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 September 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 November 9, 1998, was 7,791,142.
<PAGE> 1
CORRECTIONAL SERVICES CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets - September 30, 1998
and December 31, 1997..................................3
Condensed Consolidated Statements
of Income - for the Three Months and Nine Months
Ended September 30, 1998 and 1997......................4
Condensed Consolidated Statement
of Cash Flows - for the Nine Months
Ended September 30, 1998 and 1997......................6
Notes to Consolidated Financial Statements.............7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operation..............................9
Part II. Other Information...................................16
Signature.............................................19
<PAGE> 2
<TABLE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
ASSETS September 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,170 $ 5,216,106
Restricted cash 88,441 60,626
Accounts receivable 24,453,743 10,672,018
Receivable from sale of equipment and
leasehold improvements 1,339,082 1,380,000
Prepaid expenses and other current assets 2,557,483 964,576
------------ ------------
Total current assets 28,440,919 18,293,326
EQUIPMENT AND LEASEHOLD IMPROVEMENTS AT COST, NET 27,562,150 23,717,172
LONG-TERM RECEIVABLE FROM SALE OF EQUIPMENT AND
LEASEHOLD IMPROVEMENTS - 879,082
OTHER ASSETS
Deferred development and start-up costs, net 15,532,462 8,043,380
Other 5,116,299 4,933,327
------------ ------------
$ 76,651,830 $ 55,866,287
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 17,771,585 $ 7,539,062
Subordinated promissory notes 1,101,378 3,935,760
Deferred tax liability 125,000 125,000
Current portion of mortgage payable 1,800 1,800
------------ ------------
Total current liabilities 18,999,763 11,601,622
LONG-TERM DEBT 9,741,893 -
LONG-TERM MORTGAGE PAYABLE 319,608 321,491
LONG-TERM PORTION OF ACCRUED CLOSURE COSTS 356,000 755,000
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 1,000,000
shares authorized, none issued and
outstanding - -
Common Stock, $.01 par value, 30,000,000
shares authorized, 7,791,147 and 7,693,854
shares issued and outstanding 77,912 76,938
Additional paid-in capital 43,009,506 42,260,247
Retained earnings 4,147,148 850,989
------------ ------------
Total stockholders' equity 47,234,566 43,188,174
------------ ------------
$ 76,651,830 $ 55,866,287
------------ ------------
------------ ------------
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 3
<TABLE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<CAPTION>
Three Months Ended
September 30,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues $ 28,310,713 $ 16,252,306
------------ ------------
Expenses:
Operating 20,648,411 11,738,669
General and administrative 5,413,811 3,083,924
------------ ------------
26,062,222 14,822,593
------------ ------------
Operating income 2,248,491 1,429,713
Interest expense, net (203,555) (26,333)
------------ ------------
Income before income taxes 2,044,936 1,403,380
Income tax provision 808,000 549,000
------------ ------------
Net earnings $ 1,236,936 $ 854,380
------------ ------------
------------ ------------
Net earnings per share:
Basic $0.16 $0.11
Diluted $0.15 $0.10
Number of shares used to compute EPS:
Basic 7,790,805 7,673,504
Diluted 8,297,495 8,203,407
The accompanying notes are an integral part of these statements.
<PAGE> 4
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues $ 67,577,232 $ 42,520,258
Expenses:
Operating 48,865,951 30,863,519
General and administrative 12,803,877 8,678,605
------------ ------------
61,669,828 39,542,124
------------ ------------
Operating income 5,907,404 2,978,134
Interest income (expense), net (458,245) 144,936
------------ ------------
Income before income taxes 5,449,159 3,123,070
Income tax provision 2,153,000 1,220,000
------------ ------------
Net earnings $ 3,296,159 $ 1,903,070
------------ ------------
------------ ------------
Net earnings per share:
Basic $0.43 $0.25
Diluted $0.40 $0.23
Number of shares used to compute EPS:
Basic 7,750,947 7,670,310
Diluted 8,256,151 8,126,132
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 5
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,296,159 $ 1,903,070
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 2,785,566 1,874,676
Deferred income tax - 200,000
Changes in operating assets and liabilities:
Accounts receivable (13,781,725) (5,326,764)
Prepaid expenses and other current assets (1,592,907) 745,705
Accounts payable and accrued liabilities 10,522,653 2,458,903
Reserve for Fort Worth and NYCC facilities
carrying costs (689,130) (563,842)
------------ ------------
Net cash provided by operating activities: 540,616 1,291,748
------------ ------------
Cash flows from investing activities:
Capital expenditures (5,049,899) (10,757,100)
Development and start-up costs (8,932,169) (3,501,669)
Increase in restricted cash-maintenance fund (27,816) -
------------ ------------
Net cash used in investing activities: (14,009,884) (14,258,769)
Cash flows from financing activities:
Proceeds on short-term and long-term debt, net 9,741,893 325,000
Payment on long term borrowings (1,883) (834)
Payment of subordinated debt (2,885,658) -
Proceeds from sale of equipment and
leasehold improvements 920,000 903,800
Net proceeds from exercise of stock options
and warrants 750,233 90,223
Debt issuance costs (315,535) -
Other assets 46,282 (546,952)
------------ ------------
Net cash provided by financing activities: 8,255,332 771,237
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,213,936) (12,195,784)
Cash and cash equivalents at beginning of period 5,216,106 20,932,309
------------ ------------
Cash and cash equivalents at end of period $ 2,170 $ 8,736,525
------------ ------------
------------ ------------
Supplemental disclosures of cash flows information:
Cash paid during the period for:
Interest $ 494,701 $ 315,871
------------ ------------
------------ ------------
Income taxes $ 363,719 $ 460,776
------------ ------------
------------ ------------
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> 6
CORRECTIONAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 30,
1998 and 1997, and for the three and nine months ended
September 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 nine months ended
September 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. Upon adoption, the standard will require
the Company to expense start-up and deferred development costs as
incurred. In addition, the standard will require that all
previously capitalized start-up costs meeting the requirements of
SOP 98-5 to be expensed and reported as a cumulative effect of a
change in accounting principle at the time of the adoption. If
adopted in 1998, the Company may be required to restate its
previously reported 1998 quarterly results to reflect the change
in accounting principle. As of September 30, 1998, unamortized
startup costs and deferred development totaled $15,532,000.
<PAGE> 7
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 of basic and diluted earnings per share in accordance
with the new standard:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income $1,236,936 $ 854,380 $3,296,159 $1,903,070
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Denominator:
Basic earnings per share:
Weighted average shares
outstanding 7,790,805 7,673,504 7,750,947 7,670,310
Effect of dilutive securities -
stock options and warrants 506,690 529,903 505,204 455,822
---------- ---------- ---------- ----------
Denominator for diluted
earnings per share 8,297,495 8,203,407 8,256,151 8,126,132
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per common share -
Basic $0.16 $0.11 $0.43 $0.25
----- ----- ----- -----
----- ----- ----- -----
Net income per common share -
Diluted $0.15 $0.10 $0.40 $0.23
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
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 nine
months ended September 30, 1998 and 1997.
NOTE 5 - SUBORDINATED DEBT
On 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
of $1,101,000 was extended and the balance was repaid
<PAGE> 8
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 among
other items 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. Upon adoption of SOP 98-5 the majority of these
development costs will be expensed as incurred.
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 the
majority of these development costs will be expensed as incurred.
<PAGE> 9
RECENT DEVELOPMENTS
On September 24, 1998, the Company announced that it had entered
into a definitive merger agreement with Youth Services
International, Inc. (YSI) under which each outstanding share of
YSI common stock will be converted into .375 shares of CSC common
stock. Under the merger agreement, YSI will become a wholly
owned subsidiary of CSC. Management expects the merger to be
completed in the first quarter of 1999. Transaction cost
consisting of financial advisory fees, legal and accounting
services and travel costs of $418,000 were capitalized as of
September 30, 1998. These non-recurring costs will be charged to
operations during the fiscal quarter in which the merger is
consummated. If circumstances arise that would prevent or cause
the merger to terminate these cost would be expensed at that
time.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the
percentages of total revenue represented by certain items in the
Company's consolidated statements of income.
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues 100.0% 100.0% 100.0% 100.0%
Expenses:
Operating 72.9 72.2 72.3 72.6
General and administrative 19.1 19.0 18.9 20.4
----- ----- ----- -----
Operating income 8.0 8.8 8.8 7.0
Interest income (expense), net (0.7) (0.2) (0.7) 0.3
----- ----- ----- -----
Income before income taxes 7.3 8.6 8.1 7.3
Income tax provision 2.9 3.3 3.2 2.8
----- ----- ----- -----
Net income 4.4% 5.3% 4.9% 4.5%
----- ----- ----- -----
----- ----- ----- -----
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 1997.
Revenue increased 74.2% from $16,252,306 for the three months
ended September 30, 1997 to $28,310,713 for the three months
ended September 30, 1998. Revenues of $10,537,000 were generated
in the third quarter of 1998 by the opening of nine facilities
subsequent to September 30, 1997 (Florence, Arizona; Grenada,
Mississippi; Martin Hall, Washington; Dickens County, Texas;
Newton County, Texas; Jefferson County, Texas; Eagle Lake,
Texas; Bayamon Detention and Treatment, Puerto Rico). In
addition, revenues increased $1,079,000 for the 1998 period as
<PAGE> 10
compared to the 1997 period from the full quarter operations of
the Company's Milam County, Texas and Gallup, New Mexico
facilities. Per diem rate and occupancy level increases in
several ongoing contracts contributed to the remainder of the
increased revenues in the third quarter of 1998.
Operating expenses increased 75.9% from $11,738,669 for the three
months ended September 30, 1997 to $20,648,411 for the three
months ended September 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
increased from 72.2% for the three months ended September 30,
1997 to 72.9% for the three months ended September 30, 1998.
Other operating expenses as a percentage of revenue increased to
16.3% as of the three months ended September 30, 1998 from 15.0%
as of the three months ended September 30, 1997, due to the
opening of certain new facilities. However, salaries and related
taxes and benefits represented 77.7% and 79.2% of total operating
expenses for the three months ended September 30, 1998 and 1997,
respectively.
General and administrative expenses increased 75.5% from
$3,083,924 for the three months ended September 30, 1997 to
$5,413,811 for the three months ended September 30, 1998. The
increase in general and administrative expenses was primarily
attributable to the full quarter's operations of the facilities
in Milam County, Texas and Gallup, New Mexico and the opening of
nine new facilities subsequent to September 30, 1997. As a
percentage of revenues, general and administrative expenses were
19.0% and 19.1% for the three months ended September 30, 1997 and
1998, respectively.
Operating income increased 57.3% to $2,248,491 in the third
quarter of 1998 from $1,429,713 in the third quarter of 1997.
Improved occupancy levels, the opening of new facilities, and the
full quarter of operations of the Company's Milam County, Texas
and Gallup, New Mexico facilities primarily accounts for the
increase in the operating income.
The Company had interest expense, net of interest income of
$26,333 and $203,555 for the three months ended September 30,
1997 and 1998 respectively. During the three months ended
September 30, 1997 interest expense was partially offset by
interest income from investing a portion of the net proceeds
received from the September 1996 public offering of common stock
in cash equivalents. During the remainder of 1997 and the first
nine months of 1998 the company used working capital and bank
financing for the construction and start up of the new
facilities.
<PAGE> 11
The provision for income taxes increased to $808,000 representing
an effective tax rate of 39.5% for the three months ended
September 30, 1998 from $549,000 representing an effective tax
rate of 39.0% for the three months ended September 30, 1997. The
increase is due to higher taxable income.
Net income was $1,236,936 or $0.15 per share on a diluted basis
for the three months ended September 30, 1998 compared to net
income of $854,380 or $0.10 per share for the three months ended
September 30, 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30,1997.
Revenue increased 58.9% from $42,520,258 for the nine months
ended September 30, 1997 to $67,577,232 for the nine months ended
September 30, 1998. Revenues of $15,773,000 were generated in the
first nine months of 1998 by nine newly opened facilities
subsequent to September 30, 1997 (Florence, Arizona; Grenada,
Mississippi; Martin Hall, Washington; Dickens County, Texas;
Newton County, Texas; Jefferson County, Texas; Eagle Lake, Texas;
Bayamon Detention and Treatment, Puerto Rico). In addition,
revenues increased $6,444,000 for the 1998 period as compared to
the 1997 period from the full nine month operations of the
Company's Frio County, Texas facility, Milam County, Texas
facility, Gallup, New Mexico facility and the juvenile detention
facilities and related educational programs in Polk and Pahokee,
Florida. Per diem rate and occupancy level increases in several
ongoing contracts also contributed to the increased revenues for
the nine months ended September 30, 1998.
Operating expenses increased 58.3% from $30,863,519 for the nine
months ended September 30, 1997 to $48,865,951 for the nine
months ended September 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 72.6% for the nine months ended September 30, 1997
to 72.3% for the nine months ended September 30, 1998 due
primarily to the contribution from new facilities, and lower
corporate compensation as a percentage of revenue.
General and administrative expenses increased 47.5% from
$8,678,605 for the nine months ended September 30, 1997 to
$12,803,877 for the nine months ended September 30, 1998. The
increase in general and administrative expenses was primarily
attributable to the full nine month operations of the Company's
Frio County, Texas facility, Milam County, Texas facility,
Gallup, New Mexico facility and the juvenile detention facilities
and related educational programs in Polk and Pahokee, Florida and
<PAGE> 12
the opening of the nine new facilities noted above. As a
percentage of revenues, general and administrative expenses were
20.4% and 18.9% for the nine months ended September 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 98.4% to $5,907,404 in the first nine
months of 1998 from $2,978,134 in the first nine months of 1997.
Improved occupancy levels, the opening of new facilities, and the
full nine months of operations of the Company's Frio County,
Texas, Milam County, Texas, Gallup, New Mexico, Polk and Pahokee,
Florida facilities primarily accounts for the increase in the
operating income.
The Company had interest income, net of interest expense of
$144,936 for the nine months ended September 30, 1997, while for
the same 1998 period the Company had interest expense, net of
interest income of $458,245. During the first ten 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 nine 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 $2,153,000
representing an effective tax rate of 39.5% for the nine months
ended September 30, 1998 from $1,220,000 representing an
effective tax rate of 39.1% for the nine months ended September
30, 1997. The increase is due to higher taxable income.
Net income was $3,296,159 or $0.40 per share on a diluted basis
for the nine months ended September 30, 1998 compared to net
income of $1,903,070 or $0.23 per share for the nine months ended
September 30, 1997.
FINANCIAL CONDITION, 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 September 30, 1998 of
$9,441,156, as compared to working capital of $6,691,704 at
December 31, 1997. The Company's current ratio was 1.50 to 1 at
September 30, 1998 as compared to 1.58 to 1 at December 31, 1997.
<PAGE> 13
Net cash of $540,616 was provided by operating activities for the
nine months ended September 30, 1998 as compared to $1,291,748 of
cash provided by operations for the nine months ended September
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.
Net cash of $14,009,884 was used in investing activities during
the nine months ended September 30, 1998 as compared to
$14,258,769 being used in the nine months ended September 30,
1997. In the 1998 period such cash was used principally for the
startup of nine 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 $8,255,332 was provided by financing activities for
the nine months ended September 30, 1998 as compared to financing
activities of $771,237 during the nine months ended September 30,
1997. The primary sources of funding during 1998 were $9,742,000
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. Approximately $2,900,000
was used to retire subordinated notes, which became due in July
of 1998. During the nine months ended September 30, 1997 net
cash provided by 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 $750,233 and $90,223 from the exercise of stock
options and warrants during the nine months ended September 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 start-up costs in
connection with new contracts.
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
<PAGE> 14
line are subject to compliance with financial covenants and
borrowing base criteria. As of September 30, 1998 the total
amount outstanding on the revolver was $9,742,000 and the total
amount outstanding on the operating lease facility was
$16,537,000.
In August of 1998 the Company initiated an amendment to its
current credit agreement with a syndicate of banks led by
NationsBank N.A. Simultaneously the Company engaged NationsBank
Montgomery Securities to serve as a placement agent in connection
with a proposed offering, issue and sale privately of senior
subordinated debt securities. Under the amendment, which was
finalized on October 16, 1998, the Company received an additional
$17,500,000 temporary increase in its credit facility. The
amendment represents interim financing until the earlier of the
date that the Company receives proceeds from the senior
subordinated debt placement or April 16, 1999. Upon receipt of
the additional subordinated debt, the increase in the credit
facility will become permanent. There can be no assurance the
Company will be able to issue the necessary subordinated debt
and receive the subsequent increase in its credit facility.
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. In light of the
prospective merger with YSI the above financing arrangement may
be modified.
YEAR 2000
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. However, the Company cannot
control nor give assurances that its primary customers and
suppliers are Year 2000 compliant.
<PAGE> 15
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 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
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.
<PAGE> 16
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On September 2, 1998 the Company announced finalization of a
contract to operate a 125 bed detention center in Paulding,
Georgia. The 10 year contract calls for the Company to operate a
short-term detention program for male and female juveniles
ranging in age from 10 to 18. The facility is scheduled to open
in the first quarter of 1999.
On September 11, 1998 the Company announced a contract to operate
a 96 bed secure juvenile facility in Dallas, Texas. The facility
will house both a secure, short-term residential program and a
detention center. It is scheduled to be operational in the
fourth quarter of 1998 and is the second facility the Company has
in Dallas.
On September 24, 1998 the Company announced that it had entered
into a definitive merger agreement with Youth Services
International. Under the merger agreement, YSI will become a
wholly-owned subsidiary of CSC. Each share of YSI common stock
will be converted into .375 shares of CSC common stock.
On October 20, 1998 the Company announced commencement of
operations of a 1,200 bed all cell adult prison in Crowley,
Colorado. The facility will house inmates from Colorado and
other states.
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> 17
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.58.1 Contract between the Company and New
York State Department of Corrections for
Community Reintegration Services, dated
September 1, 1998
10.60.1 Amendment No. 1 to credit facility with
NationsBank and a syndicate of banks,
dated October 16, 1998
10.11.3 Operations Agreement for the Tarrant County
Community Correctional Facility, Mansfield,
Texas, dated September 1, 1998
10.68 Service Agreement for the Paulding,
Georgia, Regional Youth Detention Center,
dated July 21, 1998
10.69 Contract for Operation and Programming of a
96 Bed Secure Juvenile Facility
in Dallas, TX, dated August 26, 1998
10.70 Temporary Management Subcontract,
dated October 16, 1998, for Operation of
the Crowley County Correctional Facility
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE> 18
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: November 12, 1998
<PAGE> 19
STATE OF TEXAS
COUNTY OF TARRANT
OPERATIONS AGREEMENT FOR RESIDENTIAL OPERATIONS AND PROGRAM SERVICES
FOR THE TARRANT COUNTY COMMUNITY CORRECTIONAL FACILITY
This Operations Agreement (the "AGREEMENT") is made and entered into by and
between the Community Supervision and Corrections Department of Tarrant County
("DEPARTMENT"), a political entity of the Judicial District of Tarrant County
and Correctional Services Corporation ("VENDOR") as of the 1st day of
September, 1998.
WITNESSETH:
WHEREAS, on or about August 28, 1998, the parties hereto entered into this
certain contract for the provision of services by VENDOR to DEPARTMENT; and
NOW, THEREFORE, for and in consideration of the foregoing, the mutual benefits
contemplated hereby and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
TERM AND SERVICES TO BE PROVIDED
1.1 Term. This AGREEMENT is effective on the date set forth in the initial
paragraph hereof and shall continue through August 31, 1999, unless it is
terminated earlier pursuant to the provisions hereof, provided, however, that
DEPARTMENT shall have the option; at its sole discretion to renew and
extend this AGREEMENT for two (2) successive additional twelve (12) month
terms at no increase in rate for Tarrant County Community Correctional
Facility Residential Operations and Program Services, upon the giving to
VENDOR of written notice of such intention no later than thirty (30)
days prior to the expiration of the initial term and each successive term.
1.2 Vendor Budget. Unless budget adjustments are approved by DEPARTMENT and
TDCJCJAD, as applicable, VENDOR must adhere to expenditures as detailed in the
VENDOR budget. (see Attachment C)
1.3 Services to be provided by VENDOR.
A. Security and Supervision. The VENDOR will provide for the security of
the Facility and the supervision of all offenders approved for assignment to
the Tarrant County Community Correctional Facility by the District Courts of
Tarrant County and the State of Texas. All security and supervision operations
will be conducted consistent with all applicable laws and statutes, applicable
DEPARTMENT Policy and Procedure, and those generally accepted correctional
practices as embodied in the most applicable Standards of the American
Corrections Association.
1. Physical Security. The VENDOR will provide for the physical security
of the Facility, assigned personnel, and all equipment and material
physically located therein regardless of original procurement authority.
<PAGE>
a. The VENDOR will maintain in sound working condition and
replace, as necessary, all security devices, in place and operational, at
the time the agreement is signed; inclusive of closed circuit television
cameras and monitors, perimeter fencing, gates, locks, sally ports, etc.
b. The VENDOR will procure, install and maintain such additional
security equipment as may be deemed necessary as the result of a security
survey/assessment to meet any increased security needs and requirements.
c. The VENDOR will ensure that all property entering or leaving
the Facility is accounted for and that no property will be permitted to
leave the Facility without proper authorization from its owner.
d. The VENDOR will conduct an initial per joint inventory of all
property at Facility.
e. The VENDOR will conduct an annual per joint inventory of all
property at the Facility.
f. The VENDOR will ensure that all persons entering or attempting
to gain entry into the Facility are properly identified by a Control
Center or Reception Desk, and must pass through a magnetometer.
(1) The VENDOR will ensure that all persons granted access
are permitted to enter only if they are not in possession of
any contraband.
(2) All persons entering the Facility for the purpose of
visiting an assigned probationer will by logged in and out in the
Visitation Log.
(a) The VENDOR will provide and maintain the Visitation Log
and present it for inspection upon request by CSCD.
(b) The VENDOR will provide a Visitation Log that documents
the name of the visitor, the probationer to be visited, the date of the visit,
the time the visitation started and the time visitation ended.
(3) All persons not employed by the VENDOR, specifically at the
Facility, all person not employed by CSCD for assigned duty at the Facility,
and all other visitors will be logged in on the Visitor's Log.
(a) The VENDOR will provide and maintain the Visitor's
Log and present it for inspection upon request by CSCD.
(b) The VENDOR will provide a Visitor's Log that is a
bound document that displays the name of the visitor, the date of the visit,
the person to be visited, the nature of the visit, the time of entry into the
Facility and the time of departure from the facility.
2. Correctional Supervision. The VENDOR will provide positive
correctional custody, control, and supervision of the assigned population. The
correctional custody, control, and supervision of the population will be
enforced to maintain the safety, security, health, and welfare of the
Facility's population; the good order and
<PAGE>
discipline of the Facility; and the safety, security and well being
of the staff, Visitors, and surrounding community. All actions of
VENDOR will be consistent with applicable laws and statutes, CJAD
Standards, CSCD Policies and Procedures, and generally accepted
correctional practices embodied in the most applicable Standards of
the American Corrections Association.
a. The VENDOR will provide sufficient uniformed security staff to
provide close and positive correctional custody and control of all
assigned male and female probationers at all times.
(1) Particular emphasis will be placed on those occasions
when male and female residents are using common facilities, participating in
combined programmatic activities, and in all other circumstances where males
and females may be anticipated to be together.
(2) Assigned probationers may not be escorted, transported,
or individually supervised solely by one or more staff members of the
opposite gender nor may a gender mix of assigned non-work release
probationers be escorted, transported, or supervised solely by a male or
female uniformed security staff member.
b. The VENDOR will provide an adequate number of uniformed female
security staff to provide positive and direct correctional custody, control,
and supervision of assigned female probationers at all times.
(1) The VENDOR will provide specifically designated uniformed
female security staff to perform routine, random security and accountability
checks of all assigned female probationers.
(2) The VENDOR will provide uniformed female security staff
to be physically present at all activities not posted on the building or
programmatic schedules or changes thereto where assigned female probationers
are or may be in attendance with assigned male probationers.
c. The VENDOR will ensure that at all times that assigned male and
female probationers are provided and utilize separate sleeping quarters,
toilets, and shower facilities.
d. The VENDOR will develop and implement stringently enforced
procedures for positive supervision by VENDOR staff, complemented by an
adequate number of uniformed female security staff, to preclude
fraternization and any physical/sexual contact between assigned probationers
during the use of common areas and facilities such as classrooms, barracks,
dorm, training, laundry, recreational, and visitor areas.
e. The VENDOR will ensure that access to and a means of
communication between assigned probationers and their assigned Community
Supervision Officer, and/or Chemical Dependency Counselor, and/or officers
of the court, and/or their attorney or record, and/or judge, and/or
member of the staff of CJAD will not be hindered or precluded by any action
on the part of the VENDOR or the VENDOR's staff.
<PAGE>
f. The VENDOR will develop, implement when needed, and exercise
contingency plans to respond to disturbances, natural disasters
and security threats for instances that may occur on or off the Facility
Campus.
(1) The VENDOR will establish and maintain liaison with local
law enforcement authorities for the coordination of support, exercise,
and implementation of contingency plans.
(2) In the event of any activation of contingency plans the
VENDOR's uniform security staff and resources will be made available to CSCD
and any appropriate law enforcement authorities necessary to restore order
to the Facility and secure control of the assigned probationer population.
