[CIK] 0000914670
[NAME] CORRECTIONAL SERVICES CORPORATION
LEASE AGREEMENT
BETWEEN
FRIO COUNTY, LESSOR
AND
CORRECTIONAL SERVICES CORPORATION, LESSEE
THIS LEASE AGREEMENT (Lease) is made and entered into pursuant to
Subchapter F of Chapter 351 of the Texas Local Government Code, as amended,
dated to be effective as of November 26, 1997 (the "Effective Date"), between
Frio County, a political subdivision of the State of Texas ("FRIO") (Lessor),
having an office at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and Correctional Services Corporation ("CSC") (Lessee), a Delaware
corporation, having an address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. Definitions. As used in this Lease the following terms have the
meanings set forth below:
Bankruptcy Code means Title 11 of the United States Code or any other
Federal or state bankruptcy, insolvency or similar law, now or hereafter in
effect in the United States.
Business Day means any day except Saturday, Sunday and any days on which
banks in the State of Texas shall be closed.
Environmental Laws means and includes but shall not be limited to the
Resource Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sec. 9601 et
seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986,
the Hazardous Materials Transportation Act (49 U.S.C. Sec. 1801 et seq.), the
Toxic Substances Control Act (15 U.S.C. Sec. 2601 et seq.), Clean Air Act (42
U.S.C. Sec. 9402 et seq.), the Clean Water Act (33 U.S.C. Sec. 1251 et seq.) the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Sec. 136 et
seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Sec. 690
et seq.) and the Occupational Safety and Health Act (29 U.S.C. Sec. 651
et seq.) (collectively CERCLA) and all applicable federal, state and local
environmental laws, including obligations under the common law, ordinances,
rules, regulations, private agreements (such as covenants, conditions and
restrictions) as any of the foregoing may have been or may be from time to
time amended, supplemented or supplanted, and any other federal, state or
local laws, including obligations under the common law, ordinances, rules,
regulations, private agreements (such as covenants, conditions and
restrictions) now or hereafter existing relating to regulation or control of
Hazardous Substances or environmental health and safety. As used herein,
"private agreements" shall not include any private agreements entered into by
Lessee that purport to be binding upon either Lessor or the Premises unless
Lessor has expressly consented thereto in writing prior to Lessee's entering
into the same.
Governmental Requirements means any law, statute, ordinance, order, rule,
regulation or determination of any federal, state, county, municipal, local or
other governmental or quasi-governmental authority having jurisdiction over
Lessor, Lessee, the Premises, the Sheriff's Offices or any activities or
operations engaged in at the Premises by any Person at any time.
Hazardous Substances means (i) those substances included within the
definitions of or identified as "hazardous substances", "hazardous
materials", or "toxic substances" in or pursuant to, without limitation, CERCLA
and in the regulations promulgated pursuant to said laws, all as amended;
(ii) those substances listed in the United States Department of Transportation
Table (40 CFR 172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as hazardous substances (40 CFR
Part 302 and amendments thereto); (iii) any material, waste or substance
which is or contains (A) petroleum, including crude oil or any fraction
thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Sec. 1251 et seq., (33 U.S.C. Sec. 1321) or listed pursuant to Section 307 of
the Clean Water Act (33 U.S.C. Sec. 1317); (E) flammable explosives;
(F) radioactive materials; and (iv) such other substances, materials and wastes
which are or become regulated as hazardous, toxic or "special wastes" under
applicable local, state or federal law, or the United States government, or
which are classified as hazardous, toxic or as "special wastes" under
federal, state or local laws or regulations.
Lessee Entity means Lessee or any corporation or partnership more than
fifty percent of the voting power or partnership interests or membership
interests of which are owned directly or indirectly by Lessee or one or more of
its shareholders or members who in the aggregate hold more than fifty percent of
the voting power of Lessee.
Lessor's Inmates means inmates the Lessor has responsibility to confine as
part of its governmental obligations.
Lessor's actual knowledge or any other reference to the knowledge of
Lessor shall mean only those facts that are within the current actual
knowledge of Lessor's Commissioners Court or the Sheriff, no independent
investigation or inquiry having been undertaken by or required of any such
persons.
Person means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee of a trust, unincorporated
organization or government or governmental authority, agency or political
subdivision thereof.
Qualified Assignee means a person or entity (a) with, at the time of an
assignment of this Lease to such person or entity, a net worth of at least Ten
Million Dollars as of the end of its most recent fiscal year as certified by a
public accountant; (b) which has been in existence and doing business for not
less than three years; and (c) has experience operating detention facilities
similar to the Facility.
Renter's Price Index shall mean that component of the Consumer Price Index
as reported by the United States government.
2. Demise: Condition.
(a) Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees to
lease from Lessor, subject to the terms and conditions hereof and all matters
of record with respect to the Premises (hereinafter defined) in Frio County,
Texas, (i) the parcel of land (the Land) described in Exhibit B attached
hereto, (ii) the facility on the Land currently known as the Frio County
Detention Facilities as depicted on Exhibit A (the Facility), buildings and
improvements now or hereafter existing on the Land and fixtures appurtenant
thereto (collectively the Improvements) and (iii) all easements, rights and
appurtenances thereto (the Land, Improvements and all such easements, rights and
appurtenances collectively, the Premises) save and except that space
described as the Sheriff's office on Exhibit B hereto and all easements, rights
and appurtenances thereto, including, without limitation, the right to
utilize common spaces on the Premises, such as access hallways, booking
areas, and parking spaces (the "Sheriff's Offices"). As the attached survey
indicates, a certain portion of the recreation yard as well as that portion
of the Facility currently utilized for administrative space is not unde
possession of Lessor and is not a part of the Premises.
(b) Lessee has examined the Premises and Lessor's interest in and title
to the Premises, and has found the same to be satisfactory for all purposes.
Lessee's taking possession of the Premises shall constitute conclusive
evidence for all purposes of Lessee's acceptance of the Premises in a state and
condition satisfactory, acceptable and suitable for Lessee's use pursuant to
this Lease. LESSEE ACCEPTS THE PREMISES AS IS, WHERE IS, AND WITH ALL
FAULTS, AND WITHOUT ANY WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO
THE PREMISES' CONDITION, SUITABILITY OR FITNESS FOR ANY PURPOSE OR THE
PREMISES' COMPLIANCE WITH ANY GOVERNMENTAL REQUIREMENTS.
(c) Lessor warrants and represents that once the obligations noted in
Section 37 of this Lease are extinguished by the Purchase of the Premises, it
will have the unilateral right to lease the Land, Facility, Improvements and
Premises to Lessee.
(d) Lessee has the unilateral right at any time to make alterations,
additions or improvements to the Premises, including the unilateral right to
expand the bed capacity of all buildings without Lessor's consent (the
Expansion). All Expansions shall be performed in a good and workmanlike
manner in compliance with all applicable Governmental Requirements. Upon
completion of all Expansions, a full set of as-built plans covering such
Expansion shall promptly be delivered to Lessor. All Expansions shall become
part of the Premises and shall be surrendered along with the Premises upon the
expiration or termination hereof. In no event shall the aggregate of al
Expansions exceed beds more than exist as of the date hereof.
3. Term.
(a) Subject to the provisions hereof, Lessee shall hold the Premises for
a term (the Term) which shall begin on the date that all outstanding debt of
Lessor relating to the Premises is discharged and title to the Premises has
been conveyed to Lessor and end at midnight on December 1, 2009, unless sooner
terminated or extended as expressly provided herein.
