EXHIBIT 10.70.1
SUBCONTRACT,
FACILITY USE AGREEMENT,
AND ASSET PURCHASE
THIS AGREEMENT made this ____ day of December, 1998, by and among
Correctional Services Corporation ("CSC"), a Florida corporation, Trans-American
Development Associates, Inc. ("TADA"), a Louisiana corporation and FBA, L.L.C.
("FBA"), a Louisiana limited liability company. This Agreement shall have an
effective date of December 14, 1998 (the "Effective Date").
RECITALS
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WHEREAS, pursuant to that certain Cooperative Endeavor Agreement dated
February 24, 1994, and as amended by Amendment Nos. 1, 2, 3, 4, 5, 6, 7 and 8
(collectively referred to as the "Cooperative Endeavor Agreement") entered into
by and between the State of Louisiana Department of Public Safety and
Corrections ("DOC") and the City of Tallulah (the "City"), the City agreed to
construct, or cause to be constructed, a juvenile detention facility located on
the real property and improvements more particularly described on Exhibit "A"
attached hereto and incorporated herein by reference (the "TCCY Facility") for
the public purpose of providing housing and programmatic services to juveniles
adjudicated to the custody of the DOC, and, in consideration therefor, the DOC
agree to pay certain per diem payment to the City (the "Department Payments"),
with respect to the TCCY, on the terms and conditions provided in the
Cooperative Endeavor Agreement; and
WHEREAS, pursuant to a certain management services agreement dated February
16, 1994, and amended on June 1, 1995 (collectively "Management Services
Agreement"), between TADA and the City, TADA undertook to perform the City's
obligations under the Cooperative Endeavor Agreement to construct, operate and
maintain the TCCY Facility and to provide programmatic services to the juveniles
adjudicated to the custody of the DOC in consideration of the assignment of the
Department Payments; and
WHEREAS, pursuant to that certain agreement dated March 30, 1995 ("City
Assignment"), the City, as assignor, assigned to TADA, as assignee, all of the
City's rights, title and interest under and with respect to that certain
Cooperative Endeavor Agreement, including without limitation, the right to
receive the Department Payments and all rights of the City to take such
proceeding, legal, equitable, or otherwise to compel timely payment therefor
(the "Assigned Rights") as such are provided for in the Cooperative Endeavor
Agreement; and
WHEREAS, on January 27, 1997, for good and valuable consideration, TADA
sold to FBA, any and all interest that TADA had in the TCCY Facility, but not
the duty to perform the obligations obtained under the City Assignment to
operate the TCCY Facility and to provide programmatic services to the juveniles
adjudicated to the custody of the DOC; and
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WHEREAS, pursuant to that certain assignment dated May 29, 1998 (the "TADA
Assignment"), TADA, as assignor, assigned to FBA, as assignee, without recourse,
all of TADA's right, title and interest in and to the Cooperative Endeavor
Agreement, including without limitation, the right to receive the Department
Payments and the Assigned Rights, as well as the immediate and continuing right
to receive and collect all insurance proceeds, condemnation awards and all other
payments and amounts due thereunder or with respect to the TCCY Facility, except
that FBA was not made responsible or liable for any of the operational and/or
management duties and obligations of TADA under the Management Services
Agreement, which were specifically retained by TADA; and
WHEREAS, pursuant to that Absolute Assignment Agreement dated May 29, 1998
(the "FBA Assignment"), FBA, as assignor, assigned all its right, title and
interest in and to the Cooperative Endeavor Agreement, including without
limitation the right to receive Department Payments and the Assigned Rights to
First Tennessee Bank National Association (the "Trustee"), as assignee, as
Trustee for the benefit of the holders of those certain Privately-Placed Taxable
Revenue Beneficial Interest Certificates (the "Certificates"); and
WHEREAS, the Trustee executed and delivered the Certificates pursuant to
that certain Trust Indenture, dated May 29, 1998, by and among Trustee, FBA and
TADA; and
WHEREAS, pursuant to a facility use agreement dated May 29, 1998 (the
"Facility Use Agreement"), FBA permitted TADA to use the TCCY Facility for the
purpose of fulfilling TADA's operational and/or management duties and
obligations to the City and to DOC under the Management Services Agreement, the
City Assignment and the Cooperative Endeavor Agreement.
NOW THEREFORE, in consideration of the covenants and agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, CSC, TADA and FBA, intending to be
bound, agree as follows:
I. INCORPORATION BY REFERENCE
The recitals set forth above are hereby incorporated herein for all
purposes as if fully set forth below in their entirety.
The Cooperative Endeavor Agreement, the Management Services Agreement, the
City Assignment, the TADA Assignment, the FBA Assignment, the Indenture and the
Facility Use Agreement are attached hereto as Exhibits B, C, D, E, F, G and H,
respectively, and are incorporated herein for all purposes as if set forth in
their entirety. CSC makes the following representations and agreements subject
to the terms and provisions of each of the documents listed above and
incorporated herein. Unless otherwise indicated herein, the Cooperative Endeavor
Agreement, the Management Services Agreement, the City Agreement, the TADA
Assignment, the FBA Assignment, the Indenture and the Facility Use Agreement,
and each of their respective exhibits, attachments, schedules, each remain
effective and in force pursuant to its respective terms.
