Document:

Design and Development Agreement

 Exhibit 10.74.6 
  
 DESIGN AND DEVELOPMENT AGREEMENT 
  
 THIS DESIGN AND DEVELOPMENT AGREEMENT (this “Agreement”) is made and entered into as of the 1st day of
August, 2004 by and between SOUTH TEXAS DETENTION COMPLEX LOCAL DEVELOPMENT CORPORATION (the “Owner”), a non-profit, local government corporation formed by Frio County, Texas (the
“County”), and CORRECTIONAL SERVICES CORPORATION, a Delaware corporation having its principal place of business in Sarasota, Florida (“Developer”). 
  
 Witnesseth: 
  
 WHEREAS, the former United States Immigration and Naturalization
Service (the functions of which have been transferred to the United States Department of Homeland Security, Bureau of Customs and Immigration Enforcement (hereafter referred to as “ICE”)) has awarded to the Operator Contract
No. ACD-4-C-001 (as it may be amended from time to time, the “ICE Contract”) to provide for the temporary housing, safekeeping, transportation and stationary guard services for up to 1020 adult and juvenile detainees
in ICE’s custody in a facility to be located in the County (the “Detention Complex”); and 
  
 WHEREAS, the County has formed the Owner for the purposes of owning the Detention Complex and assisting Developer with the financing, development,
construction and equipping of the Detention Complex in accordance with an agreement between the County and the Developer (the “Project”); and 
  
 WHEREAS, Owner is or will become the owner of that certain parcel of real estate (the
“Land”), outlined on the site plan attached as Exhibit A hereto and made a part hereof (the “Site Plan”), and desires to retain Developer to cause the Detention Complex to be designed,
developed, constructed and equipped on the Land as required in the ICE Contract and in accordance with the Final Project Plans (as hereinafter defined) (the “Project”); and 
  
 WHEREAS, Owner intends to finance a portion of the costs of the
Project with the proceeds of the Owner’s Taxable Revenue Bonds, Series 2004 (the “Bonds”) to be issued pursuant to that certain Indenture of Trust between the Issuer and U.S. Bank National Association, as Trustee, dated
of even date herewith (the “Indenture”); and 
  
 WHEREAS, timely payment of scheduled principal and interest on the Bonds will be insured by MBIA Insurance Corporation (the “Bond Insurer”); and 
  
 WHEREAS, pursuant to the terms of this Agreement, Developer shall (i) cause to be prepared the Final Project Plans in
accordance with the ICE Contract, (ii) ensure that the Detention Complex is constructed and equipped on the Land in accordance with the Final Project Plans and in accordance with the ICE Contract, (iii) oversee the management and operation of the
Project during construction and (iv) cause the Project to be completed as required by the ICE Contract and the Indenture. 
  

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 NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein, and of the
foregoing recitals which are incorporated herein by this reference, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Developer, intending legally to be bound, agree as follows:

  
 ARTICLE 1 
  
 DEFINITIONS 
  
 1.1 Definitions. The following terms shall have the respective
meaning indicated: 
  
 “Architect” means
HOK Hellmuth, Obata & Kassabaum, Inc. or any other architect engaged by the General Contractor with the prior written consent of the Developer to render design services for the Project. 
  
 “Contractors” means all contractors and
subcontractors engaged to render construction services for the Project, including the General Contractor. 
  
 “Construction Documents” means the Design/Build Contract (including the Contract Documents referred to therein) and all other
contracts to which the Developer is a party related to the development and construction of the Project. 
  
 “Design/Build Contract” means the “Standard Form of Agreement between Owner and Design/Builder,” dated as of March 10,
2004, among Owner, Developer and General Contractor, as modified and amended by Modification No. 1, dated as of August 27, 2004, among Owner, Developer and General Contractor, which is incorporated herein by reference, and any amendments thereto
permitted by the Indenture. 
  
 “Final Project
Plans” means the final plans and specifications for the design and construction of the Detention Complex submitted by the General Contractor to and approved by the Developer and the Independent Construction Monitor pursuant to the
Design/Build Contract. 
  
 “General
Contractor” means JE Dunn Construction Company, Inc. or any other general contractor engaged to render construction services for the Project under the Design/Build Contract. 
  
 “Government Authority” means any federal, state, local, municipal or other political subdivision
thereof, or any duly empowered and authorized entity exercising jurisdiction over the Project or any part thereof. 
  
 “ICE Contract Completion Date” shall have the meaning specified in Section 8.4(a)(1) of this Agreement. 
  

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 “Independent Construction Monitor” means Pan Western Corporation and any
successor approved by the Bond Insurer. 
  
 “Legal
Requirements” means all laws, codes, statutes, ordinances, rules, permits and other regulations of the United States, the State of Texas, the City of Pearsall, Texas and the County of Frio, or any other authority with
jurisdiction which pertain to or affect the development and construction of the Project, and all easements, covenants, conditions, restrictions and other agreements affecting the Land or the Project. 
  