(b) Lessee shall vacate the Premises upon the expiration of the Lease
Term or earlier termination of this Lease. Lessee shall reimburse Lessor for'
and indemnify Lessor against all damages incurred by Lessor as a result of
any delay by Lessee in vacating the Premises. If Lessee does not vacate the
Premises upon the expiration of the Lease Term or earlier termination of the
Lease, Lessee's occupancy of the Premises shall be a "month to month" tenancy,
subject to all of the terms of this Lease, and Lessee shall pay to Lessor, as
Additional Rent hereunder (which shall be in addition to, and not in lieu of,
all other Basic Rent, Additional Rent and other sums payable from Lessee to
Lessor hereunder) holdover rental in the amount of $50,000.00 per month,
payable in advance on or before the first day of each month or fraction thereof
that Lessee remains in occupancy of the Premises after the expiration or
earlier termination hereof.
(c) This Lease may be extended for one (1) additional five (5) year term
upon mutual agreement of the parties.
4. Rent and Other Consideration.
(a) On the Effective Date, Lessee shall pre-pay one hundred forty-four
(144) months [twelve (12) years] of rent equaling $4,500,000 (Basic Rent) for
the Premises to Lessor.
(b) During the Term of the Lease, Lessor shall be entitled to 30 beds
for Lessor's Inmates in the Premises at no cost to Lessor. It is agreed that
Lessor's Inmates will be confined to the extent of its capacity in the ▇▇▇▇▇▇▇
Facility on the Premises.
(c) For beds in excess of such 30 free beds, up to a total of 40 beds
(including the 30 free beds), Lessor shall pay $28 per day per bed for each
bed used by Lessor during the first 12 months of the Term. Thereafter,
Lessor shall pay $28 per bed per day plus the increase as determined by the
Renter's Price Index.
(d) For all other beds beyond forty (40), Lessor shall be entitled to
additional beds in the Premises to house Lessor's own Inmates by paying the
prevailing market rate as established by Lessee as it pertains to non-Frio
County inmates housed in the Facility.
(e) To the extent permitted by law, Lessee shall provide telephone
service at the Facility. Lessee shall remit to Lessor: 1) 50% of all
monthly telephone revenue received by Lessee for phone services used by
inmates at the Premises plus; 2) 50% of the monthly value of all per diem
increases in the rates charged for housing inmates (above $39.75 for
out-of-state inmates, and above $35.25 for all other non-Lessor inmates).
In no event shall the aggregate amount received by the Lessor pursuant to
subsections 1) and 2) exceed the sum of $1 times the number of non-Lessor
Inmates times the number of days of incarceration.
(f) Upon any expansion of at least 25 beds, in lieu of the monies set
forth in subparagraph (e), Lessor shall receive $1 for each non-Lessor Inmate
per day.
(g) All amounts which Lessee is required to pay or discharge pursuant to
this Lease in addition to Basic Rent shall constitute additional rent hereunder
(Additional Rent). Lessee may pay Additional Rent directly to the Person
entitled thereto. All sums payable as Additional Rent to Persons other than
Lessor shall be paid when they become due to such Persons, and Lessee shall
indemnify Lessor against any liens or claims against Lessor or the Premises
arising out of Lessee's failure to timely pay any such sums. All sums payable
as Additional Rent to Lessor shall be paid monthly in arrears, not later than
the tenth day of the month immediately following the month in which they
accrue. Neither phone revenue nor per diem payments shall be deemed to
accrue until such time as the monies have been received by Lessee. Each such
payment of Additional Rent to Lessor shall be accompanied by (i) a daily
prisoner count (specifically identifying those Inmates constituting Lessor
Inmates) for the month for which Additional Rent is being paid, (ii) a
statement of Lessee's income and expenses for the Premises for such month,
and (iii) a statement of phone revenue for such month. Lessor shall have the
right, not more than once each year, at Lessor's expense and upon at least five
day's notice to Lessee, to perform or, to cause a firm of independent public
accountants or auditors to perform, an audit of Lessee's books and records
pertaining to the Premises, and if such audit establishes that Lessee has
underpaid or failed to pay Lessor any sums due to Lessor by Lessee hereunder,
Lessee shall promptly pay to Lessor such deficiency.
(h) All payments Lessee is required to make to Lessor under this Lease
shall be paid to the Frio County Auditor and deposited in an escrow account
to be established for the exclusive (subject to the provisions hereof)
benefit of Lessee.
(i) All monies received under Intergovernmental Agreements by Lessor
which relate to the Premises must be paid to Lessee within ten (10) business
days of receipt.
(j) Lessee's covenants to pay Basic Rent and Additional Rent are
separate and independent covenants from all other covenants of Lessor and
Lessee hereunder.
IT IS UNDERSTOOD AND AGREED THAT ALL REVENUES RELATED TO THE FACILITY WILL
BELONG EXCLUSIVELY TO LESSEE EXCEPT FOR AMOUNTS LESSEE IS EXPRESSLY REQUIRED TO
PAY PURSUANT TO THIS SECTION 4.
5. Use.
(a) Lessee shall use and operate the Premises throughout the Term as a
minimum or medium security correctional facility. Lessee and Lessor shall
comply with Sec. 511.0092 of the Government Code at Lessee's sole expense
pursuant to Texas law and the rules and standards promulgated or adopted by the
Texas Commission on Jail Standards. Lessor shall provide Lessee with
sufficient spaces to meet its governmental obligations to maintain a County
jail and shall provide the Sheriff of Lessee with sufficient access to such
space to carry out his duties as imposed by state law.
(b) Lessee shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein which will in any way caus
cancellation of any insurance policy covering the Premises or any part thereof.
(c) Except as provided in this Lease, or as required by law, Lessor or
its successors or assigns shall in no way have responsibility for, interfere or
oversee Lessee's operations on the Premises.
(d) Lessee shall comply with all covenants, conditions, restrictions and
Governmental Requirements applicable to the Premises, and shall promptly comply
with all governmental orders and directives for the correction, prevention
and abatement of nuisances, hazards and other conditions or activities in or
upon, or connected with the Premises, all at Lessee's sole cost, risk and
expense, including any expense or cost resulting from the compliance wit
improvements for handicapped or disabled persons or any other costs, fees or
expenses mandated by Governmental Requirements.
(e) Lessee shall pay the cost of all utility services, including but not
limited to, all charges for gas, water, sewerage, storm water disposal, trash
disposal, communications and electricity used on the Premises and in the
Sheriff's Offices.
(f) Upon 24 hours notice, Lessor and its authorized agents shall have
the reasonable right, during normal business hours, to enter the Premises, at a
time set by the Warden, (a) to inspect the general condition and state of
repair thereof, (b) to make repairs required or permitted under this Lease,
or (c) for any other reasonable purpose. In the event of an emergency,
Lessor may enter the Premises at any time.
6. Net Lease.
This Lease is a "net lease" and Lessee shall pay all Basic Rent and
Additional Rent without notice, demand, counterclaim, set-off, deduction,
defense, abatement, suspension, deferment, diminution or reduction. All costs,
expenses and obligations of every kind and nature whatsoever relating to the
Premises and the appurtenances thereto and the use and occupancy thereof by
Lessee or anyone claiming by, through or under Lessee which may arise or become
due during or with respect to the period constituting the Term hereof shall
be paid by Lessee. Lessee assumes during the Term the sole responsibility for
the condition, use, operation, maintenance and management of the Premises and
for obtaining and paying for all utilities serving the Premises and Lessor
shall have no responsibility in respect thereof and shall have no liability for
damage to the property of Lessee or any approved sublessee or assignee of Lessee
or any agent, employee, inmate, officer representative, licensee or invitee of
Lessee or for any reason whatsoever.
