MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (hereinafter called "Agreement"), dated as of
June 5, 1998 is made and entered into by and between. DOMINION MANAGEMENT-
OKLAHOMA, INC., an Oklahoma corporation ("DM-OK"), with its principal offices
in Edmond, Oklahoma; and CORRECTIONAL SERVICES CORPORATION (the "CSC"), a
Delaware corporation, with its principal offices in Sarasota, Florida. This
Agreement is applicable to DM-OK and CSC and their successors in interests.
WHEREAS, the Town of McLoud, Oklahoma (the "Town") created and
established a correctional detention facility to initially house up to 750
adult female medium-security inmates to be known as the Central Oklahoma
Correctional Facility (the "Facility"); and
WHEREAS, the Town designated and appointed DM-OK as the private prison
contractor to design, construct, equip, manage, maintain and operate the
Facility under the terms of an Intergovernmental and Private Prison Contractor
Agreement dated as of May 1, 1997 (as the same may be amended, modified,
supplemented or restated from time to time the "Intergovernmental Agreement"),
by and among the Town, DM-OK and the McLoud Economic Development Authority
("MEDA"); and ,
WHEREAS, the Facility is to be constructed on property owned by MEDA and
leased to DM-OK pursuant to the terms of a Ground Lease Agreement dated as of
May 1, 1997 as the same may be amended, modified, supplemented or restated
from time to time the "Ground Lease"), between MEDA, as lessor, and DM-OK, as
lessee; and
WHEREAS, DM-OK has been awarded a contract to house and care for up to
500 medium-security adult female inmates at the Facility pursuant to the terms
of an Inmate Services Contract dated as of April 22,1998 by and between DM-OK
and the Oklahoma DOC (hereinafter defined); and
WHEREAS, DM-OK desires to engage CSC to manage the Facility for the
benefit of DM-OK; and CSC desires to accept such engagement, all in accordance
with the terms and conditions of this Agreement as hereinafter set forth;
WHEREAS, CSC has represented to DM-OK it has resources to perform its
duties competently hereunder, including but not limited to its employees,
subcontractors, associates and affiliates, with correctional facilities, and
administrative operations, all normally associated with the operations and
maintenance of a correctional detention facility; and
NOW THEREFORE, in consideration for the mutual covenants herein
contained the parties hereby agree as follows:
ARTICLE I
Definitions
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In addition to those terms defined in the preamble, the following terms
contained within this Agreement shall have the meanings hereinafter defined by
this Article I:
ACA. The term "ACA" means the American Corrections Association (or its
successors).
ACA Standards. The term "ACA Standards" means the standards established
and amended from time to time by ACA for medium security adult correctional
facilities.
Agent. The term "Agent" means Rice Partners II, L.P., a Delaware limited
partnership, as agent for itself, ▇▇▇▇▇▇▇▇ Private Capital Partners, an
Oklahoma limited partnership and BCI Growth IV L.P., a Delaware limited
partnership.
Base Per Diem Rate. The term "Base Per Diem Rate" means a rate of $
compensation to be paid by DM-OK to CSC per Inmate Day for correctional
services to be performed by CSC under this Agreement.
Book Value. The term "Book Value" means the lesser of: 1) the actual cost
of the assets or capitalized intangible expenses less amortization over a
period of five (5) years using the straight line method, or 2) the actual cost
of the assets or capitalized intangible expenses less an amount equal to the
sum of all Unamortized Costs Payments. Amortization shall commence on the
Service Commencement Date.
Business Day. The term "Business Day" shall mean weekdays, except
weekdays which are officially designated as holidays by the United States
Government.
Effective Date. The term "Effective Date" shall mean the date in Article
II, Section 2.2.
Initial Term. The term "Initial Term" shall mean the five (5) year
period of time commencing on the Service Commencement Date.
Inmate. The term "Inmate" shall mean those prisoners charged or
convicted of violations of law and duly contracted from municipal or
governmental authorities assigned to the care, custody and control of the
Facility.
Inmate Contract. The term "Inmate Contract" means a contract between
DM-OK and/or the Town and a Jurisdiction, including the Oklahoma DOC, which
describes the rights and obligations of the parties relative to the housing and
care of inmates at the Facility.
Inmate Day. The term "Inmate Day" means each day an Inmate is assigned
to the Facility, including the day of delivery, but excluding the day such
Inmate is retaken by the Inmate's Jurisdiction, for which the delivering
Jurisdiction is contractually obligated to pay a per diem rate to or on account
of DM-OK for correctional services performed under the applicable Inmate
Contract. The definition of inmate day contained in the applicable Jurisdiction
contract shall control if there is a conflict.
Inventory. The term "Inventory" means the consumable goods purchased by
CSC which will be consumed by CSC in performing its duties under this
Agreement such as food, inmate clothing, bedding, towels, kitchen and lavatory
supplies, and building maintenance supplies.
Jurisdiction. The term "Jurisdiction" means any governmental entity that
has sentenced the Inmate to a prison term and contracted with DM-OK and/or the
Town for the Inmate's housing and care in the Facility.
Note Purchase Agreement. The term "Note Purchase Agreement" means the
Note Purchase Agreement dated as of May 1, 1997, by and among Dominion-
Management Colorado, Inc., an Oklahoma corporation, DM-OK, Dominion
Management, Inc., an Oklahoma corporation, Dominion Management III, an
Oklahoma corporation, Rice Partners II, L.P., a Delaware limited partnership,
individually ("Rice") and as Agent for ▇▇▇▇▇▇▇▇ Private Capital Partners
("▇▇▇▇▇▇▇▇"), an Oklahoma limited partnership ("▇▇▇▇▇▇▇▇") and BCI Growth IV
L.P., a Delaware limited partnership ("BCI"), ▇▇▇▇▇▇▇▇ and B, CI as the same
may be amended, modified, supplemented or restated from time to time, or
superceding financing facility (see, Annex I).
Oklahoma DOC. The term "Oklahoma DOC" means the State of Oklahoma
Department of Corrections (and its successors).
Reimbursable Expenses. The term "Reimbursable Expenses" means those
expenses incurred by CSC for funeral, transportation, hospital, surgical,
ambulance, x-ray, medicine and other expenses of a similar nature for Inmates
which the Jurisdiction has agreed to pay pursuant to an Inmate Contract which
are paid in addition to the per diem amount for such Inmates.
Renewal Term. The term "Renewal Term" means the one (1) year period
commencing on the day following the last day of the Initial Term or a
preceding Renewal Term.
Senior Management. The term "Senior Management" means those employees of
CSC assigned to the Facility to act as warden, assistant or deputy wardens,
chaplain and the maintenance supervisor for the Facility.
Service Commencement Date. The term "Service Commencement Date" shall
mean the first day on which Inmates are received at the Facility.
Start-Up Expenses. The term "Start-Up Expenses" shall mean those
tangible and intangible costs incurred by CSC in purchasing the equipment
described in Attachment 5 to this Agreement equipping the Facility and the
labor costs, costs of providing and developing the various procedures and
policies manuals and other such related costs associated with the opening and
start-up of the Facility prior to the Service Commencement Date to include
training expenses.
State. The State of Oklahoma.
Unamortized Costs Payment. The term "Unamortized Costs Payment" means
the sum of $ per Inmate Day compensation to be paid as a predetermined
reimbursement of certain costs incurred by CSC in funding Start-Up Expenses
and Phase In Operating Losses, but in any event such payment shall not exceed
the total sum of $ . These payments may be accelerated as described
in Section 6.2 hereof and in all circumstances cease at the end of the Initial
Term. If these payments through the initial five year term do not fully
amortize the $ then the balance shall extend into the extension of
the Agreement or in the event that that the Agreement is not extended with
CSC, DM-OK shall pay to CSC the unamortized balance remaining at the date of
the termination of this Agreement.