(3) The VENDOR will develop and implement written policies
and procedures and train all facility staff to the standards of those
policies and procedures concerning the use of force. Inclusive in the
policies and procedures and incorporated in the training will be the
use of Oleoresin Capsicum (O.C.) Defense Spray and de-escalation techniques.
(a) The VENDOR is not permitted, under any circumstances
to initiate or participate in the use or application of deadly force.
B. Support Services: The VENDOR will supply support services necessary
to sustain the health, welfare, and morale of the assigned probationer
population residing at the Facility.
1. Food Service. The VENDOR will provide all probationers assigned
as residents at the Facility with three (3) nutritionally balanced calorically
sufficient meals per day from a dietician approved meal plan.
a. The meals will be prepared on-site under sanitary conditions
and in compliance with applicable state and local regulation and the
applicable American Corrections Association Standards.
b. Not less than 20 minutes will be allotted per meal for the
consumption of the meal.
c. All meals will be prepared without the use of pork or pork
bi-products and the menus and meal plan as approved by the dietician will be
absent any pork products or port bi-products.
d. Every reasonable effort will be made to accommodate religious,
health, and dietary requirements of individual residents.
e. Substitutions for a meal or any portion of a meal will be made
using only those foods approved for substitution by a registered dietician.
f. The meal plan cycle will not be less than four weeks long.
g. A formal system of feedback from staff dinners and resident
dinners will be emplaced and utilized to monitor and correct meal inadequacies
and complaints.
h. The caloric content of the meals served will be sufficient for
and consistent with the level of activity of the residents program content.
<PAGE>
i. The VENDOR may offer meals to all VENDOR staff at no charge.
The VENDOR may also offer meals to CSCD staff and approved visitors at a
cost not to exceed $1.50 per meal. All staff and visitor meals will be from
the same menu as for the residents and in the same portions.
j. The VENDOR will maintain records of all meals consumed by
VENDOR's staff, by DEPARTMENT's staff and by visitors inclusive of the
documentation of the payment for those meals, the number of meals prepared
and served to assigned resident probationers.
2. Clothing and Laundry Services. The VENDOR shall operate uniform
and laundry services and provide for not less than, weekly clean uniform and
linen exchange by the assigned resident population.
a. Uniforms will be provided in sizes that afford the resident a
program specific and identifiable uniform that reasonably meets the
individual resident's height and weight characteristics.
b. Uniforms and their clean exchange will be provided in
sufficient quantities and occurrences that a resident is not required to wear
clothing that is soiled or unsanitary.
c. Linens will be issued and exchanged so that no less once every
week the resident's bed is made with clean linens.
d. Minimum acceptable quantities of uniforms, linens, and etc. are
shown at EXHIBIT A.
e. Undergarments, foundation garments and socks will be provided to
each resident consistent with program requirements and conditions of
sanitation. The minimum quantities of issue are shown at EXHIBIT A.
3. Hygiene and Personal Care Supplies. The VENDOR will provide each
resident with the basic hygiene and personal care item without charge or cost to
the individual resident.
a. The VENDOR will provide each resident an initial issue and
necessary replenishment of the following essential hygiene and personal
care supplies:
(1) Soap, bath
(2) Dish, Soap (container)
(3) Deodorant
(4) Shampoo
(5) Comb
(6) Toothpaste
(7) Toothbrush
(8) Shave Cream
(9) Razor, Disposable Safety
(10) Napkin, Sanitary
(11) Bag, Disposal for Sanitary Napkin
(12) Tampon
<PAGE>
b. The VENDOR will provide the following additional items to those
residents that are in an indigent status:
(1) Pencil
(2) Tablet, writing
(3) Stamped (first class) Envelopes (up to three per week)
c. The VENDOR need not supply hygiene and personal care items to
those residents with commissary privileges and current account balances that
have purchased and possess substitute items form the commissary.
4. Transportation. The VENDOR will provide transportation to assigned
probationers utilizing passenger vans provided by CSCD. CSCD provides not less
than nine (9) CSCD-owned passenger vans and one (1) utility/cargo van for
facility operations and maintenance. The VENDOR will operate these vans using
only qualified uniformed security staff for the purpose of transporting assigned
probationers.
a. The VENDOR will provide transportation for assigned
probationers: (1) To the Facility to join their newly court
ordered program.
(2) To and from major public transportation hubs.
(3) To and from work sites, work details, places of
employment in Tarrant County where public transportation is not available.
(4) To and from approved, scheduled appointment, medical
appointments, court appearances and other scheduled and approved requirements.
b. The VENDOR will transport assigned probationers to and from
aftercare and transition programmatic and scheduled reporting events
conducted at the Facility.
c. The VENDOR will provide only drivers that have a valid Texas
drivers license and have successfully completed a State of Texas approved
defensive driver course within the last 24 months.
The VENDOR will provide an initial list of all qualified
drivers that includes their name, drivers license number, date of birth, and
social security account number. The list will be updated not less than once
each quarter and as drivers are added or deleted from the list. VENDOR's staff
may drive following receipt of DEPARTMENT's confirmation they have been
reported to DEPARTMENT's provider of liability coverage.
d. The VENDOR will ensure all vehicles are fueled at the
Tarrant County Central Garage or other garages operated by Tarrant County as
may be designated by DEPARTMENT.
e. The VENDOR will ensure that all vehicles are presented to the
Tarrant County Central Garage for scheduled maintenance and for necessary
repairs.
f. The VENDOR will maintain all vehicles in a high state of
cleanliness at all times and ensure that they are polished not less than
semi-annually.
<PAGE>
g. The VENDOR will, for each vehicle and each trip, maintain a
daily trip and mileage log that will chronicle, at a minimum, the following:
(1) The number of assigned probationers by gender and total.
(2) The names of all assigned resident probationers that are
passengers.
(3) The starting location and vehicle mileage taken from the
odometer.
(4) All intermediate destinations and the odometer mileage
at each.
(5) The final destination and the vehicle mileage taken from
the odometer.
(6) The vehicle number and identification.
(7) The name of the driver and the name(s) of all staff
members riding that van.
(8) Any fuel, oil or other liquids added to the vehicle by
type and quantity.
(9) Any collisions and any damage, of any kind, to the vehicle.
5. Commissary. The VENDOR will provide a fully operational
commissary either directly or through a sub-VENDOR for use of all assigned
resident probationers.
a. The VENDOR will utilize prudent and sound management and
accounting practices to govern all aspects of commissary operations and
finances; including, but not limited to cash controls, accountability for
and safeguarding of all monies, refunds, inventory controls, proper
handling and protection of food items, etc.
b. The VENDOR will ensure that items sold to assigned resident
probationers are at VENDOR's cost.
c. The VENDOR will conduct a reconciliation of each assigned
resident probationer's commissary account not less than one per month. Al1
overages and/ or shortages between the individual's commissary account
and the monies in the bank will be resolved on a monthly basis so that the
balances correspond and are equal.
d. The VENDOR, from its funds, shall make up any deficit or
shortage in an assigned resident probationer's commissary account.
e. The VENDOR will contract for and cause to occur an
independent financial audit of the commissary's operation of each year for
the period 1 September through 31 August.
(1) Where the commissary operation is less than the twelve
month period then an audit for the period of operation that ended on 31
August will be conducted.
(2) In the event this AGREEMENT is terminated early, the
independent financial audit will be for the period 1 September to the
termination date.
(3) The independent audit of the commissary's operation will
be completed within sixty (60) days following the close of the period audited.
<PAGE>
(4) The VENDOR will provide CSCD with a copy of each audit
report including audit findings and recommendation's and the VENDOR's
written response (as well as the sub-VENDOR's response, where applicable)
and plan for corrective action(s) indicated. The audit will include a report
on any weaknesses in Internal Control and an assessment as to the condition
of the Resident Trust Accounts.
d. The VENDOR shall require by written contract that any
sub-VENDOR who provides commissary services shall, on a quarterly basis,
provide to the VENDOR documentation which demonstrates compliance with all
requirements of commissary operation set for the above, and shall also
provide access to records and information to CSCD and/or TDCJ-CJAD in
the same manner as the VENDOR would be required to do.
6. Health Care. The VENDOR shall provide each assigned resident
probationer access to health care services. Limited health care services will
be provided on-site at the Facility and through the utilization of
transportation assets the assigned resident probationers will be afford access
to facilities within the Tarrant County Medical District and/or private health
care services.
a. The VENDOR shall provide a practicing physician licensed in
the State of Texas.
(1) The physician will review, at least quarterly, the
medical and health care policies, procedures and practices on going at
the Facility.
(2) The physician will be available on a regularly scheduled
basis to provide on-site health care services to any assigned resident
probationers that are referred to him by the Facility Nurse.
b. The VENDOR will provide sufficient licensed/registered/
certified medical staff, inclusive of at least on full-time Registered Nurse,
to provide on-site health care services, as needed, to all assigned resident
probationers.
(1) The Registered Nurse will manage the Facility health care
services.
(a) The Registered Nurse will refer and schedule
assigned resident probationers to be seen by the Facility doctor.
(b) A Registered Nurse will be available, on call, for
advice and consultation during non-duty hours, holidays, etc. The uniformed
security staff will have access via telephone.
(c) Scheduled appointments with private physicians,
dentists and clinics will be coordinated through the Nurse's Officer.
(2) All other health care staff will meet the licensing and
certification requirements of the State of Texas.
c. Neither the VENDOR nor the DEPARTMENT assumes any
responsibility for payment for any resident's prescription drugs, medications,
off-site medical care, hospitalization or institutionalization.
d. 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.
<PAGE>
7. Work Details. The VENDOR, subject to final approval by CSCD,
shall be responsible for developing all work detail programs.
a. The VENDOR will be responsible for coordinating and
implementing the program and for security and supervision of the details.
(1) The VENDOR will ensure that supervisory staff conduct
periodic, unannounced inspections of work details at the respective
work sites to ensure that appropriate safety, security, and supervision
policies and procedures are maintained and in effect.
(a) The frequency of such inspections will be not less
than twice per month for recurring details of greater than one months duration.
(b) The frequency of inspections for recurring details
of a duration less than one month will be no less than three inspection visits
during the course of the work detail requirement.
(2) The VENDOR will provide transportation of assigned
resident probationers to and from approved work detail sites within Tarrant
County.
(3) The security supervision ratio of uniformed security
staff to assigned resident probationers will not be less than one (1 )
uniformed security staff to not more than fifteen (15) assigned resident
probationers.
(4) Only those assigned resident probationers that have
demonstrated satisfactory performance in their assigned program may be
selected for off-site work details.
(a) Any assigned resident probationer that has a history
of or a conviction for any sex oriented crime will be excluded from
participation in off-site work details.
(5) The VENDOR is responsible for ensuring that work detail
participation by any assigned resident probationer does not pose any
risks or hazards to the health and/or safety of the resident or the
supervising staff and that the work detail location allows for adequate
control and supervision of residents at all times.
(6) The VENDOR will ensure that the sponsoring agency which
the work detail supports provides the necessary materials and equipment to
perform the assigned tasks.
8. Safety and Sanitation. The VENDOR will provide for the safe and
sanitary operation of the Facility, ensuring that all areas of the Facility
are maintained in a high state of cleanliness with particular emphasis on
restrooms, food preparation areas, food serving and eating areas, living
quarters, and common areas.
a. The VENDOR will document compliance through periodic
inspections arranged for by the VENDOR from independent, commercial, or
governmental agencies designated to inspect and report compliance in areas
of health and sanitation. The cost of any such inspections is the
responsibility of the VENDOR.
9. Facility Rules and Regulations, Policies, and Operational
Guidelines. The VENDOR will develop, implement, and maintain written policies,
procedures, standard operating procedures, and post orders relative to the
routine daily operation and
<PAGE>
security of the Facility's physical plant and the correctional custody,
supervision, and control of the assigned resident probationer population.
a. All policies and procedures, standard operating procedures,
and post orders must be in compliance with applicable state laws and statutes,
TDCJ-CJAD Standards, CSCD Policy and Procedures, and ACA Standards.
b. All policies and procedures will be reviewed annually by
the VENDOR and any changes will be submitted to CSCD for review and comment.
c. The VENDOR will provide and update copies of all policies and
procedures, post orders, and standard operating procedures to CSCD.
10. Equipment, Materials and Supplies. The VENDOR will provide the
equipment, materials and supplies necessary to operate the Facility. These
will be provided, as a minimum, in the quantities and types shown at EXHIBIT A
a. In addition to the minimum requirements listed at EXHIBIT A,
the VENDOR will provide additional equipment, materials and supplies, as may be
subsequently required by increases in resident capacity, changes to applicable
laws and statutes, TDCJ-CJAD Standards, CSCD Policy and Procedure; and/or ACA
Standards. EXHIBIT A will be amended, as needed, to reflect any capacity
increases or other changes required by law, procedures, or standards.
b. All equipment, materials, and supplies provided by the
VENDOR other than office equipment and supplies will be relinquished to CSCD,
free and clear of any encumbrances, at the termination or expiration of this
AGREEMENT.
11. Utilities. The VENDOR will pay for the use of all utilities
necessary and/or required for the Facility, Facility programs, operations or
maintenance such as electricity, gas, telephone service, data transmission
lines and municipal utilities including, but not limited to, water, sewer,
waste removal, etc.
a. The VENDOR will develop and subsequently implement an
aggressive energy conservation policy and program within the Facility.
(1) The energy conservation policy and program will
incorporate training of all staff and the assigned resident probationer
population to encourage their active participation in conserving energy at
the Facility.
(2) Energy conservation activities will not impede security
procedures or requirements.
12. Admission and Discharge of Assigned Resident Probationers.
a. The VENDOR will accept for admission to the Facility
probations presented by CSCD.
b. CSCD will present for admission to the Facility only
probationers who are placed in the Facility by court order.
<PAGE>
c. CSCD will deliver to the VENDOR each resident's data sheet
and court order, upon the probationer's admission to the Facility, or as
soon thereafter as practicable.
d. The VENDOR will discharge an assigned resident probationer
only upon receipt of written direction from CSCD or the courts.
(1) Upon discharge the VENDOR will provide the departing
resident with:
(a) A full accounting of his/her commissary account
inclusive of any balance.
(b) All personal property, clothing, and valuables.
13. Facility Maintenance.
a. The VENDOR will perform or provide for the performance of
all preventative maintenance on all Facility property and equipment provided
for and/or associated with the correctional custody, control, and
supervision of the assigned resident probationers and the supervision and
management of VENDOR staff.
b. The VENDOR will perform or provide for the performance of
all maintenance and make all repairs to the Facility, its fixture, 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, subsurface plumbing components, and
electrical wiring that are not caused by negligent or willful acts or other
activities or assigned resident probationers or VENDOR staff, or resulting
from a failure to provide positive correctional custody, control, and
supervision of the assigned resident probationer population.
c. The VENDOR will maintain, repair, and replace or provide
for the maintenance, repair, or replacement of ail interior doors, locking
devices, all windows, exterior lighting, and all equipment required, used
for, and/or intended to provide security, surveillance, and the positive
correctional control, custody, and supervision of the assigned resident
probationer population.
d. The VENDOR will maintain, repair, and replace, as
necessary, all facilities, fixtures, and equipment that are provided by and
the property of CSCD used exclusively by the VENDOR's staff.
C. Personnel Recruitment and Training. The VENDOR will develop and
implement personnel recruitment and training policies that conform to the
rules and regulations of the Equal Employment Opportunity Commission.
1. The VENDOR will develop and implement a non-discriminatory policy
with respect to disability, race, color religion, sex, age, national or
ethnic origin.
<PAGE>
a. The VENDOR will provide access to records required by law to be
maintained of such non-discriminatory action upon request by CSCD.
b. A notice evidencing the VENDOR's adoption and commitment to
this policy shall be posted in a conspicuous location at the Facility.
2. The VENDOR will provide copies of the applications inclusive of the
applicants name, driver's license number, and social security account number
of all prospective employees.
a. CSCD shall, within ten (10) working days from receiving the
application information will conduct a criminal record background investigation
on all prospective VENDOR employees prior to their employment.
(1) The VENDOR will perform a routine reference check
independently on all prospective employees prior to their employment, with the
results of such checks made available to CSCD.
(2) The results of the CSCD criminal record background check will
be made available to the VENDOR. If not available within ten (10) days
of CSCD receiving the application information, the VENDOR may offer conditional
employment to the applicant if no derogatory information is present in the
results of the reference check conducted by the VENDOR.
3. The VENDOR will not provide employment to applicants as uniformed
security staff if there is a record of a conviction for any felony that is
fewer that 10 years previous to the application.
a. Applicants that have a recorded conviction of any offense related
to or specifically involving the use of a weapon; the possession, use, sale,
or transfer of any controlled substance; an assault or assault consummated by
battery; or any sexual offense may not be favorably considered for employment.
b. Applicants that have a recorded conviction for any felony DWI
within the last 10 years may not be considered for employment.
4. CSCD retains the right to direct VENDOR to reject any applicant for
employment who is not acceptable in any manner to CSCD.
5. The VENDOR is solely responsible and assumes all liability for the
payment of its employee wages, salaries, and benefits, including medical
insurance, workers' compensation insurance, and other benefits.
6. The VENDOR is responsible for providing all training, certifications
and licensure of its employees.
a. Each employee will receive training specific to his/her job
duties and receive a thorough pre-service orientation prior to being
permitted to exercise the duties and responsibilities of that position
independent of direct, positive supervision by a specific VENDOR supervisor.
<PAGE>
(1) The pre-service orientation will be a minimum of forty
(40) hours duration and will provide that training necessary to conform to
the standards set by applicable laws and statutes of the State of Texas,
TDCJ-CJAD, and ACA Standards, as appropriate.
b. The VENDOR will train those employees who will be employed as
uniformed security staff and whose duties will include the correctional
supervision, custody, and control of assigned probationers a minimum of
forty (40) hours of security training equivalent to the Texas Commission
of Law Enforcement Officer Standards and Education.
c. The VENDOR is responsible for providing adequate staffing to
meet the requirements of minimum staff as set forth in EXHIBIT B. In the
event that resident capacity at the facility increases due to implementation
of any added program(s) at the facility, VENDOR will provide the additional
staffing, and other resources necessary to ensure that adequate safety,
security, supervision, and programming is provided for the additional
residents. EXHIBIT B will be amended as needed to reflect any increases in
staffing required as a result of increases in resident capacity due to
implementation of any added program(s) at the facility.
7. The VENDOR will establish and maintain a training file on each
of its employees.
a. The training file will chronicle as to date, time, location,
duration and subject all training received by the individual employee.
b. Each employee will verify by their signature or initials the
date, time, location and conduct of all pre-service training and orientation.
D. Operational Reports and Notifications. The VENDOR will establish
and maintain operation reports and develop and implement a notification system
that will provide a self documenting compliance with all applicable laws,
statutes, standards and policies.
1. The VENDOR will establish and maintain a monthly reporting system
whereby CSCD will receive, not later than the fifth working day of the
following month, a summary of significant activities that occurred at the
Facility the preceding month. The monthly report will contain, but not be
limited to the following information:
a. A statistical compilation of reported incidents by category
and subject.
b. A statistical compilation of assigned resident probation
disciplinary actions by level and category, and a compilation of formal
punishments meted out for significant infractions by category or infraction.
c. A statistical compilation of intakes and releases by name,
date of birth, sex, race, program assignment, and court of jurisdiction.
d. Facility tours, graduations, ceremonies, and VIP visits.
e. A statistical compilation of resident grievances by general
nature and category of complaint, number resolved by the VENDOR, number
referred to CSCD, and the number unresolved.
f. Community service oriented and other off-site work details by
location, types of work preformed, number of assigned resident probationers
and agency and/or group served.
2. The VENDOR will establish and maintain a quarterly compliance and
self-inspection report.
<PAGE>
a. The report is due to CSCD each fiscal quarter.
b. The report will detail the level of compliance with applicable
codes, regulation, and standards.
c. The report will detail the actions taken to correct all noted
deficiencies and items of non-compliance.
d. The report must be received by CSCD not later than eight
working days after the end of the fiscal quarter.
3. The VENDOR will establish and maintain a system of incident
reporting to chronicle and report significant incidents as they occur
concerning the Facility, the staff, and the assigned resident probationers.
a. A copy of the report will be prepared and forwarded to CSCD
not later than 24 hours after the incident occurred, or the next normally
scheduled workday if the incident occurred on a weekend or holiday.
b. The incident report will contain all essential elements of
information concerning the reported incident including, but not limited to
the following:
(1) The date, time and location of the incident.
(2) The subject (person or event) of the incident.
(3) The name and identification of the individual(s)
reporting the incident.
(4) The specifics of the incident; who, what, where, when,
and how.
(5) The name and identification of the individual initiating
the report.
(6) The name and identification of the supervisor reviewing
the report.
4. The VENDOR will establish and maintain a continuous record of
operational activity for the Facility. To be referred to as the Daily
Operations Report and Record.
a. This documentation of daily activity will be recorded on a
specific and number formed developed and implemented by the VENDOR.
(1) The form will be initiated each day at one minute past
midnight and will chronicle consecutively those significant activities
and events occurring until midnight of the same day.
(2) The form will be forwarded to CSCD under transmittal
documentation from the VENDOR's Facility Administrator to CSCD each duty day.
Non-duty day reports will be forwarded on the next occurring duty day.
b. The Daily Operations Report and Record will contain, but not
limited to the following information:
(1) All significant events, occurrences, and incidents
relating to the operation of the facility and the activities of the
assigned resident probationers, such as:
(a) Facility counts (routine, scheduled, and special).
(b) Serious incidents (AWOL, absconding).
(c) Required incident telephonic notifications to VENDOR
and CSCD supervisory staff.
<PAGE>
(d) The transportation of assigned resident probationers.
1 The names and sex of those assigned resident
probationers that are transported to and/or from the facility.
2 The name and identification of the driver of the
vehicle and other staff riding in the vehicle.
3 The intermediate destinations on the trip and
the final destination.
4 The time of departure from the facility, the time
of return to the Facility.
5 Primary purpose of the trip.
5. The VENDOR will establish a system of notifications to apprise CSCD
and VENDOR supervisory staff of significant and/or emergency incidents that
may occur.
a. The VENDOR will immediately notify the Director of Corrections,
CSCD or his designated representative, verbally in the event of any and
all unusual occurrences and/or serious incidents involving the Facility,
the staff, or any assigned resident probationer.
b. This notification is a complementary system to the incident
reporting system discussed above.
c. Notifications will be made, but are not limited to the
following listed subjects:
(1) Fire, Fire alarm, report of fire.
(2) Structural damage to the Facility.
(3) Injury or illness of an assigned resident probationer
resulting in a 911 call and/or treatment in a hospital emergency room.
(4) Serious injury of an assigned resident probationer by
another resident.
(5) Any injury of an assigned resident probationer by any
Facility staff member or volunteer.
(6) Serious injury of an assigned resident probationer by
any visitor.
(7) The catastrophic failure of key environmental, plumbing,
sanitation, security, or vital system.
(8) The Absconding of any assigned resident probationer.
(9) An incident requiring the use of force by Facility Staff.
(10) The placement of any assigned resident probationer in
restraints, administrative segregation, disciplinary segregation, protective
custody segregation, medical watch, suicide watch, and/or seclusion.
(11) Any incident deemed reportable by the on-duty VENDOR
supervisor or any member of his/her chain of supervision.
(12) The death of an assigned resident probationer.
(13) The collision or other damage involving a CSCD-owned motor
vehicle and, any injury associated therewith.
E. Administrative and Operational Records. The VENDOR will develop,
implement, and maintain all logs, files, reports, and records required or
associated with the operation and documenting of the operation of the Facility
and the VENDOR's inherent responsibilities
<PAGE>
as the Facility Operator. All records and reports utilized by the VENDOR will
be identified and separated by an established format and form number system.
Where a specific operational form established by CSCD is in existence the
VENDOR will be required to procure and use said form as applicable and/or
directed.
1. Administrative Records. The VENDOR will maintain the following
records:
a. An individual Correctional Custody File containing, but not
limited to resident personal data, personal property inventory and
receipts, program property and equipment, clothing receipts, incident reports,
disciplinary reports and hearing disposition, programmatic participation and
progress information generated by the VENDOR, intake and discharge information,
pertinent court orders and documentation, emergency notification data, current
Facility domicile location, individual photograph, copies of files grievances
and responses, requests for information/assistance forms and responses, current
and signed information release authorizations, current approved visitor's list,
and other pertinent information as may be needed for the effective management
of the assigned resident probationer.
b. An individual health/medical record which will contain
information relative to the resident's health and medical condition; such as
the individual's physical exam results, individual's height and weight at
intake, health screen, TB screen (date and results), a copy of food handlers
certificate, copies of referrals requested by the VENDOR and medical staff to
outside providers and agencies, listing of scheduled medical appointments and
purpose, and any VENDOR provided first aid and/or treatment authorized and
performed by any member of the VENDOR's staff and/or any emergency room visits.
2. Administrative Records. The VENDOR will maintain the following
records:
a. A central file will be initiated and maintained to chronicle
disciplinary actions within the Facility, pertaining to infractions of
Facility rules and regulations established by the VENDOR to maintain and
operate the Facility within an environment of good order and discipline.
(1) The file will contain, organized by month and year, a
chronology of disciplinary reports and a record of their resolution
either informally or as a result of disciplinary hearing.
(2) All grievances regardless of documentation or form,
submitted by any assigned resident probationer will be logged in with the name
of the submitter, the general subject matter and the date received. This log
will be a permanent record.
