Sample Business Contracts

Services Agreement - Wackenhut Corrections Corp. and The Wackenhut Corp.

Sponsored Links


                               SERVICES AGREEMENT




                            THE WACKENHUT CORPORATION

            FOR THE PERIOD JANUARY 1, 2002 THROUGH DECEMBER 31, 2004

                       FINAL DOCUMENT - OCTOBER 28 , 2002


                               SERVICES AGREEMENT

This AGREEMENT (the Agreement) is made as of January 1, 2002 by and between The
Wackenhut Corporation, a Florida corporation with its principal place of
business at 4200 Wackenhut Drive #100, Palm Beach Gardens, Florida 33410
(together with all of its subsidiaries other than Wackenhut Corrections
Corporation, "TWC") and Wackenhut Corrections Corporation, a Florida corporation
with its principal place of business at 4200 Wackenhut Drive #100, Palm Beach
Gardens, Florida 33410 (together with all of its subsidiaries, "WCC").


By means of this Agreement, the parties wish to set forth the terms and
conditions on which TWC will provide WCC with services and assistance in its
business and operations.

                               TERMS OF AGREEMENT

NOW, THEREFORE, in consideration of the above premises and the mutual covenants
contained herein, it is agreed by and between the parties as follows:

A.       PRICE/PAYMENT. As consideration for the services to be provided to WCC
         by TWC under the terms of this Agreement, WCC shall pay to TWC an
         annual fee (the "Annual Services Fee") as follows:

                             PAYMENT PER AGREEMENT

MONTHS OF THE YEAR                           2002                     2003                   2004
------------------                           ----                     ----                   ----

---------------------------------- ------------------------- ------------------------ --------------------
<S>                                <C>                       <C>                      <C>
January                            $       204,918           $       134,615          $     134,615
---------------------------------- ------------------------- ------------------------ --------------------
February                                   204,918                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
March                                      256,147                   168,270                168,270
---------------------------------- ------------------------- ------------------------ --------------------
April                                      204,918                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
May                                        204,918                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
June                                       256,147                   168,270                168,270
---------------------------------- ------------------------- ------------------------ --------------------
July                                       204,918                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
August                                     192,163                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
September                                  240,201                   168,270                168,270
---------------------------------- ------------------------- ------------------------ --------------------
October                                    108,844                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
November                                   108,844                   134,615                134,615
---------------------------------- ------------------------- ------------------------ --------------------
December                                   136,052                   168,270                168,270
                                         ---------                 ---------              ---------
---------------------------------- ------------------------- ------------------------ --------------------
          Total                    $     2,322,988           $     1,750,000          $   1,750,000
---------------------------------- ========================= ======================== ====================


         The Annual Services Fee shall be payable by WCC to TWC in scheduled
         installments on a monthly basis. Any services provided by TWC to WCC
         beyond the services covered by the Annual Services Fee shall be billed
         to WCC on a cost basis as described below, or on such other basis as
         the parties may agree from time to time.

         B.       TERM. The term of this Agreement shall be for the period
                  January 1, 2002 through December 31, 2004.

         C.       SERVICES. TWC agrees to provide the following services
                  (subject to such modification or adjustment as may be mutually
                  agreed upon by the parties) to WCC during the term of this

I.       CORPORATE FINANCIAL GROUP: The Financial Department of TWC will provide
         the following services:

         A.       RISK MANAGEMENT

                  o   Procure general liability, workers' compensation,
                      automobile, Directors and Officers and property insurance
                      coverage on behalf of WCC through September 30, 2002.

                  o   As of October 1, 2002 TWC will manage all general
                      liability, automobile and workers' compensation claims
                      with occurrence dates prior to September 30, 2002.

         B.       TAX DEPARTMENT:

                  o   Prepare all tax returns and filings.

                  o   Provide guidance on tax matters in the preparation of bids
                      and proposals, financing structures, and in the
                      structuring of joint ventures and international business

                  o   Manage any IRS and State audits.

                      PROVIDED AFTER DECEMBER 31, 2002.