Utilities Agreement. The term "Utilities Agreement" shall mean the
Utilities Service and Capital Improvements Agreement dated as of May 1, 1997,
by and among the Town, the McLoud Public Facilities Authority, a public trust
("MPFA"), and DM-OK as the same may be amended, modified, supplemented or
restated from time to time.
Phase In Operating Losses. The term "Phase In Operating Losses" shall
mean losses incurred in the operation of the Facility after the Service
Commencement Date over the following 120 days of initial operations. Such
losses shall be determined as net losses (if any) of all revenues received
during this period from the operations of the Facility. This does not consider
any Start-Up Expenses or Equipment or Inventory to acquired by CSC.
ARTICLE II
Term and Relationship
---------------------
Section 2.1. Appointment and Term. DM-OK hereby appoints CSC as the
exclusive manager and operator of the Facility. CSC hereby accepts appointment
as the exclusive manager and operator of the Facility. The term of this
appointment is for the Initial Term and DM-OK shall have the option to extend
the term of this Agreement for an unlimited number of successive Renewal
Terms. DM-OK shall be deemed to have exercised its option to extend this
Agreement for an additional Renewal Term unless it delivers written notice of
termination to CSC at least 90 days prior to the end the Initial Term or the
then current Renewal Term.
Section 2.2. Effective Date. The Effective Date of this Agreement shall
be the date first appearing as the date that this Agreement is entered into.
Section 2.3. Termination. CSC or DM-OK may terminate this Agreement for
its own convenience by delivering to the other party written notice of
termination at least 120 days prior to the effective date of such termination.
Section 2.4. Independent Contractor Status. CSC in the performance of
its duties under this Agreement shall occupy the position of an independent
contractor with respect to DM-OK. Nothing contained herein shall be construed
as making the parties hereto partners or joint venturers, nor, except as
expressly provided herein, construed as making CSC an agent or employee of
DM-OK. Accordingly, CSC acknowledges and agrees that it shall not be entitled
or eligible to participate in any rights or privileges given or extended by
DM-OK or its affiliates to its or their employees and shall be responsible for
all employee payroll tax, withholding, insurance and other payments and filing
required as a result of the performance of its obligations pursuant to this
Agreement.
Section 2.5. Duty of Care: Licensing. CSC shall perform or supervise the
operation and management of the Facility and the performance of its
obligations pursuant to this Agreement so as to use its best efforts to cause
the Facility to best achieve its performance goals with optimal efficiency and
cost controls in conformance with all applicable permits, approvals, laws,
rules and regulations in respect of CSC and the Facility. CSC shall at all
times operate and manage the Facility in good faith and with no less care and
effort than it customary for it in providing services to other similar
facilities owned or operated by it. CSC shall obtain and maintain in full
force and effect during the term hereof all applicable licenses, permits and
approvals to fully perform its services and functions hereunder. CSC shall
promptly notify DM-OK should any such license, permit or approval be
terminated, suspended or threatened in any material respect. In no event shall
CSC be responsible for licensing or permitting of the Facility to permit it to
be occupied, e.g. occupancy permit, fire marshal's approval or other
construction licensing, etc.
ARTICLE III
Duties of CSC
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Section 3.1. Schedule for Opening. CSC shall timely perform the tasks
described in Attachment 1 hereto which are necessary to achieve an efficient
and timely opening of the Facility meeting the needs of the Jurisdictions and
DM-OK. CSC agrees to provide DM-OK information on the status and stages of
completion of each task at reasonable times and places.
Section 3.2. Escrow of CSC For Start-Up Costs and Working Capital. Upon
executing this Agreement, CSC shall deposit the sum of $ pursuant to the
terms of an Escrow
Agreement dated as of _________, 1998, by and among CSC, DM-OK and Bank One of
Oklahoma, as escrow agent. CSC shall be credited with expenditures that it has
made prior to this Escrow Agreement that would have been considered to be
subject to the funding of those monies if the Escrow Agreement would have been
in effect at the time of the expenditure for the Facility or its operations. As
an alternative to said escrow deposit, CSC shall on executing this Agreement,
establish an irrevocable, direct pay letter of credit from a source and under
terms acceptable to DM-OK to fund Start-Up Costs and Working Capital in the
aggregate sum of $ . It is the intention of CSC and DM-OK that these
monies will be used to fund the purchase of the assets and equipment described
in Attachment 5 hereto in the approximate amount of $ . The remainder of
said funds will be used by CSC to pay other Start-Up Expenses and Working
Capital and to purchase Inventory. This escrow's duration shall be 120 days
after the Service Commencement Date. At the end of this term an accounting of
the monies spent shall be performed and provided to DMI by CSC. The accounting
shall determine the amount of Start-Up Expenses actually incurred and to be
amortized up to an amount of $ .
Section 3.3. Duty to Perform Agreements. CSC acknowledges that it is
acting as a subcontractor of DM-OK and has received copies of the Note
Purchase Agreement, the Ground Lease, the Intergovernmental Agreement and the
Utilities Agreement. CSC will perform its duties as a subcontractor in such
consistent with the terms of said agreements, as if CSC were a party to said
agreements. CSC agrees to strictly comply with the requirements of all Inmate
Contracts as if CSC were a party to said such contracts and the terms thereof
were incorporated herein by reference hereto (all without limitation on the
duties of CSC set forth in this Agreement). (See, Annex II for the
incorporated agreement between DM-OK and the Oklahoma Department of
Corrections for the placing of inmates at the Facility, which is hereby
incorporated as part of this Agreement.) If any provision of an Inmate
Contract contradicts the provisions of this Agreement, CSC may seek, and DM-OK
shall use reasonable efforts to provide, written clarification of CSC's duties
hereunder in the event of such conflict or CSC and DM-OK shall amend this
Agreement to avoid such conflict.
Section 3.4. Indemnification. CSC agrees to be responsible for, defend
and hold harmless DM-OK, the Town, the Trustees of the Town, MEDA, the
Jurisdiction, Rice, ▇▇▇▇▇▇▇▇ and BCI, the Agent, successors and assigns of each
indemnified party and their respective directors, shareholders, officers,
agents and employees and their contractors from all proceedings, claims, suits
or actions including, without limitation, no fault liability (if any) of any
nature arising out of the acts, material omissions, negligence, willful
misconduct or other material breach of the terms hereof by CSC, its officers,
subcontractors, agents or employees under this Agreement and all costs,
expenses and fees (including, without limitation, attorneys fees and expenses)
resulting therefrom or relating thereto. DM-OK agrees to be responsible to
defend and hold harmless CSC, Rice, ▇▇▇▇▇▇▇▇ and BCI, the Agent, 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 DM-OK, its directors,
shareholders, officers, subcontractors, agents (excluding CSC) or employees
under this Agreement. CSC's indemnity shall include payment for any fees and
expenses incurred by any indemnified party arising from lawsuits or other
actions or proceedings by inmates in custody at the Facility.
Section 3.5. Maintaining Insurance. Without limiting CSC's indemnification,
it is agreed that CSC shall purchase at its own expense and maintain in force at
all times during the performance of services under this Agreement the designated
policies satisfying the requirements of Section 6.12 of the Note Purchase
Agreement, Section 2.6 of the Intergovernmental Agreement and the following
subparagraphs (a) through (i) all for the benefit of DM-OK and the Additional
Insureds (as defined below). Where specific limits are shown, it is understood
that they shall be the minimum acceptable limits. If CSC's policy contains
higher limits, DM-OK and the Jurisdiction, shall be entitled to coverage to the
extent of such higher limits. Certificates of Insurance must be furnished by CSC
to DM-OK and each indemnified party named in Section 3.4 above prior to the
Service Completion Date and must provide for a 30 day prior notice of
cancellation, non-renewal or material change.