(a) All grievances will be answered in accordance with
applicable TDCJ-CJAD policies and standards, applicable CSCD Policies and
Procedures, and applicable ACA Standards.
(b) All final appeals will be handled by CSCD.
(3) The VENDOR will initiate and maintain a Resident Alpha
Roster which is a listing of all assigned resident probationers
by assigned program, alphabetical according to last name. This record
will be updated upon the intake or release of any resident.
<PAGE>
(4) The VENDOR will maintain commissary fund records
containing the up-to-date status of each assigned resident probationer's
commissary fund and the commissary operating account.
(a) The VENDOR will conduct a reconciliation of each
individual's account not less than once per month while the resident is
assigned to the Facility.
(b) The VENDOR will, not less than five days prior to a
scheduled release, conduct a reconciliation of each departing (graduating)
resident's account.
(c) The VENDOR will, not more than two working days
subsequent to the date of an AWOL, Absconding or unscheduled release,
conduct a reconciliation of the individual's account.
(5) The VENDOR will initiate and maintain a personnel folder
for each VENDOR employee to be kept in a central location and available for
inspection by CSCD. This record may be organized and maintained according
to the VENDOR's policy but must, at a minimum, contain at least the following:
(a) A copy of the employee completed application and
resume (if provided).
(b) A job description which details the duties and
responsibilities of the employee's position, the qualifications for
that position to include education, training, and or/ related
work experience required.
(c) Documentation that the VENDOR has verified the
current status of all professional credentials required by the job
description directly with the credentialing authority.
(d) A copy of the employee's latest performance appraisal.
(e) Copies of any disciplinary action taken against the
employee.
(6) The VENDOR will initiate and maintain individual employee
training records. This record will chronicle the individual orientation and
training and document compliance with applicable laws, statutes, and
standards relative to the individual's training.
3. Compliance. The VENDOR will use all reasonable effort and
resources to case its operation and management of the Facility to conform
with and remain in compliance with:
a. All applicable laws, statuses of the Federal Government
and the State of Texas.
b. All applicable standards published by TDCJ-CJAD.
c. All applicable building and safety codes, regulations,
sanitation and health codes.
d. All applicable standards of the American Correctional
Association appropriate to the accreditation and subsequent operation of
this type facility.
F. Program Implementation. VENDOR will be responsible for implementing
and maintaining programs and activities designed to foster discipline and a
sense of
<PAGE>
responsibility in the assigned probationers. These programs and activities
will include, but not be limited to, military-style discipline,
regimentation, marching and drill practice, physical training, and customs
and courtesies. VENDOR will be responsible for instructing and supervising
assigned probationers during the periods of time that probationers are
participating in these programs and activities. All programs and activities
will be maintained and updated in accordance with DEPARTMENT policies,
procedures, and guidelines, and will be approved by DEPARTMENT prior to
implementation.
ARTICLE II
APPOINTMENT OF VENDOR
2.1 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 to DEPARTMENT, and VENDOR hereby agrees
to furnish to DEPARTMENT, the Services provided for herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
VENDOR represents and warrants to and for the benefit of DEPARTMENT, with the
intent that DEPARTMENT rely thereon for the purposes hereof, the following:
3.1 Legal Status. VENDOR (i) is a validly organized and constituted sole
proprietorship or partnership in the jurisdiction in which it is formed and
in good standing therein; or, is a corporation duly incorporated and validly
existing under the laws of the jurisdiction in which it is incorporated and in
good standing therein; (ii) is duly qualified to conduct business in the State
of Texas; and (iii) has legal power and authority to own or lease its
properties and conduct its business as presently conducted.
3.2 Authorization. The making and performance of this Agreement have been duly
authorized by all necessary action and will not violate any provision of
current law or its charter or by-laws. The Agreement has been duly executed,
and delivered by VENDOR and, assuming due execution and delivery by DEPARTMENT,
constitutes a legal, valid, and binding agreement enforceable against VENDOR in
accordance with its terms.
3.3 Taxes. VENDOR has filed all necessary federal, state, and foreign income
and franchise tax returns and has paid all taxes as shown to be due thereon,
including penalties and interest, or provided adequate reserves for payment
thereof, except to the extent that same have become due and payable but are
not yet delinquent, and except for any taxes and assessments of which the
amount, applicability or validity is currently being contested in good faith
by appropriate proceedings.
<PAGE>
3.4 No Child Support Owing. In accordance with 231.006 of the Texas Family
Code, no person who is the sole proprietor, a partner, a shareholder, or an
owner of twenty-five percent (25%) or more of VENDOR is now more than thirty
(30) days delinquent in paying court ordered approved child support. Under
Section 231.006, Family Code, VENDOR certifies that it is not ineligible to
receive the Payments and acknowledges that this Agreement may be terminated
and Payments may be withheld if this certification is inaccurate.
3.5 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 any
unallowable costs as set forth in CJAD financial guidelines. 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 participant fees from any individual who receives Services
hereunder.
3.6 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 IV
GENERAL CONDITIONS
4.1 Duties and Obligations. VENDOR shall provide the Services at the
Facility(ies) in compliance with applicable federal and state law, including all
constitutional, legal, and Court Ordered requirements, whether now in effect or
hereafter effected or implemented, and in accordance with the Operational Plan.
VENDOR shall comply with DEPARTMENT Policies and Procedures and unless otherwise
required by this Agreement shall be free to establish procedures such that the
Services attain the goals established by such DEPARTMENT Policies, provided that
any deviations are approved in writing by DEPARTMENT prior to their
implementation. The Operational Plan shall contain procedures for assumption of
Services by DEPARTMENT in the event of VENDOR'S bankruptcy or inability to
perform its duties hereunder.
4.2 Payments to VENDOR. Payments to VENDOR shall be subject to the provision of
Section 6.7. VENDOR shall deliver a monthly invoice within fifteen (15) days
following each month of service to DEPARTMENT at 200 West Belknap Street, Fort
Worth, Texas 76196. The invoice shall be accompanied by a report for the month
signed by the Facility Administrator or his/her Supervisor, and listing, each
resident/trainee, by name with the date that he/she arrived at the facility and
the date he/she was released form the facility, by the resident/trainee's
program of assignment (SATF, SIF, CRC). Additionally, VENDOR shall provide the
daily count of occupied beds (DCOB) for the entire facility for each day of the
month by program of assignment (SATF, SIF, CRC).
A. Amount of Payment. As compensation for VENDOR'S performance of its
duties and responsibilities in accordance with the terms and conditions of this
Agreement, DEPARTMENT agrees to pay VENDOR the amount of TWENTY-ONE DOLLARS AND
NINETY-FOUR CENTS ($21.94) per resident bed per day for Three hundred fifty
(350) residents.
<PAGE>
B. Invoice and Payment. DEPARTMENT agrees to pay VENDOR within 30 days
following receipt of VENDOR'S services and correct invoice.
4.3 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.
4.4 No SubVENDORs. No subVENDOR may be utilized by VENDOR unless DEPARTMENT has
furnished prior written approval thereof.
4.5 Placement of Defendants. DEPARTMENT shall have sole authority to assign and
transfer Defendants to and from the Facility, and, as appropriate, may specify
appropriate Services for any such Defendants during the term hereof.
4.6 Confidentiality. When applicable in accordance with federal and state
guidelines, VENDOR shall maintain the confidentiality of Resident records and
information, including but not limited to, compliance with federal and state
regulations concerning substance abuse treatment. No personal information of any
Defendant may be divulged or made known in any manner to any person except as
may be necessary to provide the Services. VENDOR shall notify department in
writing if any legal process requires disclosure of a Defendant's record and
shall obtain written acknowledgment of same from DEPARTMENT'S Authorized
Representative.
4.7 Non-Collusion. VENDOR warrants that no Person, other than a bona fide
employee, has been employed to solicit or secure this 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 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.
4.8 Termination at Will. Either party may terminate this Agreement for any
reason whatsoever, without cause and at any time, by furnishing to the other
party ninety (90) days prior written notice. DEPARTMENT'S only obligation for
terminating this 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 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.
4.9 Misspent Funds. Any expenditure of funds by VENDOR which is deemed
inappropriate based on VENDOR's budget, 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.
4.10 Availability of Funds. This Agreement is subject to the availability of
state funds as appropriated by the State Legislature and as made available by
TDCJ-CJAD.
4.11 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
Agreement and that VENDOR has not paid or agreed to pay any employee of
DEPARTMENT any fee, commission, percentage, brokerage fee,
<PAGE>
gift, or any other consideration, contingent upon the making of this Agreement
or as an inducement for entering into this Agreement. The unauthorized offering
or receipt of such payments may result in the immediate termination of this
Agreement by DEPARTMENT.
4.12 VENDOR's compliance with Standards and Guidelines. VENDOR agrees to comply
with all applicable standards and guidelines, including those contained in the
Contract Administration Manual, promulgated by the Texas Department of Criminal
Justice-Community Justice Assistance Division.
ARTICLE V
STATEMENT OF SERVICES
5.1 Policies and Procedures. VENDOR shall establish and maintain written policy
and procedures which govern all the services which VENDOR provides under this
AGREEMENT. Said Policy and Procedures shall be subject to review and approval by
DEPARTMENT.
5.2 Safety Requirements. VENDOR shall maintain the physical plant of the
Facility in compliance with all applicable codes.
5.3 Health and Safety. VENDOR shall ensure that adequate measures are taken to
protect the health and safety of each Defendant while receiving Services.
5.4 Staff Training. VENDOR shall ensure that all staff providing direct Services
receive continuing education and training as needed or required and that such
education and training is documented as to compliance with state law, CJAD
Standards, DEPARTMENT policy and procedures and ACA Standards.
5.5 AIDS and HIV Infection. IVENDOR) 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
HlV-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.
ARTICLE VI
ADMINISTRATION AND FISCAL SYSTEM
6.1 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.
6.2 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.
6.3 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.
<PAGE>
6.4 Remuneration. Staff of VENDOR shall not pay or receive any commission,
consideration, or benefit of any kind related to the referral of a Defendant for
treatment or engage in fee-splitting with other professionals.
6.5 Audits. VENDOR agrees to furnish DEPARTMENT and/or TDCJ with such
information as may be required relating to the Services rendered hereunder.
VENDOR shall permit DEPARTMENT to audit and inspect records and reports and
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 needed to accomplish review of program activities,
Services and expenditures, including cooperation with DEPARTMENT in its
performance of random or routine audits to determine the accuracy of VENDOR
reports.
6.6 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 this
subparagraph, the term "funds" means any amounts received by VENDOR on behalf
of any Defendant who is receiving Services at Facility; and
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.
6.7 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.
6.8 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.
ARTICLE Vl1
RETENTION AND CUSTODIAL REQUIREMENTS FOR RECORDS
7.1 Retention. All records pertinent to the provisions of Services hereunder
shall be retained for a period of five years with the following qualification:
If any audit, litigation or claim is started before the expiration of the
five-year period, the records shall be retained until all audits, litigation,
claims, or
<PAGE>
other findings involving the records have been resolved. The retention period
for all records begin after DEPARTMENT has made the final Payment hereunder.
7.2 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.
ARTICLE VIII
DEFAULT AND TERMINATION
8.1 Default by VENDOR. Each of the following shall constitute an Event of
Default on the part of VENDOR:
A. a material failure to keep, observe, perform, meet, or comply with any
covenant, agreement, term, or provision hereof, which failure continues for a
period of twenty (20) days after receipt of VENDOR of written notification
thereof;
B. (1) admit in writing its inability to pay its debts; (2) make a general
assignment for the benefit of creditors; (3) suffer a decree or order appointing
a receiver or trustee for it or substantially all of its property and, if
entered without its consent, same is not stayed or discharged within sixty (60)
days of such decree or order; (4) suffer filing under any law relating to
bankruptcy, insolvency, or the reorganization for relief of debtors by
or against it and, if contested by it, not to be dismissed or stayed within
sixty (60) days of such filing; or (5) suffer any judgment, writ of attachment
or execution, or any similar process issued or levied against a substantial part
of its property that is not released, stayed, bonded, or vacated within sixty
(60) days after such issuance or levy; or
C. the discovery by DEPARTMENT that any statement or representation of
warranty in this Agreement is false, misleading, or erroneous in any material
respect.
8.2 Remedy of DEPARTMENT. Upon the occurrence of an Event of Default by VENDOR,
DEPARTMENT shall notify VENDOR of such Event of Default, and subject to the time
provisions of Section 8.1 hereof, DEPARTMENT shall have the right to pursue any
remedy it may have at law or in equity, including, but not limited to, (a)
reducing its claim to a judgment; (b) taking action to cure the Event of
Default, in which case DEPARTMENT may offset against any Payments owed to VENDOR
all reasonable costs incurred by DEPARTMENT in connection with its efforts to
cure such Event of Default; and (c) termination and removal of VENDOR as
provider of Services at the Facility. In the event of VENDOR'S removal due to an
Event of Default, DEPARTMENT shall have no further obligations to VENDOR after
such removal and in such event, VENDOR agrees to cooperate with DEPARTMENT
regarding a transition to new provider of Services.
8.3 Default by DEPARTMENT. The following shall constitute an Event of Default on
the part of DEPARTMENT: failure by DEPARTMENT to pay within forty-five (45) days
after Payment is due any Payment required to be paid pursuant to the terms
hereof, provided such failure to pay shall not constitute an Event of Default
if the Comptroller of the State of Texas has withheld any payments pursuant to
statutory authority.
8.4 Remedy of VENDOR. Upon an Event of Default by DEPARTMENT, VENDOR'S sole
remedy shall be to terminate this Agreement. Upon such termination, VENDOR shall
be entitled to receive
<PAGE>
Payment from DEPARTMENT for all Services satisfactorily furnished hereunder up
to and including the date of termination.
ARTICLE IX
INSURANCE AND INDEMNIFICATION
9.1 Insurance. VENDOR shall provide an adequate plan of insurance that
provides: (1) 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:
1. Claims under workers compensation disability benefit, and other
similar employee benefit actions;
2. Claims for damages because of bodily injury, occupational sickness or
disease, or death of any VENDOR employees;
3. Claims for damages because of' bodily injury, sickness or disease, or
death of any Person other than VENDOR'S employees;
4. 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;
5. Claims for damages because of injury to or destruction of tangible
property, including loss of use resulting therefrom;
6. Claims for damages based on violations of civil rights;
7. Claims for damages arising from fire and lightning and other
casualties.
8. Claims for damages and/or injuries resulting from the use of
motor vehicles.
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.
<PAGE>
D. Compliance with the foregoing insurance requirements shall not relieve
VENDOR from any liability under the indemnity provisions.
9.2 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's, employees, or
licensees contributed in part to the loss or damage indemnified against.
NOTE MODIFICATION: "Indemnification shall not apply to occurrences of sole
negligence of the Indemnitee."
ARTICLE X
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, 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.l.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
indemnify 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 XI
INCREASED RESIDENT CAPACITY
DEPARTMENT will pay VENDOR a rate not to exceed $21.94 per bed per day for the
implementation of any added program(s) at the facility. Any additional
program(s) shall not add more than twenty (20) same gender beds. The actual per
bed per day rate paid to VENDOR by DEPARTMENT will be negotiated by the parties
to this AGREEMENT.
<PAGE>
ARTICLE X11
MISCELLANEOUS PROVISIONS
12.1 Required Compliance. VENDOR agrees to comply with all applicable standards
and guidelines, including those contained in the Contract Administration Manual,
promulgated by the Community Justice Assistance Division of the Texas Department
of Criminal Justice.
12.2 Inconsistencies. Where there exists any inconsistency between this
Agreement and other provisions of collateral contractual agreements that are
made a part hereof by reference or otherwise, the provisions of this Agreement
shall control.
12.3 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.
12.4 Prohibition Against Assignment. There shall be no assignment or transfer of
this Agreement without the prior written consent of both parties.
12.5 Law of Texas. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas and shall be enforced in Tarrant
County, Texas.
12.6 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 registered or certified
mail, return receipt requested, postage prepaid.
12.7 Entire. This 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 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.
12.8 Amendment. No changes to this Agreement shall be made except upon written
agreement of both parties.
12.9 Confidentiality. Any confidential information provided to or developed by
VENDOR in the performance of this 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.
12.1 0 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.
12.11 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.
<PAGE>
12.12 Counterparts. This Agreement may be executed in any number of counterparts
by the parties hereto, each of which when so executed by both parties shall be
deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
12.13 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.
12.14 VENDOR'S understanding of AGREEMENT. VENDOR acknowledges that it has an
understanding of the clauses included in this AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT including the
Exhibits attached hereto and incorporated herein by reference to be executed as
of the date first above written.
DEPARTMENT: VENDOR:
COMMUNITY SUPERVISION AND CORRECTIONAL SERVICES CORPORATION
CORRECTIONS DEPARTMENT 1819 MAIN STREET, SUITE 1000
OF TARRANT COUNTY SARASOTA, FLORIDA 34236
200 WEST BELKNAP STREET
FORT WORTH, TEXAS 76196-0255
BY: /s/ Donald R. Smith BY: /s/ James F. Slattery
Name: Donald R. Smith Name: James F. Slattery
TITLE: Director TITLE: President and CEO
DATE: 8/28/98 DATE: 9/10/98
STATE AGENCY:
State of New York
Department of Correctional Services
State Office Campus, Building 2
Albany, New York 12226
NYS COMPTROLLER'S NUMBER: -----
ORIGINATING AGENCY CODE: 10160
CONTRACTOR:
Correctional Services Corporation
1819 Main Street, Suite 1000
Sarasota, Florida 34236
941-953-9199
TYPE OF SERVICES: Community Reintegration Services
INITIAL CONTRACT PERIOD: From: 09/01/98 To: 08/31/99
FUNDING AMOUNT FOR INITIAL PERIOD: $1,660,275.50
STATUS: Contractor is a for profit corporation.
RENEWALS: Two (2) one-year terms.
<PAGE>
STATE OF NEW YORK
DEPARTMENT OF CORRECTIONAL SERVICES
AGREEMENT
THIS AGREEMENT is hereby made by and between the State of New York
Department of Correctional Services (hereinafter DOCS) and the CONTRACTOR
identified on the face page thereof.
WITNESSETH:
WHEREAS, THE DOCS has the authority to provide funding for Community
Reintegration Services and desires to contract with skilled parties
possessing the necessary resources to provide such services; and
WHEREAS, the DOCS has solicited bids in order to procure the services of
a well-qualified service provider in order to provide such services and has
selected CONTRACTOR in order to provide such services for DOCS; and
WHEREAS, the CONTRACTOR is ready, willing and able to provide such
services and possesses or can make available all necessary qualified
personnel, licenses, facilities and expertise and perform or have performed
the services required pursuant to the terms of this AGREEMENT;
NOW THEREFORE, in consideration of the promises, responsibilities and
covenants herein, the DOCS and the CONTRACTOR agree as follows:
1. SERVICES: CONTRACTOR will carry out all responsibilities and
services identified in DOCS' "Request for Proposal," attached as Exhibit "B,"
in accordance with CONTRACTOR'S "Proposal," attached as Exhibit "C," for the
following "RFP" work components:
A3 - 65 - Lincoln
2. COMPENSATION AND PAYMENT: DOCS shall compensate CONTRACTOR not more
than the amount of $1,660,275.50 for the provision of services set forth in
Exhibits B and C, which shall be paid on a bed-per-day basis as follow:
Component A-3 (Lincoln - 65) 69.98 per bed per day
BILLED MONTHLY, IN ARREARS, BASED ON
USE OR ACTUAL SERVICE RECEIVED,
ON PRESENTATION OF STATE VOUCHER.
3. INCORPORATED PAGES: This AGREEMENT incorporates the face pages
attached and all of the marked appendices identified on the face page hereof.
<PAGE>
4. EFFECTIVE DATE: This AGREEMENT shall become effective upon the
approval of the Attorney General and Comptroller of the State of New York.
5. SUBCONTRACTING: This AGREEMENT shall be binding upon the parties,
their successors and heirs. Certain responsibilities may be subcontracted
with the written approval of DOCS.
6. STATE OF LAW: This AGREEMENT shall be construed and interpreted in
accordance with the Laws of the State of New York.
7. ACCOUNTING: DOCS shall be entitled to and shall receive from
CONTRACTOR an accounting of its expenditures at the conclusion of the period
of this AGREEMENT.
8. CIVIL-EQUAL-HUMAN RIGHTS: The CONTRACTOR agrees to comply with all
applicable federal, State and local Civil Rights and Human Rights laws with
reference to equal employment opportunities and the provision of services.
9. LATE PAYMENTS: Interest on late payments is governed by State
Finance Law Section 179-m.
10. TERMINATION: This AGREEMENT may be terminated at any time upon
mutual written consent of the DOCS and the CONTRACTOR. Also, the DOCS may
terminate the AGREEMENT immediately, upon written notice of termination to
the CONTRACTOR, if the CONTRACTOR, fails to comply with the terms and
conditions of this AGREEMENT and/or with any laws, rules, regulations,
policies or procedures affecting this AGREEMENT.
<PAGE>
IN WITNESS THEREOF, the parties hereto have executed or approved the
AGREEMENT on the dates below their signatures.
Contract No.
CONTRACTOR STATE AGENCY
CORRECTIONAL SERVICES CORPORATION DEPARTMENT OF CORRECTIONAL SERVICES
By: By:
Name: James F. Slattery Name: Glenn S. Goord
Title: President Title: Commissioner
Date: October , 1998 Date:
AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT,
THE CREDIT AGREEMENT, THE TRUST AGREEMENT
AND OTHER OPERATIVE AGREEMENTS
THIS AMENDMENT NO. 1 (this "Amendment") dated as of October 16,
1998, is by and among CORRECTIONAL SERVICES CORPORATION, a Delaware
corporation (the "Lessee" or the "Construction Agent"); the
various parties listed on the signature pages hereto as
guarantors (subject to the definition of Guarantors in Appendix A
to the Participation Agreement referenced below, individually, a
"Guarantor" and collectively, the "Guarantors"); FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually but solely as the Owner Trustee
under the CSC Trust 1997-1 (the "Owner Trustee" or the
"Lessor"); the various banks and other lending institutions
listed on the signature pages hereto (subject to the definition
of Lenders in Appendix A to the Participation Agreement
referenced below, individually, a "Lender" and collectively,
the "Lenders"); NATIONSBANK, N.A., a national banking
association, as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (in such capacity, the
"Agent"); and the various banks and other lending institutions
listed on the signature pages hereto as holders of certificates
issued with respect to the CSC Trust 1997-1 (subject to the
definition of Holders in Appendix A to the Participation
Agreement referenced below, individually, a "Holder" and
collectively, the "Holders"). Capitalized terms used in this
Amendment but not otherwise defined herein shall have the
meanings set forth in Appendix A to the Participation Agreement
(hereinafter defined).
W I T N E S S E T H
WHEREAS, the parties to this Amendment are parties to that
certain Participation Agreement dated as of March 30, 1998 (the
"Participation Agreement"), certain of the parties to this Amendment
are parties to that certain Credit Agreement dated as of March 30,
1998 (the "Credit Agreement"), certain of the parties to this
Amendment are parties to that certain Trust Agreement dated as of
March 30, 1998 (the "Trust Agreement") and certain of the parties to
this Amendment are parties to the other Operative Agreements relating
to a $20 million tax retention operating lease facility (the
"Facility") that has been established in favor of the Lessee;
WHEREAS, the Lessee has requested certain modifications to the
Participation Agreement, the Credit Agreement, the Trust Agreement and
the other Operative Agreements in connection with the Facility;
WHEREAS, certain of the requested modifications require the
unanimous consent of the Financing Parties;
WHEREAS, the Financing Parties have agreed to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
<PAGE> 1
1. Appendix A to the Participation Agreement shall be amended
to add or modify the following defined terms as follows:
"Holder Commitments" shall mean $600,000; provided, in the
event the Lessee has received at $17,500,000 in proceeds from new
Subordinated Debt during the Interim Period, the term Holder
Commitments shall mean $1,050,000; provided, further, if there shall
be more than one (1) Holder, the Holder Commitment of each Holder
shall be as set forth in Schedule I to the Trust Agreement as such
Schedule I may be amended and replaced from time to time.
"Interim Period" shall mean the period from the date of
this Amendment until the earlier of (i) the date on which Borrower has
received at least $17,500,000 in proceeds from new Subordinated Debt,
or (ii) April 16, 1999.
"Lender Commitments" shall mean $19,400,000; provided, in
the event the Lessee has received at least $17,500,000 in proceeds
from new Subordinated Debt during the Interim Period, the term Lender
Commitments shall mean $33,950,000; provided, further, if there shall
be more than one (1) Lender, the Lender Commitment of each Lender
shall be as set forth in Schedule 1.1 to the Credit Agreement as such
Schedule 1.1 may be amended and replaced from time to time.
"Subordinated Debt" means any Indebtedness of a Credit
Party which by its terms is expressly subordinated in right of payment
to the prior payment of the obligations under the Lessee Credit
Agreement and the other Credit Documents (as defined in the Lessee
Credit Agreement) on terms and conditions satisfactory to the Majority
Lenders.
2. Notwithstanding any provision in any Operative Agreement to
the contrary, during the Interim Period, the Applicable Percentage for
Eurodollar Loans shall be equal to 3.00%, the Applicable Percentage
for ABR Loans shall be 1.5%, the Eurodollar Holder Advance Applicable
Percentage shall be equal to 3.75% and the ABR Holder Advance
Applicable Percentage shall be 2.25%.