7. Taxes and Other Charges; Law and Agreements.
(a) Nothing in this Lease shall require payment by Lessee of:
(i) any property or related taxes on the Lessor's fee interest in
the Premises;
(ii) any franchise, estate, inheritance, succession, or transfer
taxes (other than transfer taxes, recording fees, or similar charges payable
in connection with a conveyance hereunder to Lessee or in connection with
Lessor's exercise of remedies after an Event of Default hereunder);
(iii) net income or profits taxes of Lessor or anyone claiming by, through
or under Lessor including without limitation (other than any gross receipts
or similar taxes imposed or levied upon, assessed against or measured by the
Basic Rent, Additional Rent or any other sums payable by Lessee hereunder or
levied upon or assessed against the Premises, unless such taxes are in lieu of
or a substitute in whole or in part for an income, profit or revenue tax of
Lessor, but only to the extent of such substitution and only to the extent that
such tax, assessment or other charge would be payable if the Premises were the
only property of Lessor subject thereto); or
(iv) any taxes imposed by any federal, state or local government on, or
measured by, the gross or net income of Lessor, tax preferences or dividends
paid, taxes in the nature of capital gains, excess profits, accumulated
earnings or personal holding company taxes, unless any such tax is in lieu of or
a substitute for any other tax or assessment upon or with respect to the
Premises, which, if such other tax or assessment were in effect, would be
payable by Lessee hereunder.
Lessee and its lease hold interest in this Lease shall be subject to tax
as otherwise imposed by applicable law. However, Lessor agrees that it will
not impose any taxes, levies, fees or other impositions upon Lessee which are
for Lessor's benefit and are not either a) mandated by state law, or
b) generally applicable to the citizens or businesses within Frio Count
which is not designed to place a disproportionate burden on Lessee or c) able
to be passed back to Lessee's clients through higher per diem rates. Lessee
shall pay any taxes assessed against trade fixtures, furnishings, equipment, or
any other personal property belonging to Lessee for which it is not
tax-exempt. Lessee shall use reasonable efforts to have its personal
property taxed separately from the Premises, but if any of Lessee's personal
property is taxed with the Premises, Lessee shall pay the portion of all such
taxes attributable to the personal property of Lessee.
Lessee shall furnish to Lessor promptly, and in any event within 20 days
after the same becomes due and payable, proof of the payment of any tax
assessment, fee, rent or charge which is payable by Lessee. Such taxes
assessments, fees, water and sewer rents and other governmental charges shall
be apportioned pro rata between Lessor and Lessee as of the date on which this
Lease terminates or expires with Lessee responsible for all such taxes, fees and
charges attributable to the periods during which this Lease was in effect, and
Lessor responsible for all such taxes, fees and charges attributable to periods
thereafter. Lessor and Lessee agree to use reasonable efforts to cause bills for
taxes and other assessments and all assessment notices with respect to the
Premises to be sent directly to Lessee.
(b) Lessee shall obtain and pay all charges for utility, communication
and other services to the extent rendered or used during the Term on or about
the Premises, whether or not payment therefor shall become due after the Term.
8. Liens.
Lessee will promptly, but in any event no later than 30 days after its
knowledge of the filing thereof but in any event prior to the enforcement of the
same, at its own expense remove and discharge of record, by bond or
otherwise, any charge, lien, security interest or encumbrance upon the
Premises, any Basic Rent, or any Additional Rent or other sums payable by
Lessee under this Lease which arises for any reason (except for any act or
omission of Lessor or anyone claiming by, through or under Lessor, without the
consent of Lessee), including all liens which arise out of Lessee's possession,
use, operation and occupancy of the Premises, but not including any permitted
encumbrances. Nothing contained in this Lease shall be construed as constituting
the consent or request of Lessor, express or implied, to or for the performance
by any contractor, laborer, materialman, or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to the Premises or any part thereof. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding an interest in the
Premises or any part thereof through or under Lessee, and that no mechanic's or
other liens for any such labor, services or materials shall attach to or affect
the interest of Lessor in and to the Premises.
9. INDEMNIFICATION: FEES AND EXPENSES.
(a) LESSEE SHALL UNCONDITIONALLY AND IRREVOCABLY PAY, AND SHALL PROTECT,
DEFEND, AND INDEMNIFY LESSOR, AND ITS COMMISSIONERS, OFFICERS, EMPLOYEES,
LICENSEES, AND AGENTS (INDEMNIFIED PARTY), AGAINST AND HOLD INDEMNIFIED PARTY
HARMLESS FROM ALL LIABILITIES, LOSSES, FINES, PENALTIES, DAMAGES, COSTS,
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES, PRE AND POST JUDGEMENT
INTEREST, COSTS OF COURT, AND EXPENSES), CLAIMS, DEMANDS OR JUDGMENTS OF ANY
NATURE (A) ARISING OR ALLEGED TO ARISE IN CONNECTION WITH THE CONDITION, USE,
OPERATION, MAINTENANCE, SUBLETTING AND MANAGEMENT OF THE PREMISES, (B) RELATING
TO THE PREMISES AND THE APPURTENANCES THERETO AND THE USE AND OCCUPANCY THEREOF
BY LESSEE OR ANYONE CLAIMING BY, THROUGH OR UNDER LESSEE OR (C) ARISING OR
ALLEGED TO ARISE FROM OR IN CONNECTION WITH: (I) ANY INJURY TO, OR DEATH OF,
ANY PERSON OR ANY DAMAGE TO OR LOSS OF PROPERTY ON OR ADJACENT TO THE PREMISES
OR GROWING OUT OF OR DIRECTLY OR INDIRECTLY CONNECTED WITH, OWNERSHIP, USE,
NONUSE, OCCUPANCY, OPERATION, POSSESSION, CONDITION, CONSTRUCTION, REPAIR OR
REBUILDING OF THE PREMISES, OTHER THAN ANY INJURY, DEATH, DAMAGE OR LOSS
ARISING OUT OF SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT;
OR (II) ANY CLAIMS BY THIRD PARTIES RESULTING FROM ANY VIOLATION OR ALLEGED
VIOLATION BY LESSEE OF (A) ANY PROVISION OF THIS LEASE, OR (B) ANY
GOVERNMENTAL REQUIREMENT, OR (C) ANY OTHER AGREEMENT RELATING TO THE PREMISES.
IF INDEMNIFIED PARTY SHALL BE MADE A PARTY TO ANY SUCH CLAIM, DEMAND OR
LITIGATION, AND IF LESSEE, AT ITS EXPENSE, SHALL FAIL TO PROVIDE INDEMNIFIED
PARTY WITH COUNSEL APPROVED BY SUCH PARTY, WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD, LESSEE SHALL PAY ALL COSTS AND REASONABLE ATTORNEY'S
FEES AND EXPENSES INCURRED OR PAID BY INDEMNIFIED PARTY IN CONNECTION WITH
SUCH LITIGATION. TO THE EXTENT LEGALLY PERMISSIBLE, EACH INDEMNIFIED PARTY
CONSENTS TO BEING REPRESENTED BY THE SAME COUNSEL AS LESSEE IN SUCH ACTION;
PROVIDED, HOWEVER, THAT ANY INDEMNIFIED PARTY MAY BE REPRESENTED BY SEPARATE
COUNSEL AT LESSEE'S EXPENSE IF, IN SUCH INDEMNIFIED PARTY'S REASONABLE
JUDGMENT, SEPARATE COUNSEL IS NECESSARY TO PROTECT SUCH INDEMNIFIED PARTY'S
INTEREST.