(a) Property Insurance. CSC shall provide fire and extended
coverage insurance on the Facility, including protection against loss or
damage by other risks now embraced by the so-called all-risk coverage
endorsement, including, without limitation, loss by fire, explosion,
theft, windstorm, flood and other risks casualties under an "all risk"
insurance policy, in an amount equal to the replacement value, as new, of
the Facility, including all fixtures and personal property used at the
Facility, but in any event in an amount not less than $10,000,000. It
shall be subject to a reasonable deductible not to exceed $10,000
(including riot and earthquake). Such insurance shall also insure DM-OK
against the interruption of business relating to the Facility in such
amount as will provide sufficient moneys to pay operating expenses and
the mortgaged indebtedness of the Facility for a period of 12 months in
sum of $8,200,000 (with a deductible of not more than thirty (30) days).
(b) Workers' Compensation Insurance. CSC shall provide and maintain
in force statutory workers' compensation insurance coverage for all
employees of CSC engaged in work under this Agreement. Coverage must
extend to include all departments in which employees are engaging in work
and employer's liability protection not less than $500,000 per person,
$500,000 per occurrence. The Policy must be endorsed to waive rights of
subrogation against DM-OK, the Town, the Trustees of the Town, MEDA,
Warden, the Trustees of MEDA, Rice, BCI, Agent and ▇▇▇▇▇▇▇▇, and their
respective employees, shareholders, officers, directors, agents and other
representatives, and their successors and assigns (collectively, the
"Additional Insureds") and the Jurisdiction and name DM-OK as an
"alternate employer."
(c) Comprehensive (Commercial) General Liability Insurance. CSC
will provide and maintain in force comprehensive (commercial) general
liability insurance, with coverage limits not less than $5,000,000
combined single limit per occurrence and annual aggregates where
generally applicable and shall include premise operations, independent
contractors, products, completed operations, broad form property damage,
contractual liability coverage for indemnification clause in Section 3.4
and personal injury endorsements. It shall be subject to a reasonable
deductible or coinsurance in an amount not to exceed $50,000. This
insurance shall contain a "cross liability" or "severability of interest"
clause or endorsement and CSC, DM-OK, the Town, the Trustees of the Town,
MEDA, the Trustees of MEDA, Warden and the Additional Insureds shall be
included as additional insureds. This insurance shall be considered
primary of any other insurance carried by the Additional Insureds through
self insurance or otherwise.
(d) Comprehensive Automobile Liability Insurance. CSC shall provide
and maintain in force comprehensive automobile liability insurance
covering all owned, hired and non-owned vehicles with coverage limits not
less than $1,000,000 combined single limit per occurrence and annual
aggregate. This insurance shall contain a "cross liability" or
"severability of interest" clause or endorsement and Additional Insureds
shall be included as additional insureds. This insurance shall be
considered primary of any other insurance carried by Jurisdiction and/or
DM-OK through self insurance or otherwise. Any transportation contractor
engaged by CSC shall be subject to the same insurance requirement.
(e) Professional Liability Insurance. CSC will provide and
maintain in force professional liability insurance or a comparable policy
form providing jail keepers' legal liability insurance coverage for
errors, omissions or wrongful acts of CSC, a subcontractor or anyone
directly or indirectly employed by them in the performance of services of
this Agreement with limits not less than $5,000,000 combined single limit
per occurrence and annual aggregate limit. It shall be subject to a
reasonable deductible or coinsurance in an amount not to exceed $50,000.
This insurance shall contain a "cross liability" or "severability of
interest" clause or endorsement and the Additional Insureds shall be
included as additional insureds.
(f) Umbrella Liability Insurance. CSC will provide and maintain in
force an umbrella liability insurance coverage for with limits not less
than $5,000,000 combined single limit per occurrence and annual aggregate
limit. This insurance shall contain a "cross liability" or "severability
of interest" clause or endorsement and the Additional Insureds shall be
included as additional insureds.
(g) Additional Coverage. CSC is responsible for obtaining any
insurance required by the State where the Facility is located to cover
inmate work related injury, disability, or death.
(h) Fidelity Bond. CSC shall maintain a service provider fidelity
and theft bond for Inmate property including money held in trust for
Inmates while in the care, custody and control of' the CSC, its
employees, subcontractors or agents. Coverage limits shall not be less
than $25,000.
(i) Claims Made Coverage. If any of the required insurance is
arranged on a "claims made" basis, "tail" coverage shall be required at
the completion of this Agreement for a duration of 24 months. CSC will be
responsible for furnishing certification of "tail" coverage as described
or continuous "claims made" liability coverage for 24 months following
Agreement completion. Continuous "claims made" coverage will be
acceptable in lieu of "tail" coverage, provided its retroactive date is
on or before the effective date of this Agreement.
(k) Additional Insured. The liability insurance coverage required
for performance of this Agreement shall include the Additional Insureds
but only with respect to CSC's activities to be performed under this
Agreement.
(l) Cancellation. There shall he no cancellation, material change,
potential exhaustion of aggregate limits or intent to not renew insurance
coverages without thirty (30) days written notice from CSC or its
insurers to DM-OK. Any failure to comply with the reporting provision of
this insurance, except for the potential exhaustion of aggregate limits,
shall not affect the coverages provided to the Additional Insureds.
Section 3.6. Inmate Incarceration Services. It shall be the
responsibility of CSC to confine and supervise all Inmates assigned to the
Facility and to provide safe and humane care and treatment, in accordance with
ACA Standards, including the furnishing of subsistence, routine and emergency
medical care, training and treatment programs, compliance with sentences and
orders of the committing Jurisdiction(s), access to legal process and
compliance with all applicable laws and agreements.
(a) Food Service. Food service operations will be performed by CSC
employees or a combination of CSC staff and contractor employees. All
staff, Inmates and contractor employees will undergo medical testing
prior to initially reporting for food service duty assignments and will
be examined regularly to assure health of the staff. Menus will approved
by a registered dietitian using a minimum cycle of 21 days and will
provide for a minimum of daily calories to meet or exceed ACA standards
and State regulations. All health regulations of the State will be
followed and the results of all inspections will be promptly provided to
DM-OK. Special meals will be provided for Inmates when prescribed by a
physician or when religious beliefs require adherence to special diets.
Food shall not be withheld nor the standard menu varied as a disciplinary
sanction.
(b) Health Care. Health care operations may be delivered by CSC
employees, contractor employees or a combination of CSC staff and
contractor employees. All medical, mental health and dental care
personnel providing services to Inmates will be appropriately licensed
and/or certified under the laws of the State and all medical services
will be delivered in accordance with ACA standards and State regulations.
All correctional officers will receive training in CPR. The Facility
infirmary will be staffed 24 hours a day, seven days a week, and all
Inmates will have access to emergency medical, mental health and dental
care on that schedule. In the event that any Jurisdiction requires a
co-payment plan for Inmate treatment, CSC will participate in said plan
as instructed by the Jurisdiction. CSC will cause a pharmacy to be
maintained in the infirmary under the supervision and control of a doctor
or pharmacist stocked with frequently used over-the-counter medications
and frequently prescribed pharmaceuticals. CSC will provide for emergency
and non-emergency transportation for Inmate health care services outside
of the Facility as required. CSC will be responsible for all costs
associated with onsite health care and medication, and the Jurisdiction
will be responsible for payment or reimbursement of "approved" off-site
health care. ("Approved" by the Sentencing Jurisdiction as is required in
the Oklahoma Department of Corrections contract with DM-OK.)
(c) Inmate Programs and Case Management. CSC will develop and
deliver Inmate programs as appropriate to the needs of the Inmate
population and to the objectives of the Jurisdiction. The minimum level
of program staffing shall be as provided in Attachment 2.
The educational qualifications, training and certification of all
program staff members will satisfy the standards of the ACA and the
Jurisdiction. Academic and vocational instructors may be either CSC
employees and/or contract employees. All other programs staff members
will be CSC employees or subcontractors of CSC.
