Section 351.103 of the Local Government Code.
SECTION 11.03. Monitoring by Sheriff and County.
The Sheriff shall regularly monitor Manager's management of the Facility.
The Sheriff or his written designated representative shall conduct a thorough
on-site inspection of the Facility no less than twice each month throughout the
term of this Agreement. The County shall have the same rights to monitor
Manager's management of the Facility, as are granted to the Sheriff, pursuant
to this Section 11.03. Specifically, the monitor will be free to investigate
inmate complaints and grievances independent from any committee made up of
employees of Manager, and Manager and its employees are required to cooperate
fully in any such investigations.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Disadvantaged Business and Hiring Preferences.
Manager shall use its best efforts to identify and utilize disadvantaged
business, as defined in Section 351.1035 of the Texas Local Government Code, as
subcontractors that may provide or have the potential to provide supplies,
materials, services and equipment to Manager for performance of this Agreement.
Manager shall use its best efforts to hire local personnel as employees for the
Facility, and shall give preferential consideration in hiring to employees of
the County who meet or exceed Manager's qualifications and standards for
employment in available positions. Additionally, Manager shall use its best
efforts to purchase local goods and services in connection with the operation,
maintenance, and management of the Facility. Manager shall also encourage its
subcontractors to similarly utilize disadvantaged business, hire local personnel
and purchase goods and services locally.
SECTION 12.02. Nondiscrimination.
Manager shall at all times provide the services required hereunder in
compliance with all laws with respect to nondiscrimination in hiring, promotion
or pay of employees. No person will be subjected to discrimination on the
grounds of race, sex, age, color, religion, or national origin.
SECTION 12.03. Binding Nature.
This Agreement shall not be binding upon the parties until it is approved
and executed by both parties, and all conditions of Section 12.13 have been
fulfilled. This Agreement, after properly approved and executed by the parties,
shall inure to the benefit of the County and Manager and shall be binding upon
the County and Manager and their respective successors and assigns. This
Agreement may not be assigned by either party without the express written
consent of the other party.
SECTION 12.04. Invalidity and Severability.
In the event that any provision of this Agreement shall be held invalid
or unenforceable, the validity and enforceability of the remaining provisions
of this Agreement shall not in any way be affected thereby. The parties hereto
acknowledge that if any provision of this Agreement is determined to be invalid
or unenforceable, it is their desire and intention that such provision be
reformed and construed in such a manner that it will, to the maximum extent
practicable, be deemed to be validated and enforceable.
SECTION 12.05. Terminology and Definitions.
All personal pronouns used in this Agreement, whether used in the
masculine, feminine, or neuter gender, shall include all other genders; the
singular shall include the plural and the plural shall include the singular.
SECTION 12.06. Laws of Texas.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
SECTION 12.07. Jurisdiction.
This Agreement shall be deemed performable in Jefferson County, Texas.
Any and all suits for any and every breach of this Agreement shall be
instituted and maintained in any court of competent jurisdiction in Jefferson
County, Texas.
SECTION 12.08. Entire Agreement.
This Agreement incorporates all of the agreements, covenants and
understandings between the parties hereto, concerning the subject matter
hereof, and all such covenants, agreements and understandings have been merged
into this written Agreement. No other prior agreement or understanding, verbal
or otherwise, of the parties or their agents shall be valid or enforceable
unless embodied in this Agreement. Each party acknowledges that it was
represented by competent counsel of its own choosing regarding the negotiation
and execution of this Agreement.
SECTION 12.09. Amendment.
No changes to this Agreement shall be made except upon written agreement
of both parties. This Agreement may be amended by a written agreement signed
by the Jefferson County Judge, the Jefferson County Sheriff, and the president
or any vice president of Manager.
SECTION 12.10. Confidentiality.
To the extent allowed by applicable state and federal laws, any
confidential information provided to or developed by Manager in the performance
of this Agreement shall be kept confidential and shall not be made available to
any individual or organization by Manager or the County without prior written
approval of the other party.
SECTION 12.11. Notices.
All notices called for or contemplated hereunder shall be in writing and
shall be valid when actually received by the party to whom such notice is
given if sent via a private courier, such as Federal Express or Airborne, or
by telecopy, or by means other than the United States Mail, or on the date
when deposited in the United States Mail, postage pre-paid, and sent by
Certified Mail, Return Receipt Requested and addressed to the party as herein
specified below:
(a) Notices to the County shall be delivered or sent as
follows:
Office of the Jefferson County Judge
Jefferson County Courthouse
P.O. Box 4025
Beaumont, Texas 77701
With a copy to:
Orgain, Bell & Tucker, L.L.P.
470 Orleans
Beaumont, Texas 77701
(b) Notices to Manager shall be delivered or sent as follows:
James F. Slattery, President
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, Florida 34236
SECTION 12.12. Headings.
The headings used herein are for convenience of reference only and shall
not constitute a part hereof or affect the construction or interpretation of
this Agreement.
SECTION 12.13 Conditions to Effectiveness.
The effectiveness of this Agreement and the commencement of the Initial
Term of this Agreement are subject to the continued approval and certification
of Manager and the Facility by the Commission to receive prisoners as
contemplated hereby.
SECTION 12.14. Authority.
By his or her signature below, each signatory individual certifies that
he or she is the properly authorized agent or officer of the applicable party
hereto and has the requisite authority necessary to execute this Agreement on
behalf of such party, and each party hereby certifies to the other that any
resolutions necessary to create such authority have been duly passed and are
now in full force and effect.
SECTION 12.15. Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original and all of which shall constitute but one and the same
instrument. This Agreement shall be considered fully executed when all parties
have executed an identical counterpart, notwithstanding that all signatures may
not appear on the same counterpart.
SECTION 12. 16. Agreement Regarding Modifications to Facility.
The parties hereto acknowledge that the Facility has been vacant prior to
the date of execution of this Agreement, and that certain maintenance, cleaning,
painting, construction and other improvements may be required in order to modify
the Facility and to meet the needs, demands and requirements of certain
potential Prisoner Transfer Sources. The parties acknowledge that they will
jointly inspect the Facility and specifically describe each item of maintenance,
cleaning, painting, construction, or other improvement required and shall at
that time enter into good faith negotiations to agree as to which party hereto
shall be responsible for the cost and implementation of each item so described.
SECTION 12.17. Special Provisions Regarding Modification to Agreement.
The parties hereto acknowledge that it is in their best interest for the
Facility to remain qualified to house out-of-state prisoners in accordance with
the requirements of the Commission so as to maximize utilization of the
Facility. Accordingly, it is expressly that the parties agree to enter into good
faith negotiations to amend this Agreement at any time and from time to time as
may be necessary to maintain on a continuous basis the Facility's qualification
to house out-of-state prisoners.
[The remainder of this page has intentionally been left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
JEFFERSON COUNTY, TEXAS CORRECTIONAL SERVICES CORPORATION
By: By:
Carl R. Griffith, Jr. James F. Slattery
County Judge President
By:
Mitch Woods
County Sheriff
By:
Jimmie Cokinos
County Commissioner
By:
Mark C. Domingue
County Commissioner
By:
Waymon Hallmark
County Commissioner
By:
Ed Moore
County Commissioner
ATTEST:
By:
Sandy Wilson
Jefferson County Clerk (COUNTY SEAL)
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (hereinafter called "Agreement"), dated as of
June 5, 1998 is made and entered into by and between. DOMINION MANAGEMENT-
OKLAHOMA, INC., an Oklahoma corporation ("DM-OK"), with its principal offices
in Edmond, Oklahoma; and CORRECTIONAL SERVICES CORPORATION (the "CSC"), a
Delaware corporation, with its principal offices in Sarasota, Florida. This
Agreement is applicable to DM-OK and CSC and their successors in interests.
WHEREAS, the Town of McLoud, Oklahoma (the "Town") created and
established a correctional detention facility to initially house up to 750
adult female medium-security inmates to be known as the Central Oklahoma
Correctional Facility (the "Facility"); and
WHEREAS, the Town designated and appointed DM-OK as the private prison
contractor to design, construct, equip, manage, maintain and operate the
Facility under the terms of an Intergovernmental and Private Prison Contractor
Agreement dated as of May 1, 1997 (as the same may be amended, modified,
supplemented or restated from time to time the "Intergovernmental Agreement"),
by and among the Town, DM-OK and the McLoud Economic Development Authority
("MEDA"); and ,
WHEREAS, the Facility is to be constructed on property owned by MEDA and
leased to DM-OK pursuant to the terms of a Ground Lease Agreement dated as of
May 1, 1997 as the same may be amended, modified, supplemented or restated
from time to time the "Ground Lease"), between MEDA, as lessor, and DM-OK, as
lessee; and
WHEREAS, DM-OK has been awarded a contract to house and care for up to
500 medium-security adult female inmates at the Facility pursuant to the terms
of an Inmate Services Contract dated as of April 22,1998 by and between DM-OK
and the Oklahoma DOC (hereinafter defined); and
WHEREAS, DM-OK desires to engage CSC to manage the Facility for the
benefit of DM-OK; and CSC desires to accept such engagement, all in accordance
with the terms and conditions of this Agreement as hereinafter set forth;
WHEREAS, CSC has represented to DM-OK it has resources to perform its
duties competently hereunder, including but not limited to its employees,
subcontractors, associates and affiliates, with correctional facilities, and
administrative operations, all normally associated with the operations and
maintenance of a correctional detention facility; and
NOW THEREFORE, in consideration for the mutual covenants herein
contained the parties hereby agree as follows:
<PAGE>
ARTICLE I
Definitions
-----------
In addition to those terms defined in the preamble, the following terms
contained within this Agreement shall have the meanings hereinafter defined by
this Article I:
ACA. The term "ACA" means the American Corrections Association (or its
successors).
ACA Standards. The term "ACA Standards" means the standards established
and amended from time to time by ACA for medium security adult correctional
facilities.
Agent. The term "Agent" means Rice Partners II, L.P., a Delaware limited
partnership, as agent for itself, Chisholm Private Capital Partners, an
Oklahoma limited partnership and BCI Growth IV L.P., a Delaware limited
partnership.
Base Per Diem Rate. The term "Base Per Diem Rate" means a rate of $
compensation to be paid by DM-OK to CSC per Inmate Day for correctional
services to be performed by CSC under this Agreement.
Book Value. The term "Book Value" means the lesser of: 1) the actual cost
of the assets or capitalized intangible expenses less amortization over a
period of five (5) years using the straight line method, or 2) the actual cost
of the assets or capitalized intangible expenses less an amount equal to the
sum of all Unamortized Costs Payments. Amortization shall commence on the
Service Commencement Date.
Business Day. The term "Business Day" shall mean weekdays, except
weekdays which are officially designated as holidays by the United States
Government.
Effective Date. The term "Effective Date" shall mean the date in Article
II, Section 2.2.
Initial Term. The term "Initial Term" shall mean the five (5) year
period of time commencing on the Service Commencement Date.
Inmate. The term "Inmate" shall mean those prisoners charged or
convicted of violations of law and duly contracted from municipal or
governmental authorities assigned to the care, custody and control of the
Facility.
Inmate Contract. The term "Inmate Contract" means a contract between
DM-OK and/or the Town and a Jurisdiction, including the Oklahoma DOC, which
describes the rights and obligations of the parties relative to the housing and
care of inmates at the Facility.
Inmate Day. The term "Inmate Day" means each day an Inmate is assigned
to the Facility, including the day of delivery, but excluding the day such
Inmate is retaken by the Inmate's Jurisdiction, for which the delivering
Jurisdiction is contractually obligated to pay a per diem rate to or on account
of DM-OK for correctional services performed under the applicable Inmate
Contract. The definition of inmate day contained in the applicable Jurisdiction
contract shall control if there is a conflict.
<PAGE>
Inventory. The term "Inventory" means the consumable goods purchased by
CSC which will be consumed by CSC in performing its duties under this
Agreement such as food, inmate clothing, bedding, towels, kitchen and lavatory
supplies, and building maintenance supplies.
Jurisdiction. The term "Jurisdiction" means any governmental entity that
has sentenced the Inmate to a prison term and contracted with DM-OK and/or the
Town for the Inmate's housing and care in the Facility.
Note Purchase Agreement. The term "Note Purchase Agreement" means the
Note Purchase Agreement dated as of May 1, 1997, by and among Dominion-
Management Colorado, Inc., an Oklahoma corporation, DM-OK, Dominion
Management, Inc., an Oklahoma corporation, Dominion Management III, an
Oklahoma corporation, Rice Partners II, L.P., a Delaware limited partnership,
individually ("Rice") and as Agent for Chisholm Private Capital Partners
("Chisholm"), an Oklahoma limited partnership ("Chisholm") and BCI Growth IV
L.P., a Delaware limited partnership ("BCI"), Chisholm and B, CI as the same
may be amended, modified, supplemented or restated from time to time, or
superceding financing facility (see, Annex I).
Oklahoma DOC. The term "Oklahoma DOC" means the State of Oklahoma
Department of Corrections (and its successors).
Reimbursable Expenses. The term "Reimbursable Expenses" means those
expenses incurred by CSC for funeral, transportation, hospital, surgical,
ambulance, x-ray, medicine and other expenses of a similar nature for Inmates
which the Jurisdiction has agreed to pay pursuant to an Inmate Contract which
are paid in addition to the per diem amount for such Inmates.
Renewal Term. The term "Renewal Term" means the one (1) year period
commencing on the day following the last day of the Initial Term or a
preceding Renewal Term.
Senior Management. The term "Senior Management" means those employees of
CSC assigned to the Facility to act as warden, assistant or deputy wardens,
chaplain and the maintenance supervisor for the Facility.
Service Commencement Date. The term "Service Commencement Date" shall
mean the first day on which Inmates are received at the Facility.
Start-Up Expenses. The term "Start-Up Expenses" shall mean those
tangible and intangible costs incurred by CSC in purchasing the equipment
described in Attachment 5 to this Agreement equipping the Facility and the
labor costs, costs of providing and developing the various procedures and
policies manuals and other such related costs associated with the opening and
start-up of the Facility prior to the Service Commencement Date to include
training expenses.
<PAGE>
State. The State of Oklahoma.
Unamortized Costs Payment. The term "Unamortized Costs Payment" means
the sum of $ per Inmate Day compensation to be paid as a predetermined
reimbursement of certain costs incurred by CSC in funding Start-Up Expenses
and Phase In Operating Losses, but in any event such payment shall not exceed
the total sum of $ . These payments may be accelerated as described
in Section 6.2 hereof and in all circumstances cease at the end of the Initial
Term. If these payments through the initial five year term do not fully
amortize the $ then the balance shall extend into the extension of
the Agreement or in the event that that the Agreement is not extended with
CSC, DM-OK shall pay to CSC the unamortized balance remaining at the date of
the termination of this Agreement.
Utilities Agreement. The term "Utilities Agreement" shall mean the
Utilities Service and Capital Improvements Agreement dated as of May 1, 1997,
by and among the Town, the McLoud Public Facilities Authority, a public trust
("MPFA"), and DM-OK as the same may be amended, modified, supplemented or
restated from time to time.
Phase In Operating Losses. The term "Phase In Operating Losses" shall
mean losses incurred in the operation of the Facility after the Service
Commencement Date over the following 120 days of initial operations. Such
losses shall be determined as net losses (if any) of all revenues received
during this period from the operations of the Facility. This does not consider
any Start-Up Expenses or Equipment or Inventory to acquired by CSC.
ARTICLE II
Term and Relationship
---------------------
Section 2.1. Appointment and Term. DM-OK hereby appoints CSC as the
exclusive manager and operator of the Facility. CSC hereby accepts appointment
as the exclusive manager and operator of the Facility. The term of this
appointment is for the Initial Term and DM-OK shall have the option to extend
the term of this Agreement for an unlimited number of successive Renewal
Terms. DM-OK shall be deemed to have exercised its option to extend this
Agreement for an additional Renewal Term unless it delivers written notice of
termination to CSC at least 90 days prior to the end the Initial Term or the
then current Renewal Term.
Section 2.2. Effective Date. The Effective Date of this Agreement shall
be the date first appearing as the date that this Agreement is entered into.
<PAGE>
Section 2.3. Termination. CSC or DM-OK may terminate this Agreement for
its own convenience by delivering to the other party written notice of
termination at least 120 days prior to the effective date of such termination.
Section 2.4. Independent Contractor Status. CSC in the performance of
its duties under this Agreement shall occupy the position of an independent
contractor with respect to DM-OK. Nothing contained herein shall be construed
as making the parties hereto partners or joint venturers, nor, except as
expressly provided herein, construed as making CSC an agent or employee of
DM-OK. Accordingly, CSC acknowledges and agrees that it shall not be entitled
or eligible to participate in any rights or privileges given or extended by
DM-OK or its affiliates to its or their employees and shall be responsible for
all employee payroll tax, withholding, insurance and other payments and filing
required as a result of the performance of its obligations pursuant to this
Agreement.
Section 2.5. Duty of Care: Licensing. CSC shall perform or supervise the
operation and management of the Facility and the performance of its
obligations pursuant to this Agreement so as to use its best efforts to cause
the Facility to best achieve its performance goals with optimal efficiency and
cost controls in conformance with all applicable permits, approvals, laws,
rules and regulations in respect of CSC and the Facility. CSC shall at all
times operate and manage the Facility in good faith and with no less care and
effort than it customary for it in providing services to other similar
facilities owned or operated by it. CSC shall obtain and maintain in full
force and effect during the term hereof all applicable licenses, permits and
approvals to fully perform its services and functions hereunder. CSC shall
promptly notify DM-OK should any such license, permit or approval be
terminated, suspended or threatened in any material respect. In no event shall
CSC be responsible for licensing or permitting of the Facility to permit it to
be occupied, e.g. occupancy permit, fire marshal's approval or other
construction licensing, etc.
ARTICLE III
Duties of CSC
-------------
Section 3.1. Schedule for Opening. CSC shall timely perform the tasks
described in Attachment 1 hereto which are necessary to achieve an efficient
and timely opening of the Facility meeting the needs of the Jurisdictions and
DM-OK. CSC agrees to provide DM-OK information on the status and stages of
completion of each task at reasonable times and places.
Section 3.2. Escrow of CSC For Start-Up Costs and Working Capital. Upon
executing this Agreement, CSC shall deposit the sum of $ pursuant to the
terms of an Escrow
<PAGE>
Agreement dated as of _________, 1998, by and among CSC, DM-OK and Bank One of
Oklahoma, as escrow agent. CSC shall be credited with expenditures that it has
made prior to this Escrow Agreement that would have been considered to be
subject to the funding of those monies if the Escrow Agreement would have been
in effect at the time of the expenditure for the Facility or its operations. As
an alternative to said escrow deposit, CSC shall on executing this Agreement,
establish an irrevocable, direct pay letter of credit from a source and under
terms acceptable to DM-OK to fund Start-Up Costs and Working Capital in the
aggregate sum of $ . It is the intention of CSC and DM-OK that these
monies will be used to fund the purchase of the assets and equipment described
in Attachment 5 hereto in the approximate amount of $ . The remainder of
said funds will be used by CSC to pay other Start-Up Expenses and Working
Capital and to purchase Inventory. This escrow's duration shall be 120 days
after the Service Commencement Date. At the end of this term an accounting of
the monies spent shall be performed and provided to DMI by CSC. The accounting
shall determine the amount of Start-Up Expenses actually incurred and to be
amortized up to an amount of $ .
Section 3.3. Duty to Perform Agreements. CSC acknowledges that it is
acting as a subcontractor of DM-OK and has received copies of the Note
Purchase Agreement, the Ground Lease, the Intergovernmental Agreement and the
Utilities Agreement. CSC will perform its duties as a subcontractor in such
consistent with the terms of said agreements, as if CSC were a party to said
agreements. CSC agrees to strictly comply with the requirements of all Inmate
Contracts as if CSC were a party to said such contracts and the terms thereof
were incorporated herein by reference hereto (all without limitation on the
duties of CSC set forth in this Agreement). (See, Annex II for the
incorporated agreement between DM-OK and the Oklahoma Department of
Corrections for the placing of inmates at the Facility, which is hereby
incorporated as part of this Agreement.) If any provision of an Inmate
Contract contradicts the provisions of this Agreement, CSC may seek, and DM-OK
shall use reasonable efforts to provide, written clarification of CSC's duties
hereunder in the event of such conflict or CSC and DM-OK shall amend this
Agreement to avoid such conflict.
Section 3.4. Indemnification. CSC agrees to be responsible for, defend
and hold harmless DM-OK, the Town, the Trustees of the Town, MEDA, the
Jurisdiction, Rice, Chisholm and BCI, the Agent, successors and assigns of each
indemnified party and their respective directors, shareholders, officers,
agents and employees and their contractors from all proceedings, claims, suits
or actions including, without limitation, no fault liability (if any) of any
nature arising out of the acts, material omissions, negligence, willful
misconduct or other material breach of the terms hereof by CSC, its officers,
subcontractors, agents or employees under this Agreement and all costs,
expenses and fees (including, without limitation, attorneys fees and expenses)
resulting therefrom or relating thereto. DM-OK agrees to be responsible to
defend and hold harmless CSC, Rice, Chisholm and BCI, the Agent, successors and
<PAGE>
assigns of each indemnified party and their respective directors, shareholders,
its officers, agents and employees from all proceedings, claims, suits or
actions, including, without limitation, no fault liability (if any) of any
nature arising out of the acts or material omissions, negligence, willful
misconduct or other material breach of the terms hereof by DM-OK, its directors,
shareholders, officers, subcontractors, agents (excluding CSC) or employees
under this Agreement. CSC's indemnity shall include payment for any fees and
expenses incurred by any indemnified party arising from lawsuits or other
actions or proceedings by inmates in custody at the Facility.
Section 3.5. Maintaining Insurance. Without limiting CSC's indemnification,
it is agreed that CSC shall purchase at its own expense and maintain in force at
all times during the performance of services under this Agreement the designated
policies satisfying the requirements of Section 6.12 of the Note Purchase
Agreement, Section 2.6 of the Intergovernmental Agreement and the following
subparagraphs (a) through (i) all for the benefit of DM-OK and the Additional
Insureds (as defined below). Where specific limits are shown, it is understood
that they shall be the minimum acceptable limits. If CSC's policy contains
higher limits, DM-OK and the Jurisdiction, shall be entitled to coverage to the
extent of such higher limits. Certificates of Insurance must be furnished by CSC
to DM-OK and each indemnified party named in Section 3.4 above prior to the
Service Completion Date and must provide for a 30 day prior notice of
cancellation, non-renewal or material change.
(a) Property Insurance. CSC shall provide fire and extended
coverage insurance on the Facility, including protection against loss or
damage by other risks now embraced by the so-called all-risk coverage
endorsement, including, without limitation, loss by fire, explosion,
theft, windstorm, flood and other risks casualties under an "all risk"
insurance policy, in an amount equal to the replacement value, as new, of
the Facility, including all fixtures and personal property used at the
Facility, but in any event in an amount not less than $10,000,000. It
shall be subject to a reasonable deductible not to exceed $10,000
(including riot and earthquake). Such insurance shall also insure DM-OK
against the interruption of business relating to the Facility in such
amount as will provide sufficient moneys to pay operating expenses and
the mortgaged indebtedness of the Facility for a period of 12 months in
sum of $8,200,000 (with a deductible of not more than thirty (30) days).
(b) Workers' Compensation Insurance. CSC shall provide and maintain
in force statutory workers' compensation insurance coverage for all
employees of CSC engaged in work under this Agreement. Coverage must
extend to include all departments in which employees are engaging in work
and employer's liability protection not less than $500,000 per person,
$500,000 per occurrence. The Policy must be endorsed to waive rights of
subrogation against DM-OK, the Town, the Trustees of the Town, MEDA,
Warden, the Trustees of MEDA, Rice, BCI, Agent and Chisholm, and their
respective employees, shareholders, officers, directors, agents and other
representatives, and their successors and assigns (collectively, the
"Additional Insureds") and the Jurisdiction and name DM-OK as an
"alternate employer."
<PAGE>
(c) Comprehensive (Commercial) General Liability Insurance. CSC
will provide and maintain in force comprehensive (commercial) general
liability insurance, with coverage limits not less than $5,000,000
combined single limit per occurrence and annual aggregates where
generally applicable and shall include premise operations, independent
contractors, products, completed operations, broad form property damage,
contractual liability coverage for indemnification clause in Section 3.4
and personal injury endorsements. It shall be subject to a reasonable
deductible or coinsurance in an amount not to exceed $50,000. This
insurance shall contain a "cross liability" or "severability of interest"
clause or endorsement and CSC, DM-OK, the Town, the Trustees of the Town,
MEDA, the Trustees of MEDA, Warden and the Additional Insureds shall be
included as additional insureds. This insurance shall be considered
primary of any other insurance carried by the Additional Insureds through
self insurance or otherwise.
(d) Comprehensive Automobile Liability Insurance. CSC shall provide
and maintain in force comprehensive automobile liability insurance
covering all owned, hired and non-owned vehicles with coverage limits not
less than $1,000,000 combined single limit per occurrence and annual
aggregate. This insurance shall contain a "cross liability" or
"severability of interest" clause or endorsement and Additional Insureds
shall be included as additional insureds. This insurance shall be
considered primary of any other insurance carried by Jurisdiction and/or
DM-OK through self insurance or otherwise. Any transportation contractor
engaged by CSC shall be subject to the same insurance requirement.
(e) Professional Liability Insurance. CSC will provide and
maintain in force professional liability insurance or a comparable policy
form providing jail keepers' legal liability insurance coverage for
errors, omissions or wrongful acts of CSC, a subcontractor or anyone
directly or indirectly employed by them in the performance of services of
this Agreement with limits not less than $5,000,000 combined single limit
per occurrence and annual aggregate limit. It shall be subject to a
reasonable deductible or coinsurance in an amount not to exceed $50,000.