3. If the Lessee receives at least $17,500,000 in proceeds from
new Subordinated Debt during the Interim Period, Schedule 1.1 of the
Credit Agreement shall be deemed amended and restated in its entirety
on the Business Day following confirmation by the Agent that such
proceeds have been received to read as Schedule 1.1 attached hereto
and Schedule I of the Trust Agreement shall be deemed amended and
restated in its entirety on the Business Day following confirmation by
the Agent that such proceeds have been received to read as Schedule I
attached hereto.
4. As of the effective date of this Amendment, the Loans shall
no longer be amortized, all Loans shall be due and payable in full on
the Expiration Date, and Schedule 2 to the Participation Agreement
shall be amended and restated in its entirety to read as Schedule 2
attached hereto.
5. This Amendment shall be effective upon satisfaction of the
following conditions:
(a) execution of this Amendment by the Credit Parties and
the Lenders; and
(b) receipt by the Agent of legal opinions of counsel to
the Credit Parties relating to this Amendment in form and substance reasonably
satisfactory to the Agent.
6. Except as modified hereby, all of the terms and provisions
of the Operative Agreements (including Schedules and Exhibits) shall
remain in full force and effect.
<PAGE> 2
7. The Borrower agree to pay all reasonable costs and expenses
of the Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the
reasonable fees and expenses of Moore & Van Allen, PLLC.
8. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original and it shall not be necessary in making proof of
this Amendment to produce or account for more than one such
counterpart.
9. This Amendment shall be deemed to be a contract made under,
and for all purposes shall be construed in accordance with the laws of
the State of Florida.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of
the date first above written.
CORRECTIONAL SERVICES CORPORATION, as
the Construction Agent, as the Lessee
and as a Tranche A Guarantor
By:
Name:
Title:
ESMOR NEW JERSEY, INC., as a Guarantor
By:
Name:
Title:
CSC MANAGEMENT DE PUERTO RICO, INC.,
as a Guarantor
By:
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, except
as expressly stated herein, but
solely as the Owner Trustee under the
CSC Trust 1997-1
By:
Name:
Title:
<PAGE> 4
NATIONSBANK, N.A., as a Holder, as a
Lender and as the Agent
By:
Name:
Title:
SOUTH TRUST BANK, NATIONAL
ASSOCIATION, as Lender and Holder
By:
Name:
Title:
BANQUE PARIBAS, as Lender
By:
Name:
Title:
By:
Name:
Title:
SUMMIT BANK, as Lender
By:
Name:
Title:
<PAGE> 5
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment") dated as of October 16, 1998,
to the Credit Agreement referenced below, is by and among CORRECTIONAL
SERVICES CORPORATION, a Delaware corporation, the subsidiaries and affiliates
identified herein, the lenders identified herein, and NATIONSBANK, N.A., as
Administrative Agent. Terms used but not otherwise defined shall have the
meanings provided in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $10 million credit facility has been established in favor of
CORRECTIONAL SERVICES CORPORATION, a Delaware corporation (the "Borrower"),
pursuant to the terms of that Credit Agreement dated as of March 30, 1998 (as
amended and modified, the "Credit Agreement") among the Borrower, the
Guarantors and Lenders identified therein, and NationsBank, N.A., as
Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement in connection therewith;
WHEREAS, certain of the requested modifications require the unanimous
consent of the Lenders;
WHEREAS, the Lenders have agreed to the requested modifications on the
terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Section 1.1 shall be amended to add or modify the following
defined terms as follows:
"Aggregate Revolving Committed Amount" means, (i) during the
Interim Period, TWENTY-SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($27,500,000), and (ii) after the Interim Period, TEN MILLION DOLLARS
($10,000,000); provided, in the event Borrower has received at least
$17,500,000 in proceeds from new Subordinated Debt during the Interim Period,
the term Aggregate Revolving Committed Amount after the Interim Period means
TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($12,500,000).
"Borrowing Base" means, as of any day, the sum of (a) eighty-
five percent (85%) of Eligible Receivables for the Consolidated Group plus
(b)(i) during the Interim Period, $17,500,000, and (ii) after the Interim
Period, $0.
"Interim Period" shall mean the period from the date of this
Amendment until the earlier of (i) the date on which Borrower has received at
least $17,500,000 in proceeds from new Subordinated Debt, or (ii) April 16,
1999.
2. As of the effective date of this Amendment, the financial
covenants of Section 7.9 are amended and modified to read as follows:
<PAGE> 1
"7.9. Financial Covenants.
(a) Consolidated Net Worth. As of the end of each fiscal
quarter, Consolidated Net Worth shall be not less than the sum of $30,000,000
plus on the last day of each fiscal quarter (commencing with the fiscal
quarter ending December 31, 1997), ninety percent (90%) of Consolidated Net
Income for the fiscal quarter then ended, such increases to be cumulative and
without deductions for losses, if any, plus one hundred percent (100%) of the
net proceeds from Equity Transactions occurring after the Closing Date.
(b) Consolidated Senior Leverage Ratio. As of the end of each
fiscal quarter to occur during the periods shown, the Consolidated Senior
Leverage Ratio shall be not greater than:
Closing Date through December 31, 1998 3.5:1.0
January 1, 1999 through December 31, 1999 3.25:1.0
January 1, 2000 and thereafter 3.0:1.0
(c) Consolidated Total Leverage Ratio. As of the end of each
fiscal quarter to occur during the periods shown, the Consolidated Total
Leverage Ratio shall be not greater than:
Closing Date through December 31, 1998 4.25:1.0
January 1, 1999 and thereafter 4.0:1.0
(d) Consolidated Debt to Capitalization Ratio. As of the end of
each fiscal quarter, the Consolidated Debt to Capitalization Ratio shall be
not greater than seventy percent (70%).
(e) Consolidated Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Fixed Charge Coverage Ratio shall be not
less than 1.5:1.0.
(f) Capital Expenditures. Capital Expenditures for the
Consolidated Group shall not exceed $35,000,000 in any fiscal year.
(g) Current Ratio. As of the end of each fiscal quarter, the
ratio of Current Assets to Current Liabilities shall be not less than 1.3 to
1.0."
3. Schedule 2.1(a) of the Credit Agreement is hereby amended and
restated in its entirety to read as Schedule 2.1(a) attached hereto.
4. Notwithstanding any provision in the Credit Agreement to the
contrary, during the Interim Period the Applicable Percentage for Eurodollar
Loans shall be equal to 3.00% and the Applicable Percentage for Base Rate
Loans shall be equal to 1.50%.
5. In the event that the Borrower has not received at leased
$17,500,000 in proceeds from new Subordinated Debt during the Interim Period,
all outstanding Obligations in excess of the lesser of $10,000,000 or the
Borrowing Base, together with any interest thereon, shall be due and payable
in full on the first Business Day after the end of the Interim Period.
6. This Amendment shall be effective upon satisfaction of the
following conditions:
(a) execution of this Amendment by the Credit Parties and the
Lenders; and
<PAGE> 2
(b) receipt by the Administrative Agent of legal opinions of
counsel to the Credit Parties relating to this Amendment in form and
substance reasonably satisfactory to the Administrative Agent.
7. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (including Schedules and Exhibits) shall remain in full force
and effect.
8. The Borrower agree to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the reasonable fees
and expenses of Moore & Van Allen, PLLC.
9. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.
10. This Amendment shall be deemed to be a contract made under, and
for all purposes shall be construed in accordance with the laws of the State
of Florida.
[Remainder of Page Intentionally Left Blank]
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: CORRECTIONAL SERVICES CORPORATION,
a Delaware corporation
By: /s/ Ira Cotler
Name: Ira Cotler
Title: EVP/CFO
GUARANTORS: ESMOR NEW JERSEY, INC.,
a New Jersey corporation
By: /s/ Ira Cotler
Name: Ira Cotler
Title: Attorney-In-Fact
CSC MANAGEMENT DE PUERTO RICO, INC.,
a Puerto Rico corporation
By: /s/ Ira Cotler
Name: Ira Cotler
Title: CFO
<PAGE>
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Administrative Agent
By: /s/ Joseph Caballero
Name: Joseph Caballero
Title: Vice President
<PAGE>
BANQUE PARIBAS, as Lender
By: /s/ Duane Helkowski
Name: Duane Helkowski
Title: Vice President
By: /s/ Sean Reddington
Name: Sean Reddington
Title: Vice President
<PAGE>
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, as Lender
By: /s/ Mark R. Wellner
Name: Mark R. Wellner
Title: Group Vice President
<PAGE>
SUMMIT BANK, as Lender
By: /s/ Lisa Cohen
Name: Lisa Cohen
Title: Vice President
DEPARTMENT OF JUVENILE JUSTICE
Service Agreement for
Paulding Regional Youth Detention Center
Service Agreement Number 461-030-021203
Service Agreement made this 21st day of July, 1998, by and between Georgia
Department of Juvenile Justice ("DJJ") and Correctional Services Corporation
("Contractor").
WHEREAS, the Georgia Department of Administrative Services ("DOAS") is charged
with the responsibility of procuring goods and services on behalf of state
agencies, such ad DJJ, pursuant to OCGA Section 50-5-50 et seq.; and
WHEREAS, DJJ is charged by law to provide for the supervision, detention and
rehabilitation of juvenile delinquents committed to the State's custody
pursuant to OCGA Section 49-4A1 et. seq.; and
WHEREAS, DJJ has caused Request for Proposals Number 461-030-021203 (the
"RFP") to be issued through DOAS, soliciting proposals for the management of a
youth development campus as specified in the RFP; and
WHEREAS, the State of Georgia has received from Contractor a proposal in
response to the RFP ("Contractor's Proposal"); and
WHEREAS, Contractor's Proposal was deemed to be the proposal most advantageous
to the State;
NOW THEREFORE, in consideration of the mutual covenants and promised continued
herein, the parties agree as follows:
1. Scope of Services
-----------------
Contractor agrees to provide all of the goods, services and other
deliverables and to undertake all of the obligations as required and set forth
in the RFP, plus those goods, services and deliverables as may additionally be
described and provided for in Contractor's Proposal (collectively, the
"Services").
2. Inspection of Work Performed
----------------------------
DJJ or its authorized representative shall have the right to enter into
the premises of Contractor and/or all subcontractors, or any places where
duties under this service Agreement are being performed, to inspect, monitor,
or otherwise evaluate the delivery or performance of the Services.
3. Quality of Work
---------------
Contractor is responsible for the professional quality of the Services
and timely provision and completion of same. Contractor warrants that any
work performed pursuant to this Service Agreement shall be performed in
accordance with all of the requirements of the RFP and in a manner consistent
with that level of care and skill ordinarily exercised by other providers of
similar services under similar circumstances. All Services provided by
Contractor pursuant to this Service Agreement shall be in conformance with and
pursuant to all applicable local, state and federal rules, statues and
regulations.
4. Facility and Equipment
----------------------
A. Contractor shall maintain and provide all equipment specified in
Contractor's proposal and shall maintain and repair the facility (all grounds,
buildings and other improvements) which is the subject of the RFP in good
condition.
<PAGE> 1
B. DJJ may, from time to time, provide Contractor with certain
personal property for use in connection with Contractor's performance of the
Services under this Service Agreement ("DJJ property"). Contractor
acknowledges that, for the duration of this Service Agreement, such DJJ
property shall be in the custody and control of Contractor, and Contractor
therefore agrees to be responsible for and maintain any and all DJJ property
in accordance with the following terms and conditions:
1) All DJJ property provided to the Contractor will remain the
property of the State of Georgia and the DJJ and is subject to the rules and
regulations of DJJ throughout the life and disposition of said property.
Notwithstanding the fact that DJJ property shall remain the property of the
State of Georgia and DJJ, Contractor acknowledges that the DJJ property shall
be in the custody, control and care of Contractor for the duration of the
Service Agreement. Contractor therefore agrees to assume all risks of loss
for such DJJ property and to protect such DJJ property against destruction or
damage due to theft and casualty losses.
2) Contractor will adhere to all policies and procedures as
promulgated in the DJJ Administrative Policy and Procedures Manual, Part XIX,
Personal Property Management and the Vehicle Management Manual, which a re by
reference made a part of this Service Agreement.
3) A physical inventory of all DJJ property shall be taken by the
Contractor and the results reconciled with the inventory of DJJ. Any
difference(s) between quantities determined by the physical inspection and
those in the accounting records of Contractor shall be investigated to
determine the cause(s) of the difference(s). The Contractor shall, in
connection with the inventory, verify the existence, current utilization and
continued need for the DJJ property.
4) Contractor shall maintain an effective control system to ensure
adequate safeguards to prevent loss, damage or theft of the DJJ property. Any
loss, damage or theft of DJJ property shall be investigated and fully
documented, and Contractor shall promptly notify DJJ of such loss, damage or
theft, attention DJJ Office of Financial Services Section, on Form #5086,
Equipment Status Change Form.
5) Contractor shall implement and continue to perform adequate
maintenance procedures to keep the DJJ property in good condition.
6) The DJJ property cannot be transferred or otherwise disposed of
without written approval from the DJJ Inventory Unit. Upon termination of
this Service Agreement for any reason, including non-renewal, the Contractor
shall account for all DJJ property and DJJ shall dispose of such property in
accordance with applicable State regulations.
7) Contractor shall notify DJJ in writing within two (2) business
days of any loss or damage to any DJJ property and the reasons for such loss
or damage. Contractor shall be responsible for replacing or repairing any and
all of such DJJ property which is destroyed, damaged, stolen or otherwise
subject to loss. DJJ shall, in its sole discretion, determine whether any DJJ
property will be replaced or repaired by Contractor, and whether any
replacement or repair made by Contractor is sufficient.
8) With regard to any supplies or equipment required to be
furnished by Contractor, if Contractor at any time refuses to provide such
supplies or equipment, DJJ may (in addition to any other legal, equitable or
contractual remedies), after forty-eight (48) hours written notice to
Contractor, proceed to take any one or more of the following actions:
a. Withhold any monies then or next due to Contractor; or
b. Provide such materials, supplies and equipment as may be
necessary and deduct the amount so paid from any money then or thereafter due
Contractor.
C. With respect to the administration, operation and maintenance of
motor vehicles (and associated vehicular equipment) provided to Contractor by
the State (hereinafter collectively "State vehicles"), Contractor acknowledges
and agrees that during the period said State vehicles are in the care, custody
and control of Contractor, Contractor shall assume all risk of loss and
damages to said State vehicles, and furthermore:
1) Contractor shall operate such State vehicles at the lowest
possible costs, provide maximum availability of safe and serviceable
equipment, and shall properly operate and maintain State vehicles to ensure
economical service life. In the performance of this Service Agreement,
Contractor shall adhere to administrative, operational and maintenance
requirements as stated in the State Vehicle Management Manual, and any
amendments issued thereto and to submit reports as required.
<PAGE> 2
2) Contractor shall complete and submit to DJJ the Utilization and
Data Report furnished by DJJ.
3) Contractor shall ensure that adequate funds are available within
this Service Agreement budget to ensure minimum maintenance standards as
required in the State Vehicle Management Manual.
5. Admissions
----------
Contractor shall accept all youth referred for admission by DJJ, in
accordance with requirements of the RFP.
6. Contractor Personnel/Staffing Requirements
------------------------------------------
A. Contractor warrants that all persons assigned by it to perform work
under this Service Agreement shall be employees or authorized subcontractors
of Contractor and shall be fully qualified, as required in the RFP and
specified in Contractor's proposal, to perform the work required herein.
Personnel commitments made in Contractor's Proposal shall not be changed
unless approved by DJJ. Staffing will include the named individuals at the
levels of effort proposed.
B. Contractor shall provide and maintain sufficient qualified
personnel and staffing to enable the Services to be performed in strict
accordance with the specifications required in the RFP and the staffing
assignments set forth in Contractor's Proposal. Contractor warrants that
Contractor will comply with all staffing/personnel obligations set out in the
RFP, including but not limited to those pertaining to security, health and
safety issues.
C. If any persons (whether employees of Contractor or subcontractors)
assigned to perform any work under this Service Agreement violated any of the
security, personnel or other requirements of the RFP, or otherwise act or fail
to act, thereby posing a potential threat to any of the youths, such person
shall be prohibited from performing any work under this Service Agreement. In
the event that the foregoing necessitates the removal of any persons assigned
by Contractor to perform any work under this Service Agreement, Contractor
will cover such removed person' s duties with appropriate temporary personnel
until a full time replacement meeting all of the requirements of the RFP can
be hired, which shall be done within 60 (sixty) days from the date of removal
of the removed person.
D. Contractor agrees that the DJJ Law Enforcement Unit, upon the
request of the Commissioner or his designee, has full authority to investigate
any allegation of misconduct in performance of duties arising from this
Service Agreement against any person working at the direction of or on behalf
of Contractor. Contractor agrees to cooperate fully in such investigations by
providing the DJJ Law Enforcement Unit full access to its records and by
allowing all persons performing work under this Service Agreement to be
interviewed during such investigations.
E. Should Contractor at any time 1) refuse or neglect to supply
adequate and competent supervision, or sufficiently and properly
skilled/trained personnel or equipment of the proper quality or quantity, or
2) fail in any respect to perform work with promptness and diligence, or fail
in the performance of any Agreement on its part contained in this Service
Agreement, DJJ may (in addition to any other legal, equitable or contractual
remedies), after forty-eight (48) hours written notice to Contractor, proceed
to take any one or more of the following actions:
a. Withhold any monies then or next due to Contractor; or
b. Provide such materials, supplies, equipment, and labor as may
be necessary to complete said work, pay for same, and deduct the amount so
paid from any money then or thereafter due Contractor.
7. Contractor's Relationship with Youths Under Supervision
-------------------------------------------------------
Relationships between Contractor' s personnel or any other person
assigned to perform work under this Service Agreement and the youths under
their care and supervision shall be strictly professional at all times.
Contractor is expected to treat youths under its care and supervision, and the
families of such youths, with respect and courtesy, exercising patience and
discretion in carrying out business on behalf of the DJJ. Contractor will
respect and protect the civil and legal rights of such youths. Contractor is
prohibited from using its official position to develop or secure privileges or
personal gains for itself or others, and from engaging in any activities that
may give the appearance of being a conflict of interest for DJJ. Contractor
must neither offer nor accept from any youth any gift, loan or special favor
which might suggest more favorable treatment than afforded other youths.
<PAGE>
It is considered improper for any of Contractor' s personnel to become
personally, romantically or sexually involved with any youths under the care
and supervision of DJJ and Contractor. Staff (DJJ and Contractor' s staff)
shall report to the immediate supervisor without reservation any written
correspondence or unethical behavior that could adversely affect the integrity
of staff, DJJ or any of the youths under their care and supervision.
Additional information on this subject may be obtained by referring to DJJ
Policy and Procedure Manual Chapter 2, Policy 2.1B-Sexual Harassment, and J.2-
Relationships with fellow employees, and Chapter 17, Policies 17.2-Reporting
Abuse and Neglect, and 17.3-Reporting Special Incidents, and, DJJ
Administrative Policy and Procedures Manual, Part I.D.6.
8. Subcontracts/Assignments
------------------------
Performance under this Service Agreement shall not be assigned or
subcontracted without the prior written consent of DJJ. No subcontractor
which Contractor enters into with respect to performance under this Service
Agreement shall in any way relieve Contractor of any responsibility for any
performance required of Contractor by this Service Agreement. Contractor
shall give DJJ immediate notice in writing by registered or certified mail of
any action or suit filed against it by any subcontractor, and prompt notice of
any claim made against Contractor by any subcontractor or vendor which may
result in litigation.
9. Compensation/Payment
--------------------
For and in consideration of the Services to be performed pursuant to
this Service Agreement, DJJ shall compensate Contractor in the amounts
specified in Contractor' s Proposal. Contractor shall submit monthly invoices
in accordance with the RFP which shall contain, at a minimum, 1) the number of
youths treated and 2) the number of days each of the youths was treated. DJJ
reserves the right to require that additional information be included in any
invoices. Said monthly invoices may be paid by DJJ within thirty (30) days of
approval by DJJ.
10. Termination
-----------
(A) DJJ reserves the right to terminate this Service Agreement, in its
sole discretion, for any reason, upon giving sixty (60) days written notice to
Contractor. All records in the possession, custody or control of Contractor,
as they relate to the Deliverables provided under this Service Agreement, are
the property of the State of Georgia and will be returned to the State of
Georgia at the request of the State at no cost within fifteen (15) days of
termination of this Service Agreement. In the event that the written notice
of termination pursuant to this section stated that termination is for the
convenience of DJJ, Contractor shall be entitled to payment for 1) reasonable
costs incurred through the date of the notice of termination (not the
effective date of termination) and 2) charges for Services rendered to DJJ
through the effective date of termination but only to the extent that funds
designated for the Services are available to make payment.
(B) In the event that Contractor breaches any term or condition of the
Service Agreement or any other event occurs which demonstrates a reasonable
likelihood that Contractor is unable or unwilling to fulfill its obligations
under this Service Agreement, DJJ shall be entitled to immediately termination
this Service Agreement. In the alternative, DJJ, in its sole discretion, may,
upon request from Contractor, provide Contractor with 20 days written notice
that Contractor may avoid termination of the Service Agreement by curing, to
the satisfaction of DJJ, the breach(es) identified in the written notice
within a specified period not to exceed twenty (20) days. The determination
of DJJ as to the appropriateness of allowing Contractor an opportunity to
cure, and as to the time allowed for any such cure, shall be conclusive, based
on consideration of the circumstances of the breach; on the consequences of
the breach as to security and other critical aspects of operations, and, on
the time constraints existing at the time of such breach. Any allowance of an
opportunity to Contractor to cure a specific breach shall not operate as a
waiver by DJJ of its right to refuse such an opportunity to cure in the event
of any other breach, and shall not establish any course of dealing or
performance between the parties.
This Service Agreement shall, in any event, be immediately terminated
in the event that any of the following occurs:
1. Contractor becomes insolvent or liquidation or dissolution of
Contractor begins;
2. A voluntary or involuntary bankruptcy petition is filed by or
against Contractor under the U.S. Bankruptcy Code or any similar petition
under any state insolvency law;
3. An assignment is made by Contractor for the benefit of creditors;
or
<PAGE> 4
4. A proceeding for the appointment of a receiver, custodian,
trustee or similar agent are initiated with the respect to Contractor.
11. Term
----
This Service Agreement shall commence on July 21, 1998, and shall
continue until and through the date that the funds initially encumbered are
exhausted, but, in any event, shall terminate no later than the end of the
current State fiscal year. The written determination of DJJ as to the
exhaustion of the encumbered funds shall be conclusive. If this Service
Agreement continues until the end of the current fiscal year, DJJ shall have
the option, exercisable in its sole discretion, to renew this Service
Agreement, on a year-to-year basis, upon the same terms and conditions, for up
to ten (10) additional periods of one (1) fiscal year each.
12. Funding
-------
Notwithstanding any other provision of this Service Agreement, the
parties hereto acknowledge that DJJ, as an agency of the State of Georgia, is
prohibited from pledging the State' s credit. In the event that the source of
payment for the total obligation no longer exists or is insufficient with
respect to the Services, this Service Agreement shall terminate without
further obligation of DJJ as of that moment. The determination of DJJ of the
events above shall be conclusive.
13. Contractor Accounting Requirements
----------------------------------
Contractor agrees to maintain books, records, documents, and other
evidence pertaining to the costs and expenses of this Service Agreement
(collectively the "Records") to the extent and in such detail as will properly
reflect all costs for which payment is claimed under the provisions of this
Service Agreement. Contractor's accounting procedures and practices shall
conform to GAAP and the costs properly applicable to the Service Agreement
shall be readily ascertainable thereform.
14. Records Retention
-----------------
Contractor agrees to make available at all reasonable times during the
period set forth below any of the Records of the contracted work for
inspection or audit by any authorized representative of DOAS or the Georgia
State Auditor. Contractor shall preserve and make available its Records for a
period of five (5) years from the date of final payment under this Service
Agreement, and for such period, if any, as is required by applicable statute,
by any other paragraph of the RFP or this Service Agreement. If the Service
Agreement is completely or partially terminated, the Records relating to the
work terminated shall be preserved and made available for a period of five (5)
years from the date of any resulting final settlement. Records which relate
to appeals, litigation, or the settlements of claims arising out of the
performance of this Service Agreement, or costs and expenses of any such
agreement as to which exception has been taken by the State Auditor or any of
his duly authorized representatives, shall be retained by Contractor until
such appeals, litigation, claims or exceptions have been disposed of.
15. Compliance With All Applicable Laws and Standards
-------------------------------------------------
In the performance of all work under this Service Agreement, Contractor
shall comply with any and all laws and ordinances, and any and all rules,
regulations and orders of public authorities hereto, whether federal, state or
local. Contractor shall also comply with all applicable standards, policies
and guidelines of the DJJ, or of any other organization or agency which govern
the operations of the DJJ, including but not limited to those specified in the
RFP.
16. Insurance
---------
The following insurance coverages shall be obtained and maintained by
Contractor throughout the duration of the Service Agreement. Except as
otherwise expressly provided herein, all policies must be on an "occurrence"
basis. All policies shall provide that Contractor and its insurer)s) waive
any right of subrogation against DJJ and the State of Georgia.