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II. SUBCONTRACT
2.1 Purpose. TADA subcontracts with CSC, and FBA hereby consents to such
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subcontract, to have CSC fulfill all of TADA's obligations in connection with
operating and maintaining the TCCY Facility, as well as providing programmatic
services to the juveniles adjudicated thereto by the DOC, as required by the
provisions of the Cooperative Endeavor Agreement, Management Services Agreement
and the City Assignment.
2.2 Term. This Subcontract shall commence as of the Effective Date and
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shall continue for so long as the Facility Use Agreement remains in effect
between TADA and FBA, unless terminated earlier as provided below. As provided
in the Facility Use Agreement, FBA has the sole right to terminate the Facility
Use Agreement for any reason upon thirty (30) days prior written notice
delivered to TADA. By its execution hereon, FBA agrees to provide written notice
of any such termination to CSC simultaneously with the provisions of written
notice of such termination to TADA.
Notwithstanding the foregoing, FBA hereby covenants to TADA and CSC that it
will only exercise its sole right to terminate the Facility Use Agreement in
instances such as the following: 1) the DOC terminates the Cooperative Endeavor
Agreement pursuant to its terms, or 2) if CSC fails to operate and maintain the
TCCY Facility in accordance with the applicable standards adopted by the State
of Louisiana and the American Correctional Association (as may be amended from
time to time) or, 3) if required by the order or judgment of any court , or 4)
if CSC is in default of any of its other obligations under this Agreement, or 5)
if TADA is required by the DOC to take back over operational responsibilities
subcontracted under this Agreement, or 6) if such action is required to satisfy
the obligations of FBA and/or TADA under the Indenture.
CSC may, for its convenience, terminate this Subcontract upon one hundred
eight (180) days prior written notice to TADA.
2.3 Assignment. CSC shall not have the right to assign this Subcontract or
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any of the rights obtained hereunder without the written consent of TADA and
FBA, which consent will not be unreasonably withheld by TADA and FBA.
2.4 Management Fee; Operating Expenses. CSC is entitled to a management fee
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(the "Management Fee") in return for its operation and management of the TCCY
Facility. Pursuant to the terms of Section 3.03(b) of the Indenture, the
Trustee is directed to disburse to CSC a Management Fee calculated as follows.
The Department Payments shall be made to the Trustee and the Trustee is directed
to allocate, pursuant to Section 3.03(b) of the Indenture a proportionate amount
of the Department Payments in the following order of priority: (i) to the
payment of the principal and interest on the Certificates; (ii) to the payment
of any deficiencies in the Reserve Fund, as established pursuant to the
Indenture; (iii) to the payment of certain expenses, including (a) a monthly
payment to the City, (b) to the payment of casualty, liability, and business
interruption insurance, and all other insurance associated with the management,
operation, and ownership of the
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TCCY Facility, (c) to the payment of all taxes associated with the TCCY
Facility, including the annual property tax assessed on the TCCY Facility, (d)
to the payment of the Use Payments established in the Indenture, and as revised
herein at Section 3.4, owed from CSC to FBA, and (e) to the payment of a
Maintenance Reserve Fund, established pursuant to the Indenture. After the
Trustee has applied the Department Payments to the deposits and disbursements
itemized in (i), (ii) and (iii)(a) - (e) above, the Trustee is directed to
disburse the amount remaining to CSC as a Management Fee, from which CSC is
responsible for the payment of any and all fees associated with the management
and operation of the TCCY Facility.
So long as the Subcontract is effective, CSC, as TADA's subcontractor,
shall be solely responsible for any and all operating expenses incurred in
connection with the utilization of the TCCY Facility, including without
limitation, all taxes, charges, fees and other charges assessed or imposed upon
the TCCY Facility or the operations conducted thereon, all compensation paid to
employees and contractors in the operation of the TCCY Facility, the Use
Payments, and all utility costs and other items of overhead expense incurred in
connection with the operation of the TCCY Facility. Allocations of the
Department Payments withheld by the Trustee and deposited to the respective
funds shall be considered as revenues and expenses attributable to the party
responsible for such payment hereunder in each case.
As long as this Agreement is in effect, CSC's entitlement to the above
described Management Fee shall not be affected by any sale or assignment of any
rights hereunder by FBA or TADA.
2.5 Continuing Opportunities. CSC shall be entitled, if it desires, and if
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allowed by each particular contract, to an assignment of all contracts of TADA
relating to the rights and obligations undertaken under this Subcontract. This
shall include the opportunity to evaluate and hire any or all trained employees
currently working at the TCCY Facility. However, nothing contained herein shall
be construed to impose any responsibility on CSC to exercise these rights. To
the extent reasonably possible, TADA will assist CSC in this regard and use it
best efforts to assist CSC in its evaluation and hiring process. In connection
herewith, personnel record and other records relating to the TCCY Facility,
including but not limited to employee files, will be turned over to CSC. CSC
agrees to cooperative with FBA and TADA and make any and all of these records
available to FBA and/or TADA , upon request.