This insurance shall contain a "cross liability" or "severability of
interest" clause or endorsement and the Additional Insureds shall be
included as additional insureds.
(f) Umbrella Liability Insurance. CSC will provide and maintain in
force an umbrella liability insurance coverage for with limits not less
than $5,000,000 combined single limit per occurrence and annual aggregate
limit. This insurance shall contain a "cross liability" or "severability
of interest" clause or endorsement and the Additional Insureds shall be
included as additional insureds.
<PAGE>
(g) Additional Coverage. CSC is responsible for obtaining any
insurance required by the State where the Facility is located to cover
inmate work related injury, disability, or death.
(h) Fidelity Bond. CSC shall maintain a service provider fidelity
and theft bond for Inmate property including money held in trust for
Inmates while in the care, custody and control of' the CSC, its
employees, subcontractors or agents. Coverage limits shall not be less
than $25,000.
(i) Claims Made Coverage. If any of the required insurance is
arranged on a "claims made" basis, "tail" coverage shall be required at
the completion of this Agreement for a duration of 24 months. CSC will be
responsible for furnishing certification of "tail" coverage as described
or continuous "claims made" liability coverage for 24 months following
Agreement completion. Continuous "claims made" coverage will be
acceptable in lieu of "tail" coverage, provided its retroactive date is
on or before the effective date of this Agreement.
(k) Additional Insured. The liability insurance coverage required
for performance of this Agreement shall include the Additional Insureds
but only with respect to CSC's activities to be performed under this
Agreement.
(l) Cancellation. There shall he no cancellation, material change,
potential exhaustion of aggregate limits or intent to not renew insurance
coverages without thirty (30) days written notice from CSC or its
insurers to DM-OK. Any failure to comply with the reporting provision of
this insurance, except for the potential exhaustion of aggregate limits,
shall not affect the coverages provided to the Additional Insureds.
Section 3.6. Inmate Incarceration Services. It shall be the
responsibility of CSC to confine and supervise all Inmates assigned to the
Facility and to provide safe and humane care and treatment, in accordance with
ACA Standards, including the furnishing of subsistence, routine and emergency
medical care, training and treatment programs, compliance with sentences and
orders of the committing Jurisdiction(s), access to legal process and
compliance with all applicable laws and agreements.
(a) Food Service. Food service operations will be performed by CSC
employees or a combination of CSC staff and contractor employees. All
staff, Inmates and contractor employees will undergo medical testing
prior to initially reporting for food service duty assignments and will
be examined regularly to assure health of the staff. Menus will approved
by a registered dietitian using a minimum cycle of 21 days and will
provide for a minimum of daily calories to meet or exceed ACA standards
and State regulations. All health regulations of the State will be
followed and the results of all inspections will be promptly provided to
DM-OK. Special meals will be provided for Inmates when prescribed by a
physician or when religious beliefs require adherence to special diets.
Food shall not be withheld nor the standard menu varied as a disciplinary
sanction.
<PAGE>
(b) Health Care. Health care operations may be delivered by CSC
employees, contractor employees or a combination of CSC staff and
contractor employees. All medical, mental health and dental care
personnel providing services to Inmates will be appropriately licensed
and/or certified under the laws of the State and all medical services
will be delivered in accordance with ACA standards and State regulations.
All correctional officers will receive training in CPR. The Facility
infirmary will be staffed 24 hours a day, seven days a week, and all
Inmates will have access to emergency medical, mental health and dental
care on that schedule. In the event that any Jurisdiction requires a
co-payment plan for Inmate treatment, CSC will participate in said plan
as instructed by the Jurisdiction. CSC will cause a pharmacy to be
maintained in the infirmary under the supervision and control of a doctor
or pharmacist stocked with frequently used over-the-counter medications
and frequently prescribed pharmaceuticals. CSC will provide for emergency
and non-emergency transportation for Inmate health care services outside
of the Facility as required. CSC will be responsible for all costs
associated with onsite health care and medication, and the Jurisdiction
will be responsible for payment or reimbursement of "approved" off-site
health care. ("Approved" by the Sentencing Jurisdiction as is required in
the Oklahoma Department of Corrections contract with DM-OK.)
(c) Inmate Programs and Case Management. CSC will develop and
deliver Inmate programs as appropriate to the needs of the Inmate
population and to the objectives of the Jurisdiction. The minimum level
of program staffing shall be as provided in Attachment 2.
The educational qualifications, training and certification of all
program staff members will satisfy the standards of the ACA and the
Jurisdiction. Academic and vocational instructors may be either CSC
employees and/or contract employees. All other programs staff members
will be CSC employees or subcontractors of CSC.
(d) Inmate Work Program. CSC will develop and implement a
comprehensive work program for Inmates. The program's objective will be
to provide maximum opportunity for Inmates to be engaged in constructive
activities for as many hours each day as possible, considering mandatory
Facility schedules. A CSC Proposed Inmate Work Program, including
academic, vocational, janitorial and maintenance details, recreation and
counseling, is attached to this Agreement as Attachment 6.
(e) Religion. CSC will employ a full-time certified chaplain to
develop and conduct a comprehensive religious program with representation
from a variety of denominations and faiths. The program will be open to
all Inmates who wish to participate and no preference will be given to
the activity of any one denomination, sect or faith over another. CSC
<PAGE>
undertakes to seek participation of local churches and nonprofit organizations
near the Facility. These religious and rehabilitative programs will be
instituted and continuously encouraged by CSC that will allow the local
community to have a sense of mission to meet the inmates' religious
needs. It is understood and recognized that improving and changing lives
is the focus of these cooperative programs. CSC will be actively involved
in the support and utilization of local applications and broader
nationally recognized programs of similar application.
(f) Transportation. CSC will be responsible, at its own cost and
expense, for all local transportation of Inmates assigned to the
Facility from the point of delivery of such Inmate to the care, custody
and control of CSC and the Facility in accordance with the Inmate
Contract or as directed by the Jurisdiction delivering such inmate to
the Facility. CSC's responsibility begins once the Inmate is accepted by
CSC.
(g) Inmate Records Management. CSC will adapt its reporting
systems for basic compatibility with systems used by those Jurisdictions
whose Inmates occupy the Facility.
(h) Inmate Pay. CSC shall, at its cost and expense, contribute
$.40 per day per Inmate housed in the Facility into a "special trust
account" for the benefit of the Inmates. These funds shall be utilized
in the CSC's discretion to compensate Inmates for work activities
performed at the Facility. CSC shall account monthly and annually to
DM-OK on the activities of this account and its balances. At the end
each year of operation, CSC shall make its annual accounting in a manner
requested by DM-OK. The reserves of this account (meaning any funds
existing in the special trust account for the Inmates less all payables
to be made from the account based upon its records on the anniversary
date of commencement of operations- "closing date") shall be utilized
for the exclusive benefit of the Inmates as determined by CSC. Depending
upon the composition of the inmate population of the Facility from more
than one jurisdiction, this amount may vary from jurisdiction to
jurisdiction requiring an adjustment to modify this Agreement with
separate accounting for each jurisdiction.
Section 3.7. Facility Administration. CSC shall have authority to fully
and completely manage the operation of the Facility and to select, hire,
train, supervise and discharge all of CSC's employees assigned to the
Facility. CSC shall enter into all agreements and understandings which are
normal, routine and reasonable for the general operations of he Facility under
its own corporate identity, unless otherwise specified within this Agreement.
CSC shall prepare Policies and Procedures Manuals covering the operation of
all elements of the Facility and shall provide same to DM-OK for approval not
later than ninety (90) days prior to the expected Service Commencement Date of
the Facility. Any applicable license to use these materials at the Facility
shall be obtained in accordance with Section 3.15 hereof. These manuals will
constitute a comprehensive reference for all actions associated with the
Facility and shall incorporate, but shall not be limited to, the following terms
and conditions:
<PAGE>
(a) Personnel Hiring and Qualifications. CSC shall employ a fully
trained and uniformly dressed staff to provide 24-hour per day, seven
days per week correctional services for the Facility. Prior to their
employment, applicants will undergo background investigations to include
educational, criminal and employment history to help assure that their
personal conduct or history will not jeopardize security of operations
or discredit the Facility, CSC or DM-OK. CSC will obtain a criminal
record check and drug test for all employees at the Facility. CSC
undertakes to provide employees and personnel to meet the requirements
of an Inmate's Jurisdiction including all testing and evaluation as that
Jurisdiction may require. All persons found to have a prior felony
conviction or who are under active supervision resulting from a
misdemeanor conviction will be denied employment at the Facility, unless
mutually agreed otherwise. Drug abuse will not be tolerated. A minimum
of ten (10) correctional officers and security supervisors employed at
the opening of the Facility shall each have a minimum of one (1) year of
verified, previous correctional experience in a secured prison
environment. DM-OK has agreed in the Intergovernmental Agreement to a
hiring preference for qualified, legal residents of the McLoud, Oklahoma
community and CSC recognizes it obligation to adhere to said terms.
Section 3.7. hereof notwithstanding, DM-OK reserves the right to approve
or reject the proposed warden and successor wardens of the Facility,
which approval shall not be unreasonably withheld. The authority and
responsibility for the compensation, supervision and discharge of any Facility
warden will be vested solely with CSC.
(b) Staffing Plan and Strength. CSC will staff the Facility in
accordance with the Staffing Plan attached hereto as Attachment 2.
Proposed changes to the Staffing Plan will be submitted to DM-OK for
approval prior to implementation. Commencing on the date that the
Facility first achieves 95 percent occupancy (based upon 850 beds) and
continuing through the balance of the term hereof, the total full-time
equivalent active staff shall be not less than 94 percent with a
quarterly average of 96 percent of full-time equivalency or more of CSC
employees and/or contract employees; provided however, that to the
extent occupancy of the Facility shall be less than 95 percent for a
period greater than 30 consecutive days, CSC may reduce its active
workforce on a pro rate basis, yet maintaining operating effectiveness,
until such time that 95 percent occupancy shall have been restored.
During any period in which CSC's workforce shall be reduced as a result
of vacant bedspace, all other terms and provisions of this Agreement and
of the approved Policies and Procedures for the Facility shall remain in
full force and effect, including those affecting the integrity of the
Facility's security and delivery of required Inmate programs and
services. Further, it is agreed and undertaken by CSC that CSC will
<PAGE>
backfill vacancies of Senior Management within no more than ten (10) days with
temporary personnel and within sixty (60) days shall have a permanent
replacement for that position. DM-OK will approve or reject a candidate for
Senior Management within two working days from the time the name and resume
and/or employment application is submitted by CSC to DM-OK.
(c) Staff Training. CSC will provide a comprehensive, on-going
training program for all Facility employees that complies with ACA and
State standards. All new clerical support employees who will have minimal
contact with Inmates will complete a 40 hour orientation course during
the first year of employment, 24 hours of which will be completed prior
to assignment. Support employees who will have regular contact with
Inmates will undergo 80 hours of training during the first year of
employment, 40 of which will be completed prior to contact with Inmates.
Correctional officers with no previous training will complete 160 hours
of pre-service training during the Start-Up and a total of 200 hours of
total training during the first year of employment. Correctional officers
hired after Start-Up who have no previous corrections training will
complete 80 hours of pre-service training and 80 hours of on-the job
training within the first 180 days of employment, and a total of 200
hours of total training during the first year of employment. The daily
schedule of CSC's pre service training program for correctional officers
is attached hereto as Attachment 3. All personnel authorized to use
firearms or deadly force will complete firearms training as required by
the State prior to assignment to any position involving the potential use
of firearms. All persons assigned to the Facility's Special Operations
Response Team (SORT) will successfully complete a pre-service training
program that is similar to that provided team members in public
institutions operated by the State. The Facility SORT team will have a
planned component of 20 officers and at no time during the term hereof
shall the number of properly trained SORT team members actively employed
at the Facility be fewer than 12. All staff training conducted will be
thoroughly documented and maintained in personnel files and in separate
training files. These files will be open for periodic inspection by
DM-OK. Without limiting the foregoing, CSC shall either provide, or cause
its personnel or contractors to provide, training programs prior to the
opening of the Facility, during the term hereof, as well as upon the
hiring of any new agent, contractor or employee to work at the Facility,
which will, in each case, be designed to train each such individual to
meet the ACA Standards applicable to him or her. CSC shall report to
DM-OK in writing each time any program is offered under this Agreement
and describe the goals and results thereof in such manner as DM-OK may
reasonably request.
(d) Emergency Response Plans. Thirty (30) days prior to the
expected Service Commencement Date, CSC will deliver to DM-OK an
Emergency Response Plan for the marshaling of resources to quickly and
appropriately respond to any crisis that might arise in the operation of
<PAGE>
the Facility. Procedures and plans will be developed in coordination with
local and area fire departments, law enforcement agencies and the State
Department of Corrections, and will be provided to all parties in written
form to assure clear understandings. The plan will include procedures to
deal with fire, bomb threats, escape, hostage situations, riots, medical
epidemics and natural disasters. It will also provide for the
notification and reporting of escapes to residents within an appropriate
radius of the Facility, and to DM-OK.
(e) Accreditation. CSC shall use its best efforts to secure
accreditation of the Facility from the ACA within eighteen (18) months of
the Service Commencement Date. If in the event the Facility shall have
been inspected by ACA within eighteen (18) months of the Service
Commencement Date, but accreditation shall have been withheld for reasons
other than issues of design or construction, CSC shall be in default
under this Agreement and shall have six (6) months to cure said default
by achieving ACA accreditation. Failure to achieve ACA accreditation
within twenty-four (24) months of the Service Commencement Date shall
constitute grounds for default termination tinder this Agreement.
(f) Scheduled Meetings. Commencing approximately ninety (90) days
prior to the expected Service Commencement Date and continuing during the
term hereof monthly meetings arranged by CSC will be scheduled at the
Facility available for attendance by representatives of DM-OK,
representatives of the host government, the Facility warden, an
operations executive of CSC from its national or regional office, the
Jurisdiction's monitor, if any, and by other parties with appropriate
business for discussion. Regular topics will include Inmate population
count, Inmate departures by reason, disturbances and incidences, results
of fire and health inspections, program statistics, medical care, food
service, physical plant, personnel vacancies, client concerns, community
concerns and Inmate litigation. After the initial year of operations
CSC's executive will attend such monthly meeting no less than quarterly
(4 times per year).
(g) Records Keeping. CSC shall develop a system of financial
accounting and inmate tracking for the Facility which shall be completed
at least sixty (60) days prior to the Service Commencement Date. Records
and reports shall be maintained that comply with all applicable Inmate
Contracts and reasonable requirements to be determined by DM-OK, and
shall include, without limitation, files and reports documenting Inmates'
activities, adjustment, participation, discipline and any other relevant
information or significant events while in custody at the Facility.
Records which document compliance with this Agreement and Inmate
Contracts shall be maintained for five (5) years and the originals to
such documents shall not be destroyed or discarded by CSC without giving
DM-OK at least 30 days notice of its intentions to destroy or discard
such documents. All documents referred to in this subparagraph shall be
<PAGE>
available for inspection and copy by DM-OK for a period of five (5) years. The
obligations contained in this subparagraph survives the termination of this
Agreement. As additional Jurisdictions add Inmates to the Facility's population,
CSC will utilize its best efforts to accommodate the systems of the added
Jurisdiction(s) within the existing systems as established with the Oklahoma
Department of Correction for its Inmates.
Section 3.8. CSC Agreements. CSC has no authority to create any monetary
or contractual obligation for DM-OK without the prior express written consent
of DM-OK.
Section 3.9. Regulations and Permits. CSC shall do all reasonable things
necessary to maintain in full force and effect for the benefit of the Facility
and DM-OK to include all licenses and permits required for operations of the
Facility.
Section 3.10.Restrictions. Notwithstanding anything to the contrary set
forth herein, CSC shall not be required to do, or cause to be done, anything
for DM-OK or for the operation of the Facility which:
(a) may make CSC liable to third parties other than in the normal
course of business; or
(b) may, under any applicable law, constitute an impermissible
delegation of DM-OK duties and responsibilities including sale of assets
or actions which may result in a change in the primary business of
DM-OK; or
(c ) may not be commenced, undertaken, or completed because of
acts of God, strikes, war, or events reasonably determined both to be
beyond CSC's control and without fault of CSC; or
(d) may cause a lien to be filed against DM-OK or the Facility or
any of the equipment or fixtures located in the Facility.
Section 3.11.Information Releases. CSC shall not release for publication
any information written or oral that mentions or involves the Facility or
DM-OK or any of its affiliates or personnel without DM-OK's prior written
consent; except as follows:
(a) news releases during emergency circumstances in accordance
with the Policies and Procedures of' CSC for the Facility; and
(b) disclosures required to be made by governmental regulatory
agencies to include the Securities and Exchange Commission or other
obligation or requirement to CSC's shareholders.
DM-OK shall be consulted as to potential news release concerning the
Facility, if time will allow in the discretion of CSC. Only in extraordinary
circumstances it will be necessary to make immediate responses to new media
concerning the Facility or its operations. It is agreed that in such releases
the specifics of operations as to numbers of inmates or other data relating to
<PAGE>
operations will not be released. Similarly, DM-OK will not release information
concerning operations of the Facility without the prior approval of CSC. Both
CSC and DM-OK will make reasonable accommodations to each party's requirements
for publicity and information released concerning the Facility and its
operations.
Section 3.12.Telephone Systems. The special telephone equipment
described in Attachment 4 used by Inmates will be purchased, installed,
maintained, owned and operated by CSC and will be the sole telephone system in
the Facility for Inmate access. The security and monitoring of the Inmate
telephone system shall be the responsibility of CSC. CSC shall receive all
fees charged to the Inmate population for the use of this telephone system.
CSC shall provide telephone and other communications as required for the use
and benefit of the Jurisdiction(s) and/or DM-OK at the Facility.
The telephone system described in Attachment 5 routinely used by
employees of CSC to operate the Facility will be purchased and maintained by
CSC.
Section3.13. Relationship with Jurisdiction(s). CSC shall cooperate with
DM-OK in DM-OK's marketing efforts for occupancy of the Facility.
Jurisdictions will be treated as valued clients by CSC and DM-OK. CSC shall
recognize Jurisdictions as clients of DM-OK and shall not attempt to intervene
in that relationship or to create any atmosphere that would be detrimental to
an ongoing business relationship between DM-OK and the Jurisdiction that would
negatively impact the population of Inmates from a Jurisdiction at the
Facility. It is recognized that from time to time common relationships will
exist between DM-OK and CSC with certain Jurisdictions. In such cases both CSC
and DM-OK shall be free to continue to pursue such relationships without
violation of this Agreement. Such relationships are to have been cultivated
separate and distinct from any activity relating to the Facility or any other
DM-OK, or its affiliates, business activities jointly engaged with CSC by
DM-OK. CSC shall use its best efforts to support the marketing programs of
DM-OK by fostering and providing Facility operations that are tailored to the
needs and expressed desires of the Jurisdiction(s), to the extent the cost of
said operations shall be provided for in the Base Per Diem Rate.
Section 3.14. Related Contractual and Conditions Requirements. It is
contemplated by DM-OK and CSC that DM-OK will enter into contract(s) with
Jurisdictions for the housing of the Jurisdiction's inmates in the Facility.
In these contracts with the Jurisdictions, it is anticipated that there will
be provisions that relate to the operations of the Facility and the treatment
of the Jurisdiction's inmates while in the custody and control of CSC. These
provisions from this anticipated contractual relationship will have
application to this contractual relationship as they are agreed to "flow" from
that contract with the Jurisdiction and be incorporated as applicable in this
Agreement to CSC. Additionally, the Jurisdictions may impose "conditions" upon
the operation of the Facility. These "conditions" will also be imposed upon
CSC as "flow down" terms. Such "additional flow down" terms and conditions
shall be incorporated by amendment to this Agreement. Any conflict with any
<PAGE>
Jurisdictions' (including Oklahoma Department of Corrections) shall be resolved
in favor of the Jurisdiction's requirements; especially as applicable to Section
3.6, Inmate Incarceration Services. Any resulting material changes from the
terms and conditions of this Agreement shall be subject to mutual agreement of
DM-OK and CSC and a re-negotiation of fees pursuant to Section 6.7 hereof.
Material changes will arise in all circumstances where there is a resulting
monetary change to be made to the Base Per Diem Rate. Also, changes without
monetary impact may be considered "material changes" requiring mutual agreement
of DM-OK and CSC.
Section 3.15. Copyright and Licensing. CSC has a duty to create, develop
and implement policies and procedural manuals governing the housing and care
of inmates, disciplinary procedures, handling of disturbances, personnel
matters and other written documents which must produced for inspection in
connection with the ACA accreditation process. CSC, prior to the Service
Commencement Date, must furnish DM-OK a copy of a licensing agreement for any
of said materials which contains a copyright for unlimited future use at the
Facility by DM-OK or its subcontractors without payment of any royalty or
fees.
Section 3.16 Inmate Information. CSC shall produce for inspection to
DM-OK all Inmate tracking information, records relating to Reimbursable Costs,
and the housing of Inmates at the Facility. CSC, upon the request of DM-OK,
will furnish computer disk copies or equivalent modes of information transfer
of such Inmate information.
ARTICLE IV
Duties of DM-OK
---------------
Section 4.1. Duty to Furnish Facility. DM-OK will cause the Facility to
be constructed as provided in Section 7.1 hereof. DM-OK will enter into
agreements and contracts for the furnishing of gas, electricity, water and
sanitary sewer services. CSC pays all utility cost for the operation of the
Facility from the date of the Service Commencement Date. Prior to such time
from the date of occupancy CSC shall be responsible of the cost of utilities
except for electricity which shall be paid by DM-OK. DM-OK estimates the
Facility will be completed by September 1, 1998, with a target date of
August 1, 1998.
Section 4.2. Duty to Perform Accounting Functions. DM-OK will, or it
will cause its parent corporation Dominion Management, Inc. ("DMI") or its
successor to, invoice each Jurisdiction on timely basis for Inmate per diem
and Reimbursable Expenses based on information provided by CSC. It will cause
the receipts of all invoices to be maintained in a bank account separate and
apart from the other monies of DM-OK and/or DMI and each invoice accounted for
and matched with the corresponding receipts and split between the amounts owed
CSC and DM-OK.
Section 4.3. Duty to Cooperate and Assist. DM-OK agrees to cooperate with
<PAGE>
CSC in the performance of CSC's duties and responsibilities under this
Agreement, to act in good faith, and to do all reasonable things necessary to
aid and effect CSC's performance as an independent contractor under the terms
of this Agreement.
Section 4.4. Duty to Market Bedspace. DM-OK shall be primarily responsible
for marketing of the Facility and for all contacts, meetings, proposals, and
negotiations with the Jurisdictions and the Oklahoma DOC and the personnel
associated with the contracting for bedspace within the Facility as applicable.
ARTICLE V
Facility Maintenance and Expenses
---------------------------------
Section 5.1. DM-OK's Warranty Responsibilities. Dominion Leasing, Inc.,
as agent for DM-OK has contracted with Canam Construction, Inc. to construct
the Facility. Said construction contract provides that nonconforming work will
be corrected for a period of twelve (12) months subsequent to the date of
substantial completion of the Facility (the "Warranty Period"). DM-OK shall be
responsible for enforcing the terms of said construction contract with regard
to the repair of nonconforming work during the Warranty Period.
Section 5.2. DM-OK's Continuing Responsibilities., Subsequent to the
Warranty Period and for the balance of the term hereof, DM-OK shall be
responsible for the maintenance, repair and replacement of only the following
components of the Facility:
(a) Repair and replacement of roofing membrane or roof panels for
all buildings.
(b) Repair and replacement of all structural components of all
buildings, including walls, floor slabs, foundations, roof decking, and
columns.
(c) Repair and replacement of concrete and asphalt flatwork
parking lots, sidewalks, driveways and roads.
Section 5.3. C S C's Maintenance Responsibilities. CSC has the
responsibility to prevent waste of the Facility and the assets therein, normal
wear and tear excepted. CSC will do all things necessary in order to maintain
compliance with safety codes, laws or regulations. CSC shall be responsible for
the conservation, maintenance, repair and replacement of all improvements which
constitute the Facility, except for those specific components of the Facility
to be maintained by DM-OK during the Warranty Period, and continuing thereafter
as identified items during the Warranty Period and for latent defects that
could not be reasonably detected during the Warranty Period as defects due to
design or installation, those specifically referred to in Section 5.2. hereof.
Subject to DM-OK's obligations described in Section 5.1 hereof, CSC's
maintenance, repair and replacement obligations include, but are not limited
to, the following:
<PAGE>
(a) Maintain, repair, and/or replace as needed all mechanical
equipment, heating and cooling systems, pipes, sewer lines, water lines,
pumps, electrical systems and wires, lights, hot water tanks, kitchen
equipment, refrigerators, freezers, ovens, plumbing, emergency
generators, security devices, alarms, surveillance cameras, monitors,
control panels and locks, lights and all fixtures and equipment installed
in the Facility; and
(b) Maintain, repair and/or replace as needed the walls, ceilings,
doors, floor coverings, landscaping, recreational areas, furniture,
bedding, shower stalls, restroom toilets, fencing, on-site sewer
equipment, automatic lifts; and
(c) Maintain, repair and/or replace all of the telephone systems
used at the Facility; and
(d) Maintain, repair and/or replace all equipment, machinery and
other property described in Article VII hereof.; CSC will establish and
continuously perform a "preventive maintenance program" for the Facility
subject to periodic inspection of the Facility and the program by DM-OK
or its affiliate.