 “Project Budget” shall have the meaning given to such
term in Section 6.1(a) of this Agreement. 
  
 “Project
Costs” means the reasonable and necessary costs and expenses incurred in connection with the development, construction and equipping of the Project, including, without limitation, all costs and expenses payable to the General Contractor
under the Design/Build Contract and all other costs and expenses reflected in the Project Budget. 
  
 “Project Schedule” shall have the meaning given in Section 3.2(a) hereof. 
  
 “Required Standard of Performance” means the level of
care, competence, judgment and performance that the Developer would use in planning for, designing, developing and managing, its own design and construction projects. 
  
 “Required Substantial Completion Date” shall mean the date on which the General Contractor is
required to obtain Substantial Completion of the Work as provided in Section 14.1 of the Design/Build Contract.” 
  
 “Substantial Completion” shall have the meaning given to such term in Section 8.4 of this Agreement. 
  
 “Work” means the design professional and construction
services to be provided by the General Contractor under the Design/Build Contract. 
  
 Other terms that are defined throughout the text of this document shall have the meanings respectively ascribed to them herein. Capitalized terms used herein without definition shall have the meanings ascribed to them
in the Indenture. 
  
 ARTICLE 2 
  
 APPOINTMENT OF DEVELOPER; TERM 
  
 2.1 Appointment of Developer. Owner hereby appoints Developer
to act as herein described to develop the Project for and on behalf of the Owner. Subject to the limitations set forth herein, Developer hereby accepts such appointment and agrees to provide the services set forth herein in accordance with the Final
Project Plans, the Project Budget and the Project Schedule, and otherwise as more particularly set forth herein. The services to be provided by the Developer hereunder shall cover all phases of the Project including development and 
  

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 construction as more particularly set forth herein. Subject to the limitations set forth herein, Owner hereby delegates
to the Developer all such power and authority with respect to the development of the Project, as may be necessary or appropriate for the implementation of the plans, budgets and schedules and the development, equipping and construction of the
proposed Detention Complex. Without limitation of the foregoing or any other duty or obligation of Developer hereunder, Developer shall (i) use reasonably diligent efforts, at all times and in a manner consistent with the Required Standard of
Performance, the Project Budget , the ICE Contract and the Project Schedule, to further the interests of Owner with respect to the Project and to cause the timely completion of the various stages of development of the Project in accordance
with the ICE Contract, the Project Budget and the Project Schedule, and (ii) to cause its duties hereunder to be performed in accordance with the Required Standard of Performance. 
  
 2.2 Term of Agreement. The term of this Agreement (the “Term”) shall commence on the date hereof and
end at such time as Developer shall have completed all services required under this Agreement, unless sooner terminated pursuant to the terms of this Agreement and the Indenture. 
  
 ARTICLE 3 
  
 PROJECT SERVICES 
  
 3.1 General Project Management. Developer shall perform or cause to be performed the following general project management services
throughout the duration of the Project: 
  
 (a)
With the cooperation of Owner, perform those services and take such actions as may be necessary to comply with all obligations with respect to the development, construction and equipping of the Project under the ICE Contract. 
  
 (b) Identify all Legal Requirements affecting the Project,
and, with the cooperation of the Owner and the General Contractor, cause the Project to comply with all of those Legal Requirements. 
  
 (c) In the event any mechanics’ or materialman’s liens are recorded in connection with the Project, or notices of lien are
furnished to Owner in connection with the Project, Developer shall take such action or cause the General Contractor to take such action on behalf of Owner (and at the General Contractor’s expense or as a Project expense) as may be necessary to
obtain a release of the lien. Developer shall use its reasonably diligent efforts to cause Contractors to (i) pay or settle with any of their subcontractors, vendors or suppliers that have filed a lien or (ii) obtain security for lien claims
acceptable to Owner. Developer shall recommend courses of action to Owner with respect to any liens that cannot be removed by means of the foregoing efforts, and shall implement courses of action with respect thereto that are approved by Owner.

  
 (d) Provide or cause to be provided monthly
updates and written progress reports to the Owner and the Independent Construction Monitor and provide briefings to 
  

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 the Owner’s Board of Directors when reasonably requested, and, at the request of the Bond Insurer,
provide copies of updates and reports to the Bond Insurer and discuss such reports and updates with the Bond Insurer. 
  
 3.2 Time Management. Developer shall perform or cause to be performed the following time management services throughout the duration of the
Project: 
  
 (a) Working with the General
Contractor, Developer shall cause a Project schedule (as revised from time to time, the “Project Schedule”) to be prepared and submitted to the Independent Construction Monitor and the Bond Insurer for approval. The Project
Schedule shall be consistent with the requirements of the ICE Contract. As construction proceeds, Developer shall monitor the General Contractor’s fulfillment of General Contractor’s obligation to update the Project Schedule as
required under the Design/Build Contract. The Project Schedule shall include critical path method analysis in order to anticipate and monitor design and construction progress. 
  