CSC expressly does not assume any obligation or duty under or arising from
any contract or other agreement or the acts or omissions of TADA or FBA in the
operation of the TCCY Facility which occurred prior to the Effective Date of
this Subcontract. This includes, but is not limited to, the care or handling of
residents. CSC agrees to assume, upon the execution of this Subcontract, the
employment at will of current employees at the TCCY Facility, whose employment
may continue at will for those who meet the minimum requirements for employment
at CSC for the position in question. At the time TADA or FBA distributes final
payroll checks to its employees at the TCCY Facility, TADA or FBA shall also
distribute to each such employee all of his or her accrued vacation time. The
execution of this Subcontract and the employment of the employees by CSC will
not result
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in any carryover liability to CSC for vacation time, taxes, penalties or other
claims resulting from TADA's or FBA's employment of the employees. CSC does not
assume any responsibility for contributions to or liability in connection with
any employee benefit or health plan previously provided to the employees by TADA
or FBA, except to the extent such is required by applicable Federal or State
law.
2.6 Consideration to TADA. TADA shall receive from CSC, as full
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consideration of the granting of the subcontract rights set forth above, the
following: 1) CSC obligates itself to fulfill all of TADA's obligations in
connection with operating and maintaining the TCCY Facility, as well as
providing programmatic services to the juveniles adjudicated thereto by the DOC
pursuant to the Cooperative Endeavor Agreement, Management Services Agreement
and the City Assignment, including insuring compliance with the appropriate
American Correctional Association Standards and all DOC policies and
regulations; 2) CSC agrees to indemnify TADA as set forth below and 3) CSC
hereby pays to TADA ten ($10.00) dollars and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
TADA. TADA hereby acknowledges that for so long as the obligations and rights
contemplated by this Subcontract are in effect and CSC is in compliance hereof,
TADA will not have the right to receive the Management Fee as set forth in the
Facility Use Agreement between it and TADA and as further defined below.
2.7 Indemnification. CSC will indemnify, defend and hold harmless TADA and
FBA, their assigns, successors, officers, directors, shareholders, employees and
agents, from all claims, lawsuits, losses, costs, penalties, expenses arising
out of or related to: 1) CSC's failure to perform any of the obligations or
covenants undertaken in this Subcontract; or 2) CSC's operation and maintenance
of the TCCY Facility, including the requirement to provide programmatic services
to the juveniles adjudicated thereto by the DOC, as required by the provisions
of the Cooperative Endeavor Agreement, Management Services Agreement and the
City Assignment; or 3) CSC's obligations relating to CSC's employment of any
former employees of TADA and/or FBA; or 4) CSC's failure to comply with
applicable regulations of the DOC, the American Correctional Association
standards or any court order.
TADA and FBA will indemnify, defend and hold harmless CSC, their assigns,
successors, officers, directors, shareholders, employees and agents, from all
claims, lawsuits, losses, costs, penalties and expenses arising out of or
related to: 1) TADA's or FBA's failure to perform any of the obligations or
covenants undertaken in the Cooperative Endeavor Agreement, Management Services
Agreement, City Assignment, TADA Assignment, FBA Assignment or Facility Use
Agreement occurring prior to CSC's execution of this Subcontract; or 2) TADA's
or FBA's operation and maintenance of the TCCY Facility prior to the effective
date hereof, including the requirement to provide programmatic services to the
juveniles adjudicated thereto by the DOC; or 3) TADA's or FBA's obligation
relating to the employment of individuals prior to CSC's execution of this
Subcontract; or 4) any and all other matters relating to possession, use,
operation and maintenance of the TCCY Facility occurring prior to CSC's
execution of this Subcontract.
2.8 Annual Audits by CSC. FBA and/or TADA shall have the right, at least
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twice each
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year, to enter upon the TCCY Facility premises for the purpose of having a
licensed engineer inspect CSC's maintenance of the TCCY Facility as required by
this Agreement. CSC shall also provide FBA and TADA with a copy of any report
performed by the DOC, the City, the Department of Justice, the American
Correctional Association, etc., and relating to the TCCY Facility, within seven
(7) days of CSC's receipt of same.
In addition, CSC shall, on at least an annual basis, and otherwise as
reasonably requested by FBA, provide FBA, the Trustee and Carlyle Capital
Markets Inc. with a copy of its current audited financial statements and
reports.
2.9 Other Reports and Audits. In addition to the foregoing, CSC shall
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provide FBA and TADA with a copy of all reports, litigations or audits,
including but not limited to those initiated by DOC, the U.S. Department of
Justice and the American Correctional Association.