Section 5.4. Insurance Deductible Amounts. In the event any part of the
Facility is damaged by a hazard covered by an insurance policy, as between
DM-OK and CSC, the party required to maintain, repair or replace such damaged
part of the Facility shall pay any applicable deductible amount. ,
Section 5.5. Duty to Maintain. The responsibilities of CSC and DM-OK
under this Article shall be immediately activated when components for which the
respective parties are responsible no longer serve the purpose for which they
were designed and installed, when the safety or security of CSC staff, Inmates
or the public is at risk due to failure of the component, or when a delay in
the repair or replacement of the component could lead to damage of other
components of the Facility. CSC and DM-OK agree to coordinate the performance
of all repairs and replacements so as to minimize disturbance of Facility
operations.
Section 5.6. DM-OK's Expenses. DM-OK shall pay the expenses of the
Facility until the Service Commencement Date, excluding the expenses CSC has
specially agreed to provide in this Agreement. DM-OK specifically recognizes
its obligations to pay real estate taxes as required for the Facility.
Section 5.7. CSC's Expenses. CSC shall pay all expenses of operating the
Facility after the Service Commencement Date (see, Section 5.6 above, for
expenses CSC shall pay prior to the Service Commencement Date). The expenses of
CSC include, but are not limited to, the following:
(a) The expenses providing all the requirements and obligations
contained in Article III hereof;
(b) Electricity, gas, water, sewer, and all other utility costs and
expenses necessary for the Facility after the Service Commencement Date;
(c) CSC shall pay DM-OK an amount equal to any concession, discount or
<PAGE>
debt forgiveness for water and sanitary sewer services to the Facility made
after the Service Commencement Date which was intended to be a repayment of the
a loan made by DM-OK to the MPFA pursuant to the Utilities Agreement. CSC shall
make said payment within time limits of the normal billing cycle of the
applicable utility service;
(d) All expenses required to maintain, repair and/or replace the
assets referred in Attachments 4 and 5 hereto;
(e) All costs and damages related to any escape, riot or
disturbance;
(f) The payment of deductible amounts or coinsurance amounts for
insurance purposes; and
(g) All indemnification costs and expenses of CSC arising under
Section 3.4 hereof.
ARTICLE VI
Compensation to CSC
-------------------
Section 6.1. Base Management Fee. DM-OK shall pay CSC as a base
management fee for its performance under this Agreement an amount equal to the
Base Per Diem Rate multiplied by the number of Inmate Days. In the event an
Inmate Contract provides for raises in the per diem amount paid by the
Jurisdiction based upon some cost or consumer price index, CSC shall be
entitled to receive all of CSC's actual and established increased costs, any
amount receive above CSC's actual increased costs shall be split equally
between CSC and DM-OK for the amount of such increase in the form of a raise
in the Base Per Diem Rate.
If DM-OK's base rates from Jurisdictions (other than Oklahoma)
exceed $ ; then CSC shall receive the next $ to increase its Base Per
Diem Rate ($ to $ ) less DM-OK's actual costs of transportation of
the Jurisdiction's Inmates to and from the Jurisdiction. Any increased amount
above this $ increase and consideration of transportation costs to DM-OK
shall be divided equally between CSC and DM-OK.
All increases in fees from Oklahoma for programming added by the
Oklahoma Department of Corrections shall be paid to CSC.
Section 6.2. Unamortized Costs Payment for Start-Up Expenses. DM-OK
shall pay CSC Unamortized Costs Payments until such time CSC shall have
received an amount equal to the Start-Up Expenses and the Phase In Operating
Losses. DM-OK shall have the option, at any time, to pay CSC a lump sum
payment in an amount equal the remaining Balance of the Start-Up Expenses and
the Phase In Operating Losses. After CSC has received Unamortized Cost
Payments, and/or a lump sum payment, in an aggregate amount equal to
$ , no further Unamortized Costs Payments shall be payable by DM-OK
and CSC shall assign the property described in Attachment 5 to DM-OK, clear
title, free of all liens and encumbrances. Upon termination of this Agreement
for any reason, no further Unamortized Costs Payments shall be required except
as follows:
<PAGE>
(a) In the event CSC terminates this Agreement for its convenience
during the Initial Term, or this Agreement terminates by reason of the
provisions of Section 6.7 hereof, DM-OK shall have the option to purchase
the property described in Attachment 5 hereto for Book Value of such items at
the date of the termination. In such event, CSC shall assign the property
described in Attachment 5 to DM-OK, clear title, free of all liens and
encumbrances.
(b) In the event DM-OK terminates this Agreement by reason of
the default of CSC during the Initial Term, DM-OK shall have the option
to purchase the property described in Attachment 5 hereto for an amount
equal to the one-half (1/2) of Book Value at the date of the termination. In
such event, CSC shall assign the property described in Attachment 5 to DM-OK,
clear title, free of all liens and encumbrances.
(c) In the event DM-OK terminates this Agreement for its convenience
during the Initial Term of this Agreement, DM-OK shall pay CSC a lump sum
payment in an amount equal to the Book Value of the Start-Up Expenses of the
Facility including Phase In Operating Losses at the date of the termination. In
such event, CSC shall assign the property described in Attachment 5 to DM-OK,
clear title, free of all liens and encumbrances.
Section 6.3. Payment for Reimbursable Expenses. CSC shall receive from
DM-OK additional amounts for Reimbursable Expenses received by DM-OK under
any Inmate Contract.
Section 6.4. Submission of Invoices by DM-OK and CSC. No later than the
5th Business Day of each month, CSC shall have submitted an invoice to DM-OK
detailing the Inmate Days to be charged to each Jurisdiction and any claims
of CSC for Reimbursable Expenses. The submission shall be in a form reasonably
satisfactory to DM-OK and the Jurisdiction. Within two (2) Business Days of
receipt of CSC's invoice, DM-OK shall deliver, or cause such delivery, an
invoice to the Jurisdiction for amounts for Inmate per diem charges and
Reimbursable Expenses. DM-OK shall pay CSC's invoices by wire transfer within
five (5) Business Days of receipt of payment from a Jurisdiction if the payment
is made by check and within (2) Business Days if payment is made by the
Jurisdiction by wire transfer. If the invoice is less than $10,000.00, payment
will be mailed by DM-OK to CSC within five (5) Business Days of the receipt of
the payment (of immediately available funds) from the Jurisdiction.
Section 6.5. Limited Obligations of DM-OK. The obligations of DM-OK to
pay CSC the Base Per Diem Rate or any other management fees described in
Section 6.1, the amounts due for reimbursement of Unamortized Costs Payments
described in Section 6.2 [excluding the lump sum payments described in
<PAGE>
subparagraphs (a), (b) and (c) of Section 6.2] and the amounts due for
Reimbursable Expenses described in Section 6.3, are the special limited
obligations of DM-OK payable solely from monies DM-OK has received from the
Jurisdiction as payment related to the housing and care of its inmates at the
Facility. If, for any reason, a Jurisdiction fails to make a payment to or on
account of DM-OK, for any reason, whether by reason of a default, failure to
obtain appropriations by the applicable legislative branch of the
Jurisdiction's state government, reallocation by the executive branch for
payment of other obligations of such state or otherwise, DM-OK shall to the
extent of such nonpayment, have no corresponding obligation to CSC, until or
unless such payment is made to or on account of DM-OK by such Jurisdiction. The
amounts due by DM-OK to CSC for lump sum payments for Unamortized Costs
Payments described in subparagraphs (a), (b) and (c) of Section 6.2 are the
general obligations of DM-OK.
Section 6.6 Disputed Amounts. In the event a Jurisdiction fails to pay
or contests any charges, both DM-OK and CSC agree to cooperate in attempting
to collect the amounts due as invoiced.
Section 6.7. Re-negotiation of Management Fees. CSC and DM-OK will re-
negotiate the fees payable pursuant to Sections 6.1 and the expenses reimbursed
to CSC under the following circumstances:
(a) The Inmate Contract negotiated with the Oklahoma DOC is amended or
altered in such a manner as to have a material impact on its payments; or
(b) A material alteration of the Facility is needed to carry out
its intended purpose; or
(c) New and additional fixtures or equipment, other than the property
described in Attachments 4 and 5, are necessary for the Facility to carry out
its intended purpose.
If the parties are unable to reach an agreement, either party may terminate
this Agreement.
Section 6.8. Inventory and Working Capital Payments. In the event this
Agreement is terminated for any reason, DM-OK shall have the option to purchase
the Inventory on hand at the Facility at CSC's cost. In the event of
termination, the amounts CSC shall have incurred for Working Capital shall be
recouped in the ordinary course of business by collecting those amounts due
under Sections 6.1 and 6.3 hereof which accrued prior to the date of
termination.
<PAGE>
ARTICLE VII
Inventory, Furnishings. Fixtures and Equipment
----------------------------------------------
Section 7.1. DM-OK Assets. Ownership of all permanent, fixed assets of
the Facility, including, but not limited to, those scheduled on Attachment 4,
shall remain the property of DM-OK or its assigns and shall not be removed
from the Facility without the written approval of DM-OK. CSC shall have the
use of all Facility assets during the term hereof.
Section 7.2. CSC Assets. At its own expense, CSC shall acquire and
provide the furnishings, fixtures and equipment scheduled on Attachment 5
hereto, in addition to such unscheduled inventory, supplies and all other
expendable property to be utilized in CSC's performance under this Agreement.
CSC's cost of the acquisitions scheduled in Attachment 5 shall be amortized
during the Initial Term, at the end of which period all scheduled assets,
including replacements no matter the age, still serviceable and in use, shall
become the property of DM-OK. At that time CSC will execute and deliver to
DM-OK all necessary documentation to effect the proper transfer of those
assets. During the term hereof, CSC may acquire and install additional
unscheduled machinery or equipment in the Facility. All such assets owned and
utilized by CSC in the operation of the Facility not scheduled in Attachment 5
shall remain the property of CSC. CSC is responsible to accurately record and
maintain the Attachment 5 schedule. In all cases, CSC shall service, maintain,
repair, replace, upgrade and add improvements to all equipment, machinery and
other property so as to keep the same in good working condition, appearance
and repair in conformance with all applicable laws, rules and regulations as
well as manufacturers' or vendors' maintenance manuals and warranty
requirements, normal wear and tear excepted.
Section 7.3. Return of Equipment. At the conclusion of this Agreement,
CSC shall ensure that all DM-OK property and equipment at the Facility,
including replacements, remains at the Facility in the condition in which they
were received, normal wear and tear excepted.
ARTICLE VIII
Termination and Events of Default
---------------------------------
Section 8.1. Events of Default. Any of the following shall be an Event
of Default and cause for either party to this Agreement to terminate this
Agreement:
(a) failure by either party to keep, observe, perform, meet, or comply
with any covenant, agreement, terms, or provision of this Agreement and such
failure continues for a period beyond the curative period provided within this
Article VII after written notice thereof; or
<PAGE>
(b) failure by either party to make any payment required in this
Agreement which is not in dispute, within thirty (30) days from the date it
is due; or
(c) failure by CSC to meet or comply with any final and nonappealable
court order, mandatory ACA Standard, or Federal or State requirement of law,
or failure to maintain ACA accreditation when such failure continues for a
period beyond the curative period provided within this Article VIII after
written notice thereof, unless such failure is the result of some action or
inaction of DM-OK; or
(d) CSC (i) admits in writing its inability to pay its debts; (ii) makes
a general assignment for the benefit of creditors; (iii) suffers a decree or
order appointing a receiver or trustee for it or substantially all of its
property to be entered and, if entered, without its consent, not to be stayed
or discharged within the curative period provided within this Article VIII;
(iv) suffers proceedings under any law relating to bankruptcy, insolvency, or
the reorganization or relief of debtors to be instituted by or against it and,
if contested by it, not to be dismissed or stayed within the curative period
provided within this Article VIII; or (v) suffers any judgment, writ, or
attachment or execution, or any similar process to be issued or levied against
a substantial part of its property which is not released, stayed, bonded, or
vacated within the curative period provided within this Article VIII after
issue or levy; or
(e) the discovery by either party that any material statement,
representation, or warranty in this Agreement is false, misleading, or
erroneous in any material aspect.
Section 8 2. Curative Period. If any default of this Agreement by
either party remains uncured for a period of thirty (30) days after written
notice thereof such breach issued by the "non-offending" party shall be an
Event of Default; provided, however, if within thirty (30) days after such
notice a substantial effort in good faith has been made to cure said breach by
the offending party, said breach shall not be an Event of Default, more
particularly if the offense is cured within a reasonable time thereafter.
Section 8.3. Remedy. Upon the occurrence of an Event of Default either
party shall have the right to submit the matter to arbitration for resolution
under the rules and procedures of the American Arbitration Association. DM-OK
and CSC hereby agree to accept the determination of the arbitration process
foregoing other legal and equitable rights and remedies to obtain a swift
resolution of disputes.
Section 8.4. Transition. In the event this Agreement terminates by its
terms or upon an Event of Default by CSC, CSC agrees not to interfere and to
cooperate with DM-OK, or its assigns, in obtaining another operator/manager of
the Facility or assuming the operation by DM-OK to perform the services provided
for in this Agreement. CSC shall remain the manager and operator of the Facility
in accordance with the terms hereof until DM-OK actually identifies and starts
the services of a manager and operator in place of CSC. Such transition period
<PAGE>
shall not exceed 120 days, unless mutually agreed upon by DM-OK and CSC. During
this transition period, CSC shall operate and manage the Facility in good faith
and with no less care and effort than it used in originally performing its
duties hereunder with respect to the Facility and is customary for it in
providing services to other similar facilities owned or operated by it. All
compensation hereunder shall be prorated for the period of such transition.
ARTICLE IX
Assignment
----------
Section 9.1. Restriction on Assignments. CSC agrees to not assign, pledge,
encumber or otherwise transfer its rights or delegate its duties under this
Agreement without the written consent of DM-OK, which consent will not be
unreasonably withheld; provided, that CSC may delegate its duties to
contractors or temporary employees to the extent permitted under the express
terms of this Agreement.
Section 9.2. DM-OK Assignments. DM-OK may assign, transfer, encumber any
of its rights or delegate any of its duties without notice to or consent of
CSC. Specifically, but without limitation on the foregoing, DM-OK may, without
notice to or consent of CSC, assign all of its rights (but none of its
obligations) hereunder to the Agent as collateral security for DM-OK's (and
its affiliates') Obligations under the Note Purchase Agreement and the Other
Agreements (and therein defined). DM-OK further reserves that any form of due
diligence into the operations of the Facility will be subject to DM-OK's
agreement to allow such investigation of the Facility and its operations to
occur. In the event that CSC determines that it is in its best interest to
merge, otherwise sell, all or a substantial part of its assets, or participate
in any activity that results in a change of control of CSC either voluntarily
(or involuntarily in a hostile takeover environment), then DM-OK shall have
the right to terminate this Agreement for its convenience and to otherwise
operate the Facility with the cooperation of CSC allowing its Facility staff
to be re-employed without penalty with DM-OK in such circumstances at DM-OK's
election. This Agreement may be utilized by CSC as an asset to be pledged or
otherwise as collateral in support of its financing facilities.
ARTICLE X
Miscellaneous
-------------
Section 10.1. Headings. The headings contained herein are for convenience
only and are not intended to define or limit the scope of intent of any
provision of this Agreement.
Section 10.2. Governing Law. The validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
<PAGE>
the parties hereto shall be governed by the laws of the State of Oklahoma. The
forum for resolution of any dispute or issue for litigation shall be the state
or federal court located in Oklahoma City, Oklahoma.
Section 10.3. Notices. Any notice required or permitted herein to be
given shall be given in writing and shall be delivered by United States mail,
first class postage prepaid return receipt requested with a facsimile of the
notice provided as a courtesy on the day of posting, to the respective
President of CSC and the President of DM-OK.
Section 10.4. Successors. This Agreement shall be binding upon and inure
to the benefit of the respective parties and their permitted assigns and
successors in interest, except as restricted by Sections 9.1. and 9.2. hereof
Section 10.5. Attorney's Fees. If it shall become necessary for either
party hereto to engage attorneys to institute legal action for the purpose of
enforcing its rights hereunder, the party prevailing in such litigation shall
be entitled to receive all costs, expenses and fees, including reasonable
attorney's fees, incurred by it, including costs of any appeals from the losing
party.
Section 10.6. Severability. Should any term or provision hereof be deemed
invalid, void or unenforceable either in its entirety or in a particular
application, the remainder of this Agreement shall nonetheless remain in, full
force and effect and, if the subject term or provision is deemed to be invalid,
void or unenforceable only with respect to a particular application, such term
or provision shall remain in full force and effect with respect to all other
applications. It however, a court of competent jurisdiction should render a
final judgment that the authority granted to CSC from DM-OK exceeds the bounds
of permissible delegation under applicable law, the parties agree that this
Agreement shall be deemed amended, modified and reformed to the extent
necessary to reduce the scope of authority so delegated and to limit that
authority to that permissible under applicable law as evidenced by written
legal opinion of special counsel to DM-OK, and approved by CSC.
The parties agree that in no event shall any determination that the
discretion and authority granted to CSC hereunder exceeds permissible bounds
results in this Agreement being declared or adjudged invalid, void, or
unenforceable in its entirety; rather, the parties request that a court
examining such issue employ great latitude in reforming the Agreement so as to
make the Agreement as reformed, valid and enforceable.
Section 10.7. Third Party Rights. The provisions of this Agreement are
for the sole benefit of the parties hereto and will not be construed as
conferring any rights on any other person.
Section 10.8. Waivers. No waiver of any breach of any of the terms or
condition of this Agreement shall be held to be a waiver of any other or
subsequent breach; nor shall any waiver be valid or binding unless the same
shall be in writing and signed by the party alleged to have granted the waiver.
<PAGE>
Section 10.9. Counterparts. This Agreement may be executed in multiple
counterparts each of which shall constitute but one Agreement.
Section 10.10. Amendment. This Agreement may be amended with the written
consent of DM-OK and CSC.
Section 10.11. Entire Agreement. This Agreement including Attachments
named herein, is the entire Agreement between the parties. Any additional
amendment hereto must be in writing and signed by both parties hereto to
become into full force and effect.
DOMINION-MANAGEMENT OKLAHOMA, INC. (DM-OK)
By:
CALVIN BURGESS, PRESIDENT
CORRECTIONAL SERVICES CORPORATION (CSC)
By:
JAMES SLATTERY, PRESIDENT
OPERATIONS AND MANAGEMENT AGREEMENT
-----------------------------------
for the
-------
South Fulton Municipal Regional Jail
------------------------------------
This Operations and Management Agreement for the South Fulton Municipal
Regional Jail (the "Agreement") is made as of this 23rd day of June, 1998, by
and between Correctional Services Corporation, 1819 Main Street, Suite 1000,
Sarasota, Florida 34236, (the "Contractor)" and the South Fulton Municipal
Regional Jail Authority, 5047 Union Street, Union City, Georgia 30291 (the
"Authority"), a governmental entity of the State of Georgia, upon the terms,
conditions and provisions herein set forth.
W I T N E S S E T H:
WHEREAS, the Authority has made provisions for the financing and
construction of a jail in South Fulton County, Georgia, which Facility shall
be known as the South Fulton Municipal Regional Jail Facility (the
"Facility"); and
WHEREAS, the Authority desires to enter into a contract under which the
Contractor shall operate, maintain and manage the Facility in compliance with
all applicable Federal, State and Local laws and ordinances;
NOW, THEREFORE, for and in consideration of the mutual rights, duties,
<PAGE>
benefits and obligations herein exchanged, the sufficiency of which being
hereby acknowledged, the parties hereto covenant, agree and bind themselves as
follows:
ARTICLE ONE
Purposes
--------
1.01 The Contractor shall manage, supervise and operate the Facility for the
Authority and receive, supervise and care for each inmate that is assigned to
the Facility by the Authority pursuant to applicable law. The Contractor
shall accept inmates that are assigned by the Authority, from a jurisdiction
that enters into an Intergovernmental Agreement with the Authority to reserve
space for the on-going placement of inmates in the Facility, or a jurisdiction
that contracts with the Authority on a limited basis to house one or more
individuals in the Facility.
1.02 The Contractor shall manage and supervise the Facility to remain in
compliance with all Local, State and Federal health, fire and safety codes and
shall document such compliance at the beginning of each fiscal year. Such
documentation shall consist of certificates from the local health department,
fire marshal and building inspector and copies thereof shall be forwarded to
the Authority as required or requested. The Facility shall be managed,
operated, maintained and utilized in conformance and compliance with
applicable law and the standards and regulations of the American Correctional
Association ("ACA").
<PAGE>
1.03 The Contractor shall work cooperatively with the Authority and agrees
that the Authority shall have the right to inspect the Facility prior to the
placement of any inmate and that there shall be no initial placements made
until both the Contractor and the Facility are in compliance with all contract
provisions, and all standards or regulations of the Authority. Any material
noncompliance with the terms of this Agreement by the Contractor shall be
immediately addressed so it will not hinder the ability of the Authority to
place inmates in the Facility. All instances of material noncompliance shall
be addressed in a manner consistent with the procedure supplied in Section
2.04 herein.
1.04 Offenders subject to the Juvenile Code shall not be accepted into the
Facility.
ARTICLE TWO
Term
----
2.01 This Agreement is effective on the date set forth in the initial
paragraph of this Agreement. The base term of this Agreement shall be three
(3) years. There shall be an Initial Term, two Renewal Terms, and a Final
Term. The Initial Term shall begin on the date the first inmate occupies the
Facility and shall end on December 31, 1998. Each of the two (2) Renewal
Terms shall be for one (1) calendar year's duration beginning on January 1 and
ending on December 31. The Final Term shall begin on January 1, 2001 and end
November 1, 2001. The Agreement shall terminate absolutely and without
further obligation on the part of the Authority at the close of the calendar
<PAGE>
year in which it was executed and at the close of each succeeding calendar
year for which it may be renewed. The Agreement shall automatically renew
from the Initial Term to the first Renewal Term, provided neither party has
taken appropriate measures to terminate this Agreement. The Agreement shall
automatically renew from the first Renewal Term to the second Renewal Term,
provided neither party has taken appropriate measures to terminate this
Agreement. The Agreement shall automatically renew from the second Renewal
Term to the Final Term, provided neither party has taken appropriate measures
to terminate this Agreement.
2.02 The Authority may, unilaterally and without penalty, terminate the
Contract in the event of non-appropriation of funds. Termination of this
Agreement will obligate the Authority to pay all amounts due the Contractor
for the balance of the calendar year in which the Agreement is terminated. A
schedule of the total obligation of the Authority to the Contractor for each
calendar year during the term of this Agreement is attached to this Agreement
as Exhibit "A". Said exhibit is incorporated into this Agreement by this
reference herein. Title to any supplies, materials, equipment, or other
personal property shall remain in the Contractor until fully paid for by the
Authority.
2.03 The Authority may terminate this Agreement at any time as a result of a
default by the Contractor under this Agreement; or by reason of Contractor's
failure to operate, or failure to cause the Facility to be operated, in
compliance with the terms of this Agreement, all applicable laws, the rules
and procedures of the Authority and the standards of the ACA. Prior to any
such termination, the Authority shall give written notice of same by certified
mail to the Contractor of the reason(s) therefor. The termination notice
<PAGE>
contemplated in this section and all other notices required to be given by
this Agreement shall be addressed as follows:
If to the Contractor:
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, FL 34236
Attn: James L. Slattery, President
With a copy to:
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, FL 34236
Attn: General Counsel
If to the Authority:
South Fulton Municipal Regional Jail Authority
5047 Union Street
Union City, Georgia 30291
Attn: Chairman
2.04 Any default or reason, of which the Contractor has been notified
pursuant to Section 2.03, causing the Contractor to be unable to operate the
<PAGE>
Facility pursuant to the requirements of this Agreement shall be immediately
corrected. Within five (5) days, the Contractor shall notify the Authority in
writing that the circumstances which caused the Contractor to be in
noncompliance with the terms of this Agreement have been resolved with a
description of the action taken which brought the Contractor back into
compliance. Upon receipt of the written notification from the Contractor that
the noncompliance has been corrected, the Authority may inspect the Facility.
Any noncompliance may cause a two (2) percent penalty per day for that day's
billable man-days. All noncompliance penalties assessed by the Authority
shall be imposed against the monthly invoice of the Contractor until
compliance has been attained.
2.05 After the first six (6) months of operation, if the average daily
occupancy is sixty (60%) percent or less for any ninety (90) consecutive day
period, the Contractor may enter into negotiations with the Authority to
modify the terms of this Agreement. If mutually acceptable terms are not
reached, either party may terminate this Agreement upon forty-five (45) days
written notice.
ARTICLE THREE
Facility Costs and Payments
---------------------------
3.01 In addition to the payments outlined in Sections 3.02 and 3.03, the
Authority shall remit a monthly Furnishings, Fixtures, and Equipment (FF&E)
payment to the Contractor. The monthly FF&E payments shall be paid by the
<PAGE>
Authority to the Contractor pursuant to the schedule attached to this
Agreement as Exhibit "A". The maximum number of monthly FF&E payments the
Authority shall pay to the Contractor shall not exceed thirty-six (36) under
any circumstances.
3.02 The phase-in period is defined as the first twenty-one (21) days the
Facility is in operation commencing with the first inmate being placed in the
Facility. The Authority shall cause no more than sixty (60) inmates per week
for the first three (3) weeks the Facility is in operation to be housed in the
Facility. After the phase-in period, the Authority shall cause no more
inmates than the listed capacity of the Facility to be housed in the Facility.