(d) Inmate Work Program. CSC will develop and implement a
comprehensive work program for Inmates. The program's objective will be
to provide maximum opportunity for Inmates to be engaged in constructive
activities for as many hours each day as possible, considering mandatory
Facility schedules. A CSC Proposed Inmate Work Program, including
academic, vocational, janitorial and maintenance details, recreation and
counseling, is attached to this Agreement as Attachment 6.
(e) Religion. CSC will employ a full-time certified chaplain to
develop and conduct a comprehensive religious program with representation
from a variety of denominations and faiths. The program will be open to
all Inmates who wish to participate and no preference will be given to
the activity of any one denomination, sect or faith over another. CSC
undertakes to seek participation of local churches and nonprofit organizations
near the Facility. These religious and rehabilitative programs will be
instituted and continuously encouraged by CSC that will allow the local
community to have a sense of mission to meet the inmates' religious
needs. It is understood and recognized that improving and changing lives
is the focus of these cooperative programs. CSC will be actively involved
in the support and utilization of local applications and broader
nationally recognized programs of similar application.
(f) Transportation. CSC will be responsible, at its own cost and
expense, for all local transportation of Inmates assigned to the
Facility from the point of delivery of such Inmate to the care, custody
and control of CSC and the Facility in accordance with the Inmate
Contract or as directed by the Jurisdiction delivering such inmate to
the Facility. CSC's responsibility begins once the Inmate is accepted by
CSC.
(g) Inmate Records Management. CSC will adapt its reporting
systems for basic compatibility with systems used by those Jurisdictions
whose Inmates occupy the Facility.
(h) Inmate Pay. CSC shall, at its cost and expense, contribute
$.40 per day per Inmate housed in the Facility into a "special trust
account" for the benefit of the Inmates. These funds shall be utilized
in the CSC's discretion to compensate Inmates for work activities
performed at the Facility. CSC shall account monthly and annually to
DM-OK on the activities of this account and its balances. At the end
each year of operation, CSC shall make its annual accounting in a manner
requested by DM-OK. The reserves of this account (meaning any funds
existing in the special trust account for the Inmates less all payables
to be made from the account based upon its records on the anniversary
date of commencement of operations- "closing date") shall be utilized
for the exclusive benefit of the Inmates as determined by CSC. Depending
upon the composition of the inmate population of the Facility from more
than one jurisdiction, this amount may vary from jurisdiction to
jurisdiction requiring an adjustment to modify this Agreement with
separate accounting for each jurisdiction.
Section 3.7. Facility Administration. CSC shall have authority to fully
and completely manage the operation of the Facility and to select, hire,
train, supervise and discharge all of CSC's employees assigned to the
Facility. CSC shall enter into all agreements and understandings which are
normal, routine and reasonable for the general operations of he Facility under
its own corporate identity, unless otherwise specified within this Agreement.
CSC shall prepare Policies and Procedures Manuals covering the operation of
all elements of the Facility and shall provide same to DM-OK for approval not
later than ninety (90) days prior to the expected Service Commencement Date of
the Facility. Any applicable license to use these materials at the Facility
shall be obtained in accordance with Section 3.15 hereof. These manuals will
constitute a comprehensive reference for all actions associated with the
Facility and shall incorporate, but shall not be limited to, the following terms
and conditions:
(a) Personnel Hiring and Qualifications. CSC shall employ a fully
trained and uniformly dressed staff to provide 24-hour per day, seven
days per week correctional services for the Facility. Prior to their
employment, applicants will undergo background investigations to include
educational, criminal and employment history to help assure that their
personal conduct or history will not jeopardize security of operations
or discredit the Facility, CSC or DM-OK. CSC will obtain a criminal
record check and drug test for all employees at the Facility. CSC
undertakes to provide employees and personnel to meet the requirements
of an Inmate's Jurisdiction including all testing and evaluation as that
Jurisdiction may require. All persons found to have a prior felony
conviction or who are under active supervision resulting from a
misdemeanor conviction will be denied employment at the Facility, unless
mutually agreed otherwise. Drug abuse will not be tolerated. A minimum
of ten (10) correctional officers and security supervisors employed at
the opening of the Facility shall each have a minimum of one (1) year of
verified, previous correctional experience in a secured prison
environment. DM-OK has agreed in the Intergovernmental Agreement to a
hiring preference for qualified, legal residents of the McLoud, Oklahoma
community and CSC recognizes it obligation to adhere to said terms.
Section 3.7. hereof notwithstanding, DM-OK reserves the right to approve
or reject the proposed warden and successor wardens of the Facility,
which approval shall not be unreasonably withheld. The authority and
responsibility for the compensation, supervision and discharge of any Facility
warden will be vested solely with CSC.
(b) Staffing Plan and Strength. CSC will staff the Facility in
accordance with the Staffing Plan attached hereto as Attachment 2.
Proposed changes to the Staffing Plan will be submitted to DM-OK for
approval prior to implementation. Commencing on the date that the
Facility first achieves 95 percent occupancy (based upon 850 beds) and
continuing through the balance of the term hereof, the total full-time
equivalent active staff shall be not less than 94 percent with a
quarterly average of 96 percent of full-time equivalency or more of CSC
employees and/or contract employees; provided however, that to the
extent occupancy of the Facility shall be less than 95 percent for a
period greater than 30 consecutive days, CSC may reduce its active
workforce on a pro rate basis, yet maintaining operating effectiveness,
until such time that 95 percent occupancy shall have been restored.
During any period in which CSC's workforce shall be reduced as a result
of vacant bedspace, all other terms and provisions of this Agreement and
of the approved Policies and Procedures for the Facility shall remain in
full force and effect, including those affecting the integrity of the
Facility's security and delivery of required Inmate programs and
services. Further, it is agreed and undertaken by CSC that CSC will
backfill vacancies of Senior Management within no more than ten (10) days with
temporary personnel and within sixty (60) days shall have a permanent
replacement for that position. DM-OK will approve or reject a candidate for
Senior Management within two working days from the time the name and resume
and/or employment application is submitted by CSC to DM-OK.
(c) Staff Training. CSC will provide a comprehensive, on-going
training program for all Facility employees that complies with ACA and
State standards. All new clerical support employees who will have minimal
contact with Inmates will complete a 40 hour orientation course during
the first year of employment, 24 hours of which will be completed prior
to assignment. Support employees who will have regular contact with
Inmates will undergo 80 hours of training during the first year of
employment, 40 of which will be completed prior to contact with Inmates.
Correctional officers with no previous training will complete 160 hours
of pre-service training during the Start-Up and a total of 200 hours of
total training during the first year of employment. Correctional officers
hired after Start-Up who have no previous corrections training will
complete 80 hours of pre-service training and 80 hours of on-the job
training within the first 180 days of employment, and a total of 200
hours of total training during the first year of employment. The daily
schedule of CSC's pre service training program for correctional officers
is attached hereto as Attachment 3. All personnel authorized to use
firearms or deadly force will complete firearms training as required by
the State prior to assignment to any position involving the potential use
of firearms. All persons assigned to the Facility's Special Operations
Response Team (SORT) will successfully complete a pre-service training
program that is similar to that provided team members in public
institutions operated by the State. The Facility SORT team will have a
planned component of 20 officers and at no time during the term hereof
shall the number of properly trained SORT team members actively employed
at the Facility be fewer than 12. All staff training conducted will be
thoroughly documented and maintained in personnel files and in separate
training files. These files will be open for periodic inspection by
DM-OK. Without limiting the foregoing, CSC shall either provide, or cause
its personnel or contractors to provide, training programs prior to the
opening of the Facility, during the term hereof, as well as upon the
hiring of any new agent, contractor or employee to work at the Facility,
which will, in each case, be designed to train each such individual to
meet the ACA Standards applicable to him or her. CSC shall report to
DM-OK in writing each time any program is offered under this Agreement
and describe the goals and results thereof in such manner as DM-OK may
reasonably request.