III. FACILITY USE AGREEMENT
3.1 Use of the TCCY Facility. In consideration of the payments to be made
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pursuant to the terms of this Agreement ("Use Payments") and the provisions
stipulated to be performed by CSC in the Subcontract portion of this Agreement,
and for so long as the Subcontract between TADA and CSC is in effect, FBA, as
owner of the TCCY Facility, acknowledges that CSC shall have the exclusive right
to utilize the TCCY Facility for the purpose of operating the TCCY Facility and
fulfilling its obligations to TADA pursuant to the provisions of the Subcontract
contained hereinafter.
For purposes of this Agreement, CSC exclusive rights of use of the TCCY
Facility hereunder shall be inclusive of all buildings and appurtenances,
parking lot, Warden and Deputy Warden houses, and the guest bedrooms. This
exclusive right shall not include the right to install, operate, manage or
maintain inmate telephones, enclosures and associated equipment ("inmate
telephone services") at TCCY Facility, as all such rights belong to Tallulah
Management Facility #2, Inc (now Frostline, Inc.). CSC herein agrees to
cooperate with and assist Tallulah Management Facility #2, Inc (now Frostline,
Inc.), as necessary to protect its rights and interests with respect to the
inmate telephone services.
3.2 Term. FBA agrees that CSC shall have the exclusive right to use the
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TCCY Facility as of and from the Effective Date, continuing for so long as the
original Facility Use Agreement remains in effect between TADA and FBA, unless
terminated earlier as provided below.
The parties hereto specifically acknowledge and agree that the original
Facility Use Agreement is and remains in full force and effect and that CSC
assumes the obligations and responsibilities of TADA pursuant to the Facility
Use Agreement. The parties hereby additionally acknowledge and agree that, in
the event that this Agreement is terminated, TADA shall immediately re-assume
the obligations and responsibilities undertaken by it pursuant to the Facility
Use Agreement or find a substitute operator.
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3.3 Assignment. CSC shall not have the right to assign this Subcontract or
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any of the rights obtained hereunder without the written consent of FBA and
TADA, which consent will not be unreasonably withheld by FBA and TADA.
3.4 Use Payments. In consideration of CSC's utilization of the TCCY
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Facility, as TADA's subcontractor, CSC agrees to pay to FBA certain use payments
(the "Use Payments"). The Use Payments are composed of (i) a fixed component of
$31,000.00 payment per month; (ii) a component based upon actual TCCY Facility
juvenile population; (iii) a variable component; and (iv) other Trustee
payments described herein for which FBA is otherwise responsible. For any
partial months under this Agreement, the Use Payments shall be made on a prorata
basis. Components (i) - (iii) are to be calculated as follows:
Component No. 1 -- Fixed Component: Beginning on January 1, 1999, and
continuing on the 1st day of each month thereafter, the Trustee shall be
instructed to pay to FBA on the 25th of each month a fixed component of
$31,000.00, for the preceding month, to continue during the duration of
this Agreement unless a new Use Payment is negotiated between FBA and CSC.
Component No. 2 -- Component Based Upon Actual Facility Population:
Beginning 90 days from the Effective Date and through November 15, 1999,
Trustee shall be instructed to pay FBA each month a component of the Use
Payment calculated to be $2.00 per day for each juvenile actually housed at
the TCCY Facility during that particular month, and effective November 16,
1999, through the duration of this Agreement, Trustee will be instructed
that this component of the Use Payment will be increased to $4.00 per day
for each juvenile actually housed at the TCCY Facility during that
particular month, unless the actual increase in the total Department
Payment which becomes effective on November 16, 1999 is less than $2.00 per
juvenile, in which case this component of the Use Payments shall be
increased by the same dollar amount as the actual increase in the total
Department Payment becoming effective on November 16, 1999. Notwithstanding
the foregoing, effective November 16, 2000, and continuing for the duration
of this Agreement, this component of the Use Payment shall be $4.00 per day
for each juvenile actually housed at the TCCY Facility during each month.
Component No. 3 -- Variable Component. In addition to the fixed component
and the component based upon actual TCCY Facility population, the Trustee
shall be directed to pay each month to FBA a portion of the Use Payment
comprised of the variable component, commencing on November 16, 1999, and
continuing on the 16th day of each month thereafter. The Variable Component
of the Use Payment is calculated as follows:
The difference between --
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The "Reduced Department Payment", i.e., the amount that the DOC
would pay pursuant to the Cooperative Endeavor Agreement in the
event that the DOC assumed operation of the TCCY Facility, as
established on the date of this Agreement, i.e., $17.55,
and
the "Reduced Department Payment as escalated and recalculated
each year by a factor of the actual Consumer Price Index,
multiplied by 686, representing the number of juvenile offenders
guaranteed by the DOC,
multiplied by the actual number of days in each month,
then multiplied by a factor of 0.7.
The revised Variable Component of the Use Payment will be calculated and
effective upon the date that FBA is notified by the DOC that the DOC has
revised the amount of the Department Payments payable pursuant to the
Cooperative Endeavor Agreement. The Variable Component will be increased
by an amount corresponding to the increase in the Department Payments.
By its execution hereon, FBA agrees to provide written notification of the
revised Department Payment to the Trustee, CSC and Carlyle Capital Markets
Inc. within seven (7) days from receipt of its notice from the DOC.