3.03 The Authority shall pay the Contractor monthly the following amounts:
Year 1 Year 2 Year 3
------ ------ ------
Daily rate for
each inmate up to
and including 149 $39.56 $40.75 $41.97
Daily rate for each
inmate over 149 $37.56 $38.69 $39.85
Example: 160 inmates on 1/1/99: (149 x $39.56) + (11 x $37.56)
$5,894.44 + $413.16 = $6,307.60
<PAGE>
3.04 The Contractor shall submit documentation of an inmate count taken at
11:59 p.m. of each day. Daily inmate counts shall be presented to the
Authority every seven (7) days.
3.05 The Contractor will invoice the Authority on a monthly basis for
services rendered for the preceding month. The invoice shall include a roster
of the inmates assigned to the Facility and the number of calendar days each
inmate was housed at the Facility during the month for which the Authority is
invoiced. The roster of inmates shall include the arrival dates and the
departure dates, if applicable, for all inmates for whom the Contractor is
seeking payment from the Authority. Arrival dates shall be included in the
billable inmate days for those inmates housed in the Facility. Those persons
processed at the Facility but not assigned a bed at the Facility shall not be
included in the billable inmate days pursuant to the schedule in Section 3.03.
Those persons processed at the Facility but not assigned a bed at the
Facility shall be documented by the Contractor and a roster shall be submitted
to the Authority along with the roster of inmates. All persons on the roster
for whom no bed was assigned shall be billed at the rate of $20 per person.
Departure dates shall not be included in the billable inmate days.
3.06 Additional charges for services not in this Agreement shall be the
subject of a written amendment to this Agreement executed by both parties.
3.07 The Contractor shall provide inmate telephone service and commissary
operations during the term of this Agreement. Commissary services may be
provided either by the Contractor or by a third party vendor. The Authority
<PAGE>
shall not be considered to be a party to any agreement which may be formulated
between the Contractor and a third party vendor for the provision of
commissary services. The cost to the inmates for commissary items shall be
based on actual cost of goods plus taxes and reasonable mark-ups for overhead
and personnel. Any revenues that exist after allowing for the taxes and
reasonable mark-ups shall be the property of the appropriate inmate fund.
Inmate telephone service shall be in accordance with regulations of the Public
Utilities Commission.
ARTICLE FOUR
Duties of the Contractor
------------------------
4.01 The Contractor shall provide:
A. Intake facilities and inmate accounting which may encompass
bookkeeping, inventory processing, risk assessment, fingerprinting,
classification, record keeping, billing, controls, identification systems and
records, communication interface with law enforcement agencies, and such
statistical records as may be required by law.
B. Attendants to control ingress and egress, maintain the requisite
level of internal security and to monitor the activities of the inmates within
the Facility.
C. Food and beverage services in accordance with all applicable
<PAGE>
standards, sanitation and health codes, and individual and special needs. All
menus shall be planned and reviewed in advance by a registered dietician or
physician. Meals shall meet the dietary requirements of the U.S. Department
of Agriculture. Menu plans shall be kept for one (1) year. The menus shall
contain a variety of foods and recognize special occasions and holidays. The
quality of food and beverage service provided will be periodically reviewed by
the Authority or its designee, and the Contractor shall correct any failure to
meet the foregoing standards noted by the Authority or its designee within
seventy-two (72) hours of notification by the Authority. Special diets shall
be provided to inmates on the recommendation of a physician or dentist and for
inmates whose religious beliefs require it to be provided. Staff members
shall supervise inmates during meals. Inmates will be provided three (3)
meals each day, two (2) of which shall be hot meals. No more than fourteen
(14) hours may lapse between the evening meal and breakfast, unless a snack is
provided.
D. Clothing to inmates at least in accordance with ACA standards
which shall be adequate according to climate, and sex, height and weight of
the inmate. Inmates shall be provided with the opportunity to shower daily
and the Contractor shall provide hygiene supplies to the inmates.
E. Laundry service for inmates in accordance with ACA standards.
Inmates may exchange linens once each week. Inmates shall receive clean
towels and clean clothing twice each week.
<PAGE>
F. Procurement and purchasing of all items necessary to adequately
operate the Facility.
G. Bookkeeping and financial accounting.
H. Basic medical care as provided under Article Five.
I. Training of personnel employed at the Facility, including such
security, professional, law enforcement and cultural sensitivity training and
education as deemed appropriate by the Contractor in accordance with ACA
standards.
J. All personnel services, miscellaneous supplies and benefits
necessary to the operations of the Facility, or care and control of inmates,
including toiletries and hygiene supplies.
K. All such other services required by law or mandated by ACA
standards.
L. Orientation of inmates and all personnel to Facility rules and
regulations.
4.02 The Contractor will be responsible for the day-to-day janitorial
services within the Facility. Long-term maintenance for the equipment within
the Facility and for the Facility itself shall be the responsibility of the
Authority. All utilities shall be the responsibility of the Authority.
<PAGE>
4.03 The Contractor shall obtain all of the proper and required Local, State
and Federal permits, licenses and certifications necessary for the Facility to
serve as an Adult Detention Facility. The Contractor shall maintain such
certifications as required by the Authority, State law, other applicable law,
court order, and/or ACA standards. In the event it becomes necessary for the
Contractor to perform additional work or services, or to modify the Facility
as a prerequisite for obtaining or maintaining the above-mentioned licenses
and certifications, the Authority and the Contractor shall consult and, if
appropriate, agree upon a temporary increase or decrease in the schedule of
payments, as the case may be, sufficient to reimburse the appropriate party
for the cost of such operational modifications.
4.04 Notwithstanding anything contained herein to the contrary, the Authority
shall have no liability for any employees, agents, subcontractors or assigns
of the Contractor. The Contractor hereby agrees to indemnify and hold the
Authority and its officials, officers or employees, harmless from all costs,
claims, expenses and liabilities whatsoever which may be incurred by or
arising from all acts done or omitted to be done by the Contractor or
employees, agents, subcontractors and assigns of the Contractor, in connection
with services performed or to be performed under this Agreement. The
Contractor shall provide the Authority with copies of incident reports and
claims and the types of claims made against the Contractor each quarter.
4.05 The interviewing, hiring, training, assignment, certification, control,
management compensation, promotion and termination of all members of the
Facility's administration and staff shall be the responsibility and obligation
of the Contractor. The Contractor shall furnish reports on such matters to
<PAGE>
the Authority when so requested. The Contractor will use its best efforts to
hire and train local personnel. Staffing shall conform to the following:
A. The qualifications, selection, training and staff development
shall comply with ACA standards.
B. A sufficient number of trained, qualified employees shall be on
duty, awake and fully dressed at all times to meet all contractual
requirements and to monitor Facility control, security and inmate safety.
C. The Authority shall be notified within seventy-two (72) hours of
any change in the position of Facility Administrator.
D. Adequate staff with provision for supervision of male and female
inmates shall be maintained in accordance with all legal requirements.
4.06 The Contractor shall use its best efforts to purchase goods and services
locally, provided the goods and services are competitively priced and of good
quality.
4.07 The Contractor is associated with the Authority for the purposes and to
the extent set forth in this Agreement for the performance of operations and
management services for the Facility, and the Contractor is and shall be an
<PAGE>
independent contractor and, subject to the terms of this Agreement, shall have
the sole right to supervise, manage, operate, control and direct the
performance of the details incident to its duties under this Agreement.
Nothing contained in this Agreement shall be deemed or construed to create a
partnership or joint venture, to create the relationships of an employer-
employee or principal-agent, or to otherwise create any liability for the
Authority whatsoever with respect to the indebtedness, liabilities, and
obligations of the Contractor. The Contractor shall be solely responsible for
payment of all federal income, F.I.C.A., and other taxes owed or claimed to be
owed by the Contractor, arising out of this Agreement, and the Contractor
shall indemnify and hold the Authority harmless from and against, and shall
defend the Authority against any and all losses, damages, claims, costs,
penalties, liabilities, and expenses whatsoever arising or incurred because
of, incident to, or otherwise with respect to any such taxes.
4.08 The Contractor is responsible for performing background and employment
history checks of its employees and potential employees.
ARTICLE FIVE
Medical Care
------------
5.01 Basic medical care will be made available by the Contractor, at the
Contractor's sole cost, to all inmates housed at the Facility. For the
purposes of this Agreement, basic medical care shall be limited to routine on-
site medical services provided by a nurse or a lay technician acting under
guidelines provided by a medical doctor, including first aid for emergencies.
<PAGE>
This shall include dispensing, "over the counter" medications which have been
approved for inventory by the Facility's medical authority. Consistent with
the proposal submitted by the Contractor, a registered nurse shall be on duty
Monday through Friday from 9:00 a.m. to 5:00 p.m., and will be on call twenty-
four (24) hours. The availability of a physician or dentist shall be pursuant
to Contract.
5.02 Consistent with its duties to provide basic medical care, the Contractor
shall establish a program which includes:
A. The training of all supervisory staff in emergency first aid
procedures and cardiopulmonary resuscitation (CPR).
B. Adopting written medical backup plans which are communicated to
all employees and inmates.
C. Maintaining, sufficient first aid supplies and equipment to
adequately support the overall basic medical care requirements of the inmate
population.
D. Maintaining, replacing and replenishing medical first aid supplies
and equipment in accordance with prescribed standards recognized or approved
by a licensed health authority or organization that has expertise to evaluate,
assess and determine the potential need for, or condition of, the required
first aid supplies and equipment.
<PAGE>
5.03 All health care personnel responsible for dispensing medical services to
inmates shall possess state certification.
5.04 Except as required by lawful authority, the Contractor will not accept
or admit into the Facility any offender who represents a significant health or
medical risk. Arresting Officers must have a release from a physician for any
arrestee that has obvious medical problems such as cuts, broken bones, etc.
prior to bringing the offender to the Facility.
5.05 The Contractor shall develop workplace guidelines which address all
airborne and blood borne pathogens, and communicable diseases, including but
not limited to HIV. Said guidelines are attached to this Agreement as Exhibit
"B" and by this reference are incorporated herein. The Contractor shall
develop policies of confidentiality and an employee/client education program
in compliance with State laws.
5.06 The Contractor shall provide the Authority with copies of all medically
related policies and procedures at, on or before the commencement of this
Agreement.
5.07 Inmates shall receive a physical screening by qualified health care
personnel within seven (7) days of admittance into the Facility. The Facility
nursing staff shall perform the screenings and make referrals to a local
hospital as required.
<PAGE>
5.08 Inmate medical files shall be confidential and accessed by authorized
health care personnel only.
5.09 All prescription drugs, prostheses, dental treatment, psychiatric care,
eye glasses and medical treatment that is not a part of the basic medical
treatment at the Facility shall be at the expense of the inmate or the
Authority.
5.10 Should an inmate be hospitalized for any reason, the Contractor shall be
responsible for maintaining security of the inmate for the first twenty-four
(24) hours. Security of inmates hospitalized for more than twenty-four (24)
hours shall be the responsibility of the jurisdiction which caused the inmate
to be placed at the Facility. Costs for all hospitalization shall be borne by
the Authority.
5.11 The Contractor shall provide psychological evaluation and counseling for
inmates as necessary at the Facility.
ARTICLE SIX
Compliance With Standards
-------------------------
6.01 The Contractor shall prepare and adopt, prior to admitting any inmate to
the Facility, a Procedures Manual for the operation of the Facility so as to
assure that the Facility is operated fully in accordance with State and other
applicable laws and standards promulgated by the ACA. The Contractor shall,
from time to time, make such modifications and corrections in the said
<PAGE>
Procedures manual as are necessary to keep the Facility in compliance with
such laws, regulations and standards. The Authority and the Contractor agree
that the Facility shall be operated according to those standards established
by the American Correctional Association in the STANDARDS FOR ADULT LOCAL
DETENTION FACILITIES, third edition, as they may be amended from time to time.
6.02 The Authority and the Contractor shall agree upon a monitoring plan to
assure compliance with this Agreement.
ARTICLE SEVEN
Duties of the Authority
-----------------------
7.01 The Authority shall cooperate with the Contractor in all matters of law
enforcement security and communications and shall use its best efforts to
obtain such cooperation from local and state law enforcement agencies.
7.02 The Authority shall consider all proposed agreements presented to it by
Contractor or its agents for the placement of additional inmates in the
Facility. It is agreed that the first priority for bed space in the Facility
is to ensure space is available for such persons that are detained by the law
enforcement agencies for the cities of Union City and Palmetto.
<PAGE>
ARTICLE EIGHT
Inmate Programs, Monitoring & Staffing
--------------------------------------
8.01 The Contractor shall provide housing, supervision and programs for all
inmates including adult remedial education, counseling, and other education
and training as required by law.
8.02 Inmates may participate in programs made available by the Contractor at
no cost to the inmates.
8.03 Appropriate safeguards shall be established by the Contractor to enable
the Contractor to closely monitor the whereabouts of each inmate, including a
daily system and periodic accounting for all inmates assigned to the Facility,
and providing that such inmates shall only be allowed to leave the Facility to
conduct court-approved business. Written policies and procedures shall be
consistent with those guidelines from the ACA, and guidelines based on
generally accepted security practices not inconsistent with ACA guidelines.
8.04 The Contractor shall provide a designated area for family visitation
which shall accommodate visitors and also provide shelter during inclement
weather. Family visitation shall be allowed five (5) days a week during hours
specified by the Contractor.
8.05 The Contractor shall adopt disciplinary procedures including procedures
for the processing of violations and setting the types of sanctions which may
<PAGE>
be imposed. Each inmate shall be given the Disciplinary Rules included in the
Orientation Handbook during intake.
8.06 The Contractor shall be responsible for maintaining accurate and
complete file records and reports as necessary for each inmate. Safeguards
will be established for the protection and confidentiality of inmate records
in accordance with applicable law. Inmate records shall be maintained for a
period of three (3) years after discharge from the Facility. Files shall
include:
A. Identification data, including but not limited to fingerprints and
photographs, according to the appropriate State statutes.
B. Conditions of confinement.
C. Intake forms and assessments.
D. Classification committee records.
E. Correspondence.
F. Disciplinary records.
G. Incident reports.
<PAGE>
H. Release of information forms.
I. Medical records (in a separate file).
8.07 Inmate labor shall only be used to support the Facility.
ARTICLE NINE
Liability and Indemnity
-----------------------
9.01 The Authority and the Contractor agree to use their best efforts to
ensure that neither becomes responsible for any such actions taken with regard
to any inmate prior to the delivery of such inmate to the Contractor's
employees, officers, and agents at the Facility. To the extent possible and
allowed by law, the Authority and Contractor will require that all inmate
agreements and contracts with other jurisdictions provide that the contracting
jurisdiction shall defend, indemnify and hold harmless the Authority and the
Contractor for any claims, damages or losses arising, or alleged to have
arisen, from any act or failure to act, including but not limited to claims of
false arrest, false imprisonment, wrongful detention, violation of civil
rights, and all other claims of a similar nature, occurring prior to the
delivery of any inmate to the Facility, or occurring after the release of any
inmate therefrom to the contracting jurisdiction or assigning agency.
<PAGE>
9.02 To the fullest extent permitted by law, the Contractor agrees to and
hereby does defend, hold harmless and indemnify the Authority and its
officers, directors, employees, agents and representatives from and against
any and all claims, damages, demands, actions, judgments, losses, costs,
penalties, liabilities, assessments and expenses including, but not limited to
attorney's fees, incurred or suffered by the Authority that arise out of, or
result from, any cause, claim, loss or injury sustained by any person, or any
negligent or wrongful act, or failure to act, pursuant to the provisions of
this Agreement, by the Contractor or its officers, employees, agents or
representatives, or its subcontractors or assigns; any and all claims,
damages, demands, actions, judgments, losses, costs, penalties, liabilities,
assessments and or expenses, including, but not limited to attorneys' fees,
arising out of bodily injury to persons or damage to property caused by or
resulting from, in whole or in part, the negligent act or omission of the
Contractor or the agents or employees of the Contractor, or any legal entity
for whose negligence, action or omission the Contractor may be liable.
9.03 Notwithstanding the foregoing or any other term or provision or
condition of this Agreement, as to third parties and third party claims,
nothing in this Agreement is intended to nor shall be interpreted to: (a)
waive or deprive the Authority or the Contractor of any legal defenses; (b)
give, grant or bestow any legal right, defense or benefit upon any third
party; or (c) deprive the Authority or the Contractor of the benefits of any
legal defense, including sovereign and official immunity, or the benefits of
any law limiting damages.
<PAGE>
ARTICLE TEN
Insurance
---------
10.01 The Contractor shall obtain and maintain in force during the term of
this Agreement beginning not later than the commencement date of this
Agreement, at its sole cost, risk and expense and without charge or
reimbursement by the Authority, the insurance set forth in Exhibit 1. Such
insurance shall insure against all claims whatsoever against the Contractor or
the Authority, or their officers, employees, agents and representatives in
connection with the detention, care, security, housing and training, including
but not limited to claims based on violations or alleged violations of civil
rights, arising from services performed by the Contractor or its employees,
agents, subcontractors or assigns pursuant to this Agreement.
10.02 During the term of this Agreement or any extended term hereof, the
Contractor shall at its sole cost and expense obtain, keep and maintain in
full force and effect, an insurance policy or policies providing worker's
compensation insurance (or its approved and authorized equivalent) in amounts
not less than the amounts required by State law.
10.03 Prior to the commencement date of this Agreement, the Contractor shall
assure the Authority that the insurance required pursuant to this section
10.03 and Exhibit 1 is in full effect. The Contractor shall secure such
insurance, or additional insurance, through companies licensed to do business
in the State of Georgia.
<PAGE>
10.04 Save and except as specifically provided in this Article Ten, each and
every insurance policy required by this Article Ten shall name the Authority
as an additional insured and shall provide that such policy may not be
canceled or modified except upon at least thirty (30) calendar days notice in
writing to both the Contractor and the Authority.
10.05 The Contractor shall provide to the Authority insurance certificates as
proof of the insurance policies obtained, and if, through no fault of the
Contractor, such insurance policies are canceled or endorsed in such a way as
to limit such insurance coverage, the Contractor shall provide the Authority
written notice thereof immediately, and the Contractor shall obtain, as soon
as possible and at its own cost, replacement insurance. Should the Contractor
not obtain sufficient insurance in a reasonable time, and in any event not
later than thirty (30) days, the Authority may obtain a policy to fulfill the
obligation of the Contractor and shall adjust payments to the Contractor to
cover the premium cost of such insurance purchased by the Authority.
10.06 The Authority shall be responsible for providing liability insurance for
its officers, agents and employees, and insurance for Authority property, with
the exception of that property provided by the developer, used or stored at
the Facility other than the Facility and its contents, which is the
Contractor's responsibility to insure pursuant to Section 10.03.
10.07 Should any required insurance policy lapse from non-payment, the
Authority may provide the policy at the Contractor's expense.
<PAGE>
ARTICLE ELEVEN
Additional Provisions
---------------------
11.01 Notwithstanding the Contractor's obligation to perform, or to cause to
be performed, all duties and services set forth in this Agreement in
consideration of the compensation to be paid hereunder to the Contractor, the
Authority and the Contractor recognize and agree that operational changes and
additional services may be desired by jurisdictions contracting for the
placement of inmates, and such operational changes and additional services
may, at some future time, require that the Contractor provide services not
included in the terms of this Agreement. In such event, the Authority and the
Contractor shall negotiate and execute written terms, conditions and
amendments hereto or supplementary agreements prior to any such services being
provided or compensation earned.
11.02 In the event of the occurrence of any damage to or loss of the Facility
that materially affects the continued operation of the Facility, the
Contractor shall immediately notify the Authority of such loss or damage. If
insurance proceeds are available, the Contractor shall immediately proceed to
obtain repair and reconstruction of the Facility in consultation with the
Authority only as to the plans and quality of repair. The Authority has no
obligation to appropriate funds for this purpose, except insurance proceeds
received therefor.
11.03 The Contractor shall not be permitted to sell, assign, transfer, convey
or encumber, in whole or in part, this Agreement, or any right, interest, duty
<PAGE>
or obligation of performance herein or hereunder without the approval of the
Authority, with such approval not to be unreasonably withheld.
11.04 All subcontractors for counseling, education and employee services at
the Facility are subject to the approval of an authorized representative of
the Authority, which approval will not be unreasonably withheld.
ARTICLE TWELVE
Default and Termination
-----------------------
12.01 Each of the following shall constitute an Event of Default by the
Contractor:
A. A material failure to keep, observe, perform, meet or comply with
any covenant, Agreement, term or provision of this Agreement which is the duty
of the Contractor hereunder.
B. A material failure to meet or comply with any court order; the
standards, rules and regulations of the Authority; or any Federal or State
requirement or law.
C. The discovery by the Authority that any material statement,
representation, or warranty herein is false, misleading or erroneous in a
material respect.
<PAGE>
12.02 Upon the occurrence of an Event of Default, the Contractor may submit a
plan for a cure to the Authority. Upon receipt of the plan and review by the
Authority, the Authority may at its reasonable discretion approve or
disapprove of the plan. If the Authority approves of the plan, the Authority
agrees that it will not exercise its remedies hereunder so long as the
Contractor takes diligent, on-going conscientious action to cure the default.
If the Authority disapproves of the plan, the Authority will either identify
corrective actions necessary to be taken or terminate the Agreement.
12.03 In the event a bankruptcy, reorganization, debt arrangement, moratorium
proceeding under any bankruptcy or insolvency law, or dissolution or
liquidation proceeding is instituted by or against the Contractor, this
Agreement shall be reviewed immediately by the Authority and a determination
made as to whether to continue this Agreement or modify this Agreement to
ensure that the Authority is not liable for the Contractor's debt.
12.04 The Contractor may terminate this Agreement at its sole discretion in
the event that sufficient funds are not provided or appropriated by the
Authority to pay the amounts due the Contractor for services provided under
this Agreement if the failure of funding arises from matters beyond the
control of the Contractor and is without fault or negligence of the
Contractor.
<PAGE>
ARTICLE THIRTEEN
Non-Discrimination
------------------
13.01 The Contractor shall not discriminate against any employee, inmate or
subcontractor with regard to race, color, handicap, religion, sex, national
origin or age.
13.02 The Contractor agrees to place in conspicuous places, available to
employees and applicants for employment, notices setting forth the provisions
of this non-discrimination clause and that all advertisements for employment
shall state that the Contractor is an Equal Opportunity Employer.
ARTICLE FOURTEEN
Applicable Law and Venue
------------------------
This Agreement shall be construed under and in accordance with the laws
of the State of Georgia. Venue shall lie and be in Fulton County, Georgia.
<PAGE>
ARTICLE FIFTEEN
Legal Construction
------------------
In case any one or more of the provisions contained in the Agreement
shall, for an reason, be held invalid, illegal or unenforceable, and such is
not a material provision such invalidity, illegality or unenforceability shall
not effect any other provision hereof.
ARTICLE SIXTEEN
Amendments
----------
This Agreement may be amended only in writing, with such written
instrument approved and executed by both the Authority and the Contractor.
ARTICLE SEVENTEEN
Entire Agreement
----------------
This Agreement constitutes the sole and only Operations and Management
Agreement of the parties hereto and supersedes any prior understanding or
written or oral agreements between the parties respecting the within subject
matter.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and
affixed their seals the day and year as first above written.
SOUTH FULTON MUNICIPAL
REGIONAL JAIL AUTHORITY
(SEAL)
By: ROBERT E. CROOM, Chairman
ATTEST: PATSY WILLIFORD, Secretary
CORRECTIONAL SERVICES
CORPORATION
(SEAL)
By: IRA M. COTLER,
EVP & CFO
ATTEST: DEBRA DAWN, General Counsel
OPERATIONS AND MANAGEMENT AGREEMENT
for the
Newton County Correctional Center
This Operations and Management Agreement for the Newton County Correctional
Center (the "Agreement") is made as of the 12th day of June, 1998 (the
"Effective Date"), by and between Correctional Services Corporation, 1819 Main
Street, Suite 1000, Sarasota, Florida 34236, (the "Contractor") and Newton
County, Texas, Newton County Courthouse, Newton, Texas 75966 (the "County"), a
governmental entity of the State of Texas, upon the terms, conditions and
provisions herein set forth.
WITNESSETH
WHEREAS, the County leases the adult detention facility located on North State
Highway 87 in Newton County, Texas known as the Newton County Correctional
Center (the "Center"); and,
WHEREAS, the County desires and has the authority to enter into a contract under
which the Contractor shall operate and manage the Center in compliance with all
applicable Federal, State and Local laws and ordinances; and,
NOW THEREFORE, in consideration of the mutual rights, duties, benefits and
obligations herein exchanged, the parties hereto covenant, agree and bind
themselves as follows:
ARTICLE ONE
Purposes
1.01 The Contractor shall manage, supervise and operate the Center for the
County and receive, supervise and care for each inmate that is assigned to the
Center by the County pursuant to applicable law. The Contractor shall accept
inmates that are qualified to be housed in the Center as it is currently
licensed and that are assigned by the County from a jurisdiction that enters
into a joint powers agreement or interlocal government agreement with the County
(an "Inmate Contract") to reserve space for the on-going placement of inmates in
the Center, or a jurisdiction that contracts with the County to house one or
more individuals in the Center.
1.02 The Contractor shall manage and supervise the Center to remain in
compliance with all local, State and Federal health, fire and safety codes and
shall document such compliance at the beginning of each fiscal year. Such
documentation shall consist of certificates from the local health department,
Fire Marshall and building inspector and copies thereof shall be forwarded to
the County as required or requested. The Center shall be managed, operated
maintained and utilized in conformance and compliance with applicable law, the
standards and regulations of the Texas Commission on Jail Standards ("TCJS").