(b) LESSOR SHALL NOT BE LIABLE TO LESSEE OR TO LESSEE'S EMPLOYEES,
AGENTS, INVITEES OR VISITORS, OR TO ANY OTHER PERSON WHOMSOEVER, FOR ANY INJURY
TO PERSONS OR DAMAGE TO PROPERTY ON OR ABOUT THE PREMISES OR ANY ADJACENT AREA
OWNED BY LESSOR CAUSED BY THE NEGLIGENCE OR MISCONDUCT OF LESSEE, ITS
EMPLOYEES, SUBLESSEES, LICENSEES OR CONCESSIONAIRES OR ANY OTHER PERSON
ENTERING THE PREMISES UNDER EXPRESS OR IMPLIED INVITATION OF LESSEE, OR
ARISING OUT OF THE USE OF THE PREMISES BY LESSEE AND THE CONDUCT OF ITS
BUSINESS THEREIN, OR ARISING OUT OF ANY BREACH OR DEFAULT BY LESSEE IN
THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER; AND LESSEE HEREBY AGREES TO
INDEMNIFY AND HOLD LESSOR HARMLESS FROM ANY LOSS, EXPENSE OR CLAIMS ARISING OUT
OF SUCH DAMAGE OR INJURY.
(c) Each party hereto waives any and every claim which arises or may
arise in its favor against the other party hereto during the term of this Lease
or any renewal or extension thereof for any and all loss of, or damage to, any
of its property located within or upon, or constituting a part of, the Premises,
which loss or damage is covered by valid and collectible fire and extended
coverage insurance policies, to the extent that such loss or damage is
recoverable under such insurance policies. Such mutual waivers shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss of, or damage to, property of
the parties hereto. Inasmuch as such mutual waivers will preclude the
assignment of any aforesaid claim by way of subrogation or otherwise to an
insurance company (or any other person), each party hereby agrees immediately to
give to each insurance company which is issued to such party policies of fire
and extended coverage insurance, written notice of the terms of such mutual
waivers, and to cause such insurance policies to be properly endorsed, if
necessary, to prevent the invalidation of such insurance coverages by reason of
such waivers.
10. Environmental Matters.
(a) Lessor represents, covenants and warrants to Lessee that:
(i) no notices, complaints or orders of violation or non-compliance of
any nature whatsoever have been issued to Lessor or, to Lessor's actual
knowledge, to any Person regarding the Premises, and to Lessor's actual
knowledge, no federal, state or local environmental investigation or legal
action by a private party is pending or overtly threatened, in each case with
regard to the Premises or any use thereof or any alleged violation of, or
strict liability arising under, Environmental Laws with regard to the
Premises; to Lessor's actual knowledge, no liens have been placed upon the
Premises in connection with any actual or alleged liability under any
Environmental Laws;
(ii) the Premises (a) have not been used by Lessor or to Lessor's actual
knowledge by any other Person to generate, manufacture, refine, produce or
process any Hazardous Substance or to store, handle, transfer or transport any
Hazardous Substance other than normal and lawful uses of such Hazardous
Substances, taking into account Lessor's use of the Premises, in lawful
quantities and in compliance with Environmental Laws, and (b) will not be used
by Lessor or any other Person acting under Lessor's actual control (which
excludes among others, Lessee and its agents, employees, officers,
representatives, licensees, invitees and all inmates) at any time during the
Term to generate, manufacture, refine, produce or process any Hazardous
Substance or to store, handle, transfer or transport any Hazardous Substance;
(iii) to Lessor's actual knowledge, no Hazardous Substances have been
disposed of or otherwise released on, from or to the Premises except in
compliance with applicable Environmental Laws;
(iv) the use which Lessor makes and intends to make of the Premises will
not result in the disposal or other release of any Hazardous Substances on, from
or to the Premises except in compliance with applicable Environmental Laws.
(v) Lessor has no notice or knowledge that any lien has been created on
the Premises pursuant to any Environmental Law, nor, Lessor's actual knowledge,
is the Premises listed on or proposed for listing on the National Priorities
List under CERCLA or any similar state registry.
(vi) Lessor has no actual notice or actual knowledge that any lien has
been created on the Premises pursuant to any Environmental Law, nor, to
Lessor's actual knowledge, are the Premises listed on or proposed for listing
on the National Priorities List under CERCLA or any similar state registry.
(b) Lessee represents, covenants and warrants to Lessor that:
(i) at all times during the Term, the Premises, Lessee, and all of its
officers, employees, agents, representatives, licensees, invitees, inmates,
sublessees and any assignee of Lessee shall comply in all respects with all'
applicable Environmental Laws; Lessee has, and will ensure that Lessee and all
of its officers, employees, agents, representatives, licensees, and invitees
have obtained all permits, licenses, and any other authorizations to conduct
operations at the Premises that are required under all applicable Environmental
Laws; Lessee is, and will take all reasonable steps to ensure that Lessee and
all of its officers, employees, agents, representatives, licensees, invitees
and inmates of the Premises are, in compliance with all terms and conditions of
all permits, licenses, and any other authorizations required under all
applicable Environmental Laws;
(ii) at all times during the Term, the Premises, Lessee, all sublessees
and any assignee of Lessee shall comply in all respects with all applicable
Environmental Laws; Lessee has and will ensure that all sublessees of the
Premises have, obtained all permits, licenses, and any other authorizations to
conduct operations at the Premises that are required under all applicable
Environmental Laws; Lessee is, and will take all reasonable steps to ensure that
all sublessees of the Premises are, in compliance with all terms and conditions
of all permits, licenses, and any other authorizations required under all
applicable Environmental Laws;
(iii) no notices, complaints or orders of violation or non-compliance of
any nature whatsoever have been issued to Lessee or, to Lessee's actual
knowledge, to any Person regarding the Premises, and to Lessee's actual
knowledge, no federal, state or local environmental investigation or legal
action by a private party is pending or overtly threatened, in each case with
regard to the Premises or any use thereof or any alleged violation of, or
strict liability arising under, Environmental Laws with regard to the Premises;
to Lessee's actual knowledge, no liens have been placed upon the Premises in
connection with any actual or alleged liability under any Environmental Laws;
(iv) the Premises (a) have not been used by Lessee or to Lessee's actual
knowledge by any other Person to generate, manufacture, refine, produce or
process any Hazardous Substance or to store, handle, transfer or transport any
Hazardous Substance other than normal and lawful uses of such Hazardous
Substances, taking into account Lessee's use of the Premises, in lawful
quantities and in compliance with Environmental Laws, and (b) will not be used
by Lessee or any other Person at any time during the Term to generate,
manufacture, refine, produce or process any Hazardous Substance or to store,
handle, transfer or transport any Hazardous Substance, other than normal and
lawful uses of such Hazardous Substances, taking into account Lessee's intended
use of the Premises, in lawful quantities and in compliance with Environmental
Laws where such uses will have no material adverse effect upon the Premises;
(v) to Lessee's actual knowledge, (i) no contaminants have been disposed
of or otherwise released on, from or to the Premises except in compliance with
applicable Environmental Laws and (ii) the use which Lessee makes and intends
to make of the Premises will not result in the disposal or other release of any
Hazardous Substances on, from or to the Premises except in compliance with
applicable Environmental Laws.
(vi) Lessee has no actual notice or actual knowledge that any lien has
been - created on the Premises pursuant to any Environmental Law, nor, to
Lessee's actual knowledge, are the Premises listed on or proposed for listing
on the National Priorities List under CERCLA or any similar state registry.
(vii) Lessee will obtain and will require subtenants to obtain and
properly maintain all permits, licenses, registrations, approvals and consents
required for the Premises and Lessee's and any subtenants' operations and
facilities thereon.