The Reduced Department Payments are projected to be escalated annually by
an estimated 3%. Upon notification from or on behalf of FBA of the actual
amount of the Reduced Department Payments, Carlyle Capital Markets Inc.
will provide the revised calculations to the Trustee, CSC and FBA.
By its execution hereof, Trustee assumes no liability for the erroneous
calculations of the Variable Component of the Use Payment and will rely
solely on the information provided to it by FBA and Carlyle Capital Markets
Inc. with respect thereto.
It is specifically acknowledged by FBA and TADA, that as long as the
Subcontract and the Facility Use Agreement contained herein are in effect, FBA
will not be entitled to receive the payment stipulated in the Facility Use
Agreement between TADA and FBA, in the amount of
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$120,000.00/month, and listed as the Sixth disbursement in Section 3.03 -
Application of Other Moneys of the Indenture.
CSC shall forward its invoice on the 1st calendar day of each month to the
DOC, representing the services rendered in the preceding calendar month. Use
Payments to FBA shall be payable on the 25th day of each calendar month by the
Trustee, for services of the preceding month. Use Payments for a partial month
shall be prorated. Pursuant to the terms of provisions of Section 3.04 of the
Indenture, the Trustee is directed to allocate to the extent of funds available
thereunder, the portion of the Department Payments equal to the Use Payments,
and the Trustee is directed to deposit each Use Payment to the Use Payment Fund
established pursuant to Section 3.01 of the Indenture, to be disbursed by the
Trustee to FBA in accordance with the Indenture.
Use Payments may be increased or decreased, upon mutual agreement of the
parties hereto. If the Use Payment is increased or decreased, FBA shall notify
the Trustee of the negotiated amount, and FBA shall direct the Trustee to
allocate an amount of the Department Payments in an amount equal to such
negotiated Use Payment to be deposited to the Use Payment Fund.
3.5 Utilities/Overhead Expenses. As of the Effective Date, and for the
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duration of this Agreement, CSC will be responsible for and pay the cost of all
utilities and other items of overhead expense incurred in connection with the
TCCY Facility.
3.6 Maintenance. During the term of this Agreement, CSC will be responsible
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for all repairs and maintenance to the TCCY Facility, other than "extraordinary
maintenance." For purposes of this Agreement, the term "extraordinary
maintenance" is defined as "replacement of major building components and major
equipment (other than that listed on Exhibit I and assets purchased separately
by CSC) of the TCCY Facility. These include the following: generators, kitchen
equipment, laundry equipment, air conditioners, heater, sewerage lift station,
water distribution system and gas distribution system." Repairs and maintenance
of items generally meeting the above definition of "extraordinary maintenance"
shall not be the responsibility of FBA, if the repairs or maintenance are made
necessary as a result of vandalism.
3.7 Insurance. CSC shall, for the duration of this Agreement, obtain and
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pay all premiums for policies of general liability insurance, including business
interruption coverage (in an amount sufficient to maintain the timely payment of
Distributions for a period of twelve months), and casualty insurance, and other
insurance associated with its management, operation and maintenance of the TCCY
Facility, with aggregate limits of not less than $10,000,000 .00 per occurrence.
FBA, TADA and the Trustee shall be named in all such policies of insurance as
additional insureds.
FBA acknowledges that it is and remains responsible for the payment of all
insurance premiums associated with the ownership of the TCCY Facility. CSC and
the Trustee shall be named as an additional insureds in all policies for which
FBA is responsible. The parties specifically recognize that the insurance
requirements contained in Section 9.02(d) of the Indenture must be complied
with, and that each FBA and CSC will make its respective contributions to the
Insurance
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Fund, as defined by the Indenture, to insure timely payment of premiums for the
required coverage. Notwithstanding the foregoing, CSC and FBA acknowledge that
payment of the insurance premiums required by Section 9.02(d) of the Indenture
will be paid directly by the Trustee each month out of the Department Payments.
As such, these payments by the Trustee on behalf of CSC and FBA effectively
become additions to the Management Fee and Use Payments, respectively. Any
interest owned on the money deposited into the Insurance Fund or for fees
charged by the Trustee will belong to the parties in the portion of the
respective share of the total insurance expenditures required and fees charged.
FBA represents, and CSC acknowledges, current liability premiums (including the
business interruption coverage) are paid through 9/30/99. As such, as of the
Effective Date hereof, CSC will reimburse FBA for the prorata premium amounts
which on such date will become CSC's responsibility.
3.8 Taxes. Pursuant to the Indenture, FBA, as owner of the TCCY Facility,
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shall be responsible for the payment of property taxes, ad valorem taxes and
special assessments, state, parish or city, associated with the TCCY Facility.