<PAGE>
ARTICLE TWO
Term
2.01 This Agreement is effective on and shall commence on the Effective Date
set forth in the initial paragraph of this Agreement. The original term of this
Agreement shall be five (5) years from the Effective Date (the "Term").
2.02 Except as set forth herein, the County may unilaterally terminate this
Agreement at any time only for reason of Contractor's failure to operate or
cause the operation of the Center in compliance with the terms of this
Agreement, State law, and/or the applicable standards of the Texas Commission on
Jail Standards, or default under this Agreement. However, prior to any such
termination, the County shall give written notice by certified mail to the
Contractor of such deficiency. Contractor shall attempt to correct deficiencies
within 90 days from receipt of such notice. Within ten days of receiving the
written notice from the County, the Contractor shall submit a plan of
corrections to the County indicating action to be taken and the time frame for
full compliance. The County shall review the plan of correction and shall either
concur with the plan or identify corrective actions to be taken and state any
extended time frame for completion. At the end of the specified time frame, the
County may again inspect for deficiencies at the Center to ensure compliance
with the plan and if the deficiencies have not been corrected the County may
terminate this Agreement.
2.03 The Contractor may, upon 90-days written notice to the County,
unilaterally terminate this Agreement. The Contractor shall give written notice
by certified mail to the County of such termination.
ARTICLE THREE
Center Costs and Payments
3.01 The Contractor shall provide a billing service to the County and is
authorized to bill all Center Revenues on behalf of and in the name of the
County. "Center Revenues" shall include all receipts arising from the operation
of the Center from and after the Effective Date of this Agreement, including,
without limitation, payments received for the incarceration, detention or
housing of inmates, phone revenues and all other moneys or fees generated by the
operation of the Center, but excluding any fees generated by the Contractor
which are not directly related to the Center, including, without limitation,
fees for transportation to or from the Center, supervision fees outside the
Center or brokerage fees relating to the placement of inmates. All payments
shall be made to the County Treasurer.
3.02 Each month during the term of this Agreement, (a) County shall be
entitled to a fee (the "Inmate Fee") equal to $1.50 per non-County inmate per
day for each full day paid during the month that the inmate is housed at the
Center pursuant to an Inmate Contract; and (b) Contractor shall be entitled to a
fee (the "Contractor Fee") equal to $500,000 per month for its management of the
<PAGE>
Center. Beginning on January 1, 1999, the Contractor Fee shall be adjusted as
provided in Exhibit 2. For these purposes a day shall be a twenty-four hour
period beginning at midnight (12:00 a.m.)
3.03 All Center Revenues shall be accounted for on a monthly basis and will
be distributed by the County Treasurer in the following month, within three (3)
business days of receipt (e.g.: Center Revenues for January will be distributed
in February):
a. First, $190,000 to the County to pay the County's debt service and
required maintenance reserves for the Center.
b. Second, 1/12 of the expected ad valorem taxes on the Center to a
trust account created for such purpose. The expected ad valorem taxes shall be
equal to the valuation of the Center for the most recent year provided by the
Newton County Appraisal District. Each year after the payment of ad valorem
taxes on the Center, any excess funds in the trust account shall be disbursed to
the Contractor and treated as Center Revenues.
c. Third, the Inmate Fee to the County.
d. Fourth, a wire transfer in immediately available funds to the
Contractor to reimburse it for the payment of all expenses relating to the
operation of the Center, including but not limited to the costs of maintenance,
repairs, transportation, utilities, supplies, food service, medical care,
salaries and benefits of individuals employed and a reasonable allocation of
Contractor's overhead incurred in connection with the operation of the Center.
e. Fifth, by wire transfer in immediately available funds the
Contractor Fee due for the prior month and all prior unpaid Contractor Fees to
Contractor.
f. Sixth, the balance, if any, to the Contractor, but only until the
Contractor Fee is equal to 80% of the total compensation (excluding
reimbursement for expenses as provided in (d) above) to the extent allowed in
section 5.03(2) of Revenue Procedure 97-13.
g. Seventh, the balance to the County.
3.04 The Contractor shall participate in an annual program evaluation and
annual audit of the Center including the maintenance and availability of an
accurate and up-to-date accounting program, and inmate trust fund financial
records.
3.05 The Contractor shall submit to the County, First Union National Bank
(the "Trustee"), its counsel, Allstate Insurance Company or their designees, no
later than the fifth day of each month, an accounting of all Center Revenues and
expenses and a calculation of the Inmate Fee for the month. Additionally, the
Contractor and the County agree to cooperate with the Trustee in connection with
an annual audit by the Trustee of the revenues and expenses of the Center.
<PAGE>
3.06 Services that are desired by the County, or a jurisdiction in contract
with the County for detention services, that are not included in this Agreement,
shall be negotiated for between the County and the Contractor. Additional
charges for services not in the Agreement shall be as agreed upon between the
Contractor and the County and placed in an addendum to this Agreement
3.07 The Contractor may enter into agreements with vendors for services to be
performed at the Center, including for inmate telephone service and commissary
operations at their option. All commissions from inmate telephone service and
income from commissary operations may be utilized at the Contractor's
discretion. The cost to the inmates for commissary items shall be based on
actual cost of goods plus taxes and mark-ups for overhead and personnel. Sales
prices for goods shall be comparable to that available in local retail stores
for the same or similar goods. Inmate telephone service shall be in accordance
with regulations of the Public Utilities Commission.
3.08 The Contractor agrees to provide the County with space to house up to
twenty (20) County prisoners per day on an as needed and space available basis
at the rate of $25.00 per day. All other County prisoners will be housed on an
as needed and space available basis at the lowest market rate per diem being
charged under the Inmate Contracts.
ARTICLE FOUR
Duties of the Contractor
4.01 The Contractor shall manage, operate and provide, or cause the operation
and provision under Contractor's supervision and primary responsibility, of the
services required to comply with the Inmate Contracts, TCJS standards,
applicable law and as required to maintain the licenses required to operate the
Center.
4.02 Contractor, with the County's assistance, as requested, shall obtain and
maintain all of the proper and required local, State and federal permits,
licenses and certifications necessary for the Center. The Contractor shall
maintain such certifications as required. If after such certifications have been
obtained, the Contractor is required by the County, State law, other applicable
law, court order, rules and procedures, or TCJS standards, to perform additional
work or services, or to modify the Center, the County and the Contractor shall
consult and, if appropriate, agree upon a temporary increase in the schedule of
payments sufficient over a reasonable period of time to reimburse the Contractor
for the cost of such operational modifications.
4.03 Notwithstanding anything contained herein to the contrary, the County
shall have no liability for any employees, agents, subcontractors or assigns of
the Contractor. The Contractor hereby agrees to indemnify and hold the County
and its officials, officers, or employees, harmless from all cost, claims,
<PAGE>
expenses and liabilities whatsoever which may be incurred by or arising from any
and all acts done or omitted to be done by Contractor or its employees, agents
or subcontractors and assigns of the Contractor, in connection with services
performed or to be performed under this Agreement.
4.04 The interviewing, hiring, training, assignment, certification, control,
management, compensation, benefits, promotion and termination of all members of
the Center's administration and staff shall be the responsibility and obligation
of the Contractor, but shall be a reimbursable expense of operating the Center.
The Contractor shall furnish reports on such matters to the County when so
requested. The Contractor will use its best efforts to hire and train local
personnel.
4.05 The Contractor is associated with the County for the purposes and to the
extent set forth in this Agreement for the performance of operations and
management services for the Center, and Contractor is and shall be an
independent contractor and, subject to the terms of this Agreement shall have
the sole right to supervise, manage, operate, control, and direct the
performance of the details incident to its duties under this Agreement. Nothing
contained in this Agreement shall be deemed or construed to create a partnership
or joint venture, to create the relationships of an employer-employee or
principal agent, or to otherwise create any liability for the County whatsoever
with respect to the indebtedness, liabilities, and obligations of the
Contractor. The Contractor shall be solely liable for payment of all federal
income, F.I.C.A, and other taxes owed or claimed to be owed by the Contractor,
arising out of this Agreement, and the Contractor shall indemnify and hold the
County harmless from and against, and shall defend the County against any and
all losses, damages, claims, costs, penalties, liabilities, and expenses
whatsoever arising or incurred because of, incident to, or otherwise with
respect to any such taxes.
4.06 The Contractor shall maintain the exterior walls, roof, foundation, and
all outside utilities in good repair except for reasonable wear and tear. Such
maintenance includes the duty to repair and/or replace components of the
building that may be damaged due to neglect; with quality equivalent to the
original component.
4.07 The Contractor shall provide the services hereinafter set forth as
reimbursable expenses consistent with section 3.03(d):
A. Maintain all interior walls and ceilings, window glass, doors,
electrical fixtures, and plumbing fixtures in good repair; painting all interior
walls, as required, and furnishing furnace filters.
B. All usual janitorial and maintenance service including sweeping and
mopping of floors, trash disposal, cleaning of window, dusting and replacement
of light bulbs.
C. Maintain grounds of the Center, mowing, trimming, watering of plants
and lawn to maintain a good cosmetic appearance of the grounds.
<PAGE>
D. Periodically have the Center fumigated and/or sprayed for insects and
rodents.
4.08 Contractor is not, by the execution of this Agreement, accepting or
assuming any liability, obligation, responsibility, or duty required by any
contract, lease or other agreement entered into, executed or agreed to by any
prior operator of the Center.
ARTICLE FIVE
Medical Care
5.01 Except as required by lawful authority, the Contractor will not accept
or admit into the Center any offender who represents a significant health or
medical risk and the County shall not assign any such offender. Arresting
officers must have a release from a physician for any arrestee that has obvious
medical problems such as cuts, broken bones, etc. prior to bringing the offender
to the Center.
5.02 Should an inmate from a jurisdiction other than the County be hospitalized
for any reason, except as otherwise provided in an Inmate Contract, the
Contractor shall be responsible for maintaining security. The County shall be
responsible for County inmates which are hospitalized.
ARTICLE SIX
Compliance With Standards
6.01 The Contractor shall prepare and adopt a Procedures Manual for the
operation of the Center so as to assure that the Center is operated fully in
accordance with State and other applicable laws and regulations, rules and
procedures promulgated by the County and standards promulgated by the TCJS. The
Contractor shall, from time to time, make such modifications and corrections in
the said Procedures manual as are necessary to keep the Center in compliance
with such laws, regulations and standards.
6.02 Training of personnel employed at the Center, including such security,
professional, law enforcement and cultural sensitivity training and education as
may be required by the TCJS standards or the Texas Commission on Law Enforcement
Standards and Education.
6.03 The Contractor shall maintain a Certificate of Compliance issued by the
TCJS and will to the extent that it may reasonably do so obtain an accreditation
by the American Correctional Association. The Contractor shall also attempt to
comply with the American Correctional Association standards.
<PAGE>
ARTICLE SEVEN
Duties of the County
7.01 The County shall cooperate with the Contractor in all matters of law
enforcement, security and communications and shall use its best efforts to
obtain such cooperation from the law enforcement agencies within the County and
State.
7.02 The County shall assist and cooperate with the Contractor in obtaining
and providing information needed by the Contractor in the screening of
candidates for employment; including NCIC checks and driving records.
7.03 It is agreed that the first priority for bed space in the Center is to
assure space is available for such persons that are detained by the County
Sheriff. However, the County and Contractor agree it shall be to their mutual
benefit that the Center be utilized by an inmate population within the design
limits of bed capacity. To this end, and throughout the term of the Agreement,
the County and Contractor agree to cooperate and work to manage and limit
vacancies by contracting with other jurisdictions for the housing of their
offenders.
7.04 The County and the Sheriff shall cooperate with Contractor in all
matters of law enforcement, security and communications. The County and the
Sheriff shall assist Contractor at the request of the Contractor in the
training, at Contractor's expense, of Contractor's employees hired to operate
the Center. The Sheriff shall assist and cooperate with Contractor for purposes
of obtaining such licensing as may be required by State or federal law for the
aforementioned Contractor employees. The County and the Sheriff shall assist
and cooperate with Contractor in providing information requested by Contractor
in the screening of candidates for employment to the extent such information may
be lawfully obtained or released under federal or State law. The County and the
Sheriff will verify that all Contractor employees undertaking jailer duties are
certified, as required, by law.
7.05 The County shall diligently process and enter into all lawful and
necessary agreements with any prisoner transfer sources as may be necessary to
facilitate the receipt and incarceration of eligible high-risk and non-high-risk
prisoners in the Center. To the extent permitted by law, County will enter into
all Inmate Contracts including those relating to prisoners from out-of-state,
presented by and acceptable to Contractor that are authorized by, and comply
with all applicable governmental requirements for the type of prisoners for
which the Center is licensed. The County shall place all inmates acquired
pursuant to Inmate Contracts in the Center once approved by Contractor.
7.06 County will cooperate with Contractor to obtain all necessary approvals
for operation of the Center, including but not limited to securing use permits
and licensing. County will cooperate with Contractor to obtain all necessary
approvals for expansions of the Center and will consent to any reasonable
expansion plan presented by Contractor. County and Contractor agree that any
expansions to the Center will involve a significant capital outlay by Contractor
and that this Agreement shall be amended to enable Contractor to recoup its
capital outlay during the term of this Agreement; either through reduced Inmate
Fees to the County or recoupment of unamortized costs upon the termination of
this Agreement, subject to the County Commissioners Court approval.
<PAGE>
7.07 The County agrees that it will not impose any taxes, levies, fees or
other impositions upon Contractor which are not either a) mandated by state law,
or b) generally applicable to all citizens or businesses within Newton County
and which are not designed to place a disproportionate burden.
7.08 The Sheriff has executed this Agreement in the space provided herein to
evidence his written approval of this Agreement as required by Section 351.102
of the Texas Local Government Code.
7.09 It is understood and agreed that the County is not obligated to pay any
amounts due from it hereunder from any source other than Center Revenues
actually available therefor, and that Center Revenues are the sole source of
funding therefor.
ARTICLE EIGHT
Liability and Indemnity
8.01 The County and the Contractor agree to use their best efforts to ensure
that neither becomes responsible for any actions taken with regard to any inmate
prior to the delivery of such inmate to the Contractor's employees, officers,
and agents at the Center. To the extent possible and allowed by law, the County
and Contractor will insure that all Inmate Contracts with other jurisdictions
provide that the contracting jurisdiction shall, to the extent allowed by law,
defend, indemnify and hold harmless the County and Contractor for any claims,
damages or losses arising, or alleged to have arisen from act or failures to
act, including but not limited to claims of false arrest, false imprisonment,
wrongful detention, violation of civil rights, and all other claims of a similar
nature, occurring prior to the delivery of any inmate to the Center, or
occurring after the release of any inmate therefrom to the contracting
jurisdiction or assigning agency.
8.02 Contractor agrees to and hereby does defend, hold harmless and indemnify
THE COUNTY and its officers, directors, employees, agents and representatives
from and against any and all claims, damages, demands, loss costs, assessments
and expenses incurred or suffered by the County that arise out of or result from
any cause or claim or any negligent or wrongful act or failure to act pursuant
to the provisions of this Agreement by the Contractor or its officers,
employees, agents or representatives, or its subcontractors or assigns, but not
including liability, claims, damages, losses, or expenses, including attorneys'
fees, caused by, or resulting from, in whole or in part, the negligent act, or
omission of, the County or the agents or employees of the County, or any legal
entity for whose negligent action or omission any of these may be liable.
<PAGE>
8.03 The Contractor agrees to and does hereby assume responsibility for the
maintenance and repair of the real and personal property that is (a) owned by
the County or the Contractor; (b) located at the Center; and (c) used by the
Contractor in the operation or maintenance of the Center.
8.04 Notwithstanding the foregoing or any other term or provision or condition
of this Agreement, as to third parties and third party claims, nothing in this
Agreement is intended to nor shall be interpreted to: (a) waive or deprive the
County or the Contractor of any legal defense; (b) give, grant or bestow any
legal right, defense or benefit upon any third party, or; (c) deprive the County
or the Contractor of the benefits of any legal defense including sovereign and
official immunity, or the benefits of any law limiting damages.
ARTICLE NINE
Insurance
9.01 Contractor shall obtain and maintain in force during the term of this
Agreement beginning not later then the commencement date, the greater of, (i)
the amounts of insurance shown on Exhibit 1 . Save and except as hereafter
modified by the parties in writing, such insurance shall be in addition to the
coverage maintained or required to be maintained by the County and shall insure
against all claims whatsoever against Contractor or County, or their officers,
employees, agents and representatives in connection with the detention, care,
security, housing and training of inmates of the Center, including but not
limited to claims based on violations or alleged violations of civil rights
arising from services performed by Contractor or its employees, agents,
subcontractors or assigns pursuant to this Agreement.
9.02 During the Term of this Agreement, the Contractor shall as a reimbursable
expense obtain, keep and maintain in full force and effect, a policy or policies
providing worker's compensation insurance (or its approved and authorized
equivalent) in amounts not less than as shown on Exhibit 1.
9.03 Prior to the Effective Date the Contractor shall assure the County that
the insurance required pursuant to this Article 9 and Exhibit 1 is in full
effect. The Contractor shall secure such insurance, or additional insurance,
through companies licensed to do business in the State of Texas.
9.04 Save and except as specifically provided in this Article Ten, each and
every insurance policy required by this Article Ten shall name the County and
the Trustee as an additional insured and shall provide that such policy may not
be canceled or modified except upon at least thirty calendar days notice in
writing to the Contractor, the County, and the Trustee.
9.05 Contractor shall provide to the County and the Trustee insurance
certificates as proof of the insurance policies obtained, and if, through no
fault of the Contractor, such insurance policies are canceled or endorsed in
such a way as to limit such insurance coverage, Contractor shall provide the
<PAGE>
County written notice thereof immediately, and Contractor shall obtain, as soon
as possible and at its own cost, replacement insurance. Should the Contractor
not obtain sufficient insurance in a reasonable time, the County may obtain a
policy to fulfill the obligation of the Contractor.
9.06 Should any required policy lapse from non-payment, the County or the
Trustee may provide the policy at the Contractor's expense.
ARTICLE TEN
Additional Provisions and Specific Performance
10.01 In the event of the occurrence of any damage to or loss of the Center
that materially affects the continued operation of the Center, the Contractor
shall immediately notify the County and the Trustee of such loss or damage. If
insurance proceeds are available, the Contractor shall, immediately proceed to
obtain repair and reconstruction of the Center in consultation with the County
and the Trustee only as to the plans and quality of repair. The County has no
obligation to appropriate funds for this purpose, except insurance proceeds
received therefor. If the Contractor, in its sole discretion, decides that the
damage is too extensive to repair or reconstruct and decides not to rebuild the
Center, this Agreement shall terminate immediately upon such determination.
10.02 In the event a dispute arises between the County and Contractor regarding
this Agreement or any of the provisions hereof, the County and Contractor shall
be required to continue performance of their respective obligations during the
pendency of any such dispute. The County shall continue to make all payments to
Contractor, and any other actions required hereunder in a timely manner as set
forth in this Agreement. Likewise, Contractor shall continue to perform its
obligations in accordance with the terms of this Agreement notwithstanding the
existence of any dispute between the parties. Both the County and Contractor
shall have the right to compel specific performance by the other party of its
respective contractual obligations and to institute any legal action necessary
to compel such specific performance. The obligation of either party to perform
its respective obligations hereunder may only be terminated as provided for in
Article 2 of this Agreement or applicable law.
ARTICLE ELEVEN
Default and Termination
11.01 Each of the following shall constitute an Event of Default by the
Contractor:
A. A material failure to keep, observe, perform, meet or comply with
any covenant, agreement, term or provision of this Agreement which is the duty
of the Contractor hereunder, which failure continues for a period of 90 days
after the Contractor has received written notice thereof.
<PAGE>
B. A material failure to meet or comply with any Court Order, or any
federal or State requirement or law; which failure continues for a period of 90
days after written notice thereof of is received by the Contractor.
C. Failure of the Contractor to timely reimburse the County for utility
expenses or supplies of the Center paid for by the County; timely payments shall
be within thirty (30) days of billing.
11.02 Upon the occurrence of an Event of Default and if the Contractor
believes that it cannot be corrected within the 90 day period to cure, and if
the Contractor, through a diligent, on-going, and conscientious effort to
correct the default believes that the cure will take longer than 90 days, the
Contractor may submit a plan for a cure to the County. Upon receipt of the plan
and review by the County, the County may at its discretion approve or disapprove
of the plan. If the County approves of the plan, the County agrees that it will
not exercise its remedies hereunder so long as the Contractor takes diligent,
on-going conscientious action to cure the default. If the County disapproves of
the Contractor's plan, the County will identify corrective actions necessary to
be taken.
11.03 In the event of a bankruptcy, reorganization, debt arrangement moratorium,
proceeding under any bankruptcy or insolvency law, or dissolution or liquidation
proceeding is instituted by or against the Contractor, this Agreement shall be
reviewed immediately by the County and determination made as to continue this
Agreement or modify this Agreement to ensure that the County is not liable for
Contractor's debt.
11.04 In the event the County defaults in its payments under those certain Lease
Agreements dated separately as of June 15, 1990 and December 1, 1990 each by and
between the County and Diversified Municipal Services of Texas, Inc. and the
Trustee takes possession of the Center, then the Trustee may terminate this
Agreement without any recourse by the Contractor.
ARTICLE TWELVE
Non-Discrimination
12.01 The Contractor shall not discriminate against any employee, inmate, or
subcontractor with regard to race, color, handicap, religion, sex, national
origin or age.
12.02 The Contractor agrees to place in conspicuous places, available to
employees and applicants for employment, notices setting forth the provisions of
this non-discrimination clause and that all advertisements for employment shall
state that the Contractor is an Equal Opportunity Employer.
<PAGE>
ARTICLE THIRTEEN
Applicable Law and Venue
13.01 This Agreement shall be construed under and in accordance with the laws
of the State of Texas. Any and all suits to enforce this Agreement shall be
maintained in a court of competent jurisdiction in Newton County, Texas, or, if
appropriate, the closest federal district court to Newton County, Texas.
ARTICLE FOURTEEN
Legal Construction
14.01 In case any one or more of the provisions contained in the Agreement
shall, for any reason, be held invalid, illegal or unenforceable, and such is
not a material provision, such validity, illegality or unenforceability shall
not effect any other provision hereof.
14.02 Except as required by law, to the extent an Inmate Contract and this
Agreement contain different provisions regarding the detention of prisoners, the
provisions of the Inmate Contract shall control.
ARTICLE FIFTEEN
Amendments
15.01 This Agreement may be amended only in writing, with such written
instrument approved and executed by both the County and the Contractor.
ARTICLE SIXTEEN
Contractor's Right Of First Refusal
16.01 If County determines to sell, transfer, or exchange the Center, or any
part thereof, County shall first notify Contractor of the terms of such
transaction. If Contractor, within thirty (30) days after Contractor's receipt
of County's notice, indicates in writing its agreement to purchase the Center or
part of the Center on the terms stated in County's notice, including terms of
any required down payment and delivery to County of such down payment, County
shall, to the extent permitted by law, sell and convey the Center or a part
thereof to Contractor on the terms stated in the notice. The right of first
refusal set forth in this Article shall not apply to any foreclosure sale or any
transfer of the Center by deed in lieu of foreclosure. All indebtedness of
County shall be paid in full in connection with any sale of the Center or any
part thereof.
16.02 Should the County's interest in the Center be sold, leased or otherwise
transferred to an entity other than Contractor, this Agreement shall remain in
force and effect with such transferee, and the $190,000 paid to cover the
County's debt service and required maintenance reserves shall be treated as the
exclusive rent to be paid to the new transferee.
<PAGE>
ARTICLE SEVENTEEN
Execution Authority
17.01 By his or her signature below, each signatory individually certifies
that he or she is the properly authorized agent or officer of the applicable
party hereto and has the necessary authority to execute this Agreement on behalf
of such party and each party hereby certifies to the other that any resolutions
necessary to create such authority have been duly passed and are now in full
force and effect.
17.02 The laws of the State of Texas authorize the County to establish, acquire,
construct, operate and maintain the Center, to enter into this Agreement and the
transactions contemplated hereby and to carry out its obligations under this
Agreement.
17.03 The County has complied with all open meeting laws, all public contracting
laws and all other state and federal laws necessary to make this Agreement
effective.
ARTICLE EIGHTEEN
Entire Agreement
18.01 This Agreement constitutes the sole and only Operations and Management
Agreement of the Parties hereto and supersedes any prior understanding or
written or oral agreements between the parties respecting the within subject
matter.
18.02 This Agreement will not become valid or enforceable until the date of
the final signature set forth below.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement to be
effective as of 12:00 a.m. on the date first written above.
COUNTY OF NEWTON, TEXAS
By: Lon Sharver
County Judge
By: Weldon Wilkinson CORRECTIONAL SERVICES CORP.
Commissioner, Pct.1 a Delaware Corporation
By: Anderson White, Jr. By: James Slattery, President
Commissioner, Pct. 2
By: M.G. Jarrell
Commissioner, Pct. 3
By: Ricky Odom
Commissioner, Pct. 4
Approved and Consented To:
By: Wayne Powell
County Sheriff
By: Edward J. Tracy
District Attorney
ATTEST:
By: Mary Cobb
County Clerk
(COUNTY SEAL)
<PAGE>
EXHIBIT 1
Minimum Insurance Coverage
Type Coverage
Comprehensive General Liability $ 5,000,000 Per Occurrence
(including Civil Rights) $10,000,000 Aggregate
Workers Compensation $ 1,000,000
Automobile Liability $ 1,000,000
Building & Contents $15,600,000
<PAGE>
EXHIBIT 2
Beginning January 1, 1999, the Contractor Fee shall be calculated by
multiplying the original Contractor Fee stated in the Agreement by a fraction
determined as follows:
(1) The numerator shall be the Current Index.