(d) Emergency Response Plans. Thirty (30) days prior to the
expected Service Commencement Date, CSC will deliver to DM-OK an
Emergency Response Plan for the marshaling of resources to quickly and
appropriately respond to any crisis that might arise in the operation of
the Facility. Procedures and plans will be developed in coordination with
local and area fire departments, law enforcement agencies and the State
Department of Corrections, and will be provided to all parties in written
form to assure clear understandings. The plan will include procedures to
deal with fire, bomb threats, escape, hostage situations, riots, medical
epidemics and natural disasters. It will also provide for the
notification and reporting of escapes to residents within an appropriate
radius of the Facility, and to DM-OK.
(e) Accreditation. CSC shall use its best efforts to secure
accreditation of the Facility from the ACA within eighteen (18) months of
the Service Commencement Date. If in the event the Facility shall have
been inspected by ACA within eighteen (18) months of the Service
Commencement Date, but accreditation shall have been withheld for reasons
other than issues of design or construction, CSC shall be in default
under this Agreement and shall have six (6) months to cure said default
by achieving ACA accreditation. Failure to achieve ACA accreditation
within twenty-four (24) months of the Service Commencement Date shall
constitute grounds for default termination tinder this Agreement.
(f) Scheduled Meetings. Commencing approximately ninety (90) days
prior to the expected Service Commencement Date and continuing during the
term hereof monthly meetings arranged by CSC will be scheduled at the
Facility available for attendance by representatives of DM-OK,
representatives of the host government, the Facility warden, an
operations executive of CSC from its national or regional office, the
Jurisdiction's monitor, if any, and by other parties with appropriate
business for discussion. Regular topics will include Inmate population
count, Inmate departures by reason, disturbances and incidences, results
of fire and health inspections, program statistics, medical care, food
service, physical plant, personnel vacancies, client concerns, community
concerns and Inmate litigation. After the initial year of operations
CSC's executive will attend such monthly meeting no less than quarterly
(4 times per year).
(g) Records Keeping. CSC shall develop a system of financial
accounting and inmate tracking for the Facility which shall be completed
at least sixty (60) days prior to the Service Commencement Date. Records
and reports shall be maintained that comply with all applicable Inmate
Contracts and reasonable requirements to be determined by DM-OK, and
shall include, without limitation, files and reports documenting Inmates'
activities, adjustment, participation, discipline and any other relevant
information or significant events while in custody at the Facility.
Records which document compliance with this Agreement and Inmate
Contracts shall be maintained for five (5) years and the originals to
such documents shall not be destroyed or discarded by CSC without giving
DM-OK at least 30 days notice of its intentions to destroy or discard
such documents. All documents referred to in this subparagraph shall be
available for inspection and copy by DM-OK for a period of five (5) years. The
obligations contained in this subparagraph survives the termination of this
Agreement. As additional Jurisdictions add Inmates to the Facility's population,
CSC will utilize its best efforts to accommodate the systems of the added
Jurisdiction(s) within the existing systems as established with the Oklahoma
Department of Correction for its Inmates.
Section 3.8. CSC Agreements. CSC has no authority to create any monetary
or contractual obligation for DM-OK without the prior express written consent
of DM-OK.
Section 3.9. Regulations and Permits. CSC shall do all reasonable things
necessary to maintain in full force and effect for the benefit of the Facility
and DM-OK to include all licenses and permits required for operations of the
Facility.
Section 3.10.Restrictions. Notwithstanding anything to the contrary set
forth herein, CSC shall not be required to do, or cause to be done, anything
for DM-OK or for the operation of the Facility which:
(a) may make CSC liable to third parties other than in the normal
course of business; or
(b) may, under any applicable law, constitute an impermissible
delegation of DM-OK duties and responsibilities including sale of assets
or actions which may result in a change in the primary business of
DM-OK; or
(c ) may not be commenced, undertaken, or completed because of
acts of God, strikes, war, or events reasonably determined both to be
beyond CSC's control and without fault of CSC; or
(d) may cause a lien to be filed against DM-OK or the Facility or
any of the equipment or fixtures located in the Facility.
Section 3.11.Information Releases. CSC shall not release for publication
any information written or oral that mentions or involves the Facility or
DM-OK or any of its affiliates or personnel without DM-OK's prior written
consent; except as follows:
(a) news releases during emergency circumstances in accordance
with the Policies and Procedures of' CSC for the Facility; and
(b) disclosures required to be made by governmental regulatory
agencies to include the Securities and Exchange Commission or other
obligation or requirement to CSC's shareholders.
DM-OK shall be consulted as to potential news release concerning the
Facility, if time will allow in the discretion of CSC. Only in extraordinary
circumstances it will be necessary to make immediate responses to new media
concerning the Facility or its operations. It is agreed that in such releases
the specifics of operations as to numbers of inmates or other data relating to
operations will not be released. Similarly, DM-OK will not release information
concerning operations of the Facility without the prior approval of CSC. Both
CSC and DM-OK will make reasonable accommodations to each party's requirements
for publicity and information released concerning the Facility and its
operations.
Section 3.12.Telephone Systems. The special telephone equipment
described in Attachment 4 used by Inmates will be purchased, installed,
maintained, owned and operated by CSC and will be the sole telephone system in
the Facility for Inmate access. The security and monitoring of the Inmate
telephone system shall be the responsibility of CSC. CSC shall receive all
fees charged to the Inmate population for the use of this telephone system.
CSC shall provide telephone and other communications as required for the use
and benefit of the Jurisdiction(s) and/or DM-OK at the Facility.
The telephone system described in Attachment 5 routinely used by
employees of CSC to operate the Facility will be purchased and maintained by
CSC.
Section3.13. Relationship with Jurisdiction(s). CSC shall cooperate with
DM-OK in DM-OK's marketing efforts for occupancy of the Facility.
Jurisdictions will be treated as valued clients by CSC and DM-OK. CSC shall
recognize Jurisdictions as clients of DM-OK and shall not attempt to intervene
in that relationship or to create any atmosphere that would be detrimental to
an ongoing business relationship between DM-OK and the Jurisdiction that would
negatively impact the population of Inmates from a Jurisdiction at the
Facility. It is recognized that from time to time common relationships will
exist between DM-OK and CSC with certain Jurisdictions. In such cases both CSC
and DM-OK shall be free to continue to pursue such relationships without
violation of this Agreement. Such relationships are to have been cultivated
separate and distinct from any activity relating to the Facility or any other
DM-OK, or its affiliates, business activities jointly engaged with CSC by
DM-OK. CSC shall use its best efforts to support the marketing programs of
DM-OK by fostering and providing Facility operations that are tailored to the
needs and expressed desires of the Jurisdiction(s), to the extent the cost of
said operations shall be provided for in the Base Per Diem Rate.
Section 3.14. Related Contractual and Conditions Requirements. It is
contemplated by DM-OK and CSC that DM-OK will enter into contract(s) with
Jurisdictions for the housing of the Jurisdiction's inmates in the Facility.
In these contracts with the Jurisdictions, it is anticipated that there will
be provisions that relate to the operations of the Facility and the treatment
of the Jurisdiction's inmates while in the custody and control of CSC. These
provisions from this anticipated contractual relationship will have
application to this contractual relationship as they are agreed to "flow" from
that contract with the Jurisdiction and be incorporated as applicable in this
Agreement to CSC. Additionally, the Jurisdictions may impose "conditions" upon
the operation of the Facility. These "conditions" will also be imposed upon
CSC as "flow down" terms. Such "additional flow down" terms and conditions
shall be incorporated by amendment to this Agreement. Any conflict with any
Jurisdictions' (including Oklahoma Department of Corrections) shall be resolved
in favor of the Jurisdiction's requirements; especially as applicable to Section
3.6, Inmate Incarceration Services. Any resulting material changes from the
terms and conditions of this Agreement shall be subject to mutual agreement of
DM-OK and CSC and a re-negotiation of fees pursuant to Section 6.7 hereof.
Material changes will arise in all circumstances where there is a resulting
monetary change to be made to the Base Per Diem Rate. Also, changes without
monetary impact may be considered "material changes" requiring mutual agreement
of DM-OK and CSC.