 (b) Recommend action to mitigate the effects of any delay in the progress of design or the Work in
connection with the Project. 
  
 (c) Schedule and
conduct pre-construction, construction and progress meetings relating to the Project to discuss matters such as procedures, progress, problems and scheduling, and prepare and promptly distribute minutes to the Owner, the Independent Construction
Monitor and the Bond Insurer. 
  
 3.3 Cost
Management. Developer shall perform the following cost management services throughout the duration of the Project: 
  
 (a) Developer shall develop a system of cost control for the Project, including, without limitation, the Work performed by the
Contractors, including regular monitoring of actual costs for activities in progress and estimates for uncompleted tasks and proposed changes. Developer shall identify variances between actual and estimated costs and report the variances to the
Independent Construction Monitor at regular intervals. Developer shall cause the General Contractor to perform cost estimating services for the Project, including detailed estimates of construction costs using estimating techniques that are intended
to anticipate the various elements of the Project. Developer shall analyze and review construction cost estimates and compare estimates with the Project Budget. Developer shall perform or cause to be performed value-engineering services with respect
to the Project and implement cost saving measures and changes in the Work resulting from value engineering in the manner that Developer, in accordance with the Required Standard of Performance, reasonably deems appropriate; provided that the same
does not result in a default under the ICE Contract. Developer shall update and refine cost estimates as drawings and specifications are further developed or changes are made during the course of construction of the Project and shall incorporate
them in the Project Budget. 
  

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 (b) Developer shall continuously monitor the pre-construction costs and costs of
construction of the Project, compare those costs to the Project Budget, provide Owner, the Independent Construction Monitor and the Bond Insurer with monthly cost reports relating to the Project, keep Owner, the Independent Construction Monitor and
the Bond Insurer informed promptly of any anticipated or actual cost overruns incurred on the Project, develop and submit to the Independent Construction Monitor and the Bond Insurer, for approval, a course of action for dealing with anticipated or
actual cost overruns, and implement all courses of action approved by the Bond Insurer with respect thereto. 
  
 (c) Developer shall cause to be prepared and provide review services for cash flow reports and forecasts as needed during the course of
pre-construction and construction of the Project. Developer shall analyze costs incurred during the course of construction as such costs relate to the Project Budget and shall keep the Independent Construction Monitor and the Bond Insurer apprised
with respect thereto. 
  
 3.4 Pre-Construction and Design
Phase Services. Developer shall perform or cause to be performed the following services during the pre-construction and design phase of the Project: 
  
 (a) Schedule and attend regular meetings with the General Contractor’s representatives during the development of conceptual and
preliminary design to advise on site use and improvements, selection of materials, building systems and equipment all to be consistent with the requirements of the ICE Contract. Developer shall provide recommendations on construction feasibility,
life cycle cost analysis, cost of maintenance, availability of materials and labor, time requirements for installation and construction, and factors related to costs, including costs of alternative designs or materials, preliminary budgets and
possible economies. 
  
 (b) Review the drawings
and specifications as they are being prepared and ensure their compliance with the Project Budget, the Legal Requirements, the ICE Contract and the Project Schedule. Review the drawings and specifications as they are being prepared, recommend
alternative solutions whenever design details affect construction feasibility or schedules and perform value-engineering services. As design proceeds, cause the General Contractor to update the Project Schedule to indicate proposed activities,
sequences and durations, milestone dates for receipt and approval of pertinent information, submittal of pricing information, preparation and processing of shop drawings and samples, delivery of materials or equipment requiring long-lead time
procurement, and the proposed date of Substantial Completion. 
  
 (c) Transmit documents to ICE and other governmental and regulatory agencies for review as reasonably necessary or required, submit the Construction Documents (as defined in the Design/Build Contract) to the
Independent Construction Monitor, and advise the Independent Construction Monitor and the Bond Insurer of potential problems and suggested solutions regarding completion of such reviews. 
  

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 (d) Make applications with respect to zoning matters and building variances, endeavor to
obtain the approval of the Frio Hospital Business Park Architectural Control Committee and other owners of lots within the Frio Hospital Business Park of the Final Project Plans, endeavor to obtain approvals from Governmental Authorities exercising
jurisdiction over the Project, appear at meetings on behalf of Owner, and otherwise act on behalf of the Owner with respect to similar matters. 
  
 (e) Coordinate and supervise the selection and retention of the professional services of surveyors, special consultants, testing
laboratories and other professionals; negotiate, procure and retain the services of any additional consultants or Contractors needed to develop the Project; and coordinate and monitor the performance of the services of those consultants or
Contractors. 
  
 (f) Obtain and review conceptual
drawings, plans and specifications and construction drawings prepared for the Project by the General Contractor and its design professionals and ensure that they meet the requirements of the ICE Contract. 
  