A. Insurance Certificate
---------------------
Contractor shall procure and maintain insurance which shall protect
the Contractor and the State from any claims for bodily injury, property
damage, or personal injury which may arise out of operations under the Service
Agreement. Contractor shall procure the insurance policies at the
Contractor' s own expense and shall furnish the State an insurance certificate
listing the State as certificate holder. The insurance certificate must
<PAGE> 5
document that the liability insurance coverage purchased the Contractor
includes contractual liability coverage to protect the State.
In addition, the insurance certificate must provide the following information:
1. Name and address of authorized agent,
2. Name and address of insured,
3. Name of insurance company (licensed to operate in Georgia),
4. Description of coverage in standard terminology,
5. Policy period,
6. Limits of liability,
7. Name and address of certificate holder,
8. Acknowledgment of notice of cancellation to the State,
9. Signature of authorized agent,
10. Telephone number of authorized agent,
11. Details of policy exclusions in comments section of Insurance
Certificate.
B. Contractor also agrees to provide an insurance certificate to
document that the following types of insurance coverage have been purchased by
the Contractor:
1. Workers' Compensation Insurance (Occurrence) in the amounts of
the statutory limits as established by the General Assembly of the State of
Georgia. (A self-insurer must submit a certificate from the Georgia Board of
Workers' Compensation stating the Contractor qualifies to pay its own workers'
compensation claims.) In addition, Contractor shall require all
subcontractors occupying the premises or performing work under this Service
Agreement to obtain an insurance certificate showing proof of Workers'
Compensation Coverage.
2. Commercial General Liability Policy (Occurrence), to include
contractual liability. The Commercial General Liability Policy shall have
dollar limits sufficient to insure that there is no gap in coverage between
this policy and the Commercial Umbrella Policy required in this Service
Agreement.
3. Business Auto Policy (Occurrence), to include but not be
limited to any owned, non-owned and hired auto liability. The Business
Automobile Policy shall have dollar limits sufficient to insure that there is
no gap in coverage between this policy and the Commercial Umbrella Policy
required in this Service Agreement.
4. Commercial Umbrella Policy (Occurrence), which must provide the
same or broader coverages than those provided for in the above Commercial
General Liability and Business Auto Policies. Policy limits for the
Commercial Umbrella Policy shall have an annual aggregate limit of $5,000,000.
5. Professional Liability Policy (Claims Made). Policy limits
shall have an annual aggregate limit of $3,000,000. This policy (and any
required tail coverages) must provide and maintain a retroactive date to the
date on which the Service Agreement commences. When the Service Agreement is
terminated or otherwise expires, the Contractor must provide a four year tail
for reporting claims.
The foregoing policies shall contain a provision that coverage afforded
under the policies will not be canceled, or not renewed or allowed to lapse
for any reason until at least thirty (30) days prior written notice has been
given to DJJ. Certificates of Insurance showing such coverage to be in force
shall be filed with DJJ prior to commencement of any work under this Service
Agreement. The foregoing policies shall be obtained from insurance companies
licensed to do business in Georgia and shall be with companies acceptable to
DJJ. It shall be the responsibility of Contractor to require any
subcontractor to secure the same insurance coverage prescribed herein for the
Contractor, and to obtain a certificate or certificates evidencing that such
insurance is in effect. In addition, Contractor shall indemnify and save
harmless DJJ from any liability arising out of Contractor' s or subcontractor's
untimely failure in securing adequate insurance coverage as prescribed herein.
All such coverage shall remain in full force and effect during the initial
term of the Service Agreement and any renewal or extension thereof.
<PAGE> 6
17. Indemnification
---------------
Contractor hereby waives, releases, relinquishes, discharges and agrees
to indemnify, protect and save harmless the State of Georgia (including the
State Tort Claims Trust Fund), DJJ, DOAS, their officers and employees
(collectively "Indemnitees") of and from any and all such claims, demands,
liabilities, loss, costs or expenses for any loss or damage for bodily injury
(including but not limited to death), personal injury and property damage
caused by any act or omission of Contractor or any other party acting on
behalf of Contractor (collectively, the "Indemnity Claims").
This indemnification shall apply notwithstanding the fact that the
Indemnitees, or any of them, may be partially responsible for the situation
giving rise to the claim. However, Contractor shall only be liable to the
extent of Contractor's contribution to such situation. This indemnification
applies notwithstanding the fact that an Indemnity Claim results in a monetary
obligation that exceeds any contractual commitment.
This indemnification extends to the successors and assigns of the
Contractor, and this indemnification and release survives the termination of
this Service Agreement and shall also survive the dissolution or, to the
extent allowed by law, the bankruptcy of the Contractor.
If and to the extent such damage or loss as covered by this
indemnification is covered by the State Tort Claims Fund or any other self-
insurance funds maintained by the Department of Administrative Services
(collectively, the "Funds"), the Contractor agrees to reimburse the Funds for
such funds paid out by the Funds. To the full extent permitted by the
Constitution and the laws of the State of Georgia and the terms of the Funds,
the Contractor and its insurers waive any right of subrogation against the
State of Georgia, the Indemnitees, and the Funds and insurers participating
thereunder, to the full extent of this indemnification.
Contractor shall, at its expense, procure the insurance policies
required by this Service Agreement, in coverage amounts as specified in this
Service Agreement, with endorsements waiving rights of subrogation against the
State, the Indemnitees, the Funds and insurers participating thereunder.
Contractor shall, at its expense, be entitled to and shall have the duty
to participate in the defense of any suit against the Indemnitees. No
settlement or compromise of any claim, loss or damage asserted against
Indemnitees shall be binding upon Indemnitees unless expressly approved by the
Indemnitees.
18. Confidentiality
---------------
Contractor acknowledges that all material and information which has or
will come into its possession or knowledge in connection with this Service
Agreement, or the performance hereof, may consist of confidential and private
information, the disclosure of which to or use by third parties may be
damaging. Contractor therefore agrees to hold such material and information
in strictest confidence, not to make use thereof other than for the
performance under this Service Agreement, and not to release or disclose any
information to any other party except as may be authorized by law.
19. Drug-Free Workplace
-------------------
Contractor hereby certifies as follows:
A. Contractor will not engage in the unlawful manufacture, sale,
distribution, dispensation, possession, or use of a controlled substance or
marijuana during the performance of this Service Agreement.
B. If Contractor has more than one employee, including Contractor,
Contractor shall provide for such employees a drug-free workplace, as defined
under Official Code of Georgia Annotated ("OCGA") Sections 50-24-2(5) and 50-
24-3(b), throughout the duration of this Service Agreement.
C. Contractor will secure from any subcontractor hired to work in a
drug-free workplace the following written certification:
As part of the subcontracting agreement with (Contractor's Name),
(Subcontractor's Name) certifies to Contractor that a drug-free workplace will
be provided for the subcontractor's employees during the performance of this
Service Agreement pursuant to paragraph 7 of subsection B of ODGA Section
50-24-3.
Contractor may be suspended, terminated, or debarred if it is determined
that:
1. Contractor has made false certification hereinabove; or
2. Contractor has violated such certification by failure to carry
out the requirements of Official Code of Georgia Section 50-24-3.
<PAGE> 7
20. Taxes
-----
Contractor will forthwith pay all taxes lawfully imposed upon it with
respect to this Service Agreement. By this paragraph, DJJ makes no
representation whatsoever as to the liability or exemption from liability of
Contractor to any tax imposed by any governmental entity.
21. Inclusion Of Documents
----------------------
The RFP (and any documents referenced therein) and Contractor's Proposal
*including any best and final offer) are incorporated into this Service
Agreement by reference and form an integral part; of this Service Agreement.
In the event of a conflict between the language of the RFP and the
Contractor's Proposal, the language in the RFP shall govern. In the event of
a conflict between the language of this Service Agreement and any other
document or instrument incorporated herein, the language of this Service
Agreement shall govern.
22. Georgia Vendor Manual
---------------------
The provisions of the Georgia Vendor Manual are incorporated herein by
reference and made a part hereof just as if it had been fully set out herein.
23. Cooperation With Other Vendors
------------------------------
In the event that DJJ enters into any agreement at any time with any
other vendor(s)for additi9onal work related to the Services, Contractor agrees
to cooperate fully with such other vendors in order to facilitate the
performance of work and/or provision of deliverables by such other vendors and
to refrain from any activity which would interfere with the performance of
work and/or provision of deliverables by such other vendor.
24. Trading With State Employees
----------------------------
The parties certify that this Service Agreement does not and will not
violate the provisions of Official Code of Georgia Annotated Section 45-10-20
et seq. in any respect.
25. Relationship Of The Parties
---------------------------
Neither Contractor nor any of its agents, servants, or employees shall
become or be deemed to become agents, servants, or employees of DJJ or the
State of Georgia. Contractor and all such agents, servants, and employees
shall, for all purposes, be deemed to be independent contractors; and this
Service Agreement shall not be construed so as to create any partnership,
joint venture or landlord/tenant relationship between the Contractor and the
State of Georgia and Contractor has no property interest whatsoever in any
state property (real or personal) by performing the Services under this
Service Agreement.
26. Notices
-------
All notices under this Service Agreement shall be deemed duly given:
Upon delivery, if delivered by hand (against receipt); or three days after
posting, if sent by Registered or Certified Mail, Return Receipt Requested; to
a party hereto at the address set forth below or to such other address as a
party may designate by notice pursuant hereto.
Contractor: Correctional Services Corporation
Attn: James F. Slattery, President
1819 Main Street, Suite 1000
Sarasota, FL 34236
DJJ: Department of Juvenile Justice
Attn: Gail J. Love, Deputy Commissioner
Office of Business Services
2 Peachtree Street
Atlanta, GA 30303-3139
<PAGE> 8
27. Severability
------------
If any term or provision of this Service Agreement shall be found to be
illegal or unenforceable then, notwithstanding the offending term or
provision, this Service Agreement shall remain in full force and effect and
such term or provision shall be deemed stricken herefrom.
28. Time Of The Essence
-------------------
Time is of the essence in this Service Agreement. Any reference to
"days" shall be deemed calendar days unless otherwise specifically stated.
29. Publicity
---------
Any publicity given to the program or the Services provided pursuant to
this Service Agreement, including, but not limited to, notices, information
pamphlets, press releases, signs, reports and other public notices prepared by
or for Contractor shall identify DJJ as a sponsoring agency and shall not be
released prior to approval by DJJ.
30. Headings
--------
The paragraph headings used in this Service Agreement are for reference
purposes only and shall not be deemed a part of this Service Agreement.
31. Authority
---------
DOAS has full power and authority to sign this Service Agreement on
behalf of DJJ pursuant to O.C.G.A. Section 50-5-50 et. seq. Contractor has
full power and authority to enter into and perform this Service Agreement and
the person signing on behalf of Contractor has full power and has been
properly authorized and empowered to enter into this Service Agreement on
behalf of Contractor and to bind Contractor to the terms of this Service
Agreement. Each party further acknowledges that it has read this Service
Agreement, understands it, and agrees to be bound by it.
32. Service Agreement Execution
---------------------------
Signature of the Service Agreement by the State of Georgia shall not be
deemed to be an execution of the Service Agreement; rather, execution of the
Service Agreement shall be deemed contingent and subject to defeasance by the
processes set forth in the Georgia Vendor Manual. Only upon the exhaustion
and/or termination of the procurement processes as set forth in the Georgia
Vendor Manual shall the Service Agreement be deemed executed.
33. Parties Bound
-------------
This Service Agreement shall be binding on and inure to the benefit of
the parties to this Service Agreement and their respective heirs, executors,
administrators, legal representatives, successors, and assigns.
34. Survival Of Representations
---------------------------
The terms, provisions, representations and warranties contained in this
Service Agreement shall survive the delivery of all components procured
hereunder and the payment of the purchase price therefor.
35. Choice of Law
-------------
This Service Agreement shall be governed in all respects by the Laws of
the State of Georgia.
36. Amendments In Writing
---------------------
No amendment to this Service Agreement shall be effective unless it is
in writing and signed by duly authorized representatives of the parties.
NO REPRESENTATION, REQUEST, INSTRUCTION, DIRECTIVE OR ORDER, MADE OR
GIVEN BY ANY OFFICIAL OF ANY AGENCY OF THE STATE OF GEORGIA, WHETHER VERBAL OR
WRITTEN, SHALL BE EFFECTIVE TO AMEND THIS AGREEMENT OR EXCUSE OR MODIFY
PERFORMANCE HEREUNDER UNLESS REDUCED TO A FORMAL AMENDMENT AND EXECUTED AS SET
FORTH ABOVE. SERVICE AGREEMENT OR SHALL NOT BE ENTITLED TO RELY ON ANY SUCH
REPRESENTATION, REQUEST, INSTRUCTION, DIRECTIVE OR ORDER AND SHALL NOT, UNDER
ANY CIRCUMSTANCES WHATSOEVER,
<PAGE> 9
BE ENTITLED TO ADDITIONAL COMPENSATION, DELAY IN PERFORMANCE, OR OTHER BENEFIT
CLAIMED FOR RELYING UPON OR RESPONDING TO ANY SUCH REPRESENTATION, REQUEST,
INSTRUCTION, DIRECTIVE OR ORDER.
37. Entire Agreement
----------------
This Service Agreement (and all documents incorporated herein)
constitutes the entire agreement between the parties with respect to the
subject matter, all prior agreements, representations, statements,
negotiations, and undertakings are superseded hereby.
THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THIS SERVICE
AGREEMENT, AND AGREE TO BE BOUND BY ALL TERMS, CONDITIONS AND PROVISIONS OF
THIS SERVICE AGREEMENT, AS INDICATED BY THEIR SIGNING OF THIS SERVICE
AGREEMENT.
GEORGIA DEPARTMENT OF ADMINISTRATIVE SERVICES
on behalf of GEORGIA DEPARTMENT OF JUVENILE JUSTICE
By: /s/ David M. Candler
Name: David M. Candler
Title: State of Georgia Purchasing Agent
CONTRACTOR: CORRECTIONAL SERVICES CORPORATION
By: /s/ James F. Slattery
Name: James F. Slattery
Title: President & CEO
CONTRACT FOR OPERATION AND PROGRAMMING OF
96-BED SECURE FACILITY
BETWEEN
DALLAS COUNTY AND THE
DALLAS COUNTY JUVENILE BOARD
AND
CORRECTIONAL SERVICES CORPORATION
(CONTRACTOR)
1. PURPOSE:
This contract is entered into by and between DALLAS COUNTY, the DALLAS COUNTY
JUVENILE BOARD (DCJB), both entities hereinafter referred to as DALLAS COUNTY,
and CORRECTIONAL SERVICES CORPORATION, hereinafter referred to as CONTRACTOR.
This contract is entered into by Dallas County, and the Contractor, for the
purpose of operating and programming the 96-bed secure facility (hereinafter
referred to as Facility), located at 4639 Harry Hines Blvd. in Dallas, Texas.
Contractor will provide services for Dallas County as provided for by this
contract pursuant to the Minimum Standards for Secure Post-Adjudication
Juvenile Facilities, Texas Administrative Code Title 37, Chapter 344, and
Minimum Standards for Juvenile Detention Facilities, Texas Administrative Code
Title 37, Chapter 343, promulgated as administrative law by the Texas Juvenile
Probation Commission (TJPC); and all legal requirements in Section 51.12 of
the Texas Family Code. 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. This contract is
also subject to provisions specified in the License Agreement between Dallas
County and Contractor for use of the Facility. The License Agreement will be
signed and agreed to by both parties, and shall become Exhibit C of this
contract.
2. TERM:
A. The initial term of this contract will be from the date of execution
until September 30, 1999.
B. This contract may be renewed for two additional twelve month periods,
under the same terms and conditions unless one or more of the parties hereto
declines to renew this contract by providing written notice to all other parties
hereto at least ninety (90) days prior to the expiration of this contract, or
the contract is terminated sooner pursuant to the terms of this contract.
<PAGE> 1
C. The Contractor may, for the subsequent renewed terms, request an adjustment
to the monthly compensation rate for the post-adjudication, detention
overflow and Aftercare programs. Such rate adjustments must not exceed 6%
per renewal term. Requests for rate adjustments must be submitted to Dallas
County 120 days prior to the start of the renewal term. The Contractor must
provide detailed documentation justifying the need for such adjustments. Dallas
County solely retains the right to accept or reject such requests. Dallas County
will notify Contractor of acceptance or rejection of such requests within thirty
days after receipt from Contractor of acceptable documentation justifying the
rate adjustment request.
3. SCOPE OF WORK:
A. Contractor agrees to provide services in the operation and programming of
the 96 bed Facility as described in Request for Proposals No. 98-280 and
Addendum One issued by Dallas County, attached hereto as Exhibit A, and as
described in the original proposal submitted by Contractor in response to
Request for Proposals No. 98-280, attached hereto as Exhibit B. Exhibits A and B
are specifically incorporated into this contract by reference. It is agreed by
all parties that the provisions of this contract supersede the provisions of
Request for Proposals No. 98-280 (Exhibit A) and Contractor's proposal
(Exhibit 3), to the extent that there is conflict between provisions of the
documents.
B. The Contractor is hereby granted, delegated and assigned the right to, and
the Contractor hereby agrees to 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 pursuant to
applicable law. The Juvenile Department, in its discretion, may assign youth to
the Facility that are referred for placement or detention.
C. Contractor agrees to operate the facility as two distinct and separate
program components: a 44-bed secure, short-term post-adjudication residential
program including an aftercare component for youth in violation of their
probation and a detention center overflow program with up to 52 beds for youth
with court cases pending. Each component must operate as separate programs as
required by TJPC standards. Youth participating in one program cannot be
intermingled with youth in the other program at any time.
D. Contractor shall begin implementing the 44-bed post-adjudication program
upon final execution of this Contract.
E. Contractor shall begin activating the 52-bed detention overflow program
only upon written notification by Dallas County. Activation shall be in three
possible increments: an initial 16 beds, an additional 16 beds and a final 20
beds. Dallas County shall provide written notice of the need to activate each
increment of detention overflow beds at least 30 days prior to placing
juveniles.
<PAGE> 2
F. Contractor must assure that the program will be staffed and operated 24
hours a day, 365 days a year.
4. RELATIONSHIP OF THE PARTIES
Contractor is an independent contractor and not an agent, servant or
employee of Dallas County. Contractor represents that it has, or will
secure at its own expense, all personnel and consultants required in
performing the services under this contract. Such personnel and
consultants shall not be employees of, or have any contractual
relationship with Dallas County, without the prior written consent of
Dallas County.
5. FUNDING AND PAYMENT FOR CONTRACTOR SERVICES
A. Contractor shall be reimbursed for the actual costs of implementing the
44-bed post-adjudication program provided for in this Contract, as described in
Contractor's proposal (included as Exhibit B), not to exceed $282,409.
Implementation costs for the 44-bed post-adjudication program includes some
durable goods that will used in the entire 96-bed facility. Implementation for
the 44-bed post-adjudication program shall begin upon final execution of this
contract and end 28 days after the official contractor move-in date, which is
also the time when the program shall reach the maximum census of 44 residents.
Implementation costs are budgeted as follows:
Salaries during initial 28 days after move-in $ 89,359
Operating Expenses $ 38,832
Equipment $ 74,218
Training cost prior to youth being placed $ 80,000
B. County shall provide to Contractor within 30 days of final Contract
execution, an initial advance payment of $75,000 for implementation costs of the
44-bed post adjudication program. Contractor may submit bi-weekly requests for
actual implementation costs in a format approved by Juvenile Department. The
initial $75,000 advance payment shall be reconciled against and applied to
subsequent implementation costs reimbursements. Contractor shall provide
detailed documentation of all implementation costs with each reimbursement
request. Contractor shall also provide with each reimbursement request a list of
all equipment purchased with implementation funds that includes a description
of the equipment, model number, serial number, and cost.
C. Contractor shall be compensated $110,279 per month for operating the 44-bed
post-adjudication program. The monthly compensation shall provide for all
materials, goods, and services necessary for operating the program and
providing the services provided for in this Contract that are not otherwise
specifically stated in this Contract. Monthly compensation shall be made only
after services are actually rendered.
<PAGE> 3
D. County shall compensate Contractor on a prorated basis for the first month
of operations of the 44-bed post-adjudication program based upon the number
of days from the end of the 28 day implementation period until the end of the
initial month of full operations. Thereafter, County shall compensate Contractor
for each calendar month of operation.
E. Contractor shall be compensated for the provision of Aftercare services to
youth in the 44-bed post-adjudication program as described in Section 13 of this
Contract. Compensation for Aftercare services shall be in addition to the
monthly compensation of $110,279. Dallas County will only be obligated to pay
for those funds for Aftercare services as specified and expended in accordance
with the proposal included as Exhibit B to this contract and the Aftercare
Services Budget included as Exhibit D to this contract. The maximum amount to be
paid for Aftercare services shall not exceed $17,874 per month.
F. Contractor shall be reimbursed for the actual costs of activating each
group of detention overflow beds, as described in Contractor's proposals.
Contractor may submit bi-weekly requests for actual activation costs in a format
approved by Juvenile Department. Contractor shall provide detailed documentation
of all activation costs with each reimbursement request. Contractor shall also
provide with each reimbursement request a list of all equipment purchased with
activation funds that includes a description of the equipment, model number,
serial number, and cost. Activation costs shall not exceed the following amounts
for each group of beds:
Initial 16 beds $23,250
Second 16 beds $23,525
Final 20 beds $34,862
G. Contractor shall be compensated on a monthly basis for operating the
detention overflow program based upon the number of beds that are activated. The
monthly compensation shall provide for all materials, goods, and services
necessary for operating the program and providing the services provided for in
this Contract that are not otherwise specifically stated in this Contract.
Monthly compensation shall be made only after services are actually rendered.
Monthly compensation shall be in the following amounts for each group of beds:
16 beds $ 39,391
32 beds $ 74,402
52 beds $116,838
H. County shall compensate Contractor on a prorated basis for the first month
of operations for the appropriate number of detention overflow beds based
upon the number of days from the placement of juveniles until the end of the
initial month of activation. Thereafter, County shall compensate Contractor for
each calendar month of operation.
<PAGE> 4
I. Equipment purchased with implementation, activation, or Aftercare
compensation funds shall be property of Dallas County, and shall revert to
Dallas County's possession upon termination of this Contract. Contractor shall
implement and maintain appropriate inventory control procedures to reasonably
protect equipment against loss and shall provide to Juvenile Department upon
request a listing of all equipment purchased with Dallas County funds.
Contractor agrees to follow the policies and procedures of the Dallas County
Auditor regarding inventory control.
J. Contractor shall submit monthly compensation requests in a format approved
by Juvenile Department no later than 10 working days after the end of each
month for which the services were rendered. Monthly compensation requests shall
include the following information:
1. Name of youth enrolled in each program component.
2. Date of initial enrollment.
3. Number of days youth was in the program during the month.
4. Projected release date for each youth in the post-adjudication
program.
K. In the event that Contractor is unable to accept appropriate placement
referrals for the 44-bed post-adjudication program due to any reason within
Contractor's reasonable control, the monthly compensation for the month in which
appropriate referrals were not accepted will be reduced by the per diem rate of
$82.40 plus the difference, if any, of the cost to Dallas County for alternate
placement for each bed that was not filled. Reasons for not accepting referrals
that are within Contractor's control shall include, but are not limited to,
unavailability of adequate staff, materials, or supplies.
L. In the event that Contractor is unable to accept appropriate placement
referrals for the detention overflow program due to any reason within
Contractor's reasonable control, the monthly compensation for the month in which
appropriate referrals were not accepted will be reduced by the appropriate per
diem rate based upon level of activation for each bed that was not filled, plus
the additional cost, if any, to Dallas County for alternate placement. The per
diem rates will be $80.94 for 16 beds, $76.44 for 32 beds, or $73.87 for 52
beds. Reasons for not accepting referrals that are within Contractor's control
shall include, but are not limited to, unavailability of adequate staff,
materials, or supplies.
M. In the event that Contractor is unable to accept appropriate referrals to
either program due to acts of nature, physical damage to the Facility not caused
by Contractor's actions or negligence, or other reasons not within Contractor's
reasonable control, County and Contractor agree to negotiate compensation
adjustments that provide for Contractor's continued financial obligations and
County's need to provide for the appropriate care of youth in the Facility.
N. In the event that County determines through an audit, site review or other
means that Contractor has failed to provide the services provided for in this
Contract,
<PAGE> 5
County may, for the entire period for which the failure to provide services has
occurred, adjust compensation for such period to a monthly rate determined
solely by County.
O. Juvenile Department shall process reimbursement requests and monthly
compensation requests so that Contractor receives payment within 30 days
of submitting a complete and accurate reimbursement request.
P. Contractor understands and all parties agree that this contract
is contingent upon the availability of appropriated funds from the Dallas County
Commissioners Court and the Texas Juvenile Probation Commission. The parties
agree that, in the event sufficient funds are not available, this contract will
automatically terminate. Contractor will be entitled to payment as set forth in
this Contract for any services provided prior to the date of such termination.
Temporary interruptions in funding, as mutually agreed upon by Dallas County and
Contractor, shall not result in contract termination.
Q. Juveniles placed in the Facility by Dallas County, or their families, shall
not be assessed fees for services by Contractor unless such fee arrangements are
specified by the Juvenile Courts of Dallas County. This does not preclude
reasonable attempts to seek voluntary contributions from families of
Dallas County juveniles for provision of clothing, personal articles, medical
costs, and transportation.