(viii) IF LESSEE BREACHES THE OBLIGATIONS STATED IN THE PRECEDING
SECTIONS OR SENTENCES, OR IF THE PRESENCE OF HAZARDOUS SUBSTANCES ON THE
PROPERTY CAUSED OR PERMITTED BY LESSEE RESULTS IN CONTAMINATION OF THE PROPERTY
OR ANY OTHER PROPERTY, OR IF CONTAMINATION OF THE PROPERTY OR ANY OTHER
PROPERTY BY HAZARDOUS SUBSTANCES OTHERWISE OCCURS FOR WHICH LESSEE IS LEGALLY
LIABLE TO LESSOR FOR DAMAGE RESULTING THEREFROM, THEN LESSEE SHALL INDEMNIFY,
DEFEND AND HOLD LESSOR HARMLESS FROM ANY AND ALL CLAIMS, JUDGMENTS, DAMAGES,
PENALTIES, FINES, COSTS, LIABILITIES OR LOSSES (INCLUDING, WITHOUT LIMITATION,
DIMINUTION IN VALUE OF THE PROPERTY, DAMAGES FOR THE LOSS OR RESTRICTION ON USE
OFRENTABLE OR UNUSABLE SPACE OR OF ANY AMENITY OR APPURTENANCE OF THE PROPERTY,
DAMAGES ARISING FROM ANY ADVERSE IMPACT ON MARKETING OF BUILDING SPACE OR LAND
AREA, AND SUMS PAID IN SETTLEMENT OF CLAIMS, ATTORNEYS' FEES, CONSULTANT FEES
AND EXPERT FEES) WHICH ARISE DURING OR AFTER THE LEASE TERM AS A RESULT OF SUCH
CONTAMINATION. THIS INDEMNIFICATION OF LESSOR BY LESSEE INCLUDES, WITHOUT
LIMITATION, COSTS INCURRED IN CONNECTION WITH ANY INVESTIGATION OF SITE
CONDITIONS OR ANY CLEAN-UP, REMEDIAL WORK, REMOVAL OR RESTORATION WORK REQUIRED
BY ANY FEDERAL, STATE OR LOCAL GOVERNMENT AGENCY OR POLITICAL SUBDIVISION
BECAUSE OF HAZARDOUS SUBSTANCES PRESENT IN THE SOIL OR GROUND WATER ON OR UNDER
THE PROPERTY. WITHOUT LIMITING THE FOREGOING, IF THE PRESENCE OF ANY HAZARDOUS
SUBSTANCES ON THE PROPERTY OR ANY OTHER PROPERTY CAUSED OR PERMITTED BY LESSEE
RESULTS IN ANY CONTAMINATION OF THE PROPERTY, LESSEE SHALL PROMPTLY TAKE ALL
ACTIONS AT ITS SOLE EXPENSE AS ARE NECESSARY TO RETURN THE PROPERTY TO THE
CONDITION EXISTING PRIOR TO THE INTRODUCTION OF ANY SUCH HAZARDOUS SUBSTANCES
TO THE PROPERTY, PROVIDED THAT LESSOR'S APPROVAL OF SUCH ACTIONS SHALL FIRST BE
OBTAINED. THE FOREGOING INDEMNITY SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.
11. Maintenance and Repair.
Lessee will, at its sole cost, risk and expense, keep and maintain the
Premises, including any Expansions and any altered, rebuilt, additional or
substituted buildings, structures and other improvements thereto, in a good
condition, ordinary wear and tear excepted. Lessee will make all structural and
non-structural, and ordinary and extraordinary changes, capital and other
repairs and replacements, foreseen or unforeseen, which may be required,
whether or not caused by its act or omission, to keep the Premises in such
condition, ordinary wear and tear excepted, including taking, or causing to be
taken, action necessary to maintain the Premises in compliance with all
applicable Governmental Requirements, including all applicable Environmental
Laws. Lessee shall keep the Premises orderly and free and clear of rubbish.
Lessor shall not be required to maintain, alter, repair, rebuild or replace any
portion of the Premises or to maintain the Premises, and Lessee expressly
waives the right to make repairs at the expense of Lessor pursuant to any law
at any time in effect. Without in any way limiting the foregoing, Lessee shall
also be responsible for maintaining the Sheriff's Offices, including, without
limitation, the roof, interior and exterior walls, foundation and all
structural components thereof, as well as all HVAC, gas, electric, telephone
and other utility facilities and equipment serving the Sheriff's Offices, and
for providing routine janitorial service for the Sheriff's Offices.
12. Trade Fixtures.
Title to all trade fixtures or other personal property placed on or
affixed to the Premises by or on behalf of Lessee during the Term shall be and
remain vested in Lessee. All such personalty of Lessee shall be removed at the
expiration of the Term. Lessee shall restore the Premises to the extent damaged
by any such removal.
13. Condemnation and Casualty.
(a) If during the Term less than "substantially all" (hereinafter
defined) of the Premises shall be damaged by fire or other casualty, then
Lessee shall give prompt written notice of such damage to Lessor and shall, at
Lessee's own cost and expense, proceed with diligence and promptness to carry
out any necessary demolition and to restore, repair, replace, and/or rebuild
the Premises in order to restore the Premises, as nearly as practicable, to a
condition not less than the condition required to be maintained hereunder and
to a fair market value not less than the fair market value immediately prior to
such damage. All repair work shall be undertaken and completed in a good and
workmanlike manner and in compliance in all material respects with all
Governmental Requirements then in effect with respect to the Premises.
(b) If all or substantially all of the Premises shall be destroyed or
damaged by fire or other casualty, then Lessee may, at its sole election, (1)
use the insurance proceeds to restore the Premises, as nearly as practicable,
to a condition not less than the condition required to be maintained hereunder
and to a fair market value not less than the fair market value immediately
prior to such damage. All repair work shall be undertaken and completed in a
good and workmanlike manner and in compliance in all material respects with all
Governmental Requirements then in effect with respect to the Premises, or (2)
give notice to Lessor of Lessee's intention to terminate this Lease and
immediately assign to Lessor all of Lessee's insurance proceeds and benefits in
connection therewith and pay any required deductible. "Substantially all" of
the Premises shall be deemed to have been damaged or destroyed if the cost of
restoring the Improvements is more than one-third of the greater of the fair
market value of or the replacement cost of the Improvements immediately before
the Destruction occurs. In the event that Lessee elects to terminate this Lease
in accordance with the provisions of this paragraph (b), Lessor shall have no
duty or obligation to refund to Lessee all or any portion of the prepaid Basic
Rent.
(c) In the event of a temporary condemnation, this Lease shall remain in
full force and effect and Lessee shall be entitled to the portion of the
condemnation award or proceeds in connection therewith that is attributable to
the leasehold interest hereunder.
(d) If the Premises shall be taken or condemned for any public purpose
to such extent as to render the Premises, in the reasonable opinion of Lessor
or Lessee, not reasonably suitable for Lessee's occupancy, this Lease shall, at
the option of either party, terminate on the date title shall vest in the
condemnor or transferee. Lessor and Lessee shall attempt to cause any proceeds,
to be determined by separate awards and to the extent that they are, such award
will be the exclusive compensation to both Lessor and Lessee for such taking or
condemnation. To the extent that there is not a separate award for Lessee's and
Lessor's interest, the entire award shall be paid to Lessor, who shall refund a
portion of the Basic Rent paid under this Lease according to the following
formula: Basic Rent times number of beds lost due exclusively to the taking or
condemnation divided by (295 plus the number of beds added in any expansion)
times the number of days remaining in the Term divided by 4,380. The refund of
Basic Rent shall be paid exclusively from, and is limited by, the award Lessor
receives due to such taking or condemnation.
14. Insurance.
(a) Lessee shall, at its cost and expense, maintain or cause to be
maintained insurance of the following character and shall cause to be delivered
to Lessor annual certificates of the insurers as to such coverage:
(i) "All risk" property insurance covering the Premises and all
replacements and additions thereto, in amounts not less than the actual
replacement cost of the Premises less Land and other uninsurable items against
perils as are insurable under then available "all risk" policies.