         C.       CASH & TREASURY FUNCTIONS:

                  o   Manage daily cash transactions

                  o   Controlled disbursement funding

                  o   Stop payments

                  o   Debit & Credit detail

                  o   Lockbox, wire & ACH transfers

                  o   Electronic positive pay

                  o   Balance reporting

                  o   Daily investment sweeps

                  o   Research and analysis

                  o   Manage excess cash and maximize interest income while
                      ensuring sufficient liquidity to meet capital expenditure

                  o   Provide daily balance position, interest calculation and
                      transaction detail

                  o   Manage new account setup and account deletions as directed
                      by WCC.


         D.       PAYROLL:

                  o   Provide weekly and bi-weekly payroll processing, check
                      issuance and handle federal withholding and reporting.

                      PROVIDED AFTER DECEMBER 31, 2002.



                  o   TWC will provide mail pickup and delivery at two times

                      PROVIDED AFTER MARCH 31, 2003.


         TWC will provide Information Services in three areas:

         A.       Regarding Enterprise Resource Planning (ERP) System, TWC will,

                  o   Provide quarterly training services according to WCC
                      business requirements.

                  o   Provide application development to support data analysis
                      needs of WCC Corporate and Regional business management.

                  o   Schedule, coordinate and distribute weekly and monthly
                      financial reports.

                  o   Provide Help Desk telephone support in the use of
                      application software.

                  o   Provide support with respect to configuration and
                      deployment of personal computers for Corporate and field

                  o   Update existing application systems in the areas of human
                      resources and financials.

                  o   Design disaster recovery procedures and execute disaster
                      recovery plan in the event of a disaster.

                  o   Establish and support the existence of The Wackenhut User

                  o   Provide on-site support for Enterprise applications to PGA

         B.       Regarding Telecommunications, TWC will,

                  o   Provide necessary infrastructure and equipment to support
                      the use of telecommunications equipment throughout the

                  o   Provide on-site support for telecommunications to PGA

                  o   Provide the necessary infrastructure and equipment to
                      support the sharing of applications and data throughout
                      the organization.

                  o   Provide the necessary hardware to support the enterprise
                      systems in the areas of high-speed printing and
                      distribution, automated report distribution, automated
                      job-scheduling, back up and recovery services.

                  o   Provide Internet access and Internet e-mail capabilities
                      to WCC Corporate, PGA office and field sites.

         C.       Regarding Project Management, TWC will,

                  o   Provide project management services as required in the
                      form of day- to-day project management.


         A.       INFINIUM MODULES

                  Through the use of the shared Infinium/CCM system, TWC will
                  continue to provide core transactional application services to
                  WCC. To support the business requirements of WCC, the
                  following Infinium subsystems will continue to be utilized
                  under this service agreement:
                  In addition, if WCC decided to use any of the functionality
                  provided in the CCM specific software, WCC will negotiate with
                  TWC an appropriate fee to be paid for this use. This fee will
                  be determined by market comparison of similar software using a
                  third party,


                  such as Gartner Group or IBM, and will be agreed upon prior to
                  WCC's use of the CCM functionality.

               i.    Financial Systems

                  o   General Ledger (GL)

                  o   Accounts Receivable (AR)

                  o   Accounts Payable (AP)

                  o   Purchasing

                  o   Fixed Assets

               ii.   Payroll

               iii.  Human Resources

               iv.   Benefits

               v.    Financial Analysis System

                  As a supplemental analytical capability to Infinium's
                  reporting system, WCC also uses Essbase, an industry leader in
                  the financial Online Analytical Processing (OLAP) sector.

         B.       IT SUPPORT SERVICES

                  Consistent with the services rendered since the implementation
                  of Infinium, the TWC IT staff will provide the following
                  service and support functions to include:

                  o   Ongoing application support

                  o   Apply Infinium upgrades as needed to support core business

                  o   Printing and distribution of financial reports

                  o   Help Desk support for all WCC Infinium users

                  o   Essbase administration, which includes the ongoing
                      maintenance of the financial "cubes" and the monthly
                      loading process from the Infinium financial subsystems.

                  o   Ongoing Infinium user-ID administration as authorized by

                  o   Affirmative action and EEO reporting

                  o   Processing of daily bank extracts

         C.       HOURS OF OPERATION

                  The TWC IT function operates on a 7x24 basis. The full staff
                  is onsite from 08:30 to 17:30 Monday through Friday. A
                  computer operator is onsite from 06:30 to 24:00 Monday through
                  Friday and 00:00 to 08:00 on Sundays. During off-hours, the
                  Wackenhut Call Center can page the on-call staff member(s)
                  whenever requested. In addition, system management
                  capabilities have been implemented in the data center that
                  automatically page personnel if key systems or networks fail.