CSC shall pay, prior to delinquency, all personal property taxes levied or
assessed against CSC equipment, fixtures, personal property located at the TCCY
Facility. As with payment of the insurance premiums covered above, such payments
shall be made directly by the Trustee on FBA's and CSC's behalf , which payments
effectively become additions to the Use Payments and Management Fee,
respectively. In addition, CSC shall pay any and all licenses, charges, and
other fees of every kind and nature as and when they become due and before the
same become delinquent arising out of or in connection with CSC's use and
occupancy of the TCCY Facility.
3.9 Compliance with Laws. CSC agrees to comply with all valid laws,
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ordinances, codes, rules and regulations of governmental authorities having
jurisdiction applicable to the occupancy or use of the TCCY Facility.
3.10 Alterations and Improvements. Upon prior written consent of FBA and
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TADA, CSC shall have the right to make alterations and improvements to the TCCY
Facility. Upon the termination of this Agreement, all alterations and
improvements to the TCCY Facility shall be retained and become the property of
FBA. CSC acknowledges that the TCCY Facility is covered by a mortgage held by
the Trustee for the benefit of the Certificate Holders.
3.11 Surrender. Upon termination of this Agreement, CSC shall deliver the
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TCCY Facility to FBA in as good a condition as the TCCY Facility existed on the
Effective Date of this Agreement, reasonable wear and tear excepted.
3.12 Liability of FBA and/or TADA. Neither FBA nor TADA shall be liable to
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CSC or to CSC's employees, agents, licensees, invitees, juveniles adjudicated by
the DOC to the TCCY Facility or any other person for (1) any injury or damage to
person or property due to CSC's operations of the TCCY Facility; or (2) for any
loss or damage to any person or property occasioned by theft, act of God, or any
other matter beyond the control of FBA or TADA.
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3.13 Indemnification. CSC agrees that it shall indemnify, defend and hold
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harmless FBA and TADA, from and against (1) all fines, suits, losses, costs,
liabilities, claims, demands or actions, by reason of any breach, violation or
non-performance of any of the terms, provisions, covenants, agreements or
conditions on the part of CSC under this Agreement; and (2) all claims, demands,
actions, damages, losses, costs, liabilities, expenses and judgments suffered
by, recovered from or asserted against FBA or TADA on account of injury or
damage to person or property to the extent that any such damage or injury may be
incident to, arise out of, or be caused, either proximately or remotely, wholly
or in part by any act, omission, negligence or misconduct on the part of CSC or
any of its agents, servants, employees, contractors, guest, licensees, invitees
or juveniles adjudicated by the DOC to the TCCY Facility or of any persons
entering the TCCY Facility under or with the express or implied invitation,
permission or consent of CSC, or when any such injury or damage is the result,
proximately or remotely, of the violation of CSC or any of its agents, servants,
employees, contractors, guest, licensees, invitees or juveniles adjudicated by
the DOC to the TCCY Facility, of any law, ordinance or governmental order of any
kind, or when any such injury or damage may in any other way arise from the
occupancy or use by CSC of the TCCY Facility. CSC covenants and agrees that in
case FBA or TADA shall be made a party to any litigation commenced by or against
CSC, or relating to its use of the TCCY Facility, the CSC shall pay all
reasonable costs and expenses, including reasonable attorneys fees and court
costs, incurred by or imposed upon FBA or TADA by virtue of any such litigation,
and the amount of all such cost and expenses, including attorneys fees and court
costs, shall be a demand obligation owing by CSC to FBA and TADA, and shall bear
interest at the highest rate allowed by law.
Subject to Section 3.12, FBA and TADA agree that they shall indemnify,
defend and hold harmless CSC, from and against (1) all fines, suits, losses,
costs, liabilities, claims, demands or action, by reason of any breaches,
violations or non-performance of any of the terms, provisions, covenants,
agreements or conditions on the part of FBA and/or TADA under this Facility Use
Agreement; and (2) all claims, demands, actions, damages, losses, costs,
liabilities, expenses and judgments suffered by, recovered from or assessed
against CSC on account of injury or damage to person or property to the extent
that any such damage or injury may be incident to, arise out of, or be caused
by, either proximately or remotely, wholly or in part by any act, omission,
negligence or misconduct on the part of FBA and/or TADA or any of their agents,
servants, employees, contractors, guests, licensees or invitees, or by any
juveniles adjudicated by the by the DOC to the TCCY Facility (when such injury
or damage is sustained prior to the Effective Date hereof) or of any persons
entering the TCCY Facility under or with the express or implied invitation,
permission or consent of FBA and/or TADA or any of their agents, servants,
employees, contractors, guests, licensees, invitees or juveniles adjudicated by
the DOC to the TCCY Facility, when such damage or injury occurs prior to the
Effective Date of this Agreement, of any law, ordinance or governmental order
of any kind, or when any such injury or damage may in any other way arise from
the occupancy or use by FBA and/or TADA of the TCCY Facility prior to the
Effective Date hereof. FBA and TADA covenant and agree that in case CSC shall be
made a party to any litigation commenced by or against FBA and/or TADA, and for
which indemnity is provided in this Section, FBA and/or TADA shall pay all such
cost and expense, including attorneys fees and court costs, which shall be a
demand obligation owing by CSC to FBA and TADA, and shall bear interest at the
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highest rate allowed by law.