Section 3.15. Copyright and Licensing. CSC has a duty to create, develop
and implement policies and procedural manuals governing the housing and care
of inmates, disciplinary procedures, handling of disturbances, personnel
matters and other written documents which must produced for inspection in
connection with the ACA accreditation process. CSC, prior to the Service
Commencement Date, must ▇▇▇▇▇▇▇ ▇▇-OK a copy of a licensing agreement for any
of said materials which contains a copyright for unlimited future use at the
Facility by DM-OK or its subcontractors without payment of any royalty or
fees.
Section 3.16 Inmate Information. CSC shall produce for inspection to
DM-OK all Inmate tracking information, records relating to Reimbursable Costs,
and the housing of Inmates at the Facility. CSC, upon the request of DM-OK,
will furnish computer disk copies or equivalent modes of information transfer
of such Inmate information.
ARTICLE IV
Duties of DM-OK
---------------
Section 4.1. Duty to Furnish Facility. DM-OK will cause the Facility to
be constructed as provided in Section 7.1 hereof. DM-OK will enter into
agreements and contracts for the furnishing of gas, electricity, water and
sanitary sewer services. CSC pays all utility cost for the operation of the
Facility from the date of the Service Commencement Date. Prior to such time
from the date of occupancy CSC shall be responsible of the cost of utilities
except for electricity which shall be paid by DM-OK. DM-OK estimates the
Facility will be completed by September 1, 1998, with a target date of
August 1, 1998.
Section 4.2. Duty to Perform Accounting Functions. DM-OK will, or it
will cause its parent corporation Dominion Management, Inc. ("DMI") or its
successor to, invoice each Jurisdiction on timely basis for Inmate per diem
and Reimbursable Expenses based on information provided by CSC. It will cause
the receipts of all invoices to be maintained in a bank account separate and
apart from the other monies of DM-OK and/or DMI and each invoice accounted for
and matched with the corresponding receipts and split between the amounts owed
CSC and DM-OK.
Section 4.3. Duty to Cooperate and Assist. DM-OK agrees to cooperate with
CSC in the performance of CSC's duties and responsibilities under this
Agreement, to act in good faith, and to do all reasonable things necessary to
aid and effect CSC's performance as an independent contractor under the terms
of this Agreement.
Section 4.4. Duty to Market Bedspace. DM-OK shall be primarily responsible
for marketing of the Facility and for all contacts, meetings, proposals, and
negotiations with the Jurisdictions and the Oklahoma DOC and the personnel
associated with the contracting for bedspace within the Facility as applicable.
ARTICLE V
Facility Maintenance and Expenses
---------------------------------
Section 5.1. DM-OK's Warranty Responsibilities. Dominion Leasing, Inc.,
as agent for DM-OK has contracted with Canam Construction, Inc. to construct
the Facility. Said construction contract provides that nonconforming work will
be corrected for a period of twelve (12) months subsequent to the date of
substantial completion of the Facility (the "Warranty Period"). DM-OK shall be
responsible for enforcing the terms of said construction contract with regard
to the repair of nonconforming work during the Warranty Period.
Section 5.2. DM-OK's Continuing Responsibilities., Subsequent to the
Warranty Period and for the balance of the term hereof, DM-OK shall be
responsible for the maintenance, repair and replacement of only the following
components of the Facility:
(a) Repair and replacement of roofing membrane or roof panels for
all buildings.
(b) Repair and replacement of all structural components of all
buildings, including walls, floor slabs, foundations, roof decking, and
columns.
(c) Repair and replacement of concrete and asphalt flatwork
parking lots, sidewalks, driveways and roads.
Section 5.3. C S C's Maintenance Responsibilities. CSC has the
responsibility to prevent waste of the Facility and the assets therein, normal
wear and tear excepted. CSC will do all things necessary in order to maintain
compliance with safety codes, laws or regulations. CSC shall be responsible for
the conservation, maintenance, repair and replacement of all improvements which
constitute the Facility, except for those specific components of the Facility
to be maintained by DM-OK during the Warranty Period, and continuing thereafter
as identified items during the Warranty Period and for latent defects that
could not be reasonably detected during the Warranty Period as defects due to
design or installation, those specifically referred to in Section 5.2. hereof.
Subject to DM-OK's obligations described in Section 5.1 hereof, CSC's
maintenance, repair and replacement obligations include, but are not limited
to, the following:
(a) Maintain, repair, and/or replace as needed all mechanical
equipment, heating and cooling systems, pipes, sewer lines, water lines,
pumps, electrical systems and wires, lights, hot water tanks, kitchen
equipment, refrigerators, freezers, ovens, plumbing, emergency
generators, security devices, alarms, surveillance cameras, monitors,
control panels and locks, lights and all fixtures and equipment installed
in the Facility; and
(b) Maintain, repair and/or replace as needed the walls, ceilings,
doors, floor coverings, landscaping, recreational areas, furniture,
bedding, shower stalls, restroom toilets, fencing, on-site sewer
equipment, automatic lifts; and
(c) Maintain, repair and/or replace all of the telephone systems
used at the Facility; and
(d) Maintain, repair and/or replace all equipment, machinery and
other property described in Article VII hereof.; CSC will establish and
continuously perform a "preventive maintenance program" for the Facility
subject to periodic inspection of the Facility and the program by DM-OK
or its affiliate.
Section 5.4. Insurance Deductible Amounts. In the event any part of the
Facility is damaged by a hazard covered by an insurance policy, as between
DM-OK and CSC, the party required to maintain, repair or replace such damaged
part of the Facility shall pay any applicable deductible amount. ,
Section 5.5. Duty to Maintain. The responsibilities of CSC and DM-OK
under this Article shall be immediately activated when components for which the
respective parties are responsible no longer serve the purpose for which they
were designed and installed, when the safety or security of CSC staff, Inmates
or the public is at risk due to failure of the component, or when a delay in
the repair or replacement of the component could lead to damage of other
components of the Facility. CSC and DM-OK agree to coordinate the performance
of all repairs and replacements so as to minimize disturbance of Facility
operations.
Section 5.6. DM-OK's Expenses. DM-OK shall pay the expenses of the
Facility until the Service Commencement Date, excluding the expenses CSC has
specially agreed to provide in this Agreement. DM-OK specifically recognizes
its obligations to pay real estate taxes as required for the Facility.
Section 5.7. CSC's Expenses. CSC shall pay all expenses of operating the
Facility after the Service Commencement Date (see, Section 5.6 above, for
expenses CSC shall pay prior to the Service Commencement Date). The expenses of
CSC include, but are not limited to, the following:
(a) The expenses providing all the requirements and obligations
contained in Article III hereof;
(b) Electricity, gas, water, sewer, and all other utility costs and
expenses necessary for the Facility after the Service Commencement Date;
(c) CSC shall pay DM-OK an amount equal to any concession, discount or
debt forgiveness for water and sanitary sewer services to the Facility made
after the Service Commencement Date which was intended to be a repayment of the
a loan made by DM-OK to the MPFA pursuant to the Utilities Agreement. CSC shall
make said payment within time limits of the normal billing cycle of the
applicable utility service;
(d) All expenses required to maintain, repair and/or replace the
assets referred in Attachments 4 and 5 hereto;
(e) All costs and damages related to any escape, riot or
disturbance;
(f) The payment of deductible amounts or coinsurance amounts for
insurance purposes; and
(g) All indemnification costs and expenses of CSC arising under
Section 3.4 hereof.
ARTICLE VI
Compensation to CSC
-------------------
Section 6.1. Base Management Fee. DM-OK shall pay CSC as a base
management fee for its performance under this Agreement an amount equal to the
Base Per Diem Rate multiplied by the number of Inmate Days. In the event an
Inmate Contract provides for raises in the per diem amount paid by the
Jurisdiction based upon some cost or consumer price index, CSC shall be
entitled to receive all of CSC's actual and established increased costs, any
amount receive above CSC's actual increased costs shall be split equally
between CSC and DM-OK for the amount of such increase in the form of a raise
in the Base Per Diem Rate.