(ii) Public liability insurance covering liability against claims for
bodily injury, death or property damage, occurring on, in or about the Premises
and the adjoining land, streets, sidewalks or ways or occurring as a result of
construction, use or occupancy of the Premises or the use of products sold, or
services rendered, on the Premises, in the minimum amount of $20,000,000 with
respect to any one occurrence, accident or disaster or incidence of negligence.
Coverage should include "premises/operations", "independent contractors", and
"blanket contractual" liabilities. Up to the first $20 million of such coverage
may be a self-insured retention, so long as Lessee maintains at least $20
million in additional coverage and has a tangible net worth of $30 million as
shown on its last audited financial statements.
(iii) Worker's compensation insurance (or other similar insurance or self
insurance program permitted and in compliance with the laws of the State of
Texas) covering all Persons employed in connection with any work done on or
about the Premises with respect to which claims for death or bodily injury
could be asserted against Lessor, Lessee or the Premises, complying with the
laws of the State of Texas.
(iv) Such other insurance, in such amounts, against such risks, and with
such other provisions as is customarily and generally maintained by private
operators of facilities similar to those at the Premises.
Such insurance shall not limit Lessee's liability nor relieve Lessee of
any obligation hereunder; although such insurance shall, in part, insure
Lessee's performance of any indemnity provision of this Lease. Such insurance
shall be written by insurance companies legally qualified to issue such
insurance and shall name Lessee as insured, and Lessor as additional insured
with respect to insurance described in clause (ii) and, to the extent
applicable, clause (iv), above, and shall name Lessor as loss payee, as its
interest may appear, with respect to insurance described in clause (i) and, to
the extent applicable, clause (iv) above. Lessee shall obtain such insurance
policies from insurance companies with a General Policy Rating of A or better
in Best's Key Rating Guide or such other insurance companies or risk management
programs approved in writing by Lessor's Mortgagee.
(b) Each policy shall (i) provide that 30 days advance written notice of
cancellation, modification, termination or lapse of coverage shall be given to
Lessor; and (ii) be primary and without right or provision of contribution as to
any other insurance carried by Lessor or any other interested party.
(c) Lessee shall deliver to Lessor such original or duplicate policies
or certificates of insurers, evidencing all of the insurance required under
paragraph 14(a). Lessee shall, within ten (10) Business Days prior to the
expiration of any such policy, deliver to Lessor such original or duplicate
policies or such certificates evidencing the renewal of any such policy and
payment of the premiums for such policy. If Lessee fails to maintain or renew
any insurance required by this Lease and timely deliver evidence thereof as
required pursuant to the preceding sentence, or to pay the premium therefor,
then Lessor, at its option, but without obligation to do so, may, upon three
days' notice to Lessee, procure such insurance. Any sums so expended by Lessor
shall be Additional Rent hereunder and shall be repaid by Lessee immediately
after notice to Lessee o f such expenditure.
(d) Lessee shall comply with all of the terms and conditions of each
insurance policy maintained pursuant to the terms of this Lease.
(e) As long as their respective insurers so permit, Lessor and Lessee
hereby mutually waive their respective rights of recovery against each other
for any loss insured by fire, extended coverage, and other property insurance
policies existing for the benefit of the respective parties and Lessor and
Lessee shall each use their best efforts to cause their respective insurers to
waive all rights of recovery by way of subrogation against the other party.
Each party shall obtain any special endorsements, if required by its insurer,
to evidence compliance with the aforementioned waiver by such party and its
insurer.
15. Responsibilities of Lessor.
(a) To the extent permitted by law, Lessor will enter into all
intergovernmental agreements, including those relating to prisoners from
out-of-state, presented by Lessee that are authorized by, and comply with all
applicable Governmental Requirements, including but not limited to Sec. 511
of the Governmental Code, are for the type of prisoners for which the Premises
are licensed and which contain a satisfactory indemnification of the Lessor.
An indemnification substantially equivalent to the indemnification provided by
Lessee to Lessor pursuant to Section 9 of this Lease will be deemed to be
satisfactory to Lessor. Even though such Intergovernmental Agreements are
between Lessor and a third party, Lessee assumes all obligations of Lessor
thereunder and shall pay all reasonable expenses to be incurred thereunder
directly related to the Agreement, and, except as provided in this Lease, shall
retain all income therefrom. If Lessor pays any amounts due or required under
such an Intergovernmental Agreement and such payment is not reimbursed by
Lessee within 60 days after it is made by Lessor, such failure to r eimburse
Lessor shall constitute a breach of this Lease by Lessee.
For Intergovernmental Agreements involving out-of-state inmates, Lessor
will take such actions at Lessee's expense as necessary to comply with Texas
law and regulations governing contracts for out-of-state inmates and federal
prisoners in order to permit Lessee to house such out-of-state inmates or
federal prisoners in the Facility.
(b) Lessor will at Lessee's expense cooperate with Lessee for the term
of the Lease to obtain all necessary approvals for operation of the Facility,
including but not limited to securing use permits and licensing.
(c) Prior to Lessor incurring any expenses for which it will seek
reimbursement from Lessee, Lessor shall obtain Lessee's prior written approval.
(d) Lessor will cooperate with Lessee to obtain all necessary approvals
for expansions of Facility and will consent to any reasonable expansion plan up
to approximately fifty (50) beds.
16. Fees.
Lessee shall pay reasonable professional fees up to and not to exceed
$100,000 in the aggregate to Lessor for legal and financial advisors upon the
execution of this Lease and presentation of itemized bills. Lessee shall have
no objection to Lessor's legal and financial advisors.
17. Quiet Enjoyment.
So long as no Event of Default under this Lease shall have occurred and be
continuing, Lessor covenants that Lessee shall and may at all times peaceably
and quietly have, hold and enjoy the Premises during the Term subject to the
provisions of this Lease.
18. Survival.
In the event of the termination of this Lease as herein provided, the
obligations and liabilities of Lessee, actual or contingent, under this Lease
which arose at or prior to such termination shall survive such termination.
19. Subletting: Assignment.
(a) Except as permitted under subparagraph (b), Lessee may not assign
this Lease or sublet all or any portion of the Premises without Lessor's
consent, which consent will not be unreasonably withheld or delayed. Each such
request for consent shall be accompanied by the form of the proposed assignment
or sublease and financial statements of the proposed assignee or sublessee. The
Lessor will place the request on the agenda within fifteen (15) business days.
Lessor's consent shall in no event be conditioned on an increase in the Basic or
Additional Rent and/or any amendment to this Lease. Any assignment or subletting
without Lessor's consent shall be voidable at Lessor's election. The consent to
one assignment or subletting shall not be deemed to be a consent to any
subsequent assignment or subletting.
(b) Lessee may assign this Lease or sublet all or any part or its
interests in the Premises, without the consent of Lessor, in any of the
following situations:
(i) If the assignment or subletting is to a Lessee Entity which is a
Qualified Assignee; or
(ii) If the assignment or subletting is made to a Qualified Assignee in
connection with a merger, consolidation or reorganization involving a Lessee
Entity.
(c) No such sublease or assignment, whether to a Lessee Entity or to a
Qualified Assignee or otherwise, shall affect or reduce any obligations of
Lessee or rights of Lessor hereunder, and all obligations of Lessee hereunder
shall continue in full effect as the obligations of a principal and not of a
guarantor or surety, as though no subletting or assignment had been made. Each
such sublease shall specifically provide that the rights, title and estate of
the sublessee are subordinate and inferior to the rights, title and estate of
Lessor hereunder and shall be bound by the provisions of this Lease.