(2) The denominator shall be the Initial Index.
The "Index", as used herein, shall mean the Consumer Price Index for
Urban Consumers (all items), Houston, Galveston, Brazoria, Texas, area (1984 =
100) published by the United State Department of Labor, Bureau of Labor
Statistics.
The Initial Index shall mean the Index published for the calendar
month and year occurring two (2) months prior to the month in which the
Effective date of the Agreement occurs. The Current Index shall mean the
Index published for the calendar month and year occurring two (2) months prior
to the calculation date.
If a base year other than 1984 is adopted, the Index shall be converted in
accordance with an appropriate conversion factor in order to ensure that all
increases in the consumer price index are taken into account. If the Index is
discontinued or revised, such other Index or computation with which it is
replaced, or if no official replacement is named, such other comparable
statistics published by a responsible financial periodical or recognized
authority as is reasonably acceptable to Contractor shall be used in order to
obtain substantially the same result as would have been obtained if the Index
had not discontinued or revised.
ASSET PURCHASE AGREEMENT
*****
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
A NATIONAL BANKING ASSOCIATION,
NOT INDIVIDUALLY BUT SOLELY AS OWNER TRUSTEE UNDER
THE CSC TRUST 1997-1
a trust existing under the laws of the State of Utah
as Buyer
AND
THE COUNTY OF DICKENS
a Political Subdivision of the State of Texas
as Seller
Dated: July 14, 1998
<PAGE>
TABLE OF CONTENTS
1. Transfer of Assets 1
1.1 Transferred Assets 1
1.2 Retained Assets 3
2. Purchase Price, Inmate Fee, County Beds and Closing 3
2.1 Purchase Price 3
2.2 Inmate Fee and County Beds 3
2.3 Closing 4
3. Assumption of Obligations of Seller 4
4. Representations and Warranties of Seller 4
4.1 Organization of Seller 4
4.2 Authority 5
4.3 Title to Transferred Assets 5
4.4 Third Party Consents 5
4.5 Hazardous Materials 5
4.6 Litigation 6
4.7 Licenses and Permits 6
4.8 Compliance with Laws 7
4.9 Employee Relations 7
4.10 Brokerage and Finder's Fees 8
4.11 U.S. Persons 8
4.12 Real Property 8
4.13 Physical Condition of Transferred Assets 9
4.14 Inventory 9
4.15 Insurance 9
4.16 Changes Since Request for Proposals 9
4.17 Indebtedness Matters 10
4.18 Taxes 10
4.19 Adverse Action 11
4.20 Absence of Undisclosed Liabilities 11
4.21 Accuracy of Documents; Delivery and Inspection 11
4.22 Statements Not Misleading 11
4.23 Powers of Attorney 12
5. Representations and Warranties of Buyer 12
5.1 Organization and Good Standing 12
5.2 Authority 12
5.3 Third Party Consents 12
5.4 Brokerage and Finder's Fees 13
5.5 Discoveries Since Management Date 13
6. Conditions Precedent to Obligations of Buyer 13
6.1 Termination of Agreements 13
6.2 Title Insurance 13
6.3 Instruments of Transfer 13
6.4 Certified Resolutions 14
6.5 Opinion of Seller's Counsel 14
6.6 Tax Matters 14
6.7 Payment of Certain Obligations 14
6.8 Intentionally omitted 14
6.9 Performance of Obligations 14
6.10 Officer's Certificate 14
6.11 Liens Released 14
6.12 Other Documents 15
6.13 Payment of Taxes 15
6.14 Compliance With Governmental Requirements 15
7. Conditions Precedent to Obligations of Seller 15
7.1 Payment of Purchase Price 15
7.2 Trustee's Affidavit 15
7.3 Officer's Certificate 15
7.4 Other Documents 15
7.5 Compliance With Governmental Requirements 16
7.6 Insurance Coverage 16
8. Additional Covenants 16
8.1 Further Assurances 16
8.2 Expansion of Facility 17
8.3 Execution of Inmate Contracts 17
8.4 Cooperation of Seller and Sheriff 18
8.5 Approvals and Permits 18
8.6 No Special Fees or Taxes 18
8.7 Litigation Cooperation 18
8.8 Allocation of Purchase Price 19
8.9 Confidentiality 19
<PAGE>
8.10 Excluded Assets 19
8.11 Employee Matters 19
8.12 Right of First Refusal 20
8.13 Post-Closing Taxes 22
8.14 Post-Closing Conduct of Seller 22
9. Trigger Event 22
10. Survival of Representations 22
11. Indemnification 23
11.1 Indemnification of Seller by Buyer 23
11.2 Indemnification of Buyer by Seller 24
12. General Provisions 26
12.1 Dispute Resolution 26
12.2 Notices 26
12.3 Form of Instruments 27
12.4 Attorneys' Fees 27
12.5 Remedies Not Exclusive 28
12.6 Successors and Assigns; Third Party Rights 28
12.7 Counterparts 28
12.8 Article and Section Headings 28
12.9 Entirety of Agreement, Amendments 28
12.10 Expenses and Prorations 29
12.11 Construction 29
12.12 Waiver 29
12.13 Severability 29
12.14 Certain Definitions 30
12.15 Consents Not Unreasonably Withheld 32
12.16 Time Is of the Essence 32
12.17 Governing Law 32
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (as it may be amended, restated and modified,
the "Agreement") is made and entered into as of July 14, 1998, by and between
THE COUNTY OF DICKENS, a political subdivision of the State of Texas ("Seller"),
and FIRST SECURITY BANK, NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION,
NOT INDIVIDUALLY BUT SOLELY AS OWNER TRUSTEE UNDER THE CSC TRUST 1997-1, a trust
existing under the laws of the State of Utah ("Buyer"), with reference to the
following facts:
A. Seller owns that certain fully licensed and operational correctional
facility consisting of 479 licensed beds currently known as the Dickens County
Correctional Facility in Dickens County, Texas (the "Facility") and the other
activities and businesses related thereto (collectively, together with the
Facility, but excluding the Retained Assets referred to in Sections 1.2(a)
through (c), the "Facility Business").
B. CSC is currently the operator of the Facility and the Facility
Business under that certain Agreement (the "Management Agreement") dated June
17, 1998 (the "Management Date"), by and between Seller, CSC and Manager.
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Facility Business, and all of the equipment, fixtures and other real
and personal property owned by Seller which are directly or indirectly related
to, used in, necessary for or contribute to the operation of the Facility
Business (other than the Retained Assets), on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, and the
representations, warranties and covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:
1. Transfer of Assets
1.1 Transferred Assets
For the consideration hereinafter provided and in reliance
upon the representations and warranties of the parties set forth herein, Seller
hereby sells, transfers, conveys and assigns to Buyer, and Buyer hereby
purchases from Seller, all of Seller's assets and businesses which are related
<PAGE>
to, used in, necessary for or contribute to the operation of the Facility
Business (whether within, adjacent to or completely outside and removed from the
Facility) (collectively, the "Transferred Assets"), including, without limiting
the generality of the foregoing, the following assets (but excluding all
Retained Assets):
(a) The surface estate of the real property owned by Seller
upon which the Facility is situated (including the real property on which the
correctional facility known as "Dickens County Correctional Facility" is
located), together with all structures, construction work-in-progress, buildings
and other improvements thereon, and any and all of Seller's rights, privileges
and easements appurtenant thereto (collectively, the "Real Property"), all of
which Real Property is identified on Schedule 1.1(a).
(b) All equipment and other tangible personal property
related to the Facility Business owned by Seller.
(c) All inventories of supplies, food, janitorial, medical
supplies and office supplies, maintenance and shop supplies and other
disposables related to the Facility Business which are existing as of the
Closing and which are not obsolete (the "Inventory").
(d) To the extent lawfully transferable, all accreditations,
registrations, licenses, permits and other governmental consents or approvals
necessary to or intended for the operation of the Facility Business as presently
conducted by Seller.
(e) All advance payments, prepayments, prepaid expenses,
deposits and the like related to the Facility Business (the "Prepaids"), the
categories and amounts as of the date hereof are set forth on Schedule 1.1(e).
(f) To the extent lawfully transferable, all of Seller's
right, title and interest in and to any and all business names, marks and logos
now or ever used by Seller in connection with the Facility Business and any and
all names and logos under which Seller (in connection with the Facility
Business) or any Facility Business has ever done business or offered programs,
together with all abbreviations and variations thereof and all applications and
registrations relating to any of the foregoing, including, without limitation,
the business names and logos set forth on Schedule 1.1(f), and all goodwill
associated therewith and with the Facility Business.
(g) All unexpired warranties and covenants that are
transferable to Buyer, which Seller has received from third parties with respect
to the Transferred Assets, including, without limitation, such warranties and
covenants as are set forth in any construction agreement, lease agreement,
equipment purchase agreement, consulting agreement, agreement for architectural
and engineering services or purchase and sale agreement.
<PAGE>
(h) All records relating to the operation or management of
the Facility.
(i) All materials, documents, information, media, methods,
processes, inventions and technology owned by Seller related to the Facility
Business (except those that are privileged or proprietary and are not used in or
necessary for the business) and any and all rights to use the same, including,
but not limited to, all telephone numbers, intangible assets of an intellectual
property nature, all proprietary computer software, all clinical and policy and
procedure manuals and all promotional, marketing and recruiting materials, and
all applications or registrations relating to any of the foregoing.
(j) Any and all rights respecting computer and data processing
hardware that is related to the Facility Business, and any computer
and data processing hardware, whether or not located at the Facility, that is
part of a computer system used by any of the Facility Business, whether or not
the central processing unit for such system is located at the Facility.
(k) To the extent they may be legally conveyed, all of
Seller's right, title and interest in and to all Inmate Contracts relating to
the housing of inmates at the Facility.
1.2 Retained Assets
At the Closing, Seller shall retain only the following assets
(the "Retained Assets"):
(a) All written contracts, agreements, obligations and
commitments related to the Facility Business existing on the Closing Date.
(b) The accounts, notes or other amounts receivable from any
Person arising from or in connection with the operation of the Facility Business
on or prior to the Closing Date.
(c) Such other assets owned by Seller which are not related
to, used in, necessary for, or contribute to the operation of the Facility or
Facility Business.
2. Purchase Price, Inmate Fee, County Beds and Closing
2.1 Purchase Price
The purchase price (the "Purchase Price") to be paid by Buyer
to Seller for the Transferred Assets shall be $9,250,000.
<PAGE>
2.2 Inmate Fee and County Beds
Additionally, for so long as Buyer or an Affiliate of Buyer
owns and operates the Facility, Buyer agrees (i) to pay to Seller, beginning
July 15, 1998, (a) $150,000 (the "Yearly Fee") on or before July 15 of each
year, and (b) $1.25 per day per inmate for all inmates housed for a fee
(excluding the inmates occupying the County Beds) at the Facility, as the
Facility may be expanded by Buyer, during the preceding calendar month (the
"Monthly Fee") (the Yearly Fee and the Monthly Fee, collectively the "Inmate
Fee"), which payment shall be made by Buyer within fifteen days of receipt by
Buyer of payment for such month from the provider(s) of inmates at the Facility
during such month, and (ii) to provide, at no charge to Seller, five (5) beds
(the "County Beds") as designated by Buyer at the Facility for use by Seller.
2.3 Closing
The closing (the "Closing") shall take place at Warren Title
Company, on July 15, 1998, (the "Closing Date") at Dickens, Texas, or at such
other time and place that is mutually agreeable to the parties. At Closing,
Buyer shall
(a) pay $7,133,102.28 to Seller by wire transfer of
immediately available funds; and
(b) pay $2,116,897.72 to The Bank of New York Trust Company of
Florida N.A., as successor to NCNB Texas National Bank ("Escrow Agent"), by wire
transfer of immediately available funds to be held and distributed pursuant to
an Escrow/Paying Agent Agreement Relating to a County Jail and Detention
Facility Project dated April 1, 1990, between the County, the Escrow Agent and
Consolidated Financial Resources, Inc.; and
Seller shall
(a) execute and deliver the Special Warranty Deed (the
"Special Warranty Deed") substantially in the form attached hereto as Exhibit A;
and
(b) execute and deliver the Bill of Sale (the "Bill of Sale")
substantially in the form attached hereto as Exhibit B.
3. Assumption of Obligations of Seller
Buyer shall not assume or become obligated with respect to any
obligation or liability of Seller of any nature whatsoever (whether express or
implied, fixed or contingent, liquidated or unliquidated, known or unknown, due
<PAGE>
or to become due) (the "Seller's Liabilities"). Seller's Liabilities shall
remain the sole responsibility of Seller. Without limiting the generality of
the foregoing, Seller is retaining all rights and obligations related to, and
Buyer assumes no liability for and acquires no rights to, (a) obligations and
liabilities arising under or relating to any Retained Assets; (b) the rights,
obligations and liabilities of Seller under any pending litigation or asserted
or unasserted claims (to the extent arising from acts or omissions of Seller
before the Closing Date) against any Person.
4. Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the Closing as
follows:
4.1 Organization of Seller
Seller is a political subdivision of the State of Texas, duly
and validly existing under the laws of, and is authorized to exercise its
powers, rights and privileges and is in good standing in, the State of Texas.
Seller has full legal power to carry on the Facility Business.
4.2 Authority
Seller has the full legal power and the authority to execute
and deliver this Agreement and each Related Agreement to which it is a party, to
perform the obligations and covenants set forth herein and therein and to carry
out the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Seller and the
consummation of the transactions contemplated hereby or thereby have been duly
authorized by all necessary legal action on the part of Seller, including
approval by the County Commissioners of Dickens County, Texas. This Agreement
and the Related Agreements are valid and binding upon and enforceable against
Seller in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
or hereafter in effect relating to creditors' rights generally and, except for
Sections 8.2 and 8.3, the remedy of specific performance and injunctive and
other forms of equitable relief may not be available. The execution, delivery
and performance of this Agreement and all Related Agreements and the
consummation of the transactions contemplated hereby and thereby will not
violate any Law applicable to Seller.
4.3 Title to Transferred Assets
Except as set forth on Schedule 4.3, Seller has good title to
the Transferred Assets free and clear of all Liens.
4.4 Third Party Consents
Except as disclosed on Schedule 4.4, Seller may transfer and
assign to Buyer all of its right, title and interest in and to the Transferred
Assets without obtaining the consent or approval of any other Person, and no
consent, approval, authorization or order of, and no exemption by or filing
with, any court or Person is required on behalf of Seller in connection with the
execution and delivery of this Agreement or any Related Agreement, or the
consummation and fulfillment by Seller of the transactions contemplated hereby
or thereby, or the performance by Seller of its obligations hereunder or
thereunder.
<PAGE>
4.5 Hazardous Materials
Schedule 4.5 contains a list of all surveys or reports obtained
by or otherwise in the possession of Seller or, to Seller's knowledge, any other
Person, which relate to the environmental condition of the Facility Business
(including the Facility and the Real Property), and Seller has provided or will
provide to Buyer copies of all such reports and surveys. Except as disclosed on
Schedule 4.5, and except for matters that would not, individually or in the
aggregate, have a material adverse effect on the Real Property or on the
Facility Business and matters caused by Buyer since the Management Date, to
Seller's knowledge: (a) there has been no Release, treatment or disposal by
Seller, by any agent or representative of Seller or by any other Person of any
Hazardous Materials on or from the Real Property, or any migration of Hazardous
Materials to or from the Real Property, (b) Seller's and all other Persons'
operation and use of the Real Property and the Facility Business are not now,
nor ever were, in violation of any Environmental Regulations, (c) neither Seller
nor any other Person has caused any condition on the Real Property (nor has
Seller or any other Person caused any condition on any real property previously
owned or leased by Seller on which the Facility Business were conducted) which
constitutes or causes a health, safety, or environmental hazard on, under, or
about the Real Property (or real property previously owned or leased by Seller
on which the Facility Business were conducted) or requires remediation under any
Environmental Regulations, (d) there are no violations or alleged violations of
any Laws or Environmental Regulations relating to Hazardous Materials,
including, without limitation, those Laws or Environmental Regulations
establishing or regulating, or both, the levels of permissible human exposure to
asbestos and airborne asbestos fibers, (e) there is no Environmental Claim or
other proceeding or action pending or threatened by any Person or governmental
agency regarding the environmental condition of any of the Facility Business or
the Real Property, (f) no Hazardous Materials have been transported from the
Real Property to an off-site location which is or ever was subject to an
administrative order or other Environmental Claim or which has been, or is
proposed to be, placed on any federal or state cleanup list, (g) no portion of
the Real Property contains or has ever contained any underground storage tank,
surface impoundment, hazardous waste storage, treatment or disposal facility or
similar structure or device, (h) Seller has not received and to Seller's
knowledge no other Person has received any written notice that any of the Real
Property is the subject of a deed restriction, title-transfer restriction, other
material land-use restriction, or lien arising in each case under any
Environmental Regulation, and (i) Seller has not improperly disturbed or
encroached upon any flood plain areas, waters or wetlands associated with any of
the Real Property in violation of any Environmental Regulations.
4.6 Litigation
Except as set forth on Schedule 4.6, and except for allegations
made by inmates of the Facility, there are no actions, suits, claims or
proceedings pending or, to the knowledge of Seller, threatened against or
affecting the Transferred Assets or relating to the operations of the Facility
Business, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, agency or instrumentality. Seller is
not, and to Seller's knowledge no other Person is, subject to any continuing
judgment, decree, injunction, rule or order of any court, arbitrator or
administrative or governmental body with respect to the operation of the
Facility Business or the Transferred Assets. Seller has made available to Buyer
for inspection, review and analysis a list of the incident reports and other
similar reports with respect to incidents related to the Facility Business which
have occurred since January 1, 1996, irrespective of whether a lawsuit has been
instituted or a claim asserted.
4.7 Licenses and Permits
Except as set forth on Schedule 4.7, Seller possess all
licenses, permits and other governmental consents and approvals (the "Permits")
that are necessary to enable Seller to operate the Facility Business in all
material respects as operated on the Closing Date at the locations and in the
manner presently operated and the completion of all capital projects of Seller
in process or planned as of the Closing, except those the absence of which,
individually or in the aggregate, would not have a material adverse effect on
the operation of the Facility Business. There is no pending proceeding and
Seller has not received any notice and has no knowledge of any threatened
proceeding or any allegation by any governmental or quasi governmental entity
that could adversely affect the Facility Business or any of the Permits except
as disclosed on Schedule 4.6. Schedule 4.7 contains a list of all Permits held
or applied for by Seller which have an effect on the operation of any of the
Facility Business and indicates thereon the number and types of beds the
Facility is permitted to operate and whether any such beds are in suspense.
Except as set forth on Schedule 4.7, (a) Seller has complied and is in full
compliance in all material respects with the terms and conditions of all such
Permits, (b) all such Permits, are unconditionally in full force and effect, and
(c) there has occurred no event nor is any event, action, investigation or
proceeding pending or, to Seller's knowledge, threatened which could cause or
permit revocation or suspension of or otherwise adversely affect the maintenance
of any such Permits except as disclosed on Schedule 4.6. To Seller's knowledge,
the Facility complies with all requirements of the Texas Department of Criminal
Justice and the Texas Commission on Jail standards, and Seller shall promptly
correct any deficiencies noted by the Texas Department of Criminal Justice or
the Texas Commission on Jail Standards. Seller discloses to Buyer that the
Texas Commission on Jail Standards has indicated the electric lines in the
recreational yard of the Facility may be too low, but has not requested that any
action be taken with respect to the electric lines. Seller has previously
<PAGE>
delivered to Buyer true and complete copies of the most recent state licensing
report and list of deficiencies, if any; the most recent fire marshal's survey
and deficiency list, if any; the most recent health department report and list
of deficiencies, if any; and the corresponding plans of correction or other
responses to all such reports and surveys. The aggregate amount of capital
expenditures required under all such reports and surveys does not exceed
$10,000. Seller has taken or is in the process of taking all reasonable steps to
correct all deficiencies noted therein, and a description of any uncorrected
deficiency is included in Schedule 4.7. There are no provisions in, or other
agreements to which Seller is a party relating to, any Permits which would
preclude or limit Buyer from operating the Transferred Assets substantially as
they are now operated and using the beds of the Facility substantially as they
are currently classified.
4.8 Compliance with Laws
Except as disclosed on Schedule 4.6 and Schedule 4.8 and except
for alleged violations of laws made by inmates of the Facility (other than
allegations relating to the structural integrity of the Facility and violations
of the Americans With Disabilities Act of 1990, 42 U.S.C. Sec. 12101, et seq.,
as amended, and similar statutes relating to public facilities), Seller is in
compliance in all material respects with all applicable Laws, including, but not
limited to, Laws relating to the incarceration of inmates.
4.9 Employee Relations
Neither Seller nor any Affiliate of Seller is a party to any
agreement with any union, trade association or other employee organization with
respect to the employees of the Facility Business. To Seller's Knowledge, no
demand has been made for recognition by a labor organization with respect to any
employees of the Facility Business; no union organizing activities by or with
respect to any employees of the Facility Business are taking, or within the past
five years have taken place; the Facility Business have not suffered any strikes
(including wildcat strikes), slowdowns, walkouts, lockouts or any other
interruptions or disruptions of operations as a result of labor disturbances
with respect to employees of the Facility Business; no union representation
question exists with respect to any employees of the Facility Business; and no
collective bargaining agreement is currently being negotiated with respect to
any employees of the Facility Business. Seller does not currently employ, and
has not employed at any time, any individual in the Facility Business.
4.10 Brokerage and Finder's Fees
Other than ABN AMRO Incorporated, neither Seller nor any of its
employees or representatives has employed or contracted for the services of any
broker, finder or investment banker with respect to the negotiations leading up
to the execution of this Agreement or any Related Agreement or the consummation
of the transactions contemplated hereby, and other than ABN AMRO Incorporated,
Seller shall be solely responsible for any fees or commissions payable to any
broker, finder or investment banker by reason of the actions (or alleged
actions) of Seller, or any of its employees or representatives.
4.11 U.S. Persons
Seller is not a "foreign person" for purposes of Section 1445
of the Internal Revenue Code of 1986, as amended (the "Code"), or any other Laws
requiring withholding of amounts paid to foreign Persons.
4.12 Real Property
Schedule 4.12 contains any qualifications or other exceptions
of Seller to all or any of the statements contained in this Section.
No real property used in or necessary for the Facility Business
is leased. Except for the Real Property, there is no real property used in or
necessary for the Facility Business.
The Real Property is properly zoned for use as a correctional
facility and no zoning changes or variances will be required by Buyer for Buyer
to operate the Facility after Closing substantially as it is currently operated
in its present location.
All improvements on any of the Real Property have been
constructed substantially in accordance with the plans and specifications
submitted to any governmental authority, and substantially in accordance with
any zoning change applications and any applications for building permits related
thereto. To Seller's knowledge, all such improvements currently satisfy all
Laws (including, but not limited to, those relating to safety, building, fire,
land use, parking or access), and the continued use, occupancy and operation of
such improvements by Buyer as currently used, occupied and operated does not
constitute a prior nonconforming use permitted under such Laws. Seller has not
received any notice and has no knowledge of any proceeding or action pending to
change the zoning of, or other land use (including parking) restrictions
affecting, the Real Property. There is no pending proceeding (including,
without limitation, any condemnation proceeding), and, to the knowledge of
Seller, there is no pending study or investigation by or before any governmental
agency or authority, administrative or otherwise, which, in any way, if
concluded, could, individually or in the aggregate, have a material adverse
effect on the Facility Business or the continued use of the Facility as a
correctional facility or the composition of its licensed beds, except as
disclosed on Schedule 4.6.
4.13 Physical Condition of Transferred Assets
Except as disclosed on Schedule 4.13 (or in Schedule 4.12 with
<PAGE>
respect to the Real Property improvements), (a) the real property improvements
described in Section 1.1(a) are free of material structural or engineering
defects and are in all material respects in good condition and repair to operate
the Facility Business as now being operated, subject to ordinary wear and tear
and routine maintenance, and (b) the tangible personal property described in
Section 1.1(c) is in all material respects in good working order to operate the
Facility Business as now being operated, subject to ordinary wear and tear and
routine maintenance.
4.14 Inventory
All of the Inventory consists of items actually on hand of a
quality and quantity useable in the ordinary course of business of the Facility
Business as currently operated, consistent with past practices.
4.15 Insurance
Schedule 4.15 contains a list and brief description (including
retentions, policy limits and coverage) of all policies of insurance relating to
the Facility Business or the Transferred Assets held by (or programs of self-
insurance maintained by) Seller and currently in effect (the "Insurance
Policies"). The Insurance Policies are in full force and effect, and to the
best of Seller's knowledge the insurers have no right to terminate or reduce the
coverage thereunder. Seller has not received any written notice of any defaults
thereunder. Except as set forth on Schedule 4.15, there have been no
reservations of rights by any of the insurers under the Insurance Policies.
Schedule 4.15 specifies for each Insurance Policy whether it is a "claims made"
or an "occurrence basis" policy and whether, after the Closing, Seller will be
entitled to the benefits of such policies in accordance with their terms for
claims arising out of occurrences prior to the Closing.
4.16 Changes Since Request for Proposals
Since the date of the Seller's March 1998 Request For Proposals
to manage or acquire the Facility, other than as contemplated or permitted by
this Agreement, Seller has, and to Seller's knowledge the Manager has, conducted
the Facility Business and the Transferred Assets only in the ordinary and normal
course and, except as shown on Schedule 4.16, there has not been with respect to
the Facility Business or the Transferred Assets (but excluding the Retained
Assets):
(a) Any condemnation, casualty, or material physical damage,
destruction or loss respecting the Real Property, or the tangible personal
property described in Section 1.1(b).