 (g) Locate and purchase on behalf of Owner, as a Project
expense, all supplies and materials, furnishings, fixtures and equipment required for the Project not purchased by the General Contractor, and on behalf of Owner, coordinate and arrange for the shipment and insurance of such supplies and materials,
furnishings, fixtures and equipment to the Project. 
  
 (h) Coordinate and supervise the submission of applications to, and negotiations with, utility companies and Governmental Authorities for agreements relating to the installation of utility and sewer service to the Project site. 

 
 3.5 Construction Phase Services. During the construction of
the Project, Developer shall perform or cause to be performed the following services: 
  
 (a) Conduct a pre-construction conference during which Developer shall review the Project reporting procedures and other rules.

  
 (b) Determine the lead times necessary for
the procurement of all supplies and materials for the Project in order to allow for the procurement and shipment thereof in sufficient time to avoid delays in construction and to meet the requirements of the ICE Contract. 
  
 (c) Coordinate delivery and storage, protection, insurance
and security for purchased materials, systems and equipment that are part of the Project, until those items are incorporated into the Project. 
  
 (d) Coordinate the Work with the activities and the responsibilities of design professionals, Developer and the General Contractor as
necessary to complete the Project in accordance with the Project Budget and the Project Schedule. 
  

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 (e) Review the drawings and specifications and ensure that (i) the Work of all
Contractors is coordinated, (ii) all requirements for the Project have been assigned to the appropriate Contractor, (iii) the likelihood of jurisdictional disputes has been minimized, and (iv) proper coordination has been provided for phased
construction. 
  
 (f) Act generally as
Owner’s agent and representative in connection with the management of the construction of the Project to the extent authorized under this Agreement and perform all of the Owner’s duties under the Design/Build Contract, cooperate with the
General Contractor’s efforts to obtain permits required to be obtained by the General Contractor under the Design/Build Contract and obtain all necessary permits and approvals for which the General Contractor is not responsible under the
Design/Build Contract. 
  
 (g) Prior to
permitting any Contractors to commence any Work, obtain from the General Contractor payment and performance bonds and from all Contractors certificates of insurance evidencing the Contractors’ insurance coverage as set forth in the Design/Build
Contract, all in form and substance satisfactory to the Bond Insurer, unless a deviation from the insurance requirements is approved by the Bond Insurer. A Contractor shall not be entitled to any payment due with respect to the Project unless the
aforementioned insurance and bonds have been in place during the entire period in which the Contractor has performed any portion of the Work. 
  
 (h) Coordinate payment applications submitted by the General Contractor and final payment application procedures so as to comply with the
disbursement requirements set forth in the Indenture and the Design/Build Contract and ensure that procedures are in place so that those applications are compiled, approved and processed in an orderly and timely manner and contain all information
and approvals required as a condition of disbursements. 
  
 (i) Oversee the process whereby applications for payment submitted by the General Contractor and other Contractors, suppliers, consultants and others, including all applications for progress payments and final
payments under the Design/Build Contract, will be assembled into requisitions for payment of Project Costs and will use reasonably diligent efforts to cause requisitions for payment of Project Costs to be submitted to the Independent Construction
Monitor for its written approval and to the Trustee timely and in accordance with the Indenture and the applicable Construction Documents. Developer covenants that, to the extent that any late charges, penalties or interest are charged by any party
as a result of Developer’s failure to submit a requisition for payment to the Trustee timely, the Developer shall bear the cost thereof. 
  
 (j) Identify requirements for satisfactory performance of the Design/Build Contract; implement necessary courses of action when
requirements of the Design/Build contract are not being fulfilled and the Contractor will not take satisfactory corrective action; and handle and resolve disputes with the Contractors and suppliers on behalf of Owner, with any settlement being
subject to the Bond Insurer’s approval. Developer, with the prior approval of the Bond Insurer, shall determine the engagement of attorneys, expert witnesses or other consultants in connection with the handling of any dispute. 
  

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 (k) Recommend necessary or desirable changes in the Work to design professionals engaged
by the General Contractor and Contractors, review requests for changes, negotiate General Contractor’s proposals for changes on behalf of Owner, review and implement any change orders that Developer, in accordance with the Required Standard of
Performance and with the written concurrence of the Independent Construction Monitor, reasonably deems appropriate; provided however, that Developer shall not approve or implement any “Change Order” or “Construction Change
Directive” as those terms are defined in the Design/Build Contract that would have the effect of extending the time for Substantial Completion of the Project without the prior written consent of the Bond Insurer or that individually or in the
aggregate would have the effect of increasing the total amount of the Project Budget by more than 1% of the “Guaranteed Maximum Price” set forth in the Design/Build Contract without the prior written consent of the Bond Insurer, unless
Developer agrees in writing to fund the costs of such increase and demonstrates to the reasonable satisfaction of the Bond Insurer its financial wherewithal to pay the cost of any such increase. 
  