If DM-OK's base rates from Jurisdictions (other than Oklahoma)
exceed $ ; then CSC shall receive the next $ to increase its Base Per
Diem Rate ($ to $ ) less DM-OK's actual costs of transportation of
the Jurisdiction's Inmates to and from the Jurisdiction. Any increased amount
above this $ increase and consideration of transportation costs to DM-OK
shall be divided equally between CSC and DM-OK.
All increases in fees from Oklahoma for programming added by the
Oklahoma Department of Corrections shall be paid to CSC.
Section 6.2. Unamortized Costs Payment for Start-Up Expenses. DM-OK
shall pay CSC Unamortized Costs Payments until such time CSC shall have
received an amount equal to the Start-Up Expenses and the Phase In Operating
Losses. DM-OK shall have the option, at any time, to pay CSC a lump sum
payment in an amount equal the remaining Balance of the Start-Up Expenses and
the Phase In Operating Losses. After CSC has received Unamortized Cost
Payments, and/or a lump sum payment, in an aggregate amount equal to
$ , no further Unamortized Costs Payments shall be payable by DM-OK
and CSC shall assign the property described in Attachment 5 to DM-OK, clear
title, free of all liens and encumbrances. Upon termination of this Agreement
for any reason, no further Unamortized Costs Payments shall be required except
as follows:
(a) In the event CSC terminates this Agreement for its convenience
during the Initial Term, or this Agreement terminates by reason of the
provisions of Section 6.7 hereof, DM-OK shall have the option to purchase
the property described in Attachment 5 hereto for Book Value of such items at
the date of the termination. In such event, CSC shall assign the property
described in Attachment 5 to DM-OK, clear title, free of all liens and
encumbrances.
(b) In the event DM-OK terminates this Agreement by reason of
the default of CSC during the Initial Term, DM-OK shall have the option
to purchase the property described in Attachment 5 hereto for an amount
equal to the one-half (1/2) of Book Value at the date of the termination. In
such event, CSC shall assign the property described in Attachment 5 to DM-OK,
clear title, free of all liens and encumbrances.
(c) In the event DM-OK terminates this Agreement for its convenience
during the Initial Term of this Agreement, DM-OK shall pay CSC a lump sum
payment in an amount equal to the Book Value of the Start-Up Expenses of the
Facility including Phase In Operating Losses at the date of the termination. In
such event, CSC shall assign the property described in Attachment 5 to DM-OK,
clear title, free of all liens and encumbrances.
Section 6.3. Payment for Reimbursable Expenses. CSC shall receive from
DM-OK additional amounts for Reimbursable Expenses received by DM-OK under
any Inmate Contract.
Section 6.4. Submission of Invoices by DM-OK and CSC. No later than the
5th Business Day of each month, CSC shall have submitted an invoice to DM-OK
detailing the Inmate Days to be charged to each Jurisdiction and any claims
of CSC for Reimbursable Expenses. The submission shall be in a form reasonably
satisfactory to DM-OK and the Jurisdiction. Within two (2) Business Days of
receipt of CSC's invoice, DM-OK shall deliver, or cause such delivery, an
invoice to the Jurisdiction for amounts for Inmate per diem charges and
Reimbursable Expenses. DM-OK shall pay CSC's invoices by wire transfer within
five (5) Business Days of receipt of payment from a Jurisdiction if the payment
is made by check and within (2) Business Days if payment is made by the
Jurisdiction by wire transfer. If the invoice is less than $10,000.00, payment
will be mailed by DM-OK to CSC within five (5) Business Days of the receipt of
the payment (of immediately available funds) from the Jurisdiction.
Section 6.5. Limited Obligations of DM-OK. The obligations of DM-OK to
pay CSC the Base Per Diem Rate or any other management fees described in
Section 6.1, the amounts due for reimbursement of Unamortized Costs Payments
described in Section 6.2 [excluding the lump sum payments described in
subparagraphs (a), (b) and (c) of Section 6.2] and the amounts due for
Reimbursable Expenses described in Section 6.3, are the special limited
obligations of DM-OK payable solely from monies DM-OK has received from the
Jurisdiction as payment related to the housing and care of its inmates at the
Facility. If, for any reason, a Jurisdiction fails to make a payment to or on
account of DM-OK, for any reason, whether by reason of a default, failure to
obtain appropriations by the applicable legislative branch of the
Jurisdiction's state government, reallocation by the executive branch for
payment of other obligations of such state or otherwise, DM-OK shall to the
extent of such nonpayment, have no corresponding obligation to CSC, until or
unless such payment is made to or on account of DM-OK by such Jurisdiction. The
amounts due by DM-OK to CSC for lump sum payments for Unamortized Costs
Payments described in subparagraphs (a), (b) and (c) of Section 6.2 are the
general obligations of DM-OK.
Section 6.6 Disputed Amounts. In the event a Jurisdiction fails to pay
or contests any charges, both DM-OK and CSC agree to cooperate in attempting
to collect the amounts due as invoiced.
Section 6.7. Re-negotiation of Management Fees. CSC and DM-OK will re-
negotiate the fees payable pursuant to Sections 6.1 and the expenses reimbursed
to CSC under the following circumstances:
(a) The Inmate Contract negotiated with the Oklahoma DOC is amended or
altered in such a manner as to have a material impact on its payments; or
(b) A material alteration of the Facility is needed to carry out
its intended purpose; or
(c) New and additional fixtures or equipment, other than the property
described in Attachments 4 and 5, are necessary for the Facility to carry out
its intended purpose.
If the parties are unable to reach an agreement, either party may terminate
this Agreement.
Section 6.8. Inventory and Working Capital Payments. In the event this
Agreement is terminated for any reason, DM-OK shall have the option to purchase
the Inventory on hand at the Facility at CSC's cost. In the event of
termination, the amounts CSC shall have incurred for Working Capital shall be
recouped in the ordinary course of business by collecting those amounts due
under Sections 6.1 and 6.3 hereof which accrued prior to the date of
termination.
ARTICLE VII
Inventory, Furnishings. Fixtures and Equipment
----------------------------------------------
Section 7.1. DM-OK Assets. Ownership of all permanent, fixed assets of
the Facility, including, but not limited to, those scheduled on Attachment 4,
shall remain the property of DM-OK or its assigns and shall not be removed
from the Facility without the written approval of DM-OK. CSC shall have the
use of all Facility assets during the term hereof.
Section 7.2. CSC Assets. At its own expense, CSC shall acquire and
provide the furnishings, fixtures and equipment scheduled on Attachment 5
hereto, in addition to such unscheduled inventory, supplies and all other
expendable property to be utilized in CSC's performance under this Agreement.
CSC's cost of the acquisitions scheduled in Attachment 5 shall be amortized
during the Initial Term, at the end of which period all scheduled assets,
including replacements no matter the age, still serviceable and in use, shall
become the property of DM-OK. At that time CSC will execute and deliver to
DM-OK all necessary documentation to effect the proper transfer of those
assets. During the term hereof, CSC may acquire and install additional
unscheduled machinery or equipment in the Facility. All such assets owned and
utilized by CSC in the operation of the Facility not scheduled in Attachment 5
shall remain the property of CSC. CSC is responsible to accurately record and
maintain the Attachment 5 schedule. In all cases, CSC shall service, maintain,
repair, replace, upgrade and add improvements to all equipment, machinery and
other property so as to keep the same in good working condition, appearance
and repair in conformance with all applicable laws, rules and regulations as
well as manufacturers' or vendors' maintenance manuals and warranty
requirements, normal wear and tear excepted.
Section 7.3. Return of Equipment. At the conclusion of this Agreement,
CSC shall ensure that all DM-OK property and equipment at the Facility,
including replacements, remains at the Facility in the condition in which they
were received, normal wear and tear excepted.