R. If the Contractor receives third-party reimbursement or fiscal support from
any other source for the services provided for in this contract, Contractor
agrees to deduct these funds from the monthly reimbursement request to Dallas
County. The provisions of this paragraph do not apply to compensation Contractor
receives from the sale of unused detention overflow beds to other jurisdictions,
as described in Section 15 of this Contract.
S. Contractor must account separately for the receipt and expenditure of all
grant funds from the Texas Juvenile Probation Commission or any other funding
source. The Juvenile Department shall notify Contractor if any of the
compensation for services provided is being funded using grants.
6. FACILITY
A. Contractor agrees to operate the 96-bed secure facility located at
4639 Harry Hines Blvd., Dallas, Texas. Contractor shall enter into a separate
License Agreement with Dallas County for use of the facility. Such License
Agreement upon execution shall become Exhibit C to this Contract and shall be
specifically incorporated as part of this Contract.
B. Dallas County shall be responsible for providing the facility at
4639 Harry Hines Blvd. in Dallas, Texas as outlined in the License Agreement
(Exhibit C). Dallas
<PAGE> 6
County will use its best efforts to make the facility available to
Contractor for performance of its services under this agreement on
September 1, 1998 or such earlier agreed date as necessary to facilitate
Contractor's preparation, except as provided in Section 6.C.
C. Contractor shall hold Dallas County, as well as their officials, employees
and agents harmless, and hereby unconditionally and fully releases Dallas County
from all claims for damages, costs or expenses whether direct or indirect, or
whether incurred before or after the effective date of this Contract, resulting
directly or indirectly from any delay in availability of the Facility on
September 1, 1998.
D. Dallas County will guarantee access to the facility seven (7) days prior
to the first juvenile arriving. Any additional time needed for training or staff
development that requires space will be the responsibility of the Contractor.
E. Contractor is responsible for procurement and purchasing for all goods,
supplies and services necessary to perform Contractor's duties, unless otherwise
specified in this contract.
F. Dallas County will be responsible for utility operating expenses including
electricity, water, sewage, trash collection, and local telephone expenses.
G. Dallas County will assign adequate staff, and/or contracted services to the
Facility to meet maintenance needs. Dallas County will also be responsible for
determining when a higher level of repair service is needed and will be
responsible for providing that service at Dallas County expense, pursuant to the
terms of the License Agreement (Exhibit C).
H. Dallas County will provide and maintain Security and Fire Alarm
Systems at Dallas County's expense.
I. Dallas County will provide meals, for youth and staff, that
will be delivered to the facility each day. Dallas County will provide and
maintain such equipment necessary to refrigerate and re-heat meals. Snacks and
milk or other beverages will not be provided with meals.
J. Contractor must provide adequate staff to accept delivered meals, properly
store meals, re-heat and serve meals, and clean serving trays and equipment
after meals. Contractor shall provide eating and serving utensils, napkins,
condiments, and any other goods and materials needed to serve meals. Contractor
shall provide, at its own expense, snacks and beverages, including milk.
K. Contractor will be responsible for basic janitorial and custodial care of
the Facility.
L. Contractor will be responsible for all expenses for long-distance telephone
service.
<PAGE> 7
M. Contractor will be responsible for notifying Dallas County of
maintenance concerns.
N. Contractor will provide laundry service for all juveniles, in
accordance with TJPC standards, clean linens to each juvenile at least once
weekly and clean bath and hand towels twice per week without any deposit or
fee being charged.
O. Contractor will be responsible for purchasing bedding, such as
sheets, bedspreads, and pillows and all costs associated with upkeep such as
cleaning and replacement.
7. IMPLEMENTATION OF 44-BED POST-ADJUDICATION PROGRAM
A. Dallas County shall notify Contractor in writing of the official
move-in date for the Facility. While Dallas County will make reasonable efforts
to provide Contractor with advance access to the Facility, Contractor shall
have at least seven days in the Facility before receiving youth for staff
familiarization and training. The official move-in date is the date seven
days before receiving youth.
B. Contractor is required to have the Facility operational and ready
to accept youth no later than seven days after the official move-in date.
Contractor shall be responsible for all implementation activities not
otherwise specifically stated in this contract. Implementation activities
shall include, but are not limited to: hiring and training of all staff;
procuring necessary goods and materials; developing curriculum; and
developing enrollment procedures.
C. Contractor is to be reimbursed by Dallas County for the actual cost
of certain implementation activities as provided for in Section 5 of
this contract.
D. Youth will be placed in the post-adjudication program based upon
the following phase-in schedule, which provides that the first 30 residents
assigned to the facility will be males:
Maximum
Days after Move-In Date Admissions Maximum Census
----------------------- ---------- --------------
7 15 15
14 15 30
21 7 37
28 7 44
E. The implementation period shall end 28 days after the official
move-in date, at which time the post-adjudication program will be at the 44
youth capacity.
8. ACTIVATION OF DETENTION OVERFLOW BEDS
A. Contractor shall begin activating the 52-bed detention overflow
program upon written notification by Dallas County. Implementation shall be
in three possible increments: an initial 16 beds, an additional 16 beds and
a final 20 beds. Dallas
<PAGE> 8
County shall provide written notice of the need to activate each
increment of detention overflow beds at least 30 days prior to placing
juveniles. Once an increment of detention overflow beds is activated,
Dallas County will pay for these beds for at least 90 days. Dallas
County may deactivate any increment of detention overflow beds, after
the 90 day minimum activation period, by providing at least 45 days
written notice, after which time there will be no obligation for
continued payment to Contractor for that group of beds.
B. Contractor is required to have the Facility operational and ready
to accept youth for the detention overflow program no later than 30 days
after receiving written notification from Dallas County. Contractor shall
be responsible for all activation activities not otherwise specifically
stated in this contract. Activation activities shall include, but are not
limited to: hiring and training of all staff; procuring necessary
goods and materials; developing curriculum; and developing enrollment
procedures.
C. Contractor is to be reimbursed by Dallas County for the actual
cost of certain activation activities as provided for in Section 5 of
this Contract.
9. EQUIPMENT AND DURABLE GOODS
A. Dallas County shall provide, at no additional cost to Contractor,
the equipment and durable goods listed in Attachment B to Request for
Proposals No. 98-280, included as Exhibit A to this contract.
B. Dallas County shall have the final authority as to quantity and
quality of all equipment and durable goods provided to Contractor for
use.
C. Dallas County will be responsible for maintenance and replacement
cost, due to normal wear and tear, of the equipment listed in 9.A above,
in accordance with Dallas County policy.
D. The Contractor is responsible for the procurement, maintenance
and replacement of the following equipment and consumable supplies:
1) Computers
2) TV/VCRs
3) Linens
4) Clothing
5) Office, Medical, Cleaning, and Laundry supplies
6) Supplies needed to serve meals, snacks and beverages
7) Internal communications systems (i.e. portable radios) needed by
staff to provide a safe environment
E. All costs to be paid to the Contractor for purchases made for
equipment and durable goods must be included in the reimbursements for
actual costs of implementation as outlined in Section 5 - Funding and Payment
for Contractor Services. Dallas County will not reimburse Contractor for the
cost of additional equipment and durable goods without prior written approval.
<PAGE> 9
F. All equipment, goods and materials for which the Contractor is
reimbursed will be the property of Dallas County and will remain in the
possession of Dallas County at the time of the expiration or termination of
this contract. Contractor shall be responsible for maintaining an accurate
inventory of all equipment and non consumable goods and supplies and notify
Dallas County in the event of the loss of said equipment and non consumable
goods and supplies. In the event of the early termination of this contract,
the value of any goods and materials purchased at the request of Contractor
that cannot be used in the continued operation of the program will be
deducted from any final funds due Contractor by Dallas County.
10. OBLIGATIONS OF DALLAS COUNTY
A. Dallas County will provide Contractor written notice of Facility
availability upon final contract execution.
B. After the 28-day implementation period for the post-adjudication
program, it will be the responsibility of Dallas County to make sufficient
placement referrals to ensure that the post-adjudication program operates at
the 44-bed capacity.
C. Once Contractor is provided with 30-day written notice of activation for
a group of detention overflow beds, it will be the responsibility of Dallas
County to make sufficient placement referrals to ensure that the detention
overflow program operates at the activated capacity.
D. The Juvenile Department shall provide Contractor with the Residential
Placement Packet at the time of admission to Contractor facility.
E. Juvenile Department agrees to provide Contractor with all the
standardized Juvenile Department forms as requested.
F. Juvenile Department agrees to provide for transportation to the
Facility at the time of admission and from the Facility at the time of
discharge. In addition, Dallas County is responsible for providing
transportation for youth to and from the facility for any court proceedings
that youth are required to attend while they are assigned to the facility.
G. Juvenile Department reserves the right to terminate a client's placement
with Contractor at any time, with or without cause.
11. OBLIGATIONS OF THE CONTRACTOR
A. Dallas County, in its discretion, may assign youth to the Facility and
designate the assigned program component. The Contractor shall accept all
youth that are referred up to the maximum legal capacity of each program and
of the Facility.
<PAGE> 10
Contractor and Dallas County shall utilize the following processes to
ensure that youth are appropriately referred to the Facility:
1. Contractor will establish written guidelines outlining the profile
of youth who are appropriate for placement in each program within the
Facility, including indicators of inappropriate referrals.
2. Contractor will be allowed and encouraged to participate in the
Dallas County Juvenile Department Case Planning and Review Committee (CPRC).
If the Contractor disagrees with the placement recommendation, Contractor
can ask for the recommendation to be reviewed. CPRC will have the final
authority for making placement recommendations to the Juvenile Courts.
3. Contractor and Dallas County agree that the best interest of the
youth will be met in resolving disagreements regarding the appropriateness
of placement.
B. A Juvenile Department Residential Placement Agreement form designating
the specific program assignment will be signed by Contractor and Juvenile
Department staff at the time of admission.
C. Contractor will not release a juvenile to any person or agency without
express written consent of Juvenile Department.
D. Unsuccessful termination of the juvenile's placement with Contractor
shall occur only after notifying the designated Juvenile Department staff of
the causes and with prior notice of at least ten (10) days.
E. Contractor shall complete a Juvenile Department Discharge Summary for
each youth discharged from the post-adjudication program.
F. Contractor shall be responsible for obtaining criminal background checks
and must provide proof of such to the Dallas County designated staff upon
request:
1. For existing staff and volunteers prior to the Facility move-in
date; and
2. When any subsequent hires are made during the term of this contract.
G. Contractor agrees to make available any Contractor staff requested or
subpoenaed to appear before a Dallas County Juvenile Court on a case
involving any client receiving services under this contract.
H. Contractor agrees to make a good faith effort to retain in placement any
client whose behavior, though problematic, does not exceed behavior typical of
that which led to their removal from home or previous placement.
<PAGE> 11
I. Contractor is responsible for all transportation incidental to
the care of the child, including medical and dental visits, and for furloughs
from placement. Contractor may request that parents contribute to
transportation costs for furloughs from placement.
J. Contractor shall provide adequate staff to receive, store, re-heat and
serve meals. Contractor shall also provide all snacks and beverages,
including milk. Contractor shall ensure that all applicable regulations for
the storage and handling of food are followed. Contractor shall collect and
provide to Dallas County any data or other information needed for Dallas
County to meet the reporting requirements of the USDA School Lunch and School
Breakfast program.
12. EDUCATIONAL SERVICES
A. Contractor understands that all juveniles placed in the Facility must
have access to a free and appropriate education as provided for by the laws
of the State of Texas.
B. Dallas County has entered into a Memorandum of Understanding with Dallas
Public Schools for the provision of educational services to juveniles in the
Facility for the 180 day regular school term. Contractor agrees to cooperate
with Dallas County and Dallas Public School in providing educational services
in the Facility. Such cooperation shall include, but not be limited to,
assigning Facility space for classrooms, developing class schedules and
designing programming and operations of the facility in a manner that
complements the educational program.
C. Contractor shall provide, at its sole expense, the necessary staff and
related supplies for five hours of educational services for each Monday
through Friday, exclusive of Holidays recognized by the Dallas County
Commissioners Court, during the summer school term.
D. Contractor agrees to cooperate with Dallas County in making any
revisions to the educational services program determined necessary by Dallas
County. Such revisions may include changes in the organization providing
educational services during the 180 day regular school term.
13. AFTERCARE
A. Contractor agrees to provide formal aftercare services for all youth
placed in the 44 bed post-adjudication program. Aftercare services shall be
as described in Contractor's proposal, which is included as Exhibit B to
this contract. Aftercare services will include, but are not limited to the
following program components:
1. Intensive pre-release planning;
2. Family involvement, including in-home visits;
3. Community linkage;
4. Facilitating the process of r~ -enrolling youth in home school or
accessing GED assistance services;
<PAGE> 12
5. Assisting age appropriate youth in obtaining employment; and
6. Developing plans for leisure time activities.
B. Contractor shall primarily utilize existing community-based resources in
developing aftercare plans. Contractor may, when community-based services are
not available, request that the Juvenile Department consider placement of
youth in contract programs. Juvenile Department shall review these requests on
a case-by-case basis. The decision to place youth in contract programs will be
made at the sole discretion of Juvenile Department.
C. Contractor will conduct formal follow-up studies of juveniles who
successfully discharge the post-adjudication program and who reside within
Dallas County at one month, two months and three months to document successful
re-entry into the community, and will track status of critical outcome areas
including education, employment, relationships with parents, peers and others,
and positive living arrangements.
D. Contractor will provide information gathered in the follow-up studies to
the designated Juvenile Department staff.
14. PERFORMANCE GUARANTEE BY THE CONTRACTOR
A. The Performance Guarantee shall apply to juveniles who are successfully
discharged from the 44-bed post-adjudication program and have an opportunity
to participate in Contractor's Aftercare program. Successful discharges are
those juveniles who have substantially completed their Individual Program
Plan, as described in Section 17 of this Contract, and will be so designated
by joint agreement of Dallas County and Contractor at time of discharge.
B. The Performance Guarantee shall be in the form of a retainage of 8% of
the monthly compensation to Contractor for operation of the post-adjudication
program. Dallas County shall release each month's retainage as the juveniles
who are successfully discharged during the retainage month achieve a 90 day
anniversary of release without recidivating.
C. The retainage will be released based upon the percentage of juveniles
who complete the 90 day period after discharge from the post-adjudication
program without recidivating. An example of the retainage/release method is
described below:
Retainage percentage 8%
Monthly cost of post-adjudication program $110,279
Calculated monthly retainage $8,822
Number of juveniles released in a month 10
Number of juveniles, 90 days without recidivating 7
Amount of retainage returned (7/10 of $8,822) $6,175
<PAGE> 13
D. The retainage will begin with the first full month of monthly
compensation for operation of the post-adjudication program in which at
least one juvenile is successfully discharged from the program. All
Performance Guarantee calculations will be made at the end of each month,
and all calculations rounded to the nearest whole dollar amount. If no
juveniles are released in a given month, no retainage will be withheld.
E. Recidivism occurs when a juvenile is referred to the Juvenile
Department, and formal court action is anticipated, for alleged delinquent
conduct, which includes criminal offenses and violations of court-ordered
conditions of probation, or conduct indicating a need for supervision.
Arrests of juveniles with a charge filed for the offense in the adult court
system will also be considered as recidivism for purposes of this Recidivism
Guarantee.
15. SALE OF UNUSED DETENTION OVERFLOW BEDS
A. Contractor may provide detention overflow beds to other jurisdictions
when such beds are not activated by Dallas County.
B. Contractor shall provide to Dallas County written notice of the intent
to sell unused detention overflow beds to other jurisdictions at least 30 days
prior to accepting juveniles from another jurisdiction. Such notice shall
include identification of the jurisdiction(s) purchasing beds and copies of
any formal agreements between Contractor and other jurisdictions.
C. Contractor shall be responsible for all goods, materials and services
necessary to provide detention overflow beds to other jurisdictions. All
expenses associated with providing detention overflow beds to other
jurisdictions shall be the sole responsibility of Contractor. Any equipment
provided by Dallas County and Contractor as part of the implementation
activities described in Section 9 of this Contract will be available for
Contractor's use in providing detention overflow beds to other jurisdictions.
D. Contractor shall reimburse Dallas County for the cost, as determined by
Dallas County, of all meals provided by Dallas County for juveniles from other
jurisdictions. Additionally, Contractor shall provide compensation to Dallas
County at the rate of $3 per bed per day for any detention overflow beds sold
to other jurisdictions. Contractor shall include with its monthly compensation
requests a check made payable to Dallas County for the costs of meals and
rebate due to Dallas County for any unused detention overflow beds sold to
other jurisdictions.
E. Dallas County's need for detention overflow beds shall supersede any
agreements that Contractor may have with other jurisdictions. Contractor must
ensure that all 52 detention overflow beds are available to Dallas County upon
formal notification of activation as described in Section 8 of this contract.
F. Dallas County reserves the right to terminate authorization for the sale
of unused detention overflow beds at any time by providing written notice to
Contractor.
<PAGE> 14
16. SHARED USE OF COMMON SPACE WITH DALLAS CHALLENGE
A. Contractor understands that Dallas Challenge, a non-profit agency, will
utilize certain common areas of the facility for operation of the Truancy and
Class C Enforcement Center, hereafter referred to as Center. Those common
areas are as follows:
1) visitors entrance for families to enter the facility;
2) visitation waiting areas for use by families waiting for
interviews with Center staff and for court hearings;
3) visitation rooms for Center staff to use when interviewing
juveniles and families;
4) police entrance for law enforcement officials transporting
youth for processing by Center staff;
5) secure holding rooms for housing youth pending processing by
Center staff;
6) court room for court proceedings; and
7) the police entrance control room for office space for Center
staff responsible for providing entrance to the facility by
law enforcement officials transporting juveniles for
processing by Center staff.
B. Contractor agrees to provide staff coverage of the visitors entrance at
all times while the Center is operating. Staff assigned to the visitors
entrance shall be responsible for allowing families and other persons with
appointments with Center staff and/or court proceedings to enter the facility.
C. Contractor shall have the right to develop and implement appropriate
security procedures for Dallas Challenge staff to follow, including assignment
of keys to the facility.
D. Dallas County shall be responsible for ensuring that Dallas Challenge
conducts operations of the Center in the shared common areas in a manner that
does not interfere with Contractor's operations. Dallas County will execute a
License Agreement with Dallas Challenge that requires Dallas Challenge to
provide the following:
1) a staff person to monitor the police entrance and provide access to
the facility for law enforcement officials transporting juvenile
referred to the Center;
2) adequate supervision of juveniles held in both secure and non-secure
areas of the facility; and
3) adequate supervision of families entering the facility for
interviews and court proceedings.
<PAGE> 15
17. REPORTING AND ACCOUNTABILITY
A. Each individual client placed with Contractor in the post-adjudication
program shall have a written individualized program plan (IPP) completed by the
appropriate Contractor staff within fifteen (15) days of the time of admission
to placement. A copy of the preliminary IPP must be received by the Juvenile
Department within twenty (20) days of the time of admission.
B. The IPP shall contain the reasons why the placement will benefit the
client; shall specify behavioral goals and objectives being sought for each
client; shall state how the goals and objectives are to be achieved in
Contractor placement; and shall state how the parent(s), guardian(s), and,
where possible, grandparents or other extended family members will be involved
in the IPP to assist in preventing or controlling the client's alleged
delinquent behavior or alleged conduct indicating a need for supervision as
defined in the Texas Family Code. The IPP shall be structured to meet all
treatment goals within the estimated length of stay for each program
component, unless otherwise stipulated at the time of admission.
C. Contractor shall provide to the Juvenile Department, on a monthly basis,
the following:
1) A written report of the progress of each client during the
preceding month, in the format approved by the Juvenile Department.
2) Copies of all significant incident reports within 24 hours of
occurrence. Copies of all incident reports on each client should
also be retained in Contractor's file for each juvenile.
D. If a client in placement at the Facility makes an unauthorized
departure, becomes seriously injured or ill, commits a penal code violation,
or is involved in an incident that Contractor considers seriously jeopardizes
continued placement, Contractor shall immediately notify the designated
Juvenile Department staff, or if not during regular Juvenile Department
business hours, Juvenile Department's Detention Screening Unit. Contractor
shall also ensure that the client's parents and, when appropriate, other
authorities, including the Texas Department of Protective and Regulatory
Services and/or local law enforcement officials are notified. Contractor
shall forward a written incident report regarding the above on a Juvenile
Department Serious Incident Report form to the designated Juvenile Department
staff within two (2) working days.
E. If a client alleges child abuse, or abuse is suspected for any reason,
such abuse must be immediately reported by Contractor following all
procedures outlined above in Section 17.D of this contract.
F. Contractor will allow clients unrestricted use of telephone to make
calls to their probation officer to register grievances against Contractor
or any individual. Contractor will also ensure privacy of conversations
between the client and Juvenile Department staff at the request of either
party.
<PAGE> 16
G. Contractor will notify Juvenile Department in writing within two (2)
working days of any pending allegations of abuse or other investigations
involving Contractor staff or that may impact Contractor licensing.
H. Unless otherwise stipulated by the designated Juvenile Department staff,
the client may visit freely with parents and relatives at the Facility in
accordance with established written Contractor policies.
I. Contractor must receive and document the approval of the designated
Juvenile Department staff for any over-night stay away from the Facility
unless it is considered part of Contractor's rehabilitation program. Prior
written approval must also be received and documented for any home visit.
J. Prior to a client's discharge, a Juvenile Department Pre-discharge
Summary must be completed by Contractor. When completing the form for a
successful discharge:
1) The language should support the discharge recommendation.
2) The form must be completed no earlier than 30 days prior to the
discharge date.
3) The summary should be legible and signed.
K. When a client is unsuccessfully discharged, Contractor shall complete
the Juvenile Department Discharge Report, attach all incident reports relevant
to the decision to discharge the client and provide these to the designated
Juvenile Department staff at the time of discharge.
L. Copies of each IPP and all other forms required in this section are to be
maintained in Contractor's case file on the client.
M. Penalties for delinquent reporting may include withholding of payments
until such time as all reports are received, or cancellation of the contract
with no obligation to pay for undocumented services.
N. Contractor will be evaluated to determine the quality and effectiveness
of services. Program evaluations may be used to recommend changes in program
design. Program evaluations will include, but are not limited to the
following criteria:
1) Site Review Results
2) Fiscal Audit Results
3) Discharge History
4) Recidivism Rate
5) Cultural Competency
6) Frequency and Severity of Complaints
7) Average Length of Stay
8) Financial Responsibility
<PAGE> 17
18. EXAMINATION OF PROGRAM AND RECORDS
A. Contractor agrees that it will permit Juvenile Department designated
employees to examine and evaluate its program of services provided under the
terms of this contract and to review client records. This examination and
evaluation of the program will include but are not limited to unscheduled
site visits, observation of programs in operation, interviews, and
administration of questionnaires to Contractor staff and the clients.
B. Contractor shall maintain documentation in each juvenile's case
file indicating that services are being provided as required by Request for
Proposals No. 98-280 and Contractor's proposal, which are included as
Exhibit A and Exhibit B, respectively, to this Contract.
C. Contractor shall provide to Juvenile Department such descriptive
information of contracted clients as requested on forms provided by Juvenile
Department.
D. Contractor agrees to maintain and make available for inspection, audit
or reproduction by an authorized representative of the Juvenile Department
or the State of Texas, books, documents, and other evidence pertaining to
the cost and expenses of this contract, hereinafter called the records. For
purposes of this contract the records shall include all financial records,
child care records, special treatment records, and any and all books,
documents and evidence connected with the provision of services covered
under this contract.
E. Contractor agrees to provide Juvenile Department with a report of costs
incurred in providing residential services relating to this contract on forms
provided by Juvenile Department upon request.
F. Contractor agrees to maintain these records for four (4) years after
final payment or until the state-approved audit has been made and all
questions therefrom are resolved.
G. Dallas County Juvenile Department is responsible for closely monitoring,
and will exercise reasonable care, to enforce all the terms and conditions
of any grant awards used to fund the services provided for in this contract.
19. PERSONNEL
A. The interviewing, hiring, assignment, certification, control,
supervision, management, compensation, promotion, health, safety, welfare and
termination of all members of the Facility's administration and staff shall
be the sole responsibility of the Contractor.
B. Contractor shall ensure that staff are hired according to the credentials
and qualifications described in the proposal submitted by Contractor in
response to Request for Proposals No. 98-280, Exhibit B, and in compliance
with requirements of TJPC and other appropriate licensing agencies.
<PAGE> 18
C. Staff to youth ratios must be as described in Exhibit B and must
meet or exceed TJPC regulatory requirements for each distinctive program
component.
D. Contractor will be responsible for training of personnel including
all training required for certification by applicable licensing agencies.
Direct care staff will receive a minimum of 80 hours of pre-service training,
40 hours of in-service training during the first month of employment, and
40 hours of in-service training each year thereafter.
E. Contractor shall insure the availability of adequate and properly
trained staff to serve youth based on the Implementation schedule outlined in
Section 7 of this Contract. The projected move-in date is September 1, 1998.
F. The Contractor shall maintain documentation in an agency file including
but not limited to the following: proof of staff credentials, staff roster
including date of hire and employment departure, and staff incidents and
disciplinary action taken. Al1 current facility licenses and certifications
shall also be maintained in this file.
G. Contractor shall make a good faith effort to hire culturally competent
staff who reflect the ethnicity of the youth placed in the Facility.