 (l) Monitor performance of the Work to determine in general
that the Work is performed in accordance with the requirements of the Final Project Plans and the Construction Documents, and in accordance with applicable laws, statutes, ordinances, building codes, rules, regulations and other requirements of
public authorities, including, but not limited to, OSHA requirements; perform regularly scheduled quality control inspections, and handle (as a Project expense) all notices of noncompliance received from any governmental entities or authorities;
implement special inspection or testing of Work not in accordance with the provisions of the Construction Documents and the ICE Contract, whether or not the Work is then fabricated, installed or completed, and reject Work on behalf of Owner which
Developer determines does not conform to the requirements of the Construction Documents and the ICE Contract or of applicable Legal Requirements. 
  
 (m) Obtain on behalf of Owner all Contractor insurance certificates including coverage insuring Owner and Developer required pursuant to
the terms of their respective contracts. 
  
 (n)
Verify that each of the architects, engineers and Contractors employed in connection with the Project are covered by liability insurance, including errors and omissions insurance covering the architects, consultants and other design professionals
providing for limits of liability reasonably satisfactory to the Bond Insurer and workers compensation insurance in amounts and coverage satisfactory to the Bond Insurer. Review and coordinate the delivery of all Contractors’, architects’,
and consultants’ insurance certificates required pursuant to the terms of their respective contracts. 
  
 (o) Obtain sworn statements, lien releases and affidavits from the Contractors and suppliers with respect to the Project for all amounts
for which payment is being 
  

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 requested of Owner and with respect to amounts previously paid, deliver to the Trustee a copy of the
signed lien releases with each Payment Application and with each final payment application. 
  
 (p) Coordinate with suppliers and manufacturers on an as needed basis. 
  
 (q) When General Contractor considers each Contractor’s Work or a designated portion thereof
substantially complete, prepare, with the cooperation of Independent Construction Monitor, a list of incomplete or unsatisfactory items and a schedule for their completion. 
  
 (r) Accompany the Independent Construction Monitor in conducting inspections of the Project. 
  
 (s) When the Project or a designated portion thereof is
substantially complete, prepare for Owner and the Independent Construction Monitor a summary of the status of the Work of each Contractor, listing changes in previously issued punch lists and recommending the times within which Contractors are
expected to complete incomplete or defective items on their respective punch lists. 
  
 (t) In the event of any casualty or any other damage affecting the Project, supervise and coordinate safety precautions and the clean-up
and removal of debris in connection therewith, and, subject to Bond Insurer’s approval and to the availability to the Developer of insurance proceeds, take that action and perform those service as may be necessary to cause the damaged portion
of the Project to be rebuilt in accordance with the drawings and specifications therefor. 
  
 (u) Supervise and coordinate the construction of the Project so that the Project is constructed, equipped, furnished and completed with
new materials in a good and workmanlike manner and in accordance with the terms of the ICE Contract, this Development Agreement and the Construction Documents; enforce substantial compliance with the terms of the agreements with the General
Contractor and other contractors, subcontractors and/or design professionals for the Project and require their performance substantially in accordance therewith; administer the Contracts for the design and construction of the Project and require
that work be continuously and diligently performed to achieve Substantial Completion on or before the Substantial Completion Date. 
  
 (v) Recognizing that, all other things being equal, the Owner desires to support and utilize local subcontractors in projects it is
associated with in accordance with state and federal law, to the extent consistent with Project efficiencies and the Budget, the Developer shall use its good faith efforts to, and to cause the General Contractor to, (i) undertake an outreach program
designed to ensure that local contractors are informed of the opportunities available to them in this Project and are encouraged to submit competitive proposals to participate in the Project and (ii) size subcontracts in a manner which will enable
local subcontractors to participate when the General Contractor can do so without affecting Project efficiencies and budgets. 
  

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 (w) Promptly provide to the Bond Insurer, the Trustee and the Owner or ensure that the
Bond Insurer, the Trustee and the Owner has received copies of all notices, reports and other matters required to be provided to the Bond Insurer, the Trustee and the Owner pursuant to the Design/Build Contract. 
  
 (x) Promptly provide written notice to the Bond Insurer and
the Independent Construction Monitor of any fault or defect in the Work or any non-compliance by the General Contractor with the Design/Build Contract or the Final Project Plans noted or observed by the Developer. 
  
 3.6 Post-Construction Phase Services. Following Substantial
Completion of the Project, Developer shall perform or cause to be performed the following services: 
  
 (a) Coordinate and expedite submittals of information from the Contractors for preparation of record drawings and specifications, and
coordinate and expedite the transmittal of those record documents to the Owner and the Operator. 
  
 (b) Prior to the final completion of the Project, cause the General Contractor to compile manufacturers’ operations and maintenance
manuals, warranties and guarantees, and certificates, and index and bind those documents in an organized manner; and deliver this information to the Owner and the Operator. 
  