ARTICLE VIII
Termination and Events of Default
---------------------------------
Section 8.1. Events of Default. Any of the following shall be an Event
of Default and cause for either party to this Agreement to terminate this
Agreement:
(a) failure by either party to keep, observe, perform, meet, or comply
with any covenant, agreement, terms, or provision of this Agreement and such
failure continues for a period beyond the curative period provided within this
Article VII after written notice thereof; or
(b) failure by either party to make any payment required in this
Agreement which is not in dispute, within thirty (30) days from the date it
is due; or
(c) failure by CSC to meet or comply with any final and nonappealable
court order, mandatory ACA Standard, or Federal or State requirement of law,
or failure to maintain ACA accreditation when such failure continues for a
period beyond the curative period provided within this Article VIII after
written notice thereof, unless such failure is the result of some action or
inaction of DM-OK; or
(d) CSC (i) admits in writing its inability to pay its debts; (ii) makes
a general assignment for the benefit of creditors; (iii) suffers a decree or
order appointing a receiver or trustee for it or substantially all of its
property to be entered and, if entered, without its consent, not to be stayed
or discharged within the curative period provided within this Article VIII;
(iv) suffers proceedings under any law relating to bankruptcy, insolvency, or
the reorganization or relief of debtors to be instituted by or against it and,
if contested by it, not to be dismissed or stayed within the curative period
provided within this Article VIII; or (v) suffers any judgment, writ, or
attachment or execution, or any similar process to be issued or levied against
a substantial part of its property which is not released, stayed, bonded, or
vacated within the curative period provided within this Article VIII after
issue or levy; or
(e) the discovery by either party that any material statement,
representation, or warranty in this Agreement is false, misleading, or
erroneous in any material aspect.
Section 8 2. Curative Period. If any default of this Agreement by
either party remains uncured for a period of thirty (30) days after written
notice thereof such breach issued by the "non-offending" party shall be an
Event of Default; provided, however, if within thirty (30) days after such
notice a substantial effort in good faith has been made to cure said breach by
the offending party, said breach shall not be an Event of Default, more
particularly if the offense is cured within a reasonable time thereafter.
Section 8.3. Remedy. Upon the occurrence of an Event of Default either
party shall have the right to submit the matter to arbitration for resolution
under the rules and procedures of the American Arbitration Association. DM-OK
and CSC hereby agree to accept the determination of the arbitration process
foregoing other legal and equitable rights and remedies to obtain a swift
resolution of disputes.
Section 8.4. Transition. In the event this Agreement terminates by its
terms or upon an Event of Default by CSC, CSC agrees not to interfere and to
cooperate with DM-OK, or its assigns, in obtaining another operator/manager of
the Facility or assuming the operation by DM-OK to perform the services provided
for in this Agreement. CSC shall remain the manager and operator of the Facility
in accordance with the terms hereof until DM-OK actually identifies and starts
the services of a manager and operator in place of CSC. Such transition period
shall not exceed 120 days, unless mutually agreed upon by DM-OK and CSC. During
this transition period, CSC shall operate and manage the Facility in good faith
and with no less care and effort than it used in originally performing its
duties hereunder with respect to the Facility and is customary for it in
providing services to other similar facilities owned or operated by it. All
compensation hereunder shall be prorated for the period of such transition.
ARTICLE IX
Assignment
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Section 9.1. Restriction on Assignments. CSC agrees to not assign, pledge,
encumber or otherwise transfer its rights or delegate its duties under this
Agreement without the written consent of DM-OK, which consent will not be
unreasonably withheld; provided, that CSC may delegate its duties to
contractors or temporary employees to the extent permitted under the express
terms of this Agreement.
Section 9.2. DM-OK Assignments. DM-OK may assign, transfer, encumber any
of its rights or delegate any of its duties without notice to or consent of
CSC. Specifically, but without limitation on the foregoing, DM-OK may, without
notice to or consent of CSC, assign all of its rights (but none of its
obligations) hereunder to the Agent as collateral security for DM-OK's (and
its affiliates') Obligations under the Note Purchase Agreement and the Other
Agreements (and therein defined). DM-OK further reserves that any form of due
diligence into the operations of the Facility will be subject to DM-OK's
agreement to allow such investigation of the Facility and its operations to
occur. In the event that CSC determines that it is in its best interest to
merge, otherwise sell, all or a substantial part of its assets, or participate
in any activity that results in a change of control of CSC either voluntarily
(or involuntarily in a hostile takeover environment), then DM-OK shall have
the right to terminate this Agreement for its convenience and to otherwise
operate the Facility with the cooperation of CSC allowing its Facility staff
to be re-employed without penalty with DM-OK in such circumstances at DM-OK's
election. This Agreement may be utilized by CSC as an asset to be pledged or
otherwise as collateral in support of its financing facilities.
ARTICLE X
Miscellaneous
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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 Oklahoma. The
forum for resolution of any dispute or issue for litigation shall be the state
or federal court located in Oklahoma City, Oklahoma.
Section 10.3. Notices. Any notice required or permitted herein to be
given shall be given in writing and shall be delivered by United States mail,
first class postage prepaid return receipt requested with a facsimile of the
notice provided as a courtesy on the day of posting, to the respective
President of CSC and the President of DM-OK.
Section 10.4. Successors. This Agreement shall be binding upon and inure
to the benefit of the respective parties and their permitted assigns and
successors in interest, except as restricted by Sections 9.1. and 9.2. hereof
Section 10.5. Attorney's Fees. If it shall become necessary for either
party hereto to engage attorneys to institute legal action for the purpose of
enforcing its rights hereunder, the party prevailing in such litigation shall
be entitled to receive all costs, expenses and fees, including reasonable
attorney's fees, incurred by it, including costs of any appeals from the losing
party.
Section 10.6. Severability. Should any term or provision hereof be deemed
invalid, void or unenforceable either in its entirety or in a particular
application, the remainder of this Agreement shall nonetheless remain in, full
force and effect and, if the subject term or provision is deemed to be invalid,
void or unenforceable only with respect to a particular application, such term
or provision shall remain in full force and effect with respect to all other
applications. It however, a court of competent jurisdiction should render a
final judgment that the authority granted to CSC from DM-OK exceeds the bounds
of permissible delegation under applicable law, the parties agree that this
Agreement shall be deemed amended, modified and reformed to the extent
necessary to reduce the scope of authority so delegated and to limit that
authority to that permissible under applicable law as evidenced by written
legal opinion of special counsel to DM-OK, and approved by CSC.
The parties agree that in no event shall any determination that the
discretion and authority granted to CSC hereunder exceeds permissible bounds
results in this Agreement being declared or adjudged invalid, void, or
unenforceable in its entirety; rather, the parties request that a court
examining such issue employ great latitude in reforming the Agreement so as to
make the Agreement as reformed, valid and enforceable.
Section 10.7. Third Party Rights. The provisions of this Agreement are
for the sole benefit of the parties hereto and will not be construed as
conferring any rights on any other person.
Section 10.8. Waivers. No waiver of any breach of any of the terms or
condition of this Agreement shall be held to be a waiver of any other or
subsequent breach; nor shall any waiver be valid or binding unless the same
shall be in writing and signed by the party alleged to have granted the waiver.
Section 10.9. Counterparts. This Agreement may be executed in multiple
counterparts each of which shall constitute but one Agreement.
Section 10.10. Amendment. This Agreement may be amended with the written
consent of DM-OK and CSC.
Section 10.11. Entire Agreement. This Agreement including Attachments
named herein, is the entire Agreement between the parties. Any additional
amendment hereto must be in writing and signed by both parties hereto to
become into full force and effect.
DOMINION-MANAGEMENT OKLAHOMA, INC. (DM-OK)
By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT
CORRECTIONAL SERVICES CORPORATION (CSC)
By:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PRESIDENT