(d) For purposes of this Lease, the following events shall be deemed an
assignment or sublease, as appropriate: (i) the issuance of equity interests
(whether stock, partnership interests or otherwise) in Lessee or any subtenant
or assignee, or any entity controlling any of them, to any person or group of
related persons, in a single transaction or a series of related or unrelated
transactions, such that, following such issuance, such person or group shall
have Control (as defined below) of Lessee; or (ii) a transfer of Control of
Lessee or any subtenant or assignee, or any entity controlling any of them,
in a single transaction or a series of related or unrelated transactions
(including, without limitation, by consolidation, merger, acquisition or
reorganization), except that the transfer of outstanding capital stock or other
listed equity interests by persons or parties other than "insiders" within the
meaning of the Securities Exchange Act of 1934, as amended, through the
"over-the-counter" market or any recognized national or international
securities exchange, shall not be included in determining whether Control has
been transferred. "Control" shall mean direct or indirect ownership of 50% or
more of all of the voting stock of such corporation or 50% or more of all the
legal and equitable interest in any other business entity.
20. Events of Default and Remedies.
(a) Any of the following occurrences or acts shall constitute an Event
of Default under this Lease:
(i) if Lessee shall fail to keep in full force and effect the insurance
coverage required to be maintained by Lessee hereunder from Lessor; or
(ii) if Lessee shall default in making payment of any Basic Rent or
Additional Rent and such failure shall continue for ten Business Days after
receipt of written notice of such failure from Lessor; or
(iii) if Lessee shall default in the performance of any material
covenant, agreement or obligation on the part of Lessee to be performed under
this Lease and such default shall continue for 30 days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that in the case of a
default which can with reasonable diligence be remedied by Lessee, if Lessee
shall commence within such 30 days after its receipt of such written notice to
remedy the default and thereafter shall prosecute such remedy with all
reasonable diligence, the period of time within which to remedy the default
shall be extended for such period as may be reasonable to remedy the same
ith reasonable diligence not to exceed an extension of ninety (90) days; or
(iv) if Lessee shall vacate or abandon the Premises, provided a temporary
decrease in the number of inmates shall not be deemed to be a vacation or
abandonment so long as Lessee is actively seeking inmates; or
(v) if Lessee shall file a petition in bankruptcy, reorganization or
arrangement pursuant to the Bankruptcy Code, or shall be adjudicated a
bankrupt, make an assignment for the benefit of its creditors, admit in writing
its inability to pay its debts generally as they become due, be dissolved, or
suspend payment of its obligations; or
(vi) if a petition or answer shall be filed proposing the adjudication of
Lessee as a bankrupt or its reorganization pursuant to the Bankruptcy Code, and
(A) Lessee shall consent to such filing, or (B) such petition or answer shall
not be discharged or denied within 60 days after such filing; or
(vii) if a receiver, trustee or liquidator (or similar official) shall be
appointed for or take possession or charge of Lessee, of Lessee's estate or
interest in the Premises, and shall not be discharged within 60 days, or if
Lessee shall consent to or acquiesce in such appointment.
(b) At any time after the occurrence of an Event of Default by Lessee,
Lessor shall be entitled to exercise any and all rights and remedies available
to it at law or in equity, provided, Lessor shall only be entitled to terminate
this Lease as a result of a default by the Lessee in the case of a default
which: (1) continues undisputed for thirty (30) days after Lessee's receipt of
a written notice thereof from Lessor; provided, however, that in the case of a
default which can with reasonable diligence be remedied by Lessee, if Lessee
shall commence within such thirty (30) days after its receipt of such written
notice to remedy the default and thereafter shall prosecute such remedy with
all reasonable diligence until the cure of same, the period of time within
which to remedy such default shall be extended for such period as may be
reasonably necessary to remedy the same; or (2) is disputed in writing by
Lessee within thirty (30) days after its receipt of notice of default fro
Lessor and, within ninety (90) days of Lessee's receipt of such notice either
(i) is not resolved to the mutual satisfaction of Lessor and Lessee, or (ii) is
not the subject of a pending action in an appropriate judicial court within
Texas; or (3) results in the termination of the license or authority to operate
the Facility. Lessor may also terminate this Lease in the event an event of
default is disputed as provided in (b) (2) above and results in a final
nonappealable judgment in its favor, in whole or in part, which is not paid to
Lessor or otherwise implemented to Lessor's satisfaction within thirty (30)
days of such judgment.
21. Notices.
All communications made pursuant to this Lease shall be in writing and
shall sent by (i) registered or certified mail, return receipt requested, and
the giving of such communication shall be complete on the third Business Day
after deposit, postage prepaid, in a United States Post Office, (ii) reputable
overnight delivery service, and the giving of such communication shall be
complete on the immediately succeeding Business Day after deposit with such
delivery service or (iii) legible fax with original to follow in due course
(failure to send such original shall not affect the validity of such fax
notice), and the giving of such communication shall be complete upon receipt.
Communications to Lessor and Lessee shall be sent to the respective
addresses first shown above or to such other address as Lessor and Lessee shall
subsequently provide in writing to the other.
22. Protection of Lenders
(a) Subordination. Lessor shall have the right to subordinate this Lease
to any existing or future ground lease, deed of trust or mortgage encumbering
the Premises, and advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever
made or recorded. Lessor's right to obtain such a future subordination is
subject to Lessor's providing Lessee with a written Subordination,
Nondisturbance and Attornment Agreement reasonably acceptable to Lessors's
Mortgagee and Lessee from any such ground lessor, beneficiary or
mortgagee wherein Lessee's right to peaceable possession of the Premises during
the Lease Term shall not in any way or at any time be disturbed if Lessee pays
all rental due and performs all of Lessee's obligations under this Lease and is
not otherwise in default. If any ground lessor, beneficiary, or mortgagee
elects to have this Lease superior to the lien of its ground lease, deed of
trust or mortgage and gives written notice thereof to Lessee, this Lease shall
be deemed superior to such ground lease, deed of trust or mortgage whether this
Lease is dated prior or subsequent to the date of said ground lease, deed of
trust or mortgage or the date of recording thereof. Lessee's rights under this
Lease, unless specifically modified at the time this Lease is executed, are
subordinated to any existing ground lease, deed of trust or mortgage
encumbering the Premises.
(b) Attornment. If Lessor's interest in the Premises is transferred
voluntarily or involuntarily to any ground lessor, beneficiary under a deed of
trust, mortgagee or purchaser at a foreclosure sale, Lessee shall attorn to the
transferee of or successor to Lessor's interest in the Premises and recognize
such transferee or successor as Lessor under this Lease.
(c) Signing of Documents. Lessee shall sign and deliver any instruments
or documents necessary or appropriate to evidence any such attornment or
subordination or agreement to do so or any estoppel certificate.
(d) Estoppel Certificates. Each party hereto agrees that at any time and
from time to time (but not more than two (2) times in any fiscal year), it will
within ten days after request by the other party, execute, acknowledge and
deliver to such other party a certificate stating, to the best of such party's
knowledge, (a) that this Lease is unmodified and in force and effect (or if
there have been modifications, that this Lease is in force and effect as
modified, and setting forth any modifications); (b) the date to which Basic
Rent, Additional Rent and other sums payable hereunder have been paid; (c)
whether or not there is an existing default by Lessee in the payment of Basic
Rent or any other sum required to be paid hereunder, and whether or not there is
any other existing default by Lessee with respect to which a notice of default
has been served or of which the signer has knowledge, and, if there is any such
default, specifying the nature and extent thereof; (d) whether or not there are
any setoffs, defenses or counterclaims against enforcement of the obligations to
be performed hereunder existing in favor of the party executing such
certificate; and (e) stating that Lessee is in possession of the Premises.