(b) Other than in the ordinary course of business consistent
with past practice, Seller has not engaged in (i) any sale or other disposition
of
<PAGE>
any asset having a net book value in excess of $1,000 individually (including
a series of related dispositions) or $5,000 in the aggregate, (ii) any material
mortgage, pledge or imposition of any Lien on any such asset, or (iii) any
extraordinary sale or other disposition of inventory.
(c) Any material amendment or reduction in coverage (other
than general amendments which the carrier makes for a category of policy) or
termination of any Insurance Policy or failure to renew any Insurance Policy.
(d) Any agreement by Seller or, to the knowledge of Seller by
the Manager, whether in writing or otherwise, to take any action described in
this Section 4.16.
4.17 Indebtedness Matters
(a) Neither the Facility Business nor Seller have received any
loans, grants or loan guarantees pursuant to any federal, state or local statute
or regulation or government program whatsoever, and the transactions
contemplated hereby will not result in any obligation on the part of Buyer to
repay any such loans, grants or loan guarantees.
(b) There are no outstanding letters of credit issued at the
request of the Facility Business or Seller to any suppliers or obligees of the
Facility Business or any other party.
(c) The Facility Business have not guaranteed the obligations
of any other Person, which guarantees will survive the Closing.
4.18 Taxes
All tax returns of every kind that are due to have been filed
in accordance with applicable Laws by Seller with respect to the Facility
Business or the Transferred Assets in fact have been duly filed, and all Taxes
shown to be due and payable on such returns have been paid in full and correctly
reflect the liabilities of Seller for Taxes with respect to the Facility
Business and the Transferred Assets for the period covered by each tax return.
There is no action, suit, proceeding, investigation, audit, claim, lien or
assessment pending or, to Seller's knowledge, proposed with respect to any Taxes
or tax return, and there are no waivers or extensions of any applicable statute
of limitations for the assessment or collection of Taxes with respect to any tax
return which remain in effect. All Taxes required to be withheld and paid over
by or with respect to the Facility Business and the Transferred Assets to any
relevant taxing authority in connection with payments to independent
contractors, creditors, stockholders or to third parties have been so withheld
and paid over. Seller shall pay all Taxes due by it with respect to the
transactions closed related to this Agreement.
<PAGE>
4.19 Adverse Action
No action or proceeding is pending or threatened wherein an
unfavorable judgment, decree or order would prevent or make unlawful the
carrying out of the transactions contemplated by this Agreement, would compel
Buyer's divestiture of all or any part of the Transferred Assets or any other
assets of Buyer or its Affiliates or otherwise restrict Buyer's operation of the
Transferred Assets except as discussed in Schedule 4.6; and no governmental
agency has notified Seller that the consummation of the transactions
contemplated by this Agreement would constitute a violation of the Laws of any
jurisdiction, would compel Buyer's divestiture of all or any part of the
Transferred Assets or any other assets of Buyer or its Affiliates, would
otherwise restrict in any material respect Buyer's operation of the Transferred
Assets as they are currently operated or that it has commenced or intends to
commence proceedings to restrain the consummation of the transactions
contemplated hereunder.
4.20 Absence of Undisclosed Liabilities
With respect to the ownership of the Facility Business and the
Transferred Assets, except as set forth on Schedule 4.20 and except for alleged
violations of laws made by inmates of the Facility (other than allegations
relating to the structural integrity of the Facility and violations of the
Americans With Disabilities Act of 1990, 42 U.S.C. Sec. 12101, et seq., as
amended, and similar statutes relating to public facilities), neither Seller,
the Facility Business nor any of the Transferred Assets is subject to, any
liabilities, whether known or unknown, contingent or absolute.
4.21 Accuracy of Documents; Delivery and Inspection
Seller has furnished to Buyer true and complete copies of all
agreements, documents and other items listed in the Schedules hereto and
requested by Buyer. All documents delivered to Buyer for Buyer's review pursuant
to the terms of this Agreement and any Related Agreement are true and complete
copies of all such documents. All of the contract files, correspondence files
and other records of Seller relating to the Facility Business and the
Transferred Assets are in all material respects correct and complete.
4.22 Statements Not Misleading
No representation or warranty by Seller in this Agreement or
any Related Agreement, or in any statement, certificate or schedule furnished or
to be furnished to Buyer pursuant to this Agreement or any Related Agreement, or
in connection with the transactions contemplated hereunder or thereunder
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein and therein not
misleading. Except as disclosed in this Agreement or listed in the Schedules
<PAGE>
hereto and except for allegations made by inmates of the Facility, to Seller's
knowledge, there have been no events, transactions or facts which could,
individually or in the aggregate, have a material adverse effect on the
Transferred Assets or the Facility Business or on the ownership, use or
operation thereof by Buyer after the Closing or which should be disclosed in
order to make any statement, representation or warranty contained herein or in
any Related Agreement or Schedule delivered pursuant hereto not misleading. This
warranty is limited to events, transactions or facts which specifically affect
the operation of the Facility Business and the Transferred Assets and does not
apply to general changes in the laws or economy of the United States or matters
affecting the jail industry in general.
4.23 Powers of Attorney
The Facility Business have not granted to any Person a power of
attorney that will survive the Closing.
5. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as of the Closing as
follows:
5.1 Organization and Good Standing
Buyer is a trust in effect and validly existing under the laws
of the State of Utah.
5.2 Authority
Buyer has the full legal power and the authority to execute and
deliver this Agreement and each Related Agreement to which it is a party, to
perform the obligations and covenants set forth herein and therein and to carry
out the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Buyer and the
consummation of the transactions contemplated hereby or thereby have been duly
authorized by all necessary legal action on the part of Buyer. This Agreement
and the Related Agreements are valid and binding upon and enforceable against
Buyer in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights generally and except that the
remedy of specific performance and injunctive and other forms of equitable
relief may not be available. The execution, delivery and performance of this
Agreement and all Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not violate any Law applicable to Buyer.
<PAGE>
5.3 Third Party Consents
Except as disclosed on Schedule 5.3, no consent, approval,
authorization or order of, and no exemption by or filing with, any court or
Person is required on behalf of Buyer in connection with the execution and
delivery of this Agreement or any Related Agreement, or the consummation and
fulfillment by Buyer of the transactions contemplated hereby or thereby, or the
performance by Buyer of its obligations hereunder or thereunder.
5.4 Brokerage and Finder's Fees
None of Buyer, its Affiliates or any of their officers,
directors or trustees has employed or contracted for the services of any broker,
finder or investment banker with respect to the negotiations leading up to the
execution of this Agreement or any Related Agreement or the consummation of the
transactions contemplated hereby, and Buyer shall be solely responsible for any
fees or commissions payable to any broker, finder or investment banker by reason
of the actions (or alleged actions) of Buyer, its Affiliates or any of their
officers, directors or trustees. Buyer shall pay $121,000 of the fees of ABN
AMRO Incorporated, Verner Liipfert Bernard McPherson and Hand, and Lawrence
Financial Consulting LLC relating to payment of the tax exempt obligations
referenced in Section 6.7 hereof.
5.5 Discoveries Since Management Date
Except as disclosed on Schedule 5.5, since the Management Date,
Buyer has not discovered any information or engaged in any activity that would
make the representations of Seller herein untrue.
6. Conditions Precedent to Obligations of Buyer
The obligations of Buyer under this Agreement are, except as may be
waived in writing by Buyer, subject to the fulfillment by Seller of each of the
following additional conditions on or prior to the Closing:
6.1 Termination of Agreements
Except for the Management Agreement and the Inmate Contracts,
Seller shall have terminated all contracts and agreements relating to the
Facility Business to which Seller is a party. Additionally, if any such
contract or agreement imposes a Lien on any of the Transferred Assets, Seller
shall have filed or caused to be filed in the appropriate place or places, all
such documents required to fully release such Lien.
<PAGE>
6.2 Title Insurance
At the Closing, an owner's policy of title insurance (the
"Title Policy") shall be issued to Buyer in a form acceptable to Buyer.
6.3 Instruments of Transfer
At the Closing, Seller shall execute and deliver to Buyer the
Special Warranty Deed and the Bill of Sale, which shall be effective to transfer
to Buyer Seller's right, title and interest in the Transferred Assets consistent
with the terms of this Agreement, free and clear of all Liens except (i)
statutory liens for property taxes and assessments not yet delinquent and (ii)
the Permitted Exceptions.
6.4 Certified Resolutions
Seller shall have delivered to Buyer: (a) the resolutions of
the Board of County Commissioners of Dickens County, Texas, authorizing the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby which shall be certified as true, correct and effective as
of the Closing Date by the Dickens County Clerk, and (b) an incumbency
certificate from Seller which shall be certified as true, correct and effective
as of the Closing Date by the Dickens County Clerk.
6.5 Opinion of Seller's Counsel
Buyer shall have received an opinion from Sprouse, Smith &
Rowley, P.C., dated as of the Closing Date and addressed to Buyer, regarding the
matters in 4.1, 4.2 and 4.4 and whether or not Seller is required to make a
filing under the Hart-Scott-Rodino Act, subject to customary conditions and
limitations.
6.6 Tax Matters
Seller shall have delivered to Buyer a duly executed
certificate of non-foreign status in the form required by Code Sec. 1445.
6.7 Payment of Certain Obligations
Seller shall have provided for the payment of all existing
tax-exempt obligations incurred in connection with the Transferred Assets or
otherwise encumbering the Transferred Assets or the revenues of the Facility
Business and shall have obtained the release of all liens created in connection
therewith and encumbering the Transferred Assets.
<PAGE>
6.8 Intentionally omitted
6.9 Performance of Obligations
Seller shall have performed all agreements and covenants
required by this Agreement to be performed by it on or prior to the Closing.
6.10 Officer's Certificate
Seller shall have delivered to Buyer a certificate, dated on
the Closing Date, executed by Judge Woodie McArthur, County Judge of Dickens
County, Texas, on behalf of Seller, stating that as of the Closing (a) Seller
has duly performed all conditions precedent to Buyer's obligations under
Sections 6.1, 6.9, 6.11 and 6.13 hereof, (b) Seller knows of no facts except as
specifically disclosed in writing in such certificate which would cause Seller
to be in breach of any of its representations and warranties hereunder, and (c)
Seller has duly performed all obligations and covenants to be performed by it
hereunder.
6.11 Liens Released
Each and every lien or encumbrance of any nature, if any,
relating to the Transferred Assets shall have been terminated and released and
proof thereof delivered to the Buyer (except for liens, encumbrances and
obligations, if any, specifically assumed by Buyer pursuant to this Agreement).
6.12 Other Documents
Seller shall have delivered or caused to be delivered all
other documents, agreements, resolutions, certificates or declarations as Buyer
or its attorneys may have reasonably requested.
6.13 Payment of Taxes
All unpaid Taxes of the Seller, whether or not due, relating
to the Transferred Assets or the Facility Business shall have been paid prior to
the Closing, and Seller shall have furnished Buyer with evidence of such
payment, in form and substance satisfactory to Buyer.
6.14 Compliance With Governmental Requirements
Compliance by the parties with all governmental requirements
necessary for the consummation of the transactions contemplated by this
Agreement.
<PAGE>
7. Conditions Precedent to Obligations of Seller
The obligations of Seller under this Agreement are, except as may be
waived by Seller in writing, subject to the fulfillment by Buyer of each of the
following additional conditions on or prior to the Closing:
7.1 Payment of Purchase Price
Buyer shall have delivered, or caused to be delivered, the
Purchase Price to Seller by wire transfer of immediately available funds.
7.2 Trustee's Affidavit
Buyer shall have delivered an affidavit of the Trustee of
Buyer.
7.3 Officer's Certificate
Buyer shall have delivered to Seller a certificate, dated on
the Closing Date, executed by Ira Cotler, Executive Vice President of CSC, on
behalf of Buyer, stating that as of the Closing (a) Buyer knows of no facts
except as specifically disclosed in writing in such certificate which would
cause Buyer to be in breach of any of its representations and warranties
hereunder, and (b) Buyer has duly performed all obligations, agreements and
covenants to be performed by it hereunder on or prior to the Closing.
7.4 Other Documents
Buyer shall have delivered or caused to be delivered all other
documents, agreements, resolutions, certificates or declarations as Seller or
its attorneys may have reasonably requested.
7.5 Compliance With Governmental Requirements
Compliance by the parties with all governmental requirements
necessary for the consummation of the transactions contemplated by this
Agreement.
7.6 Insurance Coverage
At the Closing, Buyer will deliver to Seller written proof
that Buyer has obtained comprehensive general liability insurance coverage with
respect to all claims attributable to or arising out of the operation of the
Facility Business or the Transferred Assets after the Closing, in the following
amounts, limits and deductibles:
<PAGE>
Buyer will acquire base insurance covering general liability
having limits of $1,000,000 per occurrence and in the aggregate and having a
$50,000 deductible per occurrence. Additionally, Buyer will acquire umbrella
insurance for general liability having limits of $10,000,000 per occurrence and
in the aggregate.
At the Closing, Buyer shall cause the insurer to issue and
deliver to Seller a certificate of insurance evidencing each insurance policy
obtained and maintained by Buyer pursuant to the terms of this Section, naming
Seller as an additional insured thereunder, and Buyer shall cause each such
insurance policy to contain a clause requiring the insurer to give not less than
30 days prior written notice to Seller as a condition to any cancellation or
modification of such policy for any reason whatsoever.
8. Additional Covenants
The following provisions shall apply, and the following actions
shall be taken, at or subsequent to the Closing:
8.1 Further Assurances
From time to time, at the request of either party, without
further consideration, each party, at its expense and within a reasonable amount
of time after request hereunder is made, shall (i) cooperate in the preparation
and filing, if necessary, of any documents or other materials that may be
required by any governmental authority in connection with the transactions
contemplated hereby, and (ii) execute and deliver all other documents and
instruments, with acknowledgement or affidavit if required, and perform all such
further acts as may be reasonably required to more effectively assign and
transfer the Transferred Assets to Buyer in a manner consistent with the terms
and conditions of this Agreement, confirm Seller's ownership of the Retained
Assets or otherwise carry out the purposes of any provision of this Agreement.
8.2 Expansion of Facility
Seller will approve and will not oppose any reasonable
expansion plan for the Facility or modification of the Facility proposed by
Buyer or a successor or assign of Buyer. Additionally, Seller will provide
reasonable assistance requested by Buyer and will cooperate with Buyer in
obtaining all approvals, consents, licenses, certificates and permits necessary
for the proposed expansion or modification.
The parties agree that money damages or other remedies at law
would not be a sufficient or adequate remedy for any breach or violation of, or
<PAGE>
a default under, this Section by Seller and that in addition to all other
remedies available, Buyer and CSC shall be entitled, without the necessity to
post any bond, to an injunction from a court or pursuant to the dispute
resolution procedures set forth in Annex III hereto, in Buyer's discretion,
restraining such breach, violation or default or threatened breach, violation or
default by Seller and to any other equitable relief against Seller, including
without limitation specific performance.
8.3 Execution of Inmate Contracts
To the extent not conveyed to Buyer, Seller agrees to maintain
all Inmate Contracts in force and to continue to serve as the contracting party
under any and all Inmate Contracts which are not assigned to Buyer at Closing.
Thereafter, Seller shall at the request of Buyer, its Affiliates, successors or
assigns enter into any and all Inmate Contracts for the housing of inmates at
the Facility, including any expansion of the Facility and any amendment or
modification to an Inmate Contract, upon terms and conditions reasonably
acceptable to Buyer, such Affiliates or assigns; provided that no such contract
shall require Seller to expend any funds or require Seller to undertake any
obligation that imposes an affirmative duty on Seller to perform any task that
cannot be assigned to and assumed by the operator of the Facility Business,
other than obligations imposed upon Seller pursuant to this Agreement or any
Related Agreement. For any Inmate Contract that Seller serves as the
contracting party, Seller shall assign, subcontract, license and otherwise
agree, as requested by Buyer, to have the inmates housed in the Facility in
accordance with the terms of such Inmate Contract. Seller's exclusive
compensation for entering into such Inmate Contracts shall be the payments
required pursuant to Sections 2.1 and 2.2 of this Agreement. Seller shall
diligently process and enter into all lawful and necessary agreements with any
prisoner transfer sources as may be necessary to facilitate the receipt and
incarceration of eligible high-risk and non-high-risk prisoners in the Facility.
The parties acknowledge that for purposes of the Inmate
Contracts, this Agreement shall constitute a contract under Subchapter F,
Chapter 351, Local Government Code, as amended, between Seller and Buyer for
Buyer to operate the Facility, as the Facility may be expanded. The parties
agree that money damages or other remedies at law would not be a sufficient or
adequate remedy for any breach or violation of, or a default under, this Section
by Seller and that in addition to all other remedies available, Buyer and CSC
shall be entitled, without the necessity to post any bond, to an injunction from
a court or pursuant to the dispute resolution procedures set forth in Annex III
hereto, in Buyer's discretion, restraining such breach, violation or default or
threatened breach, violation or default by Seller and to any other equitable
relief against Seller, including without limitation specific performance.
8.4 Cooperation of Seller and Sheriff
Seller shall, and shall cause its Sheriff to, cooperate with
Buyer in all matters of law enforcement, security and communications. Seller
shall, and shall cause its Sheriff to, assist Buyer in the training, at Buyer's
expense, of Buyer's employees hired to operate the Facility. Seller shall cause
its Sheriff to assist and cooperate with Buyer for purposes of obtaining such
<PAGE>
licensing as may be required by State or federal law for the aforementioned
Buyer employees. Seller shall, and shall cause its Sheriff to, assist and
cooperate with Buyer in providing information requested by Buyer in the
screening of candidates for employment to the extent such information may be
lawfully obtained or released under federal or State law. Seller will, and
shall cause its Sheriff to, assist Buyer in verifying that all Buyer employees
undertaking jailer duties are certified, as required, by law.
8.5 Approvals and Permits
Seller will cooperate with Buyer to obtain all necessary
approvals for operation of the Facility, including but not limited to securing
use permits, licensing and certificates.
8.6 No Special Fees or Taxes
Seller agrees that it will not impose any taxes, levies, fees
or other impositions upon Buyer, the Facility Business or the Transferred
Assets, other than nondiscriminatory taxes created under state, county or
municipal law which apply generally to all commercial businesses in Dickens
County, Texas.
8.7 Litigation Cooperation
After the Closing, upon reasonable written request, each party
shall cooperate with the other, at the requesting party's expense (but including
only the costs incurred by any party for the wages or other benefits paid to its
officers, directors, or employees and not any out-of-pocket expenses), in
furnishing information, testimony and other assistance in connection with any
actions, tax audits, proceedings, arrangements or disputes involving either of
the parties hereto (other than in connection with disputes between the parties
hereto) and which relate to the Facility Business or the Transferred Assets,
including, without limitation, arranging discussions with, and the calling as
witnesses of, commissioners, elected official, officers, directors, employees,
agents and representatives of Buyer and Seller; provided, that nothing in this
Section shall require any such commissioner, elected official, officer,
director, employee, agent or representative to take actions that would
materially interfere with the performance of his or her duties.
<PAGE>
8.8 Allocation of Purchase Price
The Purchase Price shall be allocated among each of the
Transferred Assets as set forth on Schedule 8.8. Except as otherwise required
by law, Seller and Buyer hereby agree to allocate the Purchase Price in
accordance with such schedule, to be bound by such allocations for all purposes,
to account for and report the purchase and sale of the Transferred Assets
contemplated hereby for all purposes (including, without limitation, financial,
accounting, and federal, state and local tax purposes) in accordance with such
allocations, and not to take any position (whether in financial statements, tax
returns, tax audits or otherwise), which is inconsistent with such allocations
without the prior written consent of the other party.
8.9 Confidentiality
Subject to applicable Law, Seller shall at all times keep
confidential all information pertaining to the Transferred Assets and the
Facility Business.
8.10 Excluded Assets
Except as provided elsewhere herein, any asset (including all
remittances and all mail and other communications) that is determined by the
parties' agreement, or, absent such agreement, determined by the dispute
resolution procedures set forth in this Agreement, to be or otherwise relate to
a Retained Asset and that is or comes into the possession, custody or control of
Buyer or any of its Affiliates shall forthwith be transferred, assigned or
conveyed by Buyer or such Affiliate to Seller, and, until such transfer,
assignment and conveyance, Buyer and its Affiliates shall not have any right,
title or interest in such asset, but instead shall hold such asset in trust for
the benefit of Seller. Any asset (including all remittances and mail and other
communications) that is determined by the parties' agreement or, absent such
agreement, determined by the dispute resolution procedures set forth in this
Agreement, to be or otherwise relate to a Transferred Asset and that is or comes
into the possession, custody or control of Seller shall forthwith be
transferred, assigned and conveyed by Seller to Buyer, and, until such transfer,
assignment and conveyance, Seller shall not have any right, title or interest in
such asset, but instead shall hold such asset in trust for the benefit of Buyer.
Additionally, if any such asset is or comes into the possession, custody or
control of the Manager, Seller shall, upon request of Buyer, cooperate with and
assist Buyer in obtaining such asset from the Manager.
8.11 Employee Matters
For the purpose of defining the obligations between Buyer and
Seller with respect to the individuals employed in the operation of the Facility
Business as of the Closing, this Agreement shall not be construed as (i)
<PAGE>
creating any employment contract or other contract between either Buyer or
Seller, on the one hand, and any such employee, on the other, (ii) restricting
Buyer's right to terminate, create or modify any employee benefit plan or (iii)
creating or imposing any obligation on the part of Buyer to the Manager or
giving the Manager any right as to Buyer. All such employees shall remain
terminable at will by Buyer, Seller or the Manager, as the case may be, except
to the extent otherwise required by Law.
8.12 Right of First Refusal
(a) Notice. If Buyer receives an offer from, or desires to
enter into an agreement with, a Person to acquire in one or more related
transactions all or substantially all of the Facility Business (whether by means
of a sale of stock or merger of an entity owning all or substantially all of the
assets comprising the Facility Business, a sale or lease of all or substantially
all of the assets comprising the Facility Business or other similar
transaction), and Buyer desires to transfer the Facility Business to such
Person, Buyer shall not accept such offer or enter into such agreement (unless
such offer or agreement is conditioned on Buyer's compliance with the provisions
of this Section), or complete such disposition to such Person, unless and until
Buyer first shall have given to Seller written notice of such offer or
agreement, which notice shall contain the following:
(i) A description of the securities or the assets and
properties of the Facility Business that Buyer intends to transfer (the "Offered
Assets");
(ii) A statement indicating the identity and address of
the proposed purchaser (the "Proposed Purchaser");
(iii) A statement indicating the proposed purchase price
(the "Proposed Price") and the other material terms and conditions of the
proposed transfer; which terms shall require the Proposed Purchaser to assume
Buyer's obligations under this Agreement (the "Proposed Terms"); and
(iv) An offer (the "Offer") to sell the Offered Assets
to Seller at the Proposed Price and on the Proposed Terms.
<PAGE>
(b) Procedures.
(i) Seller shall have 30 days after delivery of such
notice in which to accept or reject the Offer. Such acceptance shall be in
writing and must be received by Buyer prior to the expiration of such 30 day
period. If Seller does not accept the Offer within such 30 day period, Seller
shall be deemed to have rejected the Offer, and Buyer thereupon shall be free,
for a period of 12 months following the expiration of such 30 day period, to
transfer the Offered Assets to the Proposed Purchaser at the Proposed Price and
on the Proposed Terms. If the Offered Assets are not so transferred within said
12 month period, or if there is any material change in the Proposed Purchaser,
the Proposed Price, the Offered Assets or the Proposed Terms, then the Offered
Assets shall again be subject to the provisions of this Section.
(ii) If Seller accepts the Offer within the 30 day
period hereinabove provided, Buyer and Seller shall use their best efforts to
consummate the sale of the Offered Assets to Seller at the Proposed Price and on
the Proposed Terms as soon as practicable thereafter. If Seller does not
complete the purchase of the Offered Assets within 120 days after the date of
its acceptance of the Offer, all rights of Seller to acquire the Offered Assets,
and the requirements of this Section applicable to the Facility Business, shall
automatically terminate and be of no further force or effect, and Buyer
thereafter shall be free to sell any or all of the assets comprising the
Facility Business at any time and at such price and on such terms as Buyer may,
in its sole discretion, determine, without any further right of Seller to
purchase or prevent the sale of the same.
(iii) If Buyer proposes to sell the Offered Assets for a
consideration consisting, in whole or in part, of property other than cash or
cash equivalents, then the Purchase Price to be paid by Seller for the Offered
Assets shall be equal to the fair market value of such non-cash consideration as
determined in good faith by an independent third party mutually agreed upon by
Seller and Buyer (provided that if the parties are unable to agree upon such
third party within 10 days of a request by either party, either party may
initiate the dispute resolution proceedings attached hereto as Annex III), plus
the amount of any cash consideration, and the full amount of the Purchase Price
shall be payable in cash by Seller at the closing of the sale of the Offered
Assets.
(c) Permitted Transfers. Anything herein to the contrary
notwithstanding, the provisions of this Section shall not apply: (i) to any
transaction (whether or not for value) with respect to any or all of the
Facility Business, or any of the assets thereof, entered into by Buyer with any
one or more of CSC's Affiliates or CSC, (ii) any transaction involving only the
transfer of the Real Property, provided Buyer, CSC or an Affiliate of CSC
remains the manager of the Facility or (iii) to any transaction that may
constitute a Change in Control of CSC; provided that such transferee agrees to
assume all of the obligations of Buyer hereunder.