                  Please note that the all major IT applications, including
                  Infinium, are not available to users on Sundays, from 00:00 to
                  12:00. System maintenance, modifications and upgrades are
                  performed during this weekly "change window".

         D.       NETWORK SERVICES

                  TWC will continue to provide both long distance voice
                  communications and Wide Area Network (WAN) data network
                  communications under the respective AT&T services contracts.


                  The AT&T long distance voice contract expires January 1, 2003.
                  The value of WCC participating under a common long distance
                  contract is simply an optimal cost per minute as part of a
                  larger volume-based service. WCC intends to continue to
                  participate in a shared long distance contract. TWC is
                  currently negotiating a two-year extension with AT&T given the
                  unsettled dynamics associated with the telecommunications
                  industry (there is a fear the cost per minute could rise due
                  to reduced competition). WCC will participate in discussions
                  with TWC prior to and during negotiations of this contract.
                  WCC reserves the right to opt out of participating in any
                  common long distance contract up until contract signing.
                  Nothing in this agreement prevents WCC from negotiating a
                  separate agreement with the same or different contractor.

                  The AT&T WAN contracts (one for the data services and one for
                  management services) expire November 2003. TWC will continue
                  to provide WCC data network services to HQ and Field employees
                  to provide access to Infinium, email, operational applications
                  and the Internet.

                  Technically, the network links at the correctional and
                  hospital facilities will be redirected to the new WCC
                  Headquarters facility. Optionally, two high-speed, diverse
                  network links will be provided between the WCC and TWC
                  locations for authorized access to Infinium depending on the
                  location of the AS-400 and the location of the Essbase server.

                  From a security perspective, TWC will place and manage a
                  firewall at the WCC location to ensure only authorized network
                  traffic is routed to the TWC Infinium environment.

                  WCC will directly pay for the network links between their HQ
                  facility and the TWC Headquarter facility. In addition, WCC
                  will contract with an Internet Service Provider (ISP) to gain
                  direct access to the Internet from their new HQ facility.

         E.       END USER TRAINING

                  The TWC IT department will provide quarterly classroom-style
                  training sessions on all applicable Infinium modules for WCC
                  personnel. Typically, the training sessions are three days in
                  length. Assuming that the new WCC Headquarters facility has an
                  adequate training classroom, the session will be held at the
                  WCC location. If training facilities are not available,
                  training will be held at the TWC Headquarters location.

                  WCC is responsible for all travel, lodging, and meal costs for
                  WCC field personnel who attend the quarterly training

                  TWC will provide Infinium technical training to WCC IT
                  personnel for support of the Infinium system.


                  TWC has a commercial contract with IBM for IT DRP services.
                  Specifically, TWC can restore all major business applications
                  at an IBM location in New Jersey in the event of a disaster.
                  In addition, the TWC IT department conducts a "dry-run" of the
                  DRP restoral process on an annual basis to best ensure the
                  staff is prepared to support TWC and WCC in the event of an
                  actual business disaster.

                  Please note two important elements of the DRP contract with

                  o   There will be an incremental charge of $39,000 to WCC due
                      to the need for a second AS400. This charge will be in
                      addition to the $1.75mm annual service fee.


                  o   Systems based at the WCC correctional facilities (e.g.,
                      PDS, commissary system) are NOT covered under the TWC DRP
                      plan per previous direction from the WCC management team.
                      These systems could be covered under the DRP strategy if
                      desired at an incremental cost. Please note that a DRP
                      strategy for critical business systems will be a primary
                      element of any external audit of IT systems and processes.

                  o   If WCC elects to operate the server at its new
                      headquarters in Boca Raton Florida, it may elect to obtain
                      IT DRP services from an alternative provider.