23. No Merger.
Lessee agrees that there shall be no merger of this Lease or of any
sublease under this Lease or of any leasehold or subleasehold estate hereby or
thereby created with the fee or any other estate or ownership interest in the
Premises or any part thereof by reason of the fact that the same entity may
acquire or own or hold, directly or indirectly, (a) this Lease or any sublease
or any leasehold or subleasehold estate created hereby or thereby or any
interest in this Lease or any such sublease or in any such leasehold or
subleasehold estate and (b) the fee estate or other estate or ownership
interest in the Premises or any part thereof.
24. Surrender.
(a) Upon the expiration or earlier termination of the Term, Lessee shall
peaceably leave and surrender the Premises to Lessor in the same condition in
which the Premises was originally received from Lessor, except as repaired,
rebuilt, restored, altered or added to as required by or permitted by this
Lease; ordinary wear and tear excepted.
(b) Lessee shall remove from the Premises on or prior to such expiration
or earlier termination all property which is not the property of Lessor, and
shall repair any damage caused by such removal.
(c) All fixed assets installed by Lessee after the date first written
above remain the property of Lessee, upon termination, provided the same are
removed by Lessee in accordance with paragraph (b) of this Section 24.
(d) Except for surrender upon the expiration or earlier termination of
the Term hereof, no surrender to Lessor of this Lease or of the Premises shall
be valid or effective unless agreed to and accepted in writing by Lessor.
25. Separability.
If any provision of this Lease or the application thereof to any Person or
circumstance shall be invalid or unenforceable, the remainder of this Lease, or
the application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby, and
each provision of this Lease shall be valid and enforceable to the extent
permitted by law.
26. Signs.
Lessor shall not, at any time without Lessee's consent (not to be
unreasonably withheld or delayed), place on or about the Premises any signs,
including "For Sale" signs except for signs identifying the Sheriff's Offices or
related to the activities conducted therein. Lessee shall have the right to
place, construct and maintain on the Premises one or more signs identifying
Lessee, any assignee or sublessee and advertising any business located at the
Premises that is permitted under this Lease, subject to compliance with all
applicable Governmental Requirements.
27. Recording.
Lessor and Lessee will execute, acknowledge, deliver and cause to be
recorded in the manner and place required or permitted by any present or future
law, a memorandum hereof, and all other instruments, including financin
statements, continuation statements, releases and instruments of similar
character, which shall be reasonably requested by Lessor or Lessee as being
necessary or appropriate to protect their respective interests in the Premises.
28. Lessee's Right Of First Refusal.
(a) To the extent permitted by law, if during the Term Lessor determines
to sell, transfer, or exchange the Premises, or any part thereof, Lessor shall
first notify Lessee of the terms of such transaction. If a Lessee Entity,
within thirty (30) days after Lessee's receipt of Lessor's notice, indicates in
writing its agreement to purchase the Premises or part of the Premises on the
terms stated in Lessor's notice, including terms of any required down payment
and delivery to Lessor of such down payment, Lessor shall sell and convey the
Premises or a part thereof to such Lessee Entity on the terms stated in the
notice. If a Lessee Entity does not so indicate its agreement within thirty
days, Lessor thereafter shall have the right to sell and convey the Premises
or part of the Premises to a third party on substantially the same material
terms as stated in the notice. If Lessor does not sell and convey the Premises
or part of the Premises within one hundred eighty days following the date of
notice given to Lessee, any further sale shall be deemed a new determination by
Lessor to sell and convey the Premises or a part of the Premises, and the
provisions of this Section shall be applicable.
(b) The right of first refusal set forth in this Article shall not apply
to any foreclosure sale or any transfer of the Premises by deed in lieu of
foreclosure. All indebtedness of Lessor to Lessor's Mortgagee shall be paid in
full to Lessor's Mortgagee or assumed by the purchaser from Lessor in
connection with any sale of the Premises or any part thereof.
29. Time is of the Essence.
Time is of the essence of this Lease and of the performance of each
provision hereof.
30. Miscellaneous.
Subject to the limitations on Lessee's assignment and subletting set forth
in Section 19 hereof, this Lease shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Lease may not be amended, changed, waived, discharged or
terminated orally, but only by an instrument executed by the party against whom
enforcement is sought. No failure, delay, forbearance or indulgence in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, or as an acquiescence in any breach, nor shall any single or partial
exercise of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. This Lease and the rights and obligations in respect hereof shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of Texas. This Lease may be executed in any number of counterparts, each
of which shall be an original, and such counterparts together shall constitute
but one and the same instrument.
31. Broker.
Each of the parties hereto represent and warrant to the other that no
commissions or fees are due and payable to any broker or other person as a
result of the execution, delivery or performance of this Lease by the
warranting party, and each party agrees, to the extent permitted by law, to
indemnify, defend and hold the other party harmless from and against all claims
for commissions or other brokerage claims by an person claiming by, through or
under the indemnifying party.
32. Interpretation.
The captions of the Articles or Sections of this Lease are to assist the
parties in reading this Lease and are not a part of the terms or provisions of
this Lease. Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. For convenience,
each party hereto is referred to in the neuter gender, but the masculine,
feminine and neuter genders shall each include the other. In any provision
relating to the conduct, acts or omissions of Lessee, the term "Lessee" shall
include Lessee's agents, employees, contractors, invitees, successors or others
using the Premises with Lessee's expressed or implied permission.
33. Termination of Prior Agreements; Modifications.
This Lease is the only agreement between the parties pertaining to the
Premises and no other agreements are effective, except for that certain
Contract between Lessor and Lessee whereby Lessee agrees to pay Lessor
$1,700,000. All amendments to this Lease shall be in writing and signed by all
parties. Any other attempted amendment shall be void. All prior agreements
between the parties are hereby terminated, including any agreements Lessee
acquired from Dove Development Corporation. Lessee agrees to execute any
required termination statements or releases requested by Lessor. Lessor and
Lessee shall enter into a separate management and operations agreement dated
of even date herewith with regard to the housing of Lessor Inmates.
34. Venue.
All obligations hereunder shall be performable and payable in the county
in which the Property is located.
35. Governing Law.
The laws of the State of Texas shall govern this Lease.
36. No Waiver.
None of Lessor's obligations herein nor any other terms or provisions of
this Lease are intended or shall operate as a waiver by Lessor of any
immunities, limitations of liability, or other rights afforded Lessor under the
Texas Tort Claims Act, V.T.C.A., Civil Practice & Remedies Code Sec. 101.001
et seq., including all amendments and successor statutes thereto.
37. Pre-Existing Agreements.
All obligations connected to the Lease-Purchase Agreements set forth below
will be extinguished by Lessor purchasing the property covered by such
Agreements at the earliest date such option may be exercised:
(a) Lease Purchase Agreement dated September 1, 1987, between Consolidated
Financial Resources, Inc. ("CFR"), as lessor, and the County, as lessee;
(b) Lease Purchase Agreement dated June 1, 1988, between CFR, as lessor,
and County, as lessee; and
(c) Municipal Lease Purchase Agreement dated April 19, 1994, between
County, as lessee and CFR, as lessor.
38. Payments and Notices.
All payments and notices under this Lease shall be sent to:
LESSOR at: LESSEE at:
Frio County Auditor Chief Financial Officer
FRIO COUNTY COURTHOUSE CORRECTIONAL SERVICES CORPORATION
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly
executed and delivered as of the date first written above.
Lessor:
FRIO COUNTY
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: County Judge
Date: 11-26-97
Lessee:
CORRECTIONAL SERVICES CORPORATION,
a Delaware corporation
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: Executive VP
Date: 11-24-97