[CIK]      0000914670
[NAME]     CORRECTIONAL SERVICES CORPORATION


                      THIRD AMENDMENT TO LOAN AGREEMENT

     THIS Amendment to Loan Agreement is dated as of January 5, 1998 by and
between NATIONSBANK, N.A. f/k/a NATIONSBANK, N.A. (SOUTH), a National Banking
Association (hereinafter called the "Lender" or "Bank") and CORRECTIONAL
SERVICES CORPORATION, a Delaware corporation (f/k/a ESMOR CORRECTIONAL SERVICES,
INC., and successor by merger with ESMOR, INC., a New York corporation, ESMOR
(BROOKLYN), INC., a New York corporation, ESMOR CANADIAN, INC., a Texas
corporation, ESMOR FORT WORTH, INC., a Texas corporation, ESMOR HOUSTON, INC.,
a Texas corporation, ESMOR MANHATTAN, INC., a New York corporation, ESMOR
MANSFIELD, INC., a Texas corporation, ESMOR (SEATTLE), INC., a Washington
corporation, ESMOR TRAVIS, INC., a Texas corporation and CORRECTIONAL SERVICES
MANAGEMENT, INC., a Delaware corporation f/k/a Esmor Management, Inc.,) and
ESMOR NEW JERSEY, INC., a New Jersey corporation, jointly and severally
(collectively hereinafter called the "Borrower")and CSC Management de Puerto
Rico, Inc. a Puerto Rico corporation ("Guarantor").

                                  RECITALS:

     WHEREAS, in connection with a $5,000,000 Term Loan and a $6,000,000, Line
of Credit Loan from Lender to Original Borrower, Lender and Borrower entered
into that certain Loan and Security Agreement dated effective December 31, 1995,
as amended by Amendment to Loan Agreement dated January 19, 1996 and Second
Amendment to Loan Agreement dated June 28, 1996 (collectively the "Loan
Agreement") and Original Borrower executed and delivered to Lender the Loan
Documents, as defined in the Loan Agreement; and

     WHEREAS, the Term Loan has been paid in full and Borrower has requested
Lender to modify the Loan Agreement and Lender has agreed to do so provided that
Borrower and Guarantor enter into this Amendment and Guarantor execute and
deliver its guarantee to Lender.

     NOW THEREFORE, in consideration of the modification of the $6,000,000 Line
of Credit Loan and the covenants and provisions set forth herein, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties mutually agree as follows:

     1.  The above recitals are true and correct.

     2.  The following is added to paragraph 2.1(c):

        If Line of Credit Note is in default or if any Letter of
Credit which shall have an expiration date subsequent to
the Maturity Date of the Line of Credit Note and the
term of the Line of Credit Note is not renewed for a
period beyond such expiration date, upon such default or
the maturity date of the Line of Credit Note, as
applicable, Borrower hereby agrees that Borrower shall
either: (i) deposit with Lender and pledge as security
for all outstanding Letter(s) of Credit, cash in the
amount of all outstanding Letter(s) of Credit or other
collateral satisfactory to Bank in its sole discretion,
or (ii) Borrower shall immediately make application to
another financing institution to issue such letters of
credit in replacement of the Letters of Credit and shall
agree to such financial institution's conditions to the
issuance of the replacement letters of credit without
reservation.  The failure to provide the Bank with (i)
replacement letters of credit for the benefit of
beneficiary, as defined in the Letters of Credit, and
the beneficiary's authorization to cancel the Letters of
Credit or (ii) the cash or additional collateral, within
fifteen (15) days of Bank's written request shall
constitute an event of default under this Restated Loan
Agreement.  In connection with the deposit of cash or
additional collateral, Borrower agrees to execute and
deliver such pledges, security agreements, financing
statements or other loan documents reasonably required
by Lender.

4.  The following paragraph 2.1(d) is added to the Loan Agreement:

2.1(d)  Borrower and Guarantor acknowledge and agree
that pursuant to their request, Bank has structured and
entered into an $800,000.00 loan transaction wherein
Bank has loaned $800,000.00 to First Security Bank,
National Association as owner/trustee under the CSC
Trust 1997-1 ("First Security"), pursuant to which First
Security has executed and delivered to Lender an
$800,000.00 promissory note dated January 12, 1998
and pursuant to which First Security, Borrower and
Guarantor have executed and delivered to Bank an
Indemnification Agreement dated January 12, 1998.
Borrower and Guarantor acknowledge and agree that the
unpaid principal balance together with any and all other
amounts owed by First Security, Borrower and/or
Guarantor to Bank pursuant to the terms of the
$800,000.00 Promissory Note or Indemnification Agreement
shall not be available for advances under the Line of
Credit.  Further, Borrower and Guarantor acknowledge and
agree that in the event of default under the $800,000.00
Promissory Note or the Indemnification Agreement, or in
the event Borrower or Guarantor are required to take
title to the real property, as described in the
Indemnification Agreement, Borrower and Guarantor
acknowledge and agree that Lender shall be entitled to
draw as an advance under the Line of Credit all sums
necessary to pay Bank any and all sums due to Bank under
the terms and provisions of the $800,000.00 Note and the
Indemnification Agreement.  Borrower and Guarantor
acknowledge and agree that they requested the specific
structure, as a benefit to them, for the $800,000.00
loan to First Security, that they shall receive direct
financial benefit and gain therefrom, and have given
this covenant and agreement in consideration of Bank
making such loan pursuant to the requested loan
structure and agreeing to the terms and provisions of
this Third Amendment."

4.  The parties acknowledge and agree that as additional collateral for
Borrower's obligations under the Loan Agreement, Note and other loan documents,
Guarantor has executed and delivered to Lender its continuing and unconditional
guaranty (the "Guaranty") dated of even date herewith, guaranteeing Borrower's
obligations to Lender.  Borrower and Guarantor covenant and agree with Lender
that a default under the Guaranty shall be a default under the Loan Agreement,
Note and other loan documents from Borrower to Lender, and similarly, a default
by Borrower under the Loan Agreement, Note and other loan documents shall be a
default under the Guaranty.

5.  Borrower acknowledges and certifies to Lender that Borrower has no
claim, demand or setoff whatsoever against Lender and that Borrower is justly
indebted to Lender pursuant to the terms and provisions of the Line of Credit
Note, Loan Agreement and other loan documents, as defined in the Loan Agreement.

6.  As amended hereby, the Loan Agreement remains in full force and
effect.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first above written.