                  WCC will build and implement fully functional Human Resources,
                  Payroll, Accounts Payable and Tax capabilities by January 1,
                  2003. These functional areas will continue to use the infinium
                  application supported and maintained by TWC. To securely
                  support this functional separation, a dedicated AS400 is
                  required to run a copy of Infinium/CCM for WCC. The one-time
                  capital / operating expense associated with the AS400 is
                  estimated at $810,000. WCC will be the owner of the new AS 400
                  and all associated data and software except for Infinium/CCM.
                  WCC will determine the operating location of the AS-400 and
                  Essbase server. Ongoing operating expenses are estimated at
                  $64,000 (excludes depreciation, software maintenance and
                  hardware maintenance). These costs will be directly paid by
                  WCC and are not part of the $1.75mm annual service charge.

                  In the event that the AS400 is moved from TWC Headquarters to
                  any other location, WCC will provide and will be responsible
                  for operational support to TWC in the following areas: Backup
                  and recovery, offsite date storage, and other support as

                  If WCC elects to select new service providers (e.g., banking
                  partner, medical insurer, 401K/retirement) and electronic
                  interfaces are required between Infinium and the third party
                  business partner, the development of the computer interfaces
                  will be charged to WCC on a time and materials basis. All work
                  will have proper authorization from the WCC management team
                  before any expense is incurred.

                  At some point, during the term of this agreement for IT
                  Services, WCC will begin the process of transitioning to its
                  own fully functional IT department. TWC will assist with this
                  process on a negotiated basis. Specifically, TWC may assist
                  with programming, data retrieval, etc.

         H.       OUT OF SCOPE SERVICES

               i.    Electronic Mail

                      While part of the Year 2000 systems strategy called for a
                      common, Lotus Notes-based email solution for Security
                      Services, WCC and WRI, only Security Services fully
                      adopted this mail platform. There was a stated direction
                      for WCC to adopt Lotus Notes approximately six months ago,
                      but with the planned separation, WCC has elected to
                      implement their own email platform (Microsoft Exchange) no
                      later than January 1, 2003. The WCC technical support team
                      will implement and manage this email package.

               ii.   PC Service and Support

                      WCC will continue to provide help desk and technical
                      support for all PCs within their respective organization.
                      Whenever upgraded PC software is required to access
                      Infinium, TWC will provide a copy of the software via a CD
                      to the WCC staff for installation.


               iii.  Local Area Network (LAN) Service and Support

                      WCC will continue to support all file and print services
                      as well as the physical infrastructure associated with
                      their LAN environments (e.g., wiring, Ethernet hubs).

               iv.   Corporate Headquarters Telephone System (PBX) Service and

                      WCC will manage the PBX system in the new HQ facility.
                      This includes all moves, additions, and troubleshooting of
                      telephones and inside wiring.


                      WCC will continue to have full responsibility and
                      accountability for all correctional and hospital-base
                      business applications. Key examples include PDS, their
                      inmate tracking system, and their commissary system.

               vi.   NEW PROJECTS PROCESS

                      If and when WCC elects engage the TWC IT staff for any new
                      project activity, a detailed proposal will be jointly
                      developed outlining overall project goals and objectives,
                      business benefits, project costs, and a project timeline
                      for management review. If approved by the WCC and TWC
                      management teams, the project will then be fully
                      initiated. Please note that the costs of any project are
                      not included in the $1.75mm service charge and will result
                      in an incremental charge to WCC.

                  THESE SERVICES WILL EXPIRE DECEMBER 31, 2004.