Contractor must take into consideration the ethnic diversity of youth
involved in the Dallas County juvenile justice system when making hiring
decisions and determining staff ratios. Contractor agrees to hire, whenever
possible, bilingual staff (Spanish-speaking) that will be able to
communicate with youth and families who utilize English as a second
language. Contractor agrees to provide upon request documentation of good
faith efforts in maintaining a culturally competent staff.
20. LICENSING
A. Contractor is responsible for ensuring that the Facility is eligible
for certification by Dallas County as suitable to house youth in compliance
with the Minimum Standards for Secure Post-Adjudication Juvenile Facilities
and Minimum Standards for Juvenile Detention Facilities promulgated by the
Texas Juvenile Probation Commission. Contractor shall obtain such
certification prior to accepting youth for placement in the Facility and
shall be responsible for annual re-certification. Contractor shall also be
responsible for maintaining current knowledge of Texas Juvenile Probation
Commission standards and making any programmatic revisions necessary to
maintain certification.
B. Contractor shall manage and supervise the Facility to remain in
compliance with all applicable city, county, and state health, fire, and
safety codes and ordinances.
C. Written documentation of compliance with the standards listed in
Paragraphs A and B of this Section must be kept on file and posted at the
program facility. Failure to comply with any of the above requirements will
put Contractor in default of this Contract and may result in the disallowance
of funds and the withholding of future awards and payments, or the termination
of this Contract.
<PAGE> 19
21. MEDICAL AND DENTAL SERVICES
A. Juvenile Department agrees to provide each client with medical
and dental examinations prior to admission to Contractor facility as required
by TJPC or other Contractor licensing body. Contractor agrees to pay for
subsequent periodic medical and dental examinations as required.
B. Contractor shall provide emergency, routine and urgent health
care for all juveniles assigned to the facility as described in Contractor's
proposal, included as Exhibit C to this Contract. Such services shall meet the
requirements of appropriate TJPC standards. Such services shall also include
obtaining any medications prescribed by Contractor's staff and/or contracted
health care professionals.
C. Contractor will provide nursing staff that will be available on-site a
minimum of eight hours a day, 5 days a week, with a total of 40 hours of
on-site nursing staff per week, and on-call nursing staff available 24 hours
a day seven days a week. Contractor will also provide a Physician that will
be available for on-call telephone consultation for emergencies and to
provide appropriate medical services to juveniles who have been triaged and
referred from the daily sick call.
D. Contractor will be responsible for providing all psychological
and/or psychiatric services proposed other than the initial assessment
completed by Juvenile Department prior to Placement.
E. Contractor will be responsible for establishing arrangements with local
hospitals to provide emergency medical services for youth. Contractor will
also be responsible for transportation of youth to and from health care
facilities for emergency and non emergency care.
F. Contractor will be responsible for the supervision of youth who are
receiving medical services, including hospitalization.
G. Contractor shall develop and implement procedures for responding to
medical and dental emergencies. These written procedures shall be submitted
to Dallas County for review and approval by the Dallas County Health
Authority prior to implementation.
H. Dallas County agrees to reimburse Contractor or third-party providers
for the cost of any health care for juveniles assigned to the Facility that
is in addition to those services described in Contractor's proposal. Such
reimbursements will be made only if the following conditions are met:
1. Contractor demonstrates that an effort has been made to obtain the
services without cost to Dallas County through Medicaid, other private or
public funding available to the juvenile, or the juvenile's parent(s) or
guardian(s);
<PAGE> 20
2. Contractor has coordinated with the Juvenile Department to
obtain health care through publicly funded sources including, but not limited
to Dallas County Health Department, Parkland Hospital or Parkland satellite
clinics;
3. Contractor receives written approval for reimbursement from a
member of Juvenile Department Contract Services staff prior to the services
being rendered (approval is specific to each item of cost, not to an
incidence of injury or illness, and must be requested each time a client is
to receive services or medication);
4. If, in Contractor's opinion, the services cannot be delayed a
sufficient time to comply with 1, 2 and/or 3 above without hardship to the
youth and Contractor notifies a member of Juvenile Department's Contract
Services staff of the expenditures the next working day after services are
provided; and
5. Any bills approved for reimbursement are received by Juvenile
Department within forty-five days of the date the service is provided with
written approval attached.
I. Dallas County agrees to pay for medical or dental treatment by
third-party providers for juveniles assigned to the facility who had a
pre-existing medical condition, unless treatment for the pre-existing
condition is part of the rehabilitation program of Contractor. The procedure
outlined in Section 21, Paragraph H above must be followed in order for
Contractor and/or the third party provider to receive reimbursement.
Contractor agrees to collaborate with Juvenile Department in developing
procedures for obtaining refills of prescriptions for routine medications
to treat pre-existing conditions. Dallas County retains sole authority
for determining the source of and procedures for obtaining prescription
medications.
J. Dallas County may refuse reimbursement for any medical expenses
resulting from injuries to a juvenile assigned to the facility resulting,
as determined by Juvenile Department, from a lapse in supervision or
improper physical restraint by Contractor staff.
K. Under no circumstances will Dallas County reimburse Contractor for the
cost of health care provided by health care professionals employed or
contracted by Contractor for the purposes of providing the health care
services described in Contractor's proposal, included as Exhibit C to this
Contract.
22. LAW AND VENUE
The terms of this Contract shall be construed in accordance with the
laws of Texas and exclusive venue for any legal actions arising from
this Contract shall be in Dallas County, Texas.
<PAGE> 21
23. ASSURANCES
A. Contractor agrees to establish safeguards to prohibit employees from
using their positions for a purpose that constitutes or presents the
appearance of personal or organizational conflict of interest, or personal
gain.
B. Contractor assures no person will, on the grounds of race, creed,
color, religion, handicap, national origin, gender, political affiliation
or beliefs, be subjected to discrimination, excluded from or be denied the
benefits of any program or activity funded in whole or in part under this
contract.
C. Contractor assures that it will not transfer or assign its interest in
this contract without prior written consent of Dallas County.
D. Contractor, by acceptance of funds provided under this contract
agrees and ensures that personnel paid from these funds are duly licensed
and/or qualified to perform the required services. Contractor further agrees
and ensures that all program and/or facility licenses necessary to perform
the required services are current and that Dallas County will be notified
immediately if such licenses become invalid during the term of this contract.
E. Contractor assures that funds received pursuant to this contract shall
in no way be used for any lobbying purposes.
F. The person or persons signing and executing this contract on behalf of
Contractor, or representing themselves as signing and executing this contract
on behalf of Contractor, do hereby warrant and guarantee that he, she or they
have been duly authorized by Contractor to execute this contract on behalf of
Contractor and to validly and legally bind Contractor to all terms,
performances and provisions herein set forth.
G. Pursuant to Article 2.45 of the Business Corporation Act, Texas Civil
Statutes, which prohibits Dallas County from entering into a contract with a
corporation which is delinquent in paying taxes under Chapter 171, Tax Code,
Contractor by executing this Contract hereby certifies that it is not
delinquent in its Texas franchise tax payments, or that it is exempt from,
or not subject to such a tax. A false statement concerning the corporation's
franchise tax status shall constitute grounds for termination of the Contract
at the sole option of Dallas County.
H. Failure to comply with any of these assurances will put Contractor in
default of this contract and may result, at the sole discretion of Dallas
County, in the disallowance of funds and the withholding of future awards,
in addition to any other remedies permitted by law.
I. The Juvenile Department shall require Contractor to provide
certification of eligibility to receive state funds as required by Texas
Family Code Section 231.006.
<PAGE> 22
24. INSURANCE AND INDEMNIFICATION
A. Contractor agrees it will protect, defend, indemnify and hold
harmless Dallas County and all officers, agents, employees, and
representatives from and against any and all claims, demands, causes,
actions, damages, judgments, loss and expenses, including attorney's fees,
of whatsoever nature, character, or description that any person or entity has
or may have arising from or on account of any injuries or damages (including
but not restricted to death) received or sustained by any person, persons,
or property, on account of, arising out of, or in connection with the
performance of the work, including without limiting the generality of the
forgoing, any negligent act or omission of the Contractor or any agent,
servant, employee or sub-contractor of the Contractor in the execution of
performance of this Contract. Contractor further agrees to protect, indemnify
and hold harmless Dallas County against and from any and all claims and
against and from any and all loss, cost, damage, judgments or expenses,
including attorney's fees arising out of the breach of any of the
requirements and provisions of this contract or any failure of
Contractor, its employees, officers, agents, contractors, invitees, or
assigns in any respect to comply with and perform all the requirements and
provisions hereof.
B. Contractor also agrees to purchase and maintain insurance coverage for
operation of the Facility as follows:
1. Liability Insurance. Contractor shall, at all times during the
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 coverage; 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) for any one occurrence.
2. Workers' Compensation Insurance. Contractor shall, at all times
during the term of this Contract 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
3. The Juvenile Board of Dallas County and Dallas County shall be
named as additional insured on such policies.
C. The insurance policies required under this Section shall not be
modified or canceled except upon 30 days written notice to Dallas County and
the Juvenile Board.
<PAGE> 23
D. Contractor shall provide to the Juvenile Department insurance
certificates evidencing the required policies have been obtained prior to
the receipt of any funds under this Contract.
25. SUBCONTRACTING
Contractor may enter into subcontracts for the provision of services to
youth and their families only with the prior written consent of Dallas
County, which consent shall not be unreasonably withheld. Contractor
shall provide Dallas County with a copy of all subcontracts. Subcontracts
entered into by Contractor will be in writing and subject to the
requirements of this contract, and shall not relieve Contractor of any
requirement, duty, obligation or liability under this contract.
Contractor agrees that it will be responsible to Dallas County for the
performance of any subcontractor. The costs of all subcontracted services
are included in the fees outlined in Section 5 of this Contract, unless
otherwise specifically stated in this contract. In selecting
subcontractors, Contractor shall ensure that existing community based
organizations and certified minority and women business enterprises are
utilized to the fullest extent possible, and as detailed in Contractor's
proposal (Exhibit B).
26. GENERAL PROVISIONS
Requirements of the State of Texas Uniform Grant and Contract Management
Standards are adopted as part of this contract, including the contract
provision as in Attachment 0, Item 14, of the above standards. Juvenile
Department shall provide Contractor with a copy of the State of Texas Uniform
Grant and Contract Management Standards prior to referrals being made.
Juvenile Department shall keep all project records and all records shall be
preserved for four (4) years for inspection by Criminal Justice Division, or
any state or federal agency authorized to inspect the same.
27. EQUAL OPPORTUNITY
Services shall be provided by Contractor in compliance with the Civil
Rights Act of 1964. Contractor will not discriminate against any
employee, applicant for employment, or client because of race, religion,
color, gender, national origin, age or handicapped condition.
Contractor will take affirmative action to ensure that qualified
applicants are employed, and that employees are treated during employment
without regard to race, religion, color, gender, national origin, age or
handicapped condition.
28. OFFICIALS NOT TO BENEFIT
No officer, member or employee of the Juvenile Department and no member
of its governing body and no other public officials of the governing body
of the locality or localities in which the project is situated or being
carried out who exercise any
<PAGE> 24
functions or responsibilities in the review or approval of the
undertaking or carrying out of this project, shall participate in any decision
relating to this contract which affects personal interest or have any personal
or pecuniary interest, direct or indirect, in this contract or the process
thereof.
29. AMENDMENTS
This contract may be amended during the term of the contract, and any
such amendments will be in writing and duly executed by the parties hereto.
30. TERMINATION
A. Dallas County may terminate this Contract without cause by providing
ninety (90) days written notice of intention to terminate to the Contractor.
B. Dallas County may immediately terminate this contract for cause
without notice based upon the following:
1. Failure of Contractor to have the facility in operation and
ready to accept youths 30 days after Contractor receives written notice of
the move-in date.
2. Failure of Contractor to maintain in effect the insurance
policies required by Section 24 of this Contract.
3. Substantiated physical or sexual abuse of youths by employees,
agents or subcontractors of Contractor which, when investigated, reveal
negligent acts or omissions by the Contractor.
4. This contract may automatically terminate pursuant to the
provisions of Section 5.P of this Contract.
C. Each of the following shall constitute an Event of Default by the
Contractor:
1. A material failure to keep, observe, perform, meet, or comply with
any covenant, agreement, term, or provision of this Contract which is
the duty of the Contractor hereunder, which failure continues for a period
of thirty (30) days after the Contractor has been provided written notice
thereof;
2. A material failure to meet or comply with any Court order; the
standards, rules and regulations of TJPC, TCADA, or any federal or State
requirement or law; which failure continues for a period of thirty (30) days
after written notice thereof to the Contractor, except with regard to
material breaches that create a safety or security hazard, which shall be an
immediate event of default, only seventy-two (72) hours notice and the
opportunity to cure shall be required, subject to immediate action if the
delay of 72 hours creates a further danger to the safety, health or welfare
of the Clients;
<PAGE> 25
3. The Contractor shall (a) admit in writing its inability to pay
its debts; (b) make a general assignment for the benefit of creditors; (c)
suffer 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 sixty (60) days; (d) suffer
proceedings under any law relating to bankruptcy, insolvency, or the
reorganization or relief of debtors instituted by or against it and, if
contested by it, not to be dismissed or stayed within sixty (60) days; or (e)
suffer any judgment, writ of 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 sixty (60) days after
issue or levy, and any of these events has caused or threatens to adversely
affect or interrupt the continued operation of the Facility in full
compliance with all conditions of this Contract.
4. The discovery by Dallas County that any material statement,
representation, or warranty herein or provided in materials or made in support
of the award of this Contract to the Contractor is false, misleading, or
erroneous in a material respect; or
5. Chronic failure of the Contractor to timely pay trade creditors,
payroll and other operational expenses which is not corrected or remedied
within thirty (30) days written notice from Dallas County.
D. Upon the occurrence of an Event of Default of the type specified in
C. 1 or C. 2 and if the Contractor reasonably believes: (a) that such Event
of Default cannot be cured within the thirty (30) days allowed to cure such
Event of Default, and (b) that such Event of Default can be cured, through a
diligent, on-going and conscientious effort on the part of the Contractor,
the Contractor may, within the thirty day cure period, submit a plan for
curing the Event of Default to Dallas County (which plan shall show in
detail the means the Contractor proposes to cure the event of Default).
Upon receipt of any such plan for curing an Event of Default, Dallas
County shall promptly review such plan and, at its discretion, allow or
disallow the Contractor to pursue such plan. If Dallas County allows the
Contractor to pursue the plan, Dallas County agrees that it will not
exercise its remedies hereunder with respect to such Event of Default
providing the contractor diligently, conscientiously and timely undertakes
to cure the Event of Default in accordance with the approved plan. If
Dallas County does not allow an extension of the cure period, the thirty
day time period shall be tolled during the period of time the plan is
pending before Dallas County.
E. Upon the occurrence of an Event of Default by the Contractor, Dallas
County shall have the right to pursue any remedy it may have at law or
equity, including but not limited to; (a) reducing its claim to a judgment;
(b) taking action to cure the Event of Default, in which case Dallas County
may offset against any payments owed to the contractor all reasonable costs
incurred by Dallas County in connection with its efforts to cure such Event
of Default; (c) recovery of its reasonable attorneys fees and costs from
Contractor; and (d) termination of this Contract and removal of the
<PAGE> 26
Contractor as the operator of the Facility and the offsetting against any
payments owed to the Contractor by Dallas County of any reasonable amounts
expended by Dallas County to cure the Event of Default. In the event of the
Contractor's removal as operator due to an Event of Default, Dallas County
shall have no further obligation to the Contractor after such removal and
the Contractor agrees to comply with Section 30.F hereof and to cooperate
with Dallas County during the transition of the Facility.
F. Notwithstanding anything to the contrary herein, in the event any
bankruptcy, reorganization, debt arrangement, moratorium, proceeding under
any bankruptcy or insolvency law, or dissolution or liquidation proceeding,
is instituted by or against contractor and, if instituted against Contractor,
is consented to or acquiesced in by Contractor or is not dismissed within
sixty (60) calendar days, this Contract shall be immediately terminated and
canceled, and Dallas County shall promptly assume responsibility for the
operation, management and supervision of the Facility. In the event this
Contract is canceled pursuant to the terms of this section, Contractor
agrees that Dallas County may take control and ownership of all the
property, materials, supplies and records within the Facility. Further,
Dallas County may, at its discretion, employ or contract for personal
services with any, or all employees, agents or employees of Contractor at
the Facility. In such event, Contractor shall have no claim, and hereby
expressly waives all claims for compensation and payment for such property,
materials, supplies, and records and/or regarding such employees.
G. Any notice, demand, or request to be given under this Contract shall be
deemed to have been given if reduced to writing and delivered in person or
mailed by overnight or Registered Mail, postage pre-paid, to the party who is
to receive such notice, demand or request at the addresses set forth below.
Such notice, demand or request shall be deemed to have been given three (3)
days subsequent to the date it was so delivered or mailed.
DALLAS COUNTY AND CORRECTIONAL SERVICES
DALLAS COUNTY CORPORATION
JUVENILE BOARD
Michael K. Griffths, Director James F. Slattery,
Dallas County Juvenile Department President and CEO
2600 Lone Star Drive 1819 Main Street
Dallas, Texas 75212 Suite 1000
Sarasota, Florida 34236
31. SEVERABILITY
If any provision of this contract is construed to be illegal, invalid
or unenforceable, this will not affect the legality or validity of any of
the other provisions hereof. The illegal, invalid or unenforceable
provision will be deemed stricken and deleted herefrom, but all other
provisions will continue and be given effect as if the illegal, invalid
or unenforceable provision had never-been incorporated herein.
<PAGE> 27
32. EXHIBITS INCORPORATED
By this reference, Exhibits A, B, C and D are incorporated into
this Contract as if fully set forth herein.
33. ACCEPTANCES
By their signatures below, the representative of Dallas County, and
Contractor executing this Contract represent that they are duly authorized
to execute the Contract on behalf of their Party and to validly bind their
Party to all terms, conditions, performances and provisions set forth
herein.
Executed this 26th day of August, 1998.
FOR: CORRECTIONAL SERVICES FOR: DALLAS COUNTY AND THE
CORPORATION DALLAS COUNTY JUVENILE BOARD
/s/ James F. Slattery /s/ Lee F. Jackson
President an CEO Dallas County Judge and
Chairman of Dallas County
Juvenile Board
Date: 8/26/98 Date: 8/18/98
Approved as to form: /s/ John B. Dahill
District Attorney
<PAGE> 28
COURT ORDER
ORDER NO: 98 1700
DATE: SEP 1, 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 1st day of September, 1998, on motion made by Michael
Cantrell, Commissioner of District No. 2, and seconded by Jim Jackson,
Commissioner of District No. 1,the following order was adopted:
WHEREAS, this matter was briefed to the Commissioners Court on August 25, 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 operation and programming of a 96-Bed Secure Facility located at 4639 Harry
Hines, Dallas, Texas; and
WHEREAS, the contract is to begin on date of execution and end September 30,
1999, with the option for two additional twelve month periods under the same
terms and conditions; and
WHEREAS, under the terms of the contract Dallas County is required to provide a
facility to be located at the Old Juvenile Detention Facility, 4639 Harry Hines,
Dallas, Texas; and
WHEREAS, the facility consists of 51,460 square feet of building space; and
WHEREAS, CSC will share the premises with Dallas Challenge consisting of 1,321
square feet of building space; and
WHEREAS, CSC will be responsible for providing services for the operation and
programming of a 96-Bed facility; and
WHEREAS, CSC will manage, supervise and operate the facility and receive,
supervise and care for each juvenile that is assigned to or 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, natural gas,
water, sewage, trash collection and local telephone services; and
<PAGE>
WHEREAS, the Assistant Director of Facilities Management, and the Director of
Juvenile and the Assistant District Attorney, Civil Section have reviewed the
terms of the License/Shared Use 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 to execute a
License/Shared Use Agreement with the Correctional Services Corporation for
approximately 51,460 square feet of building space of which 1,321 square feet of
space is shared with Dallas Challenge for use as a 96-Bed Secure Facility
located at the Old Juvenile Detention Center, at 4639 Harry Hines, Dallas,
Texas, beginning September 1, 1998, ending upon the expiration or termination of
the contract with the CSC for operation of the facility, with Dallas County
providing maintenance staff, maintenance, utility operating services to include
electricity, natural gas, water, sewage, pest control, trash collection and
local telephone service.
DONE IN OPEN COURT this the 1st day of September, 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/SHARED USE AGREEMENT
DALLAS COUNTY JUVENILE DETENTION CENTER
4639 HARRY HINES
DALLAS COUNTY, TEXAS AND THE DALLAS COUNTY
JUVENILE BOARD (DCJB)
and
CORRECTIONAL SERVICES CORPORATION
(CSC)
DATE: SEPTEMBER 1998
<PAGE>
LICENSE/SHARED USE AGREEMENT
This Agreement is entered into to be effective the 1st day of September, 1998,
between Dallas County, Texas, (County), the Dallas County Juvenile Board (DCJB),
and Correctional Services Corporation, hereinafter referred to as ("CSC").
RECITALS:
WHEREAS, pursuant to Dallas County Request for Proposals No. 98-280, 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 operation and programming of the 96-Bed Secure Facility, to select
the operator for the 96-Bed Secure Facility that will be operated in the
Juvenile Detention Center located at 4639 Harry Hines, Dallas, Texas, forty four
(44) beds to be used for operations of a post adjudication program that will
serve as a "last chance" for juveniles who commit technical violations of their
probation and a maximum of fifty two (52) beds to be used as a detention center
for youth(s) with court cases pending, (hereinafter the "Contract"); and
WHEREAS, County has agreed to furnish the real and personal property as
described in the Request for Proposal 98-280 and the Contract for the use of
Correctional Services Corporation for the limited purpose of operation and
programming the Dallas County 96-Bed Secure Facility (hereinafter referred to as
"Facility", to be located on the campus of the Dallas County Juvenile Detention
Center, 4639 Harry Hines, 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 Juvenile Detention Center as requested by
CSC and DCJB.
NOW THEREFORE, subject to the mutual agreed terms, conditions, covenants and
warranties contained herein and conditioned upon strict compliance therewith,
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> 2
I.
BASIC TERMS
(A) Definitions:
-----------
"County" means Dallas County acting through the Dallas County Commissioners
Court. As used in this License only, it does not include the Dallas County
Juvenile Board.
"CSC" means Correctional Services Corporation, and their officers, agents,
employees, invites, licensees, Juveniles, or visitors.
"DC" means Dallas Challenge, Inc. and their officers, agents, employees,
invitees, licenses, 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.
"Operating Expenses" means all expenses that County shall reasonably pay in
connection with the ownership, and maintenance of the building;
"Premises" means approximately 51,460 square feet of building, more or less,
and land area within the security fencing, including such fencing, and the
outside paved recreational area, known as the Dallas County 96-Bed Secure
Facility located at the County Juvenile Detention Center, 4639 Harry Hines, City
of Dallas, Texas, as more specifically described in Exhibit "A" and as located
on Exhibit "B", both of which are attached hereto and incorporated herein by
reference as if fully reproduced herein, which area includes the Shared
Premises.
"Premises Common Area" means that portion of the Juvenile Detention Center
located at 4639 Harry Hines, City of Dallas, Texas, intended for the common use
of CSC, DC and their officers, employees, agents, invitees, contractors and
subcontractors including among other facilities the parking areas, invitees,
contractors and subcontractors including among other facilities the parking
areas, private streets and alleys, landscaping, curbs, loading area, sidewalks,
lighting facilities, drinking fountains, and the like, but excluding (1) streets
and alleys maintained by the City of Dallas, (2) any area not owned by the
County or leased or licensed by the County to any other person or entity,
excluding the Shared Premises, or (3) areas where access is restricted by the
County including but not limited to, all maintenance equipment and facilities,
jail, detention or other secure facilities, excluding those licensed to CSC
herein, telephone, computer or financial areas, or any other area designated by
County as an employee only or restricted access or security area.
<PAGE> 3
"Juveniles" shall mean those persons delivered into the possession and control
of CSC for placement in the 96-Bed Facility.
"Facility Operation Hours" means twenty four (24) hours per day, seven (7) days
per week.
"Shares Premises" means the approximately 1,321 square feet of the building more
or less, located in the Juvenile Detention Center, 4639 Harry Hines, Dallas,
Texas, as more particularly described in Exhibit "A" and as located as shown on
Exhibit "C", both attached hereto and incorporated by reference as if fully
reproduced herein word for word, which is shared by DC, County and CSC, and
their assigns, licensees, agents, officers, employees, representatives,
invitees, contractor and subcontractors, being one and the same as the Common
Area described in the Contract of which this is attachment "C".
"Facility" means the Premises, including the Shared Premises and Premises Common
Area.
(B) Address of 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) Subject to the mutual agreed terms, conditions, covenants and warranties
contained herein and conditioned upon strict compliance and conditioned
therewith and the joint utilization of the Shared Premises by CSC and DC, the
County hereby grants a license to CSC to enter and use the Facility for the sole
purpose of operating and programming the 96-Bed Secure Facility as described in
Request for Proposals No. 98-280, and as described in the Contract with the
County and DCJB for providing those services, each of which are
<PAGE> 4
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. 98-280
(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 XVIII (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 XVIII, 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 (l0th) 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
<PAGE> 5
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.
------------
(1) Premises. The Premises shall be occupied and used exclusively for the
Permitted Use of implementing and operating the Dallas County 96-Bed Secure
Residential Facility and shall not be used for any other purposes.