3.14 No Real Rights Created. This Agreement does not create a servitude or
-----------------------
other real right on or to the TCCY Facility. Neither this Agreement nor any
memorandum or extract hereof shall be recorded in the public records of the
Parish of Madison, State of Louisiana. This Agreement shall be subject to and
subordinate to the lien of any mortgage now or hereinafter placed upon the TCCY
Facility.
3.15 Conflict with the Indenture. To the extent that the terms, conditions
---------------------------
or provisions contained herein are in conflict with the terms, conditions or
provisions of the Indenture, the terms, conditions and provisions of the
Indenture shall govern.
IV. ASSET PURCHASE
4.1 Ownership of Assets. TADA represents that it has full power,
-------------------
authority, and legal right to transfer, assign and sell the assets listed on
Exhibit I ("the Assets"), attached hereto and incorporated herein for all
purposes. TADA represents that no other party owns any of the Assets.
4.2 Price. CSC hereby purchases from TADA all of the Assets, subject to
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any existing security interests granted thereon, for the full sum of $357,323.00
(hereinafter the "Asset Price"), which amount includes applicable sales taxes,
the receipt and sufficiency of which is hereby acknowledged by TADA. CSC, TADA
and FBA mutually agree that the Asset Price stipulated above is a fair market
price for the purchase of the Assets, taking into consideration the condition of
the Assets and all existing security interests attaching thereto. TADA and FBA
agree to deliver such bills of sales, financing statements and/or titles as CSC
may reasonably request to effectuate the purchase of the Assets and the transfer
of title of the Assets to CSC.
4.3 Inspection. CSC acknowledges that it has had an opportunity to and has
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inspected the Assets, and confirms that all of the Assets are present and
accounted for.
4.4 Sales Tax. CSC acknowledges that it will be responsible for the
---------
payment of any and all sales tax imposed by any taxing authority on the Assets,
as well as any other personal property, equipment and fixtures now or
hereinafter owned by CSC and located at the TCCY Facility.
V. DISCLOSURES
5.1 Inmate Telephone Services. TADA represents, and CSC acknowledges, that
-------------------------
pursuant to an assignment dated March 30, 1995, TADA assigned the exclusive
right to install, operate, manage, maintain inmate telephones, enclosures and
associated equipment ("inmate telephone services") at TCCY, either directly or
indirectly, to Tallulah Management Facility #2, Inc (now Frostline, Inc.). CSC
understands that none of the rights and benefits associated with the inmate
telephone services are conveyed herein, as such rights belong to Tallulah
Management Facility #2, Inc (now Frostline, Inc.). CSC agrees to cooperate with
and assist Tallulah Management Facility #2,
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Inc (now Frostline, Inc.), as necessary to protect its rights with respect to
the inmate telephone services.
5.2 Pending Litigation. To the best of TADA's and FBA's knowledge, there
------------------
are no pending or threatened actions or proceedings before any court or
administrative agency which shall materially adversely affect the condition,
business or operation of CSC or the ability of CSC to perform its obligations
hereunder, with the exception of the following: 1) Xxxxx Xxxxxxxx, et xx x.
Xxxx XxXxxxxxx, et al, C.A. #71-98B, filed in the United States District Court
for the Middle District of Louisiana; this matter has been consolidated with In
Re: Juvenile Facilities, C.A. # CH97-M5-001-B and In Re: Tallulah Correction
Center for Youth, C.A. #CH97-0665-B-M1 and The United States of America v. State
of Louisiana, et al, C.A. 98-947-B-1 seeking injunctive relief; and 2) Xxxxx
X., et al v. Xxxxxxx Xxxxxxx, et al, C.A. #98-886-B-M1, seeking injunction and
which may be consolidated with the foregoing civil actions.
Further, TADA represents that there are a number of administrative review
actions and civil actions seeking damages against TADA, in which case TADA is
being defended by its insurer(s), and which matters remain the responsibility of
TADA notwithstanding any other obligations undertaken herein by CSC.
VI. DEFAULT
6.1 Assurances. CSC may be required from time to time, at its own cost,
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at the request of TADA and/or FBA, to provide reasonable assurances, as TADA
and/or FBA deem necessary and appropriate to insure the CSC is capable of
fulfilling all of its obligations hereunder.
6.2 Notice and Opportunity to Cure. In the event that CSC shall be in
------------------------------
default of any material obligations arising out of this Agreement, TADA and/or
FBA shall provide written notice to CSC of the condition(s) constituting default
and will indicate a reasonable time period within which TADA and/or FBA requires
CSC to cure such condition(s).