IV.      Human  Resources Department: The Human Resources Department of TWC will
         provide the following services until December 31, 2002. After that the
         services described in A. though F. will no longer be provided:


                  o   Administration of group health benefit programs to include
                      preparation of employee communications, processing of
                      enrollments/cancellations, reconciling and processing of
                      insurance carrier invoices for payment, responding to
                      employee inquiries, etc.

                  o   Provide compliance with laws affecting employee group
                      health benefit programs in an effort to avoid penalties
                      and potential lawsuits, (e.g., Section 125, Form 5500,
                      preparation/distribution of Summary Annual Reports and

                  o   Identify benefit providers and appropriate plan designs to
                      support new and existing WCC business needs.

                  o   Negotiate annual renewal of HMO contracts. Present
                      information with alternatives, if applicable, to WCC

                  o   Implementation of new benefit plans to include set up of
                      new plans in the Payroll/HR System, participation in
                      education and orientation of employees, etc.


                  o   Administer merit budget for headquarters to provide
                      compliance with WCC guidelines.


                  o   Analyze Position Analysis Questionnaires to develop
                      recommendations for competitive salary ranges and merit

                  o   Provide recommendations for competitive salaries for
                      facility employees, as needed.

         C.       RETIREMENT PROGRAMS:

                  o   Oversee plan administration to include preparation of plan
                      documents and required amendments, processing of
                      enrollments/withdrawals, responding to employee inquiries,

                  o   Design and develop retirement plans to support new and
                      existing WCC business needs.

                  o   Provide compliance with regulatory issues.

                  o   Compile all information required for discrimination
                      testing and review results.

                  o   Prepare employee communication materials as well as
                      educate employees through orientation meetings.


                  o   Provide guidance and support with respect to equal
                      employment opportunity/affirmative action concerns and

                  o   Serve as a source for certain affirmative action
                      statistical information, Federal and State civil rights
                      legislation, and TWC and WCC policy interpretation.
                      Prepare equal employment/affirmative action policies and
                      make periodic modifications to provide consistency with
                      Federal and State Civil Rights Laws.

                  o   Investigation and prepare position statements in response
                      to charges of discrimination filed with Federal (EEOC) and
                      State Agencies (Texas Commission on Human Rights,
                      California Department of Fair Employment and Housing,
                      etc.) Serve as liaison with investigating agencies
                      throughout the duration of said charges. Prepare and
                      provide additional information when requested by the
                      government agencies. Coordinate settlement of charges if
                      deemed appropriate.

                  o   Coordinate OFCCP Compliance reviews and provide technical
                      support for audits of WCC locations; serve as liaison with
                      the OFCCP.


                  o   Provide support in the area of identifying, interviewing,
                      and selecting candidates.

                  o   Coordinate relocation of new hires and transfers.


         F.       EMPLOYEE RELATIONS:

                  o   Provide guidance and compliance with certain Federal and
                      State Regulations pertaining to the Family Medical Leave
                      Act, Fair Labors Standards Act, Wage and Hour issues, etc.

                  o   Assist in the review and critique of employee handbooks.

                  o   Provide support and interpretation of company human
                      resources policies and practices.

                  o   Administer service and recognition award programs.

                  o   Provide support with unemployment claim issues.

                  o   Monitor Worker Opportunity Tax Credit (WOTC) program for

                  o   Provide guidance with respect to employee issues involving
                      disciplinary actions and counseling.

V.       Details of Performance; Changes. Reasonable details of TWC's
         performance of services hereunder may be specified in greater detail in
         one or more memoranda signed by the parties and such memoranda shall be
         deemed incorporated in this Agreement by reference as if recited herein
         in their entirety.

VI.      Audit Rights. WCC shall have the right to (or cause its accountants to)
         review the books and records of TWC at any time during reasonable
         business hours to (a) confirm that the services required to be provided
         by TWC hereunder as part of the Annual Services Fee have been provided,
         and (b) to confirm the cost basis of any services provided by TWC which
         are not provided as part of the Annual Services Fee. The cost of such
         audit shall be borne by WCC, unless such audit shall reveal a
         discrepancy in the cost of any services in excess of 5%, in which case,
         the cost of such audit shall be borne by TWC.

VII.     No Agency. TWC shall perform its services under this Agreement as an
         independent contractor. Each party acknowledges and agrees that it is
         not granted any express or implied authority to assume or create any
         obligation or responsibility on behalf of the other party, or to bind
         the other party with regard to third parties in any manner.

VIII.    Notices. Any notices required or permitted to be provided pursuant to
         this Agreement shall be provided in writing and be deemed received upon
         delivery by hand or five days after mailing by certified mail, return
         receipt requested, addressed to the recipient party at its address set
         forth above.