<PAGE>
(d) Change in Control Defined. For purposes of this
Section, a "Change in Control" of CSC means any of the transactions or events
described below, but only if the transaction results in or causes a change in
more than a majority of the members of CSC's Board of Directors or a change in
the ownership of more than 50% of the then issued and outstanding stock of CSC,
in each case as constituted immediately prior to the execution of the definitive
agreements providing for such transaction (but taking into account any changes
made in contemplation or related to the consummation of the transaction). The
transactions that may result in a Change in Control are:
(i) A merger of CSC or its Affiliate with or into any
other Person in which CSC or its Affiliate is not the surviving corporation or
in which CSC or its Affiliate survives as a subsidiary of another Person;
(ii) The sale, transfer or other disposition of all or
substantially all of the assets of CSC or its Affiliate; or
(iii) The acquisition by any Person of beneficial
ownership (as defined in Rule 13(d)-3 under the Securities Exchange Act of 1934)
of securities of CSC representing 50% or more of the combined voting power of
CSC's then outstanding securities;
provided, however, in no event shall a transaction with or between any one or
more of CSC's Affiliates be deemed to constitute a Change in Control.
8.13 Post-Closing Taxes
Seller covenants and agrees that each year, during which Buyer,
CSC or a CSC Affiliate owns the Facility, Seller shall refund, within 30 days of
assessment, the portion of the Yearly Fee equal to the amount of ad valorem
taxes assessed during such year by all taxing entities within Dickens County,
Texas against the Facility Business, excluding any ad valorem taxes attributable
to expansions of the Facility Business, to the extent such taxes are based on a
value for the taxable assets of the Facility Business that is greater than the
Maximum Value.
As used in this Section, "Maximum Value" means $6,100,000 as
such amount may be increased or decreased each year by the average percentage
increase or decrease for all real and personal property subject to ad valorem
taxes in Dickens County, Texas for such year.
8.14 Post-Closing Conduct of Seller
Seller will not engage in any activity or transaction that
might materially adversely affect the Transferred Assets or the Facility
Business or their value.
9. Trigger Event.
Seller hereby covenants and agrees that during the occurrence of a
Trigger Event and for a period of 90 days after such Trigger Event is cured,
Buyer (or its Permitted Transferee) shall not be obligated to pay the Inmate Fee
set forth in Section 2.2. Seller further covenants and agrees that upon the
occurrence of a Trigger Event, Seller shall promptly refund to Buyer a pro rated
portion of the Yearly Fee equal to the Yearly Fee divided by 365 multiplied by
the number of days during which Seller is in breach of Sections 8.2 or 8.3
hereof. Additionally, Seller covenants and agrees that during the occurrence of
a Trigger Event, Seller shall timely pay all principal, interest, premium,
penalty and other amounts owed for borrowed money indebtedness secured by a
mortgage on the Real Property. The remedy set forth in this Section shall not
be Buyer's exclusive remedy, but shall be in addition to any other rights and
remedies at law, in equity or under this Agreement to which Buyer may be
entitled.
<PAGE>
"Trigger Event" means a breach by Seller of any of the covenants
contained in Sections 8.2 or 8.3 hereof.
10. Survival of Representations
Notwithstanding any investigation made by Seller or Buyer, any
distribution in liquidation or dissolution, or any voluntary or involuntary act
of Seller or Buyer, the representation warranties, covenants, agreements and
indemnifications made by the parties shall survive the Closing for the
applicable statutory period of limitations and shall be deemed to be material
and to have been relied upon by Buyer and Seller. If a party elects to close
hereunder notwithstanding actual awareness of any default or breach of the
foregoing, the closing shall constitute a waiver of any rights or remedies which
such party may have with respect thereto, provided the party asserting such
waiver demonstrates or proves such actual awareness. All statements contained
in any certificate, Schedule or other instrument delivered pursuant hereto by or
on behalf of Seller, or by or on behalf of Buyer, shall be deemed to be
representations and warranties made pursuant to this Agreement by the delivering
party.
11. Indemnification
11.1 Indemnification of Seller by Buyer
11.1.1 Indemnification
Buyer shall, to the extent permitted by law, indemnify
and hold Seller harmless from and against all losses, liabilities, damages,
costs and expenses including reasonable attorneys' fees ("Seller's Losses")
incurred, paid or required to be paid by Seller, resulting in whole or in part
from (a) any breach of any representation, warranty or covenant made herein by
Buyer or (b) any obligation, liability or claim relating to the Inmate
Contracts, the Transferred Assets or the operations of the Facility Business,
but (for purposes of subpart (b) of this Section) only to the extent such
obligation, liability or claim is based upon acts or omissions of Buyer
occurring, or any event or circumstance occurring or existing, after the Closing
Date (and not associated with or related to any act, omission, event or
circumstance occurring or existing on or prior to the Closing Date), is not due
to the fraud, gross negligence or intentional misconduct of Seller or any
Affiliate or agent of Seller, and is not an Excluded Liability or a Retained
Asset (including, without limitation, any Environmental Claim based upon any
event or circumstance occurring after the Closing Date and not associated with
or related to any event or circumstance occurring or existing on or prior to the
Closing Date); provided that Buyer shall not be liable for any costs or
expenses, including attorney's fees, relating to Seller's review or approval of
any Inmate Contracts.
<PAGE>
11.1.2 Notification and Settlement of Claims
Buyer shall not be required to indemnify Seller with
respect to any claim unless Seller shall, within 60 days after its receipt
of actual knowledge of the claim, notify Buyer of such claim (the "Seller
Indemnification Notice"), shall provide Buyer with a copy of such claim or other
documents received, and shall upon request otherwise make available to Buyer all
relevant nonprivileged information material to the defense of such claim and
within Seller's possession. Notwithstanding the foregoing, if the Seller
Indemnification Notice is not sent within the time period specified in the
preceding sentence and if Buyer has not suffered material prejudice as a result
thereof, then Seller may provide a Seller Indemnification Notice, Buyer shall
not be relieved or released from its indemnification obligation to Seller with
respect to such claim and the Seller Indemnification Notice will be deemed to
have been timely delivered. Buyer shall notify Seller in writing, within thirty
days after a Seller Indemnification Notice is given to Buyer, whether Seller is
entitled to indemnification hereunder or defense with respect to such claim. If
Buyer determines that Seller is not entitled to indemnification hereunder, or
the 30 day period expires without Buyer having assumed Seller's defense, Seller
may defend itself and seek to enforce this section against Buyer at law or in
equity. If Buyer determines that Seller is entitled to indemnification
hereunder, then Buyer shall have the right by notice given to Seller within 30
days after the date of the Seller Indemnification Notice to assume and control
the defense thereof, including the employment of counsel selected by Buyer, and
Buyer shall pay all expenses of such defense. Seller shall have the right to
employ separate counsel in any such proceeding and to participate in (but not
control) the defense of such claim, but the fees and expenses of such counsel
shall be borne by Seller unless the employment thereof has been specifically
authorized by Buyer in writing; provided, however, if the named parties to any
such proceeding (including any impleaded parties) include both Seller and Buyer,
and if Buyer requires that the same counsel represent both Seller and Buyer and
if representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, then Seller shall have
the right to retain its own counsel at the cost and expense of Buyer. If Buyer
shall have failed to assume the defense of any claim in accordance with the
provisions of this Section, then Seller shall have the absolute right to control
the defense of such claim, and the fees and expenses of Seller's counsel shall
be borne by Buyer but Buyer shall be entitled, at its own expense, to
participate in (but not control) such defense. Where Buyer has assumed control
of the defense as provided above, Buyer shall have the right to settle or
compromise any such claim in its sole and absolute discretion and without
consultation with Seller so long as such settlement or compromise does not
impose any obligations on Seller (except with respect to providing releases of
the third party). Seller shall not settle or compromise the claim without
satisfying one of the following conditions (otherwise Buyer shall be released
from all indemnification obligations hereunder to Seller with respect to such
claim): (a) Seller shall first obtain the written consent of Buyer (which
consent shall not be unreasonably withheld or delayed), or (b) Buyer shall have
failed, after written notice to it of such suit, to take action to defend the
same within the 30-day period described above.
<PAGE>
11.1.3 Calculation of Losses
In computing Seller's Losses, such amount shall be
computed net of any related recoveries which Seller actually received under
insurance policies or from any other Person and net of any tax benefits actually
received (through a receipt of a refund, credit or offset) by Seller, taking
into account the income tax treatment of the receipt of indemnification.
11.2 Indemnification of Buyer by Seller
11.2.1 Indemnification
Seller shall, to the extent permitted by law, indemnify
and hold Buyer harmless from and against all losses, liabilities, damages, costs
and expenses including reasonable attorneys' fees ("Buyer's Losses") incurred,
paid or required to be paid by Buyer, resulting in whole or in part from (a) any
breach of any representation, warranty or covenant made herein by Seller, (b)
any obligations, liability or claim relating to any Retained Asset, or (c) any
obligation, liability or claim relating to the Transferred Assets or the
operations of the Facility Business, but (for purposes of subpart (c) of this
Section) only to the extent such obligation, liability or claim is based upon
acts or omissions of Seller occurring, or any event or circumstance occurring or
existing, on or prior to the Closing Date.
11.2.2 Notification and Settlement of Claims
Seller shall not be required to indemnify Buyer with
respect to any claim unless Buyer shall, within 60 days after its receipt of
actual knowledge of the claim, notify Seller of such claim (the "Buyer
Indemnification Notice"), shall provide Seller with a copy of such claim or
other documents received, and shall upon request otherwise make available to
Seller all relevant nonprivileged information material to the defense of such
claim and within Buyer's possession. Notwithstanding the foregoing, if the Buyer
Indemnification Notice is not sent within the time period specified in the
preceding sentence and if Seller has not suffered material prejudice as a result
thereof, then Buyer may provide a Buyer Indemnification Notice, Seller shall not
be relieved or released from its indemnification obligation to Buyer with
respect to such claim and the Buyer Indemnification Notice will be deemed to
have been timely delivered. Seller shall notify Buyer in writing, within thirty
days after a Buyer Indemnification Notice is given to Seller, whether Buyer is
entitled to indemnification hereunder or defense with respect to such claim. If
Seller determines that Buyer is not entitled to indemnification hereunder, or
the 30 days period expires without Seller having assumed Buyer's defense, Buyer
may defend itself and seek to enforce this section against Seller at law or in
equity. If Seller determines that Buyer is entitled to indemnification
hereunder, then Seller shall have the right by notice given to Buyer within 30
days after the date of the Buyer Indemnification Notice to assume and control
<PAGE>
the defense thereof, including the employment of counsel selected by Seller, and
Seller shall pay all expenses of such defense. Buyer shall have the right to
employ separate counsel in any such proceeding and to participate in (but not
control) the defense of such claim, but the fees and expenses of such counsel
shall be borne by Buyer unless the employment thereof has been specifically
authorized by Seller in writing; provided, however, if the named parties to any
such proceeding (including any impleaded parties) include both Seller and Buyer,
and if Seller requires that the same counsel represent both Seller and Buyer and
if representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, then Buyer shall have
the right to retain its own counsel at the cost and expense of Seller. If
Seller shall have failed to assume the defense of any claim in accordance with
the provisions of this Section, then Buyer shall have the absolute right to
control the defense of such claim, and the fees and expenses of Buyer's counsel
shall be borne by Seller but Seller shall be entitled, at its own expense, to
participate in (but not control) such defense. Where Seller has assumed control
of the defense as provided above, Seller shall have the right to settle or
compromise any such claim in its sole and absolute discretion and without
consultation with Buyer so long as such settlement or compromise does not impose
any obligations on Buyer (except with respect to providing releases of the third
party). Buyer shall not settle or compromise the claim without satisfying one
of the following conditions (otherwise Seller shall be released from all
indemnification obligations hereunder to Buyer with respect to such claim): (a)
Buyer shall first obtain the written consent of Seller (which consent shall not
be unreasonably withheld or delayed), or (b) Seller shall have failed, after
written notice to it of such suit, to take action to defend the same within the
30-day period described above.
11.2.3 Calculation of Losses
In computing Buyer's Losses, such amount shall be
computed net of any related recoveries which Buyer actually received under
insurance policies or from any other Person and net of any tax benefits actually
received (through a receipt of a refund, credit or offset) by Buyer, taking into
account the income tax treatment of the receipt of indemnification.
12. General Provisions
12.1 Dispute Resolution
Notwithstanding the provisions of Section 12.5 hereof and
except as set forth in Section 8.2 and 8.3 hereof, any claim, dispute or
controversy of any nature whatsoever, including but not limited to tort claims
or contract disputes, among the parties to this Agreement or their respective
successors and assigns, arising out of or relating to the terms and conditions
of this Agreement, including the implementation, applicability and
interpretation thereof, shall be resolved in accordance with the dispute
resolution procedures set forth on Annex III attached to this Agreement.
<PAGE>
12.2 Notices
All notices, requests, demands, waivers, consents and other
communications hereunder shall be in writing, shall be delivered either in
person, by facsimile or other electronic means, by overnight air courier or by
mail, and shall be deemed to have been duly given and to have become effective
(a) upon receipt if delivered in person or by facsimile or other electronic
means calculated to arrive on any business day prior to 5:00 p.m. local time at
the address of the addressee, or on the next succeeding business day if
delivered on a non-business day or after 5:00 p.m. local time, (b) one business
day after having been delivered to an air courier for overnight delivery, or (c)
three business days after having been deposited in the mails as certified or
registered mail, return receipt requested, all fees prepaid, directed to the
parties or their assignees at the following addresses (or at such other address
as shall be given in writing by a party hereto):
If to Buyer, addressed to:
First Security Bank, National Association,
as Owner Trustee for CSC Trust 1997-1
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton
Facsimile: 801-246-5053
and
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, Florida 34236
Attention: James F. Slattery, President and CEO
Facsimile: (941) 953-9198
with a simultaneous copy to counsel for Buyer:
Debra Dawn
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, Florida 34236
Facsimile: (941) 953-9198
and
<PAGE>
James P. Plummer, Esq.
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, TX 78205
Facsimile: (210) 270-7205
If to Seller, addressed to:
Dickens County
Montgomery Street & U.S. 82
Courthouse
P. O. Box 179
Dickens, Texas 79229
Attention: The Honorable Woodie McArthur, Jr., County Judge
Facsimile: (806) 623-5319
with a simultaneous copy to counsel for Seller:
Jeff E. Tankersley
Sprouse, Smith & Rowley
801 S. Fillmore, Suite 600
Amarillo, Texas 79105
Facsimile: (806) 373-3454
12.3 Form of Instruments
Each document required to be delivered hereunder shall be in
form and substance, and shall be executed and delivered in a manner, reasonably
satisfactory to the recipient thereof and consistent with the provisions of this
Agreement.
<PAGE>
12.4 Attorneys' Fees
In any litigation or other proceeding relating to this
Agreement or any Related Agreement, or any transactions contemplated herein or
therein, the prevailing party shall be entitled to recover its out-of-pocket
costs and reasonable attorneys' fees.
12.5 Remedies Not Exclusive
Except as otherwise expressly set forth in this Agreement or a
Related Agreement, no remedy conferred by any of the specific provisions of this
Agreement or such Related Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by a
party shall not, except as otherwise expressly provided for herein, constitute a
waiver of the right to pursue other available remedies.
12.6 Successors and Assigns; Third Party Rights
The rights under this Agreement shall not be assignable nor the
duties delegable by any party without the written consent of the other; and
nothing contained in this Agreement, express or implied, is intended to confer
upon any Person or entity, other than the parties hereto and their permitted
successors-in-interest and permitted assignees, any rights or remedies under or
by reason of this Agreement unless expressly so stated to the contrary.
Notwithstanding the foregoing, so long as Buyer complies with the provisions of
Section 8.12, Buyer may assign this Agreement and Buyer's rights and obligations
hereunder to any Person.
12.7 Counterparts
This Agreement and each of the Related Agreements may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
12.8 Article and Section Headings
Article and section headings used herein or in any Related
Agreement are for convenience only and are not a part of this Agreement or such
Related Agreement and shall not be used in construing it.
12.9 Entirety of Agreement, Amendments
This Agreement (including the Schedules and Exhibits hereto)
and the Related Agreements and other documents and instruments specifically
provided for in this Agreement contain the entire understanding between the
parties concerning the subject matter of this Agreement and such other documents
and instruments and, except as expressly provided for herein, supersede all
prior understandings and agreements, whether oral or written, between them with
respect to the subject matter hereof and thereof. There are no representations,
warranties, agreements, arrangements or understandings, oral or written, between
the parties hereto relating to the subject matter of this Agreement and such
other documents and instruments which are not fully expressed herein or therein.
This Agreement and each of the Related Agreements may be amended or modified
only by an agreement in writing signed by all of the parties hereto.
12.10 Expenses and Prorations
(a) Each party shall bear and pay its own costs and expenses
relating to the transactions contemplated by, or the performance of or
compliance with any condition or covenant set forth in, this Agreement. In
determining the costs and expenses of each party hereunder, the following rules
shall apply: (a) Buyer shall pay all costs and expenses for the issuance of the
Title Policy, the Title Survey and all documentary transfer taxes and recording
fees; (b) all filing fees payable in connection with submissions to governmental
agencies relating to the approval of the transactions contemplated hereby shall
be paid by the party filing the same; (c) all fees and charges in connection
with the submissions made to any governmental agency and advice in connection
therewith respecting the approval of the transactions contemplated hereby will
be borne one-half by Seller and one-half by Buyer; and (d) all other charges and
fees shall be paid by the party incurring such charge or fee. Each party will
pay its own attorneys fees incurred in the negotiation and review of this
Agreement and the closing documents and the closing of this transaction. Fees
or charges payable or earned under the Inmate Contracts, charges for utilities
serving the Facility, and other items of income or expense shall be apportioned
between the parties as of the date of Closing in accordance with the Management
Agreement.
(b) Any deposits by Seller with utility companies will be
refunded to Seller at Closing. Municipal or other governmental taxes or
assessments for improvements assessed before the Closing date shall be paid by
Seller in full.
12.11 Construction
This Agreement, the Related Agreements and any other documents
or instruments delivered pursuant hereto shall be construed without regard to
the identity of the Person who drafted the various provisions of the same. Each
and every provision of this Agreement, the Related Agreements and such other
documents and instruments shall be construed as though the parties participated
equally in the drafting of the same. Consequently, the parties acknowledge and
agree that any rule of construction that a document is to be construed against
the drafting party shall not be applicable to this Agreement, the Related
Agreements or such other documents and instruments.
<PAGE>
12.12 Waiver
Except as provided herein, the failure of any party to insist,
in any one or more instances, on performance of any of the terms, covenants and
conditions of this Agreement or any Related Agreement shall not be construed as
a waiver or relinquishment of any rights granted hereunder or thereunder or of
the future performance of any such term, covenant or condition, but the
obligations of the parties with respect thereto shall continue in full force and
effect.
12.13 Severability
The provisions of this Agreement and each Related Agreement
are severable, and if any one or more provisions may be determined to be
judicially unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provisions, to the extent enforceable, shall
nevertheless be binding upon and enforceable against the parties hereto.
12.14 Certain Definitions
(a) Newly Defined Terms. For purposes of this Agreement
(including the Annex attached hereto), and the Related Agreements except as may
be otherwise expressly stated therein, the following terms shall have the
following meanings:
"Affiliate" of a specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person specified. The term
"control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person.
"CSC" means Correctional Services Corporation, a Delaware
corporation, and its successors and assigns.
"Environmental Claim" means any claim, action or cause of
action, suit, Lien, judgment, demand or other written communication by any
Person (including the parties hereto and their respective Affiliates) alleging
or asserting potential liability (including, without limitation, potential
liability for investigatory costs, clean-up costs, governmental response costs,
natural resources damages, property damages, personal injuries, fees or
penalties) arising out of, based on or resulting from, in whole or in part, the
presence or Release into the environment of any Hazardous Materials.
<PAGE>
"Environmental Regulations" means all Laws relating to the
use, handling, treatment, storage, transportation or Release of Hazardous
Materials, or exposure to Hazardous Materials or otherwise relating to the
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) or industrial
hygiene, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., or any
analogous state statute.
"Hazardous Materials" means any substance, material or waste
which is now listed, identified or defined in or pursuant to any Law as
"hazardous substances", "hazardous waste", "toxic substances", "toxic
pollutant", "infectious waste" or similarly identified substances, materials or
mixtures (including, without limitation, medical wastes, asbestos in any form,
formaldehyde, radon, radioactive substances, hydrocarbons, petroleum, gasoline,
crude oil or any products, by-products or fractions thereof, polychlorinated
biphenyls, industrial solvents, flammables, or explosives) or which is either
now or anytime in the future: (i) potentially injurious to the public health,
safety or welfare or to the environment, (ii) potentially injurious to, or may
impair the value or beneficial use of, the Real Property (or any improvements
thereon), (iii) regulated or monitored by, or required to be remediated at the
behest of, any governmental agency, or (iv) a basis for a claim or liability of
any owner, manager or operator of the Real Property to any Person under any
applicable Law (including the Environmental Regulations).
"Inmate Contract" means an agreement (including interlocal
government agreements) between Seller and any governmental entity for the
housing of inmates at the Facility.
"Knowledge" or "knowledge", means the actual or constructive
knowledge of a Person and what the person should have known given the facts
available to the Person, without conducting a due diligence investigation at the
Facility. In addition, when used with respect to a Person other than a natural
person, the term includes the "knowledge" of its commissioners, elected
officials, officers, directors, managers, partners, trustees, administrators,
executors, employees, consultants and agents.
"Laws" means the common law, statutes, rules, regulations,
ordinances, orders, codes, permits, licenses of any federal, state or local
governmental or regulatory authorities and any order, writ, injunction or decree
issued by any court, arbitrator or governmental agency or in connection with any
judicial, administrative or other non-judicial proceeding (including, without
limitation, arbitration or reference).
"Liens" means all liens, encumbrances (including security
interests of any kind whatsoever), covenants, conditions, restrictions,
easements, encroachments, rights of way, charges or other rights, options,
claims or interests of any third party whatsoever.
<PAGE>
"Manager" means BRG Operations of Dickens County, Inc., a
Texas corporation, the former manager of the Facility.
"Permitted Exceptions" means the standard printed exceptions
shown on a title commitment or title policy in the State of Texas and such other
exceptions approved by Buyer.
"Person" means any individual, partnership, corporation,
limited liability company, trust, unincorporated association, joint venture or
any other entity of any kind whatsoever, whether for profit or not for profit,
and any governmental agency.
"Related Agreements" means any and all other agreements,
documents and instruments which may be entered into by and between or among the
parties hereto under, related to or in connection with this Agreement or the
transactions contemplated hereby, including, without limitation, the agreements
and documents referred to herein or attached hereto as Exhibits, and the
Management Agreement.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment or as otherwise defined in or pursuant to any
Environmental Regulation.
"Taxes" means (i) all federal, state, county and local income,
franchise, sales, use, property, payroll, recordation and transfer taxes
(including estimated taxes), (ii) all federal, state, county and local taxes,
levies, fees, assessments and surcharges (however designated, including
privilege taxes, room or bed taxes and user fees) which are based on the gross
receipts or net operating revenues of the Facility Business for a period ending
on, before or including the Closing Date or a formula taking any one of the
foregoing into account, and (iii) any interest, penalties and additions to tax
attributable to any of the foregoing.
12.15 Consents Not Unreasonably Withheld
Wherever the consent or approval of any party is required
under this Agreement or any Related Agreement, such consent or approval shall
not be unreasonably withheld, delayed or conditioned, unless such consent or
approval is expressly stated to be at the sole and absolute discretion of such
party or is otherwise similarly qualified.
12.16 Time Is of the Essence
(a) Time is of the essence in the performance of the
obligations contained herein.
<PAGE>
(b) Notwithstanding the foregoing, in the event that any
action or performance shall be due hereunder or under any Related Agreement on a
Saturday, Sunday or any legal holiday for banks in the jurisdiction in which
such action or performance is due or where the party required to provide the
same is located, the time for such performance shall automatically be extended
until the end of the next business day.
12.17 Governing Law
This Agreement and each Related Agreement shall be construed
and enforced in accordance with the laws of the State of Texas as applied
between residents of that state entering into contracts to be performed wholly
within the State of Texas.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
Buyer:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
A NATIONAL BANKING ASSOCIATION, NOT
INDIVIDUALLY BUT SOLELY AS OWNER TRUSTEE
UNDER THE CSC TRUST 1997-1
By: Greg A. Hawley
Title: Vice President
Seller:
COUNTY OF DICKENS, TEXAS
By: Board of Dickens County Commissioners
By: Woodie McArthur, Jr.
County Judge
ATTEST:
By: Dickens County Clerk
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000914670
<NAME> Correctional Services Corporation
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 538,959
<SECURITIES> 0
<RECEIVABLES> 16,285,756
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,829,539
<PP&E> 28,408,596
<DEPRECIATION> 2,619,564
<TOTAL-ASSETS> 65,089,950
<CURRENT-LIABILITIES> 13,791,876
<BONDS> 0
0
0
<COMMON> 77,899
<OTHER-SE> 43,002,391
<TOTAL-LIABILITY-AND-EQUITY> 45,990,502
<SALES> 20,156,477
<TOTAL-REVENUES> 20,156,477
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,264,441
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,738,233
<INCOME-TAX> 687,000
<INCOME-CONTINUING> 1,051,233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,051,233
<EPS-PRIMARY> $0.14
<EPS-DILUTED> $0.13
</TABLE>