(2) Premises Common Area. With respect to the Premises Common Area, CSC
agrees that (1) County may from time to time designate specific areas for
parking of motor vehicles, limited to automobiles land light trucks (pick up
trucks and vans) owned by CSC, its employees, or invitees; (2) CSC, and its
employees agents, representatives, invitees, contractors and subcontractors
shall not interfere with or permit the interference with the right of other
persons to use the Premises Common Area; (3) County, at its sole discretion, may
temporarily close any part of the Premises Common Areas as may be necessary for
maintenance, repairs or alterations; (4) the roof(s) of the building(s) are
specifically not included in the common or other area and access thereto by CSC
and its employees, invitees, agents, representatives, contractors and
subcontractors is prohibited.
(3) Shared Premises and Use.
(a) CSC understands and agrees that County will enter into a
License/Shared Use Agreement with DC for the operation of a Truancy and Class C
Enforcement Center (the "Center") and will share the use of the Shared Premises
with CSC.
(b) CSC and its employees, invitees, agents, representatives,
contractors and subcontractors shall have the non-exclusive right to use the
Shared Premises Common Area (specifically excluding the roof or roofs) as
constituted from time to time, such use to be in common with DC, the County, its
Department heads, officers, employees, invitees, agents, representatives,
contractors and subcontractors, lessee(s), licensee(s) and assignees subject to
such reasonable rules and regulations governing use as County from time to time
may prescribe.
(c) DC shall have the non-exclusive right and joint use of the areas of
the Shared Premises and Common Area licensed to DC by County from 8:00 A.M. to
6:00 P.M. or until completion of any court or magistrate proceeding, Monday
through Friday of each Week as follows to be used by DC for the following
purposes:
<PAGE> 6
(1) visitors entrance, to be ;used by DC for families to enter the
Shared Premises;
(2) visitation waiting areas, to be used by DC for use by families
waiting for interviews with Center staff and for court hearings;
(3) visitation rooms, to be used by DC for Center staff to use when
interviewing juveniles and families;
(4) police entrance, to be used by DC for law enforcement officials
transporting youth for processing by Center staff;
(5) secure holding rooms, to be used by DC for housing youth pending
processing by Center staff;
(6) court room, to be used by DC for court proceedings; and
(7) the police entrance control room, to be used by DC for office
space for Center staff responsible for providing entrance to the Shared Premises
by law enforcement officials transporting juveniles for processing by Center
staff.
All other uses and times are for the non-exclusive use of CSC.
(d) CSC agrees to timely furnish all schedules for the use of the
Shared Premises to DC and to fully co-operate with DC to allow for maximum
utilization of the Shared Premises and to prevent the disruption of any Court or
Magistrate proceedings. In the event of a conflict regarding the use of the
Share Premises that cannot be settled by mutual agreement of the parties
utilizing the Share Premises, such conflict shall be submitted to County for
resolution with such determination by County to be final.
(e) CSC shall have control of the security of the Shared Premises. DC,
its officers and employees, shall comply with and shall require that its agents,
representatives, invitees, contractors, subcontractor, licensee(s) and
assignees, if any, comply with any and all rules and regulations as may be
promulgated by CSC, or the County, its Department heads, officers, employees,
agents, representatives, invitees, contractors, subcontractors, licensee(s) and
assignees.
(f) DC shall provide a staff person to monitor the police entrance and
provide access to the Shared Premises for law enforcement officials transporting
Juveniles referred to the Center.
(g) CSC shall develop and furnish such rules and regulations that are
required to maintain the security of the Shared Premises for the joint non-
exclusive use by both CSC and DC. Such rules shall not interfere with, prevent
or restrict the operation of the Truancy and Class C Enforcement Center and/or
court or magistrate proceedings more than is required to maintain a secure
Facility. DC has agreed to conduct Center operations in the Shared Premises in
a manner that maintains the strict security of, and does not interfere with,
operations of the
<PAGE> 7
secure juvenile facility by Dallas County, its contractors, including but not
limited to Correctional Services Corporation, licensee(s), assignees, and/or its
designee(s). Further, DC agrees to follow all rules and regulations of County,
including but not limited to those shown in Exhibit "C", which is incorporated
herein as if fully reproduced, word for word its Department heads, officers,
employees, agents, representatives, invitees, contractors, including but not
limited to Correctional Services Corporation, subcontractors, licensee(s) and
assignees, regarding security of the Shared Premises, including but not limited
to, access, assignment of keys, checking of or for weapons, and persons allowed
into and out of the Shared Premises. In this regard DC has agreed that DC will
provide adequate supervision of Juveniles held in both secure and non-secure
areas of the Shared Premises and provide adequate supervision of families
entering the Shared Premises for interviews and court proceedings.
(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
<PAGE> 8
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
<PAGE> 9
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 personalty 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;
<PAGE> 10
(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; and
(j) 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;
(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; and
(e) Notifying Dallas County of maintenance concerns.
(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
<PAGE> 11
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 98-280, 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).
<PAGE> 12
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
<PAGE> 13
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. Additionally, CSC shall not inscribe, paint, or affix
to or display any signs, advertisements or notices from or on the premises
Common Area.
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 98-280 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.
<PAGE> 15
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
<PAGE> 16
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, 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 98-280, 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,
<PAGE> 17
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
<PAGE> 18
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 98-280 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 ninety
(90) 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/Shared Use Agreement.
<PAGE> 19
XVII.
SURVIVAL
All Indemnification provisions, including but limited to section XI
(g)(Indemnity) of this agreement; all insurance provisions, including but not
limited to sections XI (a) (Property Insurance), (b)(Liability Insurance),
(c)(Worker' Compensation Insurance), (d)(Insurance); and (f)(Premiums and
Deductibles), section IV (Security Deposit); section XVIII (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.
<PAGE> 20
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
<PAGE> 21
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.
COUNTY OF DALLAS CORRECTIONAL SERVICES
CORPORATION
BY: Lee F. Jackson By: James F. Slattery
Presiding County Judge Title: President and CEO
Date: 9/1/98 Date: 9/10/98
APPROVED AS TO FORM:
By: John Dahill
Assistant District Attorney, Civil Section
CROWLEY MANAGEMENT SUBCONTRACT (Temporary)
THIS CROWLEY MANAGEMENT SUBCONTRACT (hereinafter called "Agreement"),
dated as of October 16, 1998, is made and entered into by and between.
CROWLEY CORRECTIONAL SERVICES L.L.C., a Delaware limited liability company
("CCSL"), 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 CCSL and CSC
and their successors in interests.
WHEREAS, Crowley County, Colorado (the "County") created and
established a correctional detention facility to initially house up to 1,200
adult male medium-security inmates to be known as the Crowley County
Correctional Facility (the "Facility"); and
WHEREAS, the County designated and appointed Dominion
Management-Colorado, Inc. ("DMC") 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
October 24, 1997 (as the same may be amended, modified, supplemented or
restated from time to time the "Intergovernmental Agreement"), between the
County and DMC. DMC, with the consent of the County, assigned its rights under
the Intergovernmental Agreement to Dominion Venture Group, L.L.C., a Delaware
limited liability company ("DVG"), to further assign and/or lease its
interest in the Facility and the Agreement to another subsidiary or other
subsidiaries, including but not limited to, Crowley Correctional Properties,
L.L.C., a Delaware limited liability company ("CCPL") and/or CCSL; and
WHEREAS, DVG assigned its interest in the Facility and the
Intergovernmental Agreement to CCPL pursuant to the terms of an Assumption and
Assignment Agreement dated as of August 28, 1998, and CCPL has subleased the
Facility pursuant to the terms of a Lease dated as of August 28, 1998 and CCSL
has assumed and agreed to perform all of CCSL's obligations under the
Intergovernmental Agreement.
WHEREAS, CCSL desires to engage CSC to manage the Facility for the
benefit of CCSL 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 CCSL it has resources to perform its
duties competently hereunder, including but not limited to 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> 1
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.
Base Per Diem Rate. The term "Base Per Diem Rate" means a rate of $31.50
compensation to be paid by CCSL to CSC per Inmate Day for correctional services
to be performed by CSC under this Agreement. The sum of One Dollar ($1.00) of
said compensation shall be considered as a payment by CCSL to CSC for Start-Up
Expenses.
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
payments made to CSC which have been considered a payment to CSC for Start-Up
Expenses from the Base Per Diem Rate. 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.
Colorado DOC. The term "Colorado DOC" means the State of Colorado
Department of Corrections and its successors under the Inmate Contract.
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 CCSL
and/or the County and a Jurisdiction, including the Colorado 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
<PAGE> 2
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 CCSL 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.
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 CCSL and/or the
County for the Inmate's housing and care in the Facility.
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 4 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.
State. The State of Colorado.
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 to be acquired by CSC pursuant to Section 7.2 hereof or
inventory to acquired by CSC in operating the Facility.
<PAGE> 3
ARTICLE II
Term and Relationship
---------------------
Section 2.1. Appointment and Term. CCSL 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 CCSL shall have the option to extend the term of this
Agreement for an unlimited number of successive Renewal Terms.
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.
Section 2.3. Termination. CSC or CCSL shall terminate this Agreement on
December 1, 1998, unless extended by the mutual agreement of the parties hereto.
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 CCSL. 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 CCSL.
Accordingly, CSC acknowledges and agrees that it shall not be entitled or
eligible to participate in any rights or privileges given or extended by CCSL 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 the operation and
management of the Facility and the performance of its obligations pursuant to
this Agreement 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 is customary in the industry for similar facilities. 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 CCSL 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.
<PAGE> 4
ARTICLE III
Duties of CSC
Section 3.1. Schedule for Opening. CSC shall timely perform the tasks which
are necessary to achieve an efficient and timely opening of the Facility meeting
the needs of the Jurisdictions and CCSL. CSC agrees to provide CCSL information
on the status and stages of completion of each task at reasonable times and
places.
Section 3.2. Funding of Start-Up Costs and Working Capital. CSC shall
provide the monies to be used to fund the purchase of the assets and equipment
described in ATTACHMENT 4 hereto in the approximate amount of $1,000,000 and to
pay other Start-Up Expenses, working capital and inventory necessary to operate
the Facility.
Section 3.3. Duty to Perform Agreements. CSC acknowledges that it is acting
as a subcontractor of CCSL and has received a copy of the Intergovernmental
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 agreement.
CSC agrees to strictly comply with the terms of and said Inmate Contracts shall
be incorporated by reference into this Agreement. (all without limitation on
the duties of CSC set forth in this Agreement). CSC shall provide all insurance
required by the Intergovernmental Agreement and Inmate Contracts. If any
provision of an Inmate Contract contradicts the provisions of this Agreement,
CSC may seek, and CCSL shall use reasonable efforts to provide, written
clarification of CSC's duties hereunder in the event of such conflict or CSC
and CCSL shall amend this Agreement to avoid such conflict.
Section 3.4. Indemnification. CSC agrees to be responsible for, defend and
hold harmless CCSL, CCPL, the County, the Commissioners of the County, the
Jurisdiction, successors and assigns of each indemnified party and their
respective members, 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 during the
term of this Agreement out of the acts, omissions, negligence, willful
misconduct or other breach of the terms hereof by CSC, its officers,
contractors, subcontractors, agents or employees and all costs, expenses and
fees (including, without limitation, attorneys fees and expenses) resulting
therefrom or relating thereto. CCSL agrees to be responsible to defend and hold
harmless CSC, successors and 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
CCSL, its directors, shareholders, officers, subcontractors, agents (excluding
CSC) or employees under this Agreement. CSC's indemnity shall include without
limitation 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.
<PAGE> 5
The provisions of this Section 3.4 relating to indemnities shall survive the
termination of this Agreement for any reason.
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 2.6 of the Intergovernmental
Agreement and the following subparagraphs (a) through (i) all for the benefit of
CCSL 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, CCSL and the Jurisdiction, shall be
entitled to coverage to the extent of such higher limits. Certificates of
Insurance must be furnished by CSC to CCSL 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 $34,000,000. It shall be subject to a reasonable
deductible not to exceed $ 25,000 (including riot and earthquake). Such
insurance shall also insure CCSL 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 $7,000,000 (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 CCSL, CCPL, the County, the Commissioners of the County, Warden, and
their respective employees, members, shareholders, officers, directors,
agents and other representatives, and their successors and assigns
(collectively, the "Additional Insureds") and the Jurisdiction and name CCSL
as an "alternate employer."
(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
<PAGE> 6
combined single limit per occurrence and annual aggregates (but not less
than $20,000,000) 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, CCSL, CCPL the County, the
Commissioners of the County, 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 CCSL 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, agents, employees, contractors, subcontractors 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
$35,000,000 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.
(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.
<PAGE> 7
(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,
contractors, 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.
(1) 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 CCSL. 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 that health. 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 CCSL. 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.
(b) Health Care. Health care operations may be delivered by
<PAGE> 8
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 copayment 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 on-site
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 Colorado Department of
Corrections contract with CCSL.)
(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 1.
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 5.
(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 undertakes
to seek participation of local churches and
<PAGE> 9
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 $1.00
per day per Colorado Inmate housed in the Facility into a "special trust
account" for the benefit of the Inmates. These funds shall be utilized as
directed by the Colorado DOC to compensate Colorado Inmates assigned to the
Facility. CSC shall account monthly and annually to CCSL on the activities
of this account and its balances. To the extent that inmates from states
other than Colorado are housed at the Facility, CSC shall contribute such
amount per day into trust accounts for payment of inmate wages as required
by the Jurisdiction, but in no event shall the amount contributed by CSC
exceed $1.00 per inmate day. At the end each year of operation, CSC shall
make its annual accounting in a manner requested by CCSL. 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 for operations of the
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 CCSL
for
<PAGE> 10
approval not later than 30 (90) days after 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:
(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 CCSL. 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. Section 3.7. hereof
notwithstanding, CCSL reserves the right to approve or reject the warden,
maintenance supervisor, chaplain and successor wardens, maintenance
supervisors and chaplains 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 1. Proposed
changes to the Staffing Plan will be submitted to CCSL for approval prior
to implementation. Commencing on the date that the Facility first achieves
95 percent occupancy (based upon 1,200 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. Notwithstanding that during any period in which CSC's workforce
may be reduced as a result of vacant bed space, all other terms and
provisions
<PAGE> 11
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 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. CCSL 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 CCSL.
(c) Staff Training. CSC will provide a comprehensive, on-going
training program for all Facility employees that complies with ACA Standards
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
2. 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 CCSL. 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 CCSL in writing each time any program is offered under this
Agreement and
<PAGE> 12
describe the goals and results thereof in such manner as CCSL may reasonably
request.
(d) Emergency Response Plans. Thirty (30) days prior to the expected
Service Commencement Date, CSC will deliver to CCSL an Emergency Response
Plan for the marshaling of resources to quickly and appropriately respond to
any crisis that might arise in the operation of 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
CCSL.
(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 CCSL, 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
<PAGE> 13
CCSL, 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 CCSL at least 30
days notice of its intentions to destroy or discard such documents. All
documents referred to in this subparagraph shall be available for inspection
and copy by CCSL 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 Colorado
Department of Correction for its Inmates.
Section 3.8. CSC Agreements. CSC has no authority to create any monetary or
contractual obligation for CCSL without the prior express written consent of
CCSL.
Section 3.9. Regulations and Permits. CSC shall do all things necessary to
maintain in full force and effect, for the benefit of the Facility and CCSL, 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 CCSL 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 CCSL duties and responsibilities including sale of assets or
actions which may result in a change in the primary business of CCSL; 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 CCSL 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, the
County, CCPL or CCSL or any of its affiliates or personnel without CCSL'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
<PAGE> 14
(b) disclosures required to be made by governmental regulatory
agencies to include the Securities and Exchange Commission (to include
rising of the Facility in 10-Qs and 10-Ks) or other obligation or requirement
to CSC's shareholders.
CCSL shall be consulted as to potential news release concerning the
Facility, except as provided in subparagraph (a) above. 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
operations will not be released. CCSL will not release information concerning
operations of the Facility which would be in violation of applicable law and
Jurisdiction's rules and regulations. Both CSC and CCSL 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 3 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 CCSL at the Facility.
The telephone system described in ATTACHMENT 4 routinely used by employees
of CSC to operate the Facility will be purchased and maintained by CSC.
Section 3.13. Relationship with Jurisdiction(s). CSC shall cooperate with CCSL
in CCSL's marketing efforts for occupancy of the Facility. Jurisdictions will be
treated as valued clients by CSC and CCSL. CSC shall recognize Jurisdictions as
clients of CCSL and shall not attempt to intervene in that relationship or to
create any atmosphere that would be detrimental to an ongoing business
relationship between CCSL 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 CCSL and CSC with
certain Jurisdictions. In such cases both CSC and CCSL 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 CCSL, or its affiliates, business
activities jointly engaged with CSC by CCSL. CSC shall use its best efforts to
support the marketing programs of CCSL 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.
<PAGE> 15
Section 3.14. Related Contractual and Conditions Requirements. It is
contemplated by CCSL and CSC that CCSL 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 Jurisdictions' (including
Colorado 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 CCSL 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 CCSL
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 CCSL a copy of a licensing agreement for any of said
materials which contains a copyright for unlimited future use at the Facility
by CCSL or its subcontractors without payment of any royalty or fees.
Section 3.16 Inmate Information. CSC shall produce for inspection to CCSL
all Inmate tracking information, records relating to Reimbursable Costs, and the
housing of Inmates at the Facility. CSC, upon the request of CCSL, will furnish
computer disk copies or equivalent modes of information transfer of such Inmate
information.
ARTICLE IV
Duties of CCSL
Section 4.1. Duty to Furnish Facility. CCSL will cause the Facility to be
constructed as provided in Section 7.1 hereof. CCSL, or one of its affiliated
entities, will enter into agreements and contracts for the furnishing of gas,
electricity, water and sanitary sewer services. CSC pays all utility cost for
the
<PAGE> 16
operation of the Facility from the date of the Service Commencement Date. CCSL
estimates the Facility will be totally completed by January 1, 1999, but
occupancy may commence prior to said date.
Section 4.2. Duty to Perform Accounting Functions. CCSL will, or it will
cause one of its affiliated entities, 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 CCSL and each invoice
accounted for and matched with the corresponding receipts and split between the
amounts owed CSC and CCSL.
Section 4.3. Duty to Cooperate and Assist. CCSL agrees to cooperate with 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. Marketing Bedspace. CCSL shall be primarily responsible to
market bedspace for the Facility and to make all contacts, meetings, proposals,
and negotiations with the Jurisdictions and the Colorado DOC and the personnel
associated with the contracting for bedspace within the Facility as applicable.
ARTICLE V
Facility Maintenance and Expenses
Section 5.1. CCSL's Warranty Responsibilities. Canam Construction, L.L.C.
has constructed the Facility pursuant to a construction contract. 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
each individual building (the "Warranty Period"). CCSL 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. CCSL's Continuing Responsibilities. Subsequent to the Warranty
Period and for the balance of the term hereof, CCSL 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 flatworm parking
lots, sidewalks, driveways and roads.
<PAGE> 17
Section 5.3. CSC'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 CCSL 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 CCSL's obligations described in Section 5.1 hereof, CSC's maintenance, repair
and replacement obligations include, but are not limited to, the following:
(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 CCSL 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 CCSL
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 CCSL 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 CCSL agree to coordinate the
<PAGE> 18
performance of all repairs and replacements so as to minimize disturbance of
Facility operations.
Section 5.6. CCSL's Expenses. CCSL shall pay the expenses of the Facility
until the Service Commencement Date, excluding the expenses CSC has specially
agreed to provide and/or pay for in this Agreement. CCSL 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) All expenses required to maintain, repair and/or replace the
assets referred in ATTACHMENTS 3 and 4 hereto;
(d) All costs and damages related to any escape, riot or
disturbance;
(e) The payment of deductible amounts or coinsurance amounts for
insurance purposes; and
(f) All indemnification costs and expenses of CSC arising under
Section 3.4 hereof.
ARTICLE VI
Compensation to CSC
Section 6.1. Base Management Fee. CCSL 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 CCSL for
the amount of such increase in the form of a raise in the Base Per Diem Rate.
Any increases in fees for the Colorado Inmates received specifically for
programming as requested by the Colorado DOC shall be paid to CSC.
In addition, CCSL and CSC shall equally split (50-50) the amount of per
diems, from jurisdictions other than Colorado, which exceeds the per diem paid
<PAGE> 19
by Colorado to CCSL for the Facility (applies to amounts above $48.34 the
Colorado per diem).
Section 6.2. Start-Up Expenses and Phase In Operating Losses. CCSL shall pay
CSC for monies its expends relating to Start-Up Expenses and Phase In Operating
Losses under the following circumstances:
(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, CCSL shall have the option to purchase the
property described in ATTACHMENT 4 hereto for Book Value of such items at
the date of the termination. In such event, CSC shall assign the property
described in ATTACHMENT 4 to CCSL, clear title, free of all liens and
encumbrances.
(b) In the event CCSL terminates this Agreement by reason of the
default of CSC during the Initial Term, CCSL shall have the option to
purchase the property described in ATTACHMENT 4 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 4 to CCSL,
clear title, free of all liens and encumbrances.
(c) In the event CCSL terminates this Agreement for its convenience
during the Initial Term of this Agreement, CCSL 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 4 to
CCSL, clear title, free of all liens and encumbrances.
Section 6.3. Payment for Reimbursable Expenses. CSC shall receive from CCSL
additional amounts for Reimbursable Expenses received by CCSL under any Inmate
Contract.
Section 6.4. Submission of Invoices by CCSL and CSC. No later than the 5th
Business Day of each month, CSC shall have submitted an invoice to CCSL
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 CCSL and the Jurisdiction. Within two (2) Business Days of
receipt of CSC's invoice, CCSL shall deliver, or cause such delivery, an
invoice to the Jurisdiction for amounts for Inmate per diem charges and
Reimbursable Expenses. CCSL 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 CCSL to CSC within five (5) Business Days of the receipt of
the payment (of immediately available funds) from the Jurisdiction.
<PAGE> 20
Section 6.5. Limited Obligations of CCSL. The obligations of CCSL 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 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 CCSL payable
solely from monies CCSL 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 CCSL, 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, CCSL 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 CCSL by such Jurisdiction. The amounts due by CCSL to CSC for
lump sum payments for payments described in subparagraphs (a), (b) and (c)
of Section 6.2 are the general obligations of CCSL.
Section 6.6 Disputed Amounts. In the event a Jurisdiction fails to pay or
contests any charges, both CCSL and CSC agree to cooperate in attempting to
collect the amounts due as invoiced.
Section 6.7. Re-negotiation of Management Fees. CSC and CCSL 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 Colorado 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 3 and 4, 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, CCSL 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 6.2 hereof which accrued prior to the date of
termination.
<PAGE> 21
ARTICLE VII
Inventory, Furnishings Fixtures and Equipment
Section 7.1. CCSL Assets. Ownership of all permanent, fixed assets of the
Facility, including, but not limited to, those scheduled on ATTACHMENT 3, shall
remain the property of CCSL or its assigns and shall not be removed from the
Facility without the written approval of CCSL. 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 4 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 4 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 CCSL. At that time CSC will execute and deliver to CCSL 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 4 shall remain the
property of CSC. CSC is responsible to accurately record and maintain the
Attachment 4 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 CCSL 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. Each of the following shall be an Event of
Default and cause for either party to this Agreement to terminate this
Agreement:
<PAGE> 22
(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 VIII
after written notice thereof; or
(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 CCSL; or
(d) CSC in breach of its obligations hereunder (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. The Section 8.2 shall not apply to situations
where no cure period, or a cure period of less than thirty (30) is
provided for in an Inmate Contract, the Intergovernmental Agreement or
the Lease, for a action or inaction which results in a default.
Section 8.3. 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 CCSL, or its assigns, in obtaining another
operator/manager of
<PAGE> 23
the Facility or assuming the operation by CCSL 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 CCSL actually identifies and starts
the services of a manager and operator in place of CSC. Such transition period
shall not exceed 120 days, unless mutually agreed upon by CCSL 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 CCSL, 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. CCSL Assignments. CCSL 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, CCSL 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 CCSL's (and its affiliates')
Obligations under the Note Purchase Agreement and the Other Agreements (and
therein defined). CCSL further reserves that any form of due diligence into the
operations of the Facility will be subject to CCSL'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 CCSL 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 CCSL in such circumstances at CCSL'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.
<PAGE> 24
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
the parties hereto shall be governed by the laws of the State of Colorado. 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 sha11 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 CCSL.
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 CCSL 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 CCSL, 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.
<PAGE> 25
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 except as provided in Section 10.4.
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.
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 CCSL 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.
NOTWITHSTANDING THE PROVISIONS OF THE ABOVE AND FOREGOING TERMS AND
CONDITIONS OF THIS AGREEMENT TO THE CONTRARY, THIS AGREEMENT SHALL EXPIRE
DECEMBER 1, 1998, AND ALL CONTINUING CCSL AND CSC OBLIGATIONS SHALL CEASE AT
THIS TIME.
CCSL: CROWLEY CORRECTIONAL SERVICES L.L.C.
By: /s/ JOHN R. THOMPSON
Title: EXECUTIVE VICE PRESIDENT
CSC: CORRECTIONAL SERVICES CORPORATION
By: JAMES F. SLATTERY
Title: PRESIDENT
<PAGE> 26
<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> SEP-30-1998
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0
0
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