IX.      Transition: TWC will assist WCC in the process of transitioning
         services currently provided for human resources, payroll and tax. This
         assistance will include, but not be limited to, historical information,
         job descriptions, access to data, discussion of policies, electronic
         copies of policies.

X.       For purposes of historical payroll and tax information TWC will provide
         access to this information in the event of audits by local state or
         federal regulators or agencies. Labor and material cost incurred
         related to retrieving information will be paid for by WCC.

XI.      Force Majeure. In the event that either party is prevented from
         performing, or is unable to perform, any of its obligations under this
         Agreement due to any act of God, fire, casualty, flood, war, strike,
         lock out, failure of public utilities, injunction or any act, exercise,
         assertion or requirement of governmental authority, epidemic,
         destruction of production facilities, insurrection, inability to
         procure materials, labor, equipment, transportation or energy


         sufficient to meet manufacturing needs, or any other cause beyond the
         reasonable control of the party invoking this provision, and if such
         party shall have used its best efforts to avoid such occurrence and
         minimize its duration and has given prompt written notice to the other
         party, then the affected party's performance for the period of delay or
         inability to perform due to such occurrence shall be suspended. Should
         TWC fail to perform hereunder and shall have provided proper notice to
         WCC that it is unable to perform on account of one or more reasons set
         forth in this section, WCC may obtain replacement services from a third
         party for the duration of such delay or inability to perform, or for
         such longer period as WCC shall be reasonably required to commit to in
         order to obtain such replacement services and the Annual Services Fee
         shall be reduced accordingly up to a maximum of the annual service fee
         calculated on a pro rate basis for each day services are not provided.
         However, WCC will not be permitted to recover any resultant or
         consequential damages due to the inability of TWC to perform.

XII.     Deleted

XIII.    Miscellaneous.

         A.       This Agreement embodies the entire agreement and understanding
                  of the parties hereto with respect to the subject matter
                  hereof, and supersedes all prior agreements and understandings
                  relative to said subject matter.

         B.       This Agreement shall be binding upon, and shall inure to the
                  benefit of TWC, WCC and their respective successors and

         C.       Neither this Agreement nor any rights or obligations hereunder
                  shall be assignable by either party without the prior written
                  consent of the other party hereto, which consent shall not be
                  unreasonably withheld.

         D.       This Agreement shall be governed by and construed in
                  accordance with the law of the State of Florida applicable to
                  contracts to be performed entirely in that State.

         E.       This Agreement may be executed in any number of counterparts,
                  each of which shall be an original but all of which together
                  shall constitute one and the same instrument.

         F.       The headings contained in this Agreement are for reference
                  purposes only and shall not affect the meaning or
                  interpretation of this Agreement.


         The parties have caused this Agreement to be signed as of the date
         first above written, whereupon it became a binding agreement.

              THE WACKENHUT                 WACKENHUT CORRECTIONS
               CORPORATION                       CORPORATION

BY:         DANIEL E. MASON           BY:   JOHN G. O'ROURKE
  ---------------------------------      -----------------------------
     ------------------------------        ---------------------------
      -----------------------------         ------------------------------------
DATE:      OCTOBER 22, 2002           DATE: OCTOBER 22, 2002
     ------------------------------        -------------------------------------



    SERVICES                                    2002                    2003                    2004
------------------------------------- ----------------------- ----------------------- -----------------------
<S>                                   <C>                     <c>                     <c>
     PAYROLL                          $       213,531                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     WAREHOUSE                                  9,991                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     TREASURY                                  28,119                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     INFORMATION SYSTEMS                    1,438,086         $       1,750,000       $       1,750,000
------------------------------------- ----------------------- ----------------------- -----------------------
     TAX                                      148,011                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     BUILDING SERVICES                                                  -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     HUMAN RESOURCES                          415,144                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     INTERNAL AUDIT                            70,106                   -                       -
------------------------------------- ----------------------- ----------------------- -----------------------
     TOTAL G&A                        $     2,322,988         $       1,750,000       $       1,750,000
                                      ======================= ======================= =======================
------------------------------------- ----------------------- ----------------------- -----------------------