 (c) Obtain or cause to be obtained all certificates of occupancy by coordinating final testing, preparing
and submitting documentation to Governmental Authorities and accompanying governmental officials during inspection of the Project. 
  
 (d) With Independent Construction Monitor, observe the checkout of utilities, operational systems and equipment, including Owner-purchased
systems and equipment, for readiness, and assist in the coordination of their initial start-up and testing. 
  
 (e) Coordinate all warranty and corrective work of Contractors or cause the General Contractor to do so. 
  
 3.7 Financing Services. Developer shall perform the following
services throughout the duration of the Project: 
  
 (a) Coordinate, supervise and cause implementation of all applications and related documents required in connection with the financing of the Project. 
  

(b) Coordinate, supervise and cause implementation of the administration of any Project financing requirements, including providing
information reasonably requested by the Trustee or the Bond Insurer. 
  

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 ARTICLE 4 
  
 BOOKS AND RECORDS; BANK ACCOUNTS 
  
 4.1 Books and Records. Developer shall cause accurate books and records to be maintained in accordance with
the terms of this Agreement in which shall be entered all matters relating to the Project. Developer shall maintain those books and records in such a manner as to permit Developer to provide to the Owner, the Trustee and the Bond Insurer from time
to time, on a timely basis, any and all financial information, in Developer’s possession or control, concerning the Project as may be reasonably requested by the Owner, the Trustee or the Bond Insurer. Developer shall keep and maintain books
and records of account at all times at a place or places approved by the Trustee. ICE, the Owner, the Trustee and the Bond Insurer and their employees and representatives and any governmental or regulatory authorities with jurisdiction shall have
the right to inspect, examine and copy the books, records, files, and other documents of Developer relative to the Project at all reasonable times. The Owner, the Trustee and the Bond Insurer shall be entitled to conduct on-site inspections of the
Project throughout the term of this Agreement, upon reasonable advance notice to the Developer. Developer and its employees shall cooperate fully with such inspections. 
  
 ARTICLE 5 
  
 PROJECT FUNDS 
  
 5.1 Project Funds. 
  
 (a) Developer understands and agrees that the Owner’s sole financial contribution to the costs of the Project shall be made from the proceeds of the
Bonds and the proceeds of the First Subordinated Loan and Second Subordinated Loan to be made by Developer hereunder, and that, based upon the Project Budget, as of the date hereof, all of the funds required by the Project Budget to be contributed
by the Owner for the development, construction and equipping of the Project have been deposited into the “Project Fund” established under the Indenture. Developer further acknowledges and agrees that the Owner will not contribute any of
its own funds for the Project, shall not be required to raise or contribute any funds for the Project in excess of the amounts initially deposited in the Project Fund upon the sale of the Bonds, and shall have no obligation for the payment of any
costs or expenses related to the development, construction or equipping of the Project, except to the extent that funds are available in the “Project Fund” established under the Indenture for the payment thereof. 
  
 (b) Developer shall be obligated to contribute a total of $5 million in
current funds to the Project Costs. The Developer’s $5 million financial contribution to the Project Costs shall be deemed to be a loan to the Owner, and the obligation of the Owner to repay the principal amount thereof and the accrued interest
thereon shall be evidenced by the Subordinated Notes, which shall be executed and delivered by the Owner to the Developer in connection with the closing of the sale of the Bonds. 
  

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 (c) The Developer’s financial contribution to the Project shall be made in no more than two (2)
installments as follows: 
  
 (i) Simultaneously with, and subject
to, the closing of the sale of the Bonds, the Developer shall deposit with the Trustee, for the benefit of the Owner, for deposit by the Trustee in the “Suspense Account” of the “Project Fund” established under the Indenture, the
amount of $3.9 million, less the total amount of (1) the costs advanced by the Developer to the General Contractor prior to the closing of the sale of the Bonds for design and pre-construction services provided by the General Contractor, as
evidenced by documentation delivered to the Trustee and the Bond Insurer, and (2) provided that the same are documented to the reasonable satisfaction of the Bond Insurer, without mark-up by the Developer, all other actual, out-of-pocket costs and
expenses incurred by the Developer prior to the closing on the sale of the Bonds in connection with negotiating a contract for the purchase of the Land; securing an option for the purchase of the Land; conducting boundary, geo-technical,
topographical and environmental surveys of the Land; evaluating the environmental condition of the Land; negotiating with and making presentations to Governmental Authorities in connection with the Project; making application for and prosecuting
necessary zoning approvals; developing the Project Budget; obtaining from the Architect conceptual drawings and preliminary and revised plans and specifications for the design and construction of the Project; value engineering the construction
aspects of the Project with the General Contractor; and otherwise readying the Project for construction (the “First Subordinated Loan”). The obligation of the Owner to repay the First Subordinated Loan shall be evidenced by
the First Subordinated Note. 
  