Upon the occurrence of a condition constituting default, and after receipt
of notice from TADA and/or FBA, if CSC believes that the condition(s) cannot be
corrected within the time set forth by TADA and/or FBA, and if CSC, through a
diligent, ongoing, and conscientious effort to correct the default believes that
the cure will take longer that the time set forth by TADA and/or FBA, then CSC
shall submit a plan for review by FBA and/or TADA. FBA and/or TADA have the
option to approve the plan, in which instance they will not exercise their
remedies hereunder as long as CSC takes diligent , ongoing and conscientious
actions to cure the default. If FBA and/or TADA disapprove CSC's plan, then FBA
and/or TADA will identify corrective action necessary to be taken and the time
period within which such corrective actions must be taken. If, after receipt of
the required corrective action and required time period from TADA and/or FBA,
CSC should fail or refuse, for any reason, to timely take the corrective actions
required by TADA and/or FBA, then the Facility Use Agreement and the Subcontract
shall be immediately terminated. Thereafter, TADA and/or FBA may without the
necessity of additional notice or demand to CSC, and without releasing
13
CSC from any obligation, covenant or condition, make, perform, observe, take or
do whatever necessary to protects its rights and interest. Under such
circumstances, the exclusive right to utilize the TCCY Facility shall
immediately revert back to FBA, and all rights granted to CSC under the
Subcontract shall immediately revert back to TADA. In the event of such a
default termination, TADA shall have an absolute right to take regain possession
of and use all of Assets, and all other assets and resources being used at the
time of the default termination by CSC to operate and maintain the TCCY
Facility, either itself or by way of a substitute operator, and to fulfill its
obligations under the Cooperative Endeavor Agreement, Management Services
Agreement and the City Assignment. This right shall include without limitation,
any contractual right with respect to the employees of CSC. Notwithstanding the
foregoing, in no event shall such a default termination or subsequent actions
taken by TADA and/or FBA to mitigate their damages limit any rights of TADA or
FBA to seek compensation or bring an action to recover all damages.
In the event of a bankruptcy, reorganization, debt arrangement moratorium,
proceeding under any bankruptcy or insolvency law, or dissolution or liquidation
proceeding is instituted by or against CSC, this Agreement shall be reviewed
immediately and determination made as to continue this Agreement or modify this
Agreement to ensure that FBA and TADA are not liable for CSC's debt.
VII. MISCELLANEOUS
The following general conditions shall apply to all aspects of this
Agreement:
7.1 No Implied Waiver. The failure of FBA and/or TADA to insist at any
-----------------
time upon the strict performance of any covenant or agreement or to exercise any
right, power or remedy contained in this Agreement shall not be construed as a
waiver or a relinquishment thereof in the future.
7.2. Severability. If any provision of this Agreement should be held
------------
invalid or unenforceable, the validity and enforceability of the remaining
provisions hereof shall not be affected thereby
7.3 Notice. Any notice required or permitted to be made in connection with
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this Agreement may be deemed delivered, whether actually received or not, two
(2) days after being deposited in the U.S. Mail, postage prepaid, by certified
or registered mail, return receipt requested, addressed to the applicable
party(ies) at such address indicated below:
If to FBA: FBA, L.L.C.
X.X. Xxx 00000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxx
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If to TADA: TADA, Inc.
X.X. Xxx 00000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxx
If to CSC: CSC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
If to Carlyle
Capital Markets Inc.: Carlyle Capital Markets Inc.
00000 Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President
If to the Trustee: First Tennessee Bank National Association
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Vice President
7.4 Amendments in Writing. This Agreement shall not be changed orally, but
---------------------
shall only be changed by way of a written agreement signed by all parties
hereto. Any waiver or consent with respect to this Agreement shall only be
effective in that specific instance and for the specific purpose for which it
was given. No course of dealings, usage of trade nor parole evidence shall be
used to supplement or modify any of the terms or conditions of this Agreement.
7.5 Governing Law. This Agreement shall be governed and controlled by the
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laws of the State of Louisiana as to interpretation, enforcement, validity,
construction, effect and in all other respects. Subject to the requirement of
Section 7.6, the parties hereto agree that any lawsuit by one of the parties
hereto against another parties hereto, and arising out of or related to this
Agreement, shall be filed in the Nineteenth Judicial District Court for the
State of Louisiana.
7.6 Disputes. The parties hereto agree to submit any grievance or dispute
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arising out of or in any way related to this Agreement to non-binding mediation
prior to the initiation of litigation. Such mediation shall be held in Baton
Rouge, Louisiana.
7.7 Entire Agreement. This Agreement contains the full agreement of the
----------------
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understanding relating thereto. All prior agreements with
respect to the subject matter hereof shall be null, void and of no consequence.
Further, no representations, inducements, promises or agreements have been made.
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This document may be executed in multiple originals.
THUS DONE AND SIGNED, after due reading of the whole, at _____________ ,
_____________, this ____ day of December, 1998.
FBA, L.L.C.
By: /s/ Xxxxx Xxxx
-----------------------------
XXXXX XXXX
Managing Member
Trans-American Development Associates, Inc.
By: /s/ Xxxxx Xxxx
-----------------------------
XXXXX XXXX
Vice President
Correctional Services Corporation
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
XXXXX X. XXXXXXXX
President
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ACKNOWLEDGED this ____ day of December, 1998.
First Tennessee Bank National Association
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
XXXXXX X. XXXXXXXXX
President
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