 (ii) On or before the date of
Substantial Completion of the Project or the occupancy of the Complex by the Developer as operator, pursuant to the Operating Agreement, whichever occurs earlier, the Developer shall deposit with the Trustee, for the benefit of the Owner, for
deposit by the Trustee in the “Suspense Account” of the “Project Fund” as provided for in the Indenture, an additional $1.1 million (the “Second Subordinated Loan”). The obligation of the Owner to repay
the Second Subordinated Loan shall be evidenced by the Second Subordinated Note. 
  
 ARTICLE 6 
  
 COMPLIANCE WITH THE BUDGET; FUNDING REQUESTS 
  
 6.1 Compliance with Budget. 
  
 (a)
Developer has developed and submitted to the Trustee and the Bond Insurer a Project Budget, a copy of which has been provided to the Owner, in form and substance acceptable to the Bond Insurer setting forth in detail all estimated receipts and
expenditures to be realized or incurred in connection with the Project (the “Project Budget”). If, at any time, Developer shall determine that the Project Budget is no longer appropriate or feasible because of changes in
conditions, circumstances or otherwise (including Developer’s failure to perform any of its duties hereunder), Developer shall submit to the Independent Construction Monitor and the Bond Insurer for approval a revised Project Budget indicating,
in narrative form, the reasons the original or prior Project Budget is no longer appropriate or feasible. Developer shall, in the performance of its duties hereunder, use and employ reasonably diligent efforts, and observe and 
  

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 maintain the Required Standard of Performance, to keep the Project in compliance with the Project Budget. In connection
with its compliance with the Project Budget, Developer shall be entitled to allocate any contingency line items included within the Project Budget among the other line items of the Project Budget in the manner that Developer, in accordance with the
Required Standard of Performance, reasonably deems appropriate, and Developer shall notify the Independent Construction Monitor in writing of any such allocation promptly after the making thereof. 
  
 (b) Except as provided in Section 6.3 of this Agreement, the Developer shall
not spend amounts or incur obligations for and on behalf of Owner or take any other actions that individually or in the aggregate would have the effect of increasing the total amount of the Project Budget by more than 1% of the “Guaranteed
Maximum Price” set forth in the Design/Build Contract (the “Guaranteed Maximum Price”) (after utilization of the general contingency contained in the Project Budget, any allocations of contingency line items and savings made by
Developer in accordance with Section 3.3(a) above), without the prior written consent of the Bond Insurer and the Independent Construction Monitor, unless Developer agrees in writing to fund the costs of such increase and demonstrates to the
reasonable satisfaction of the Bond Insurer its financial wherewithal to pay the cost of any such increase. 
  
 (c) Notwithstanding the foregoing, the Developer shall not approve or implement any Change Order or Construction Change Directive (as those terms are
defined in the Design/Build Conract) or otherwise approve any changes to the Project that would have the effect of increasing the costs of the Project beyond the amounts deposited in the Project Fund established under the Indenture, unless Developer
agrees in writing to fund the costs of such increase and demonstrates to the reasonable satisfaction of the Bond Insurer and the Owner its financial wherewithal to pay the cost of any such increase. 
  
 (d) In no event shall the Developer approve or implement any Change Order or
Construction Change Directive (as those terms are defined in the Design/Build Conract) or authorize any expenditures for or on behalf of the Owner that would cause the costs of the Project to exceed the amount of the Trust Estate, unless Developer
agrees in writing to fund the costs of such increase and demonstrates to the reasonable satisfaction of the Bond Insurer and the Owner its financial wherewithal to pay the cost of any such increase. 
  
 6.2 Funding Requests. 
  
 (a) With the concurrence of the Independent Construction Monitor, Developer
shall be entitled to requisition from the Construction Costs Account and the General Project Costs Account in the “Project Fund” those amounts as may be necessary to make expenditures consistent with the Project Budget and otherwise
authorized under the terms of the Indenture for the payment of Project Costs. 
  
 (b) (i) In addition, but subject to the terms of the Indenture, Developer shall be entitled to requisition from the Contingency Account in the Project Fund established under the Indenture in order to pay for Project
Costs that exceed the amount of the Project Budget, but in no event shall any requisition or requisitions, individually or in the aggregate, exceed an amount equal to 1% of the Guaranteed Maximum Price without the prior written approval of the Bond
Insurer. 
  

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 (ii) Subject to the Indenture, Section 6.2(b)(i) and Section 6.2(c), Developer shall be
entitled to requisition from the Contingency Account in order to pay Project Costs that exceed the amount of the Project Budget (A) with the consent of the Independent Construction Monitor, if and to the extent that such costs are (1) attributable
to an unforeseen or unanticipated cost of construction, (2) otherwise required in order to comply with the Final Project Plans; or (3) required in order to comply with any change to the Final Project Plans dictated by ICE or any other change to the
Project dictated by ICE; and (B) without the consent of the Independent Construction Monitor, if and to the extent that such costs are attributable to minor changes in the Final Project Plans deemed reasonable and necessary by Developer for the
efficient operation of the Detention Complex in accordance with its intended purpose; provided, that the excess Project Costs described in this Section 6.2(b) are not attributable to the Developer’s failure to perform any of its duties
hereunder in accordance with the Required Standard of Performance; and provided further that any such requisition described in this Section 6.2(b), individually or in the aggregate, would not result in an increase to the total amount of the
Project Budget of more than 1% of the Guaranteed Maximum Price or cause the total amount disbursed from the Contingency Account to exceed an amount equal to 1% of the Guaranteed Maximum Price. 
  
 (iii) Except as provided in Section 6.2(b)(ii), and subject to Section
6.2(c), Developer shall be entitled to requisition from the Contingency Account in order to pay for Project Costs that exceed the amount of the Project Budget only with the prior written approval of the Bond Insurer and only in accordance with the
terms of the Indenture. If at any time an aggregate amount equal to 1% of the Guaranteed Maximum Price has been disbursed from the Contingency Account pursuant to one or more requisitions, any further disbursements from the Contingency Account must
be approved in writing by the Bond Insurer. 
  
 (c)
Notwithstanding the powers and duties given to Developer hereunder or any provision of this Agreement to the contrary (other than the provisions of Section 6.3), if the actual Project Costs shall exceed the total amount of the Project Budget
(after utilization of the general contingency contained therein, any allocations of contingency line items and savings made by Developer in accordance with Section 3.3(a) above) and the excess is attributable to Developer’s failure to
perform any of its duties hereunder to the level of the Required Standard of Performance, then, notwithstanding any other provision to the contrary contained in this Agreement (other than the provision of Section 6.3), Developer shall bear
the cost and expense of the overage. 
  
 6.3
Emergencies. Notwithstanding Sections 6.1 and 6.2 to the contrary, in any emergency which Developer in good faith believes is likely to affect the safety of persons or property, Developer shall be authorized to act in a manner
intended to mitigate or prevent threatened damage, injury or loss, and shall be entitled to make expenditures in excess of amounts budgeted therefor in connection therewith; provided, however, that Developer shall authorize those acts and make those
expenditures only after Developer has made a reasonable attempt, if circumstances permit, to inform the Independent Construction Monitor and the Bond Insurer of the cause of the emergency, Developer’s proposed course of action in connection

  

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 therewith, and the likely amount of the expenditures. Developer shall in all events as soon as reasonably practicable
after authorizing those acts and making those expenditures inform the Independent Construction Monitor and the Bond Insurer in writing of the aforesaid matters. 
  

ARTICLE 7 
  
 AUTHORITY AND RESPONSIBILITIES OF PARTIES 
  
 7.1 Developer. 
  
 (a) In addition to the general authority granted to Developer under Section 2.1 of this Agreement, Developer is hereby authorized to negotiate the
terms of and to enter into third party contracts on behalf of Owner (including, by way of example and not by way of limitation, agreements with contractors, engineers, surveyors, architects, attorneys, accountants, consultants and other qualified
personnel) in order to accomplish all the duties of Developer as set forth herein; provided, however, that, notwithstanding anything to the contrary contained in this Agreement, Developer shall have no authority, on behalf of Owner, to hire
any person or entity who would for any purpose be deemed or considered an employee of Owner; provided further that the costs of such contracts shall be payable solely from the Project Fund as a Project Cost or from the Developer’s own
funds; and provided further that the Developer shall not enter into any such contracts with affiliates or parties related to the Developer unless the Developer demonstrates to the reasonable satisfaction of the Owner that the terms of such
contract are comparable to or better than the terms that the Developer could have obtained from an unrelated third party in an arm’s length transaction. 
  
 (b) If, and to the extent that the Developer is required to purchase any materials, supplies or equipment for the Project, the Developer shall purchase
only new materials, supplies or equipment, and shall be entitled only to receive reimbursement for the actual costs thereof from the Project Fund without mark-up by the Developer. 
  
 (c) Notwithstanding any contrary or inconsistent provision set forth in this Agreement and so long as the Developer conducts
itself in accordance with the Required Standard of Performance and uses best efforts to enforce the Design/Build Contract, Developer shall not be responsible for: (i) construction means, methods, techniques, sequences and procedures employed by
Contractors, subcontractors or other consultants in the performance of their respective contracts; or (ii) the failure of engineers, architects, general contractors, subcontractors or other consultants to carry out their respective duties and
obligations. 
  
 (d) Developer has visited the Land and has
conducted all explorations, surveys, investigations and studies it deems necessary and has studied all reports of explorations and tests of subsurface conditions at or contiguous to the Land and all drawings of physical conditions in or relating to
existing surface and subsurface structures and conditions at or contiguous to the Land. The Developer agrees that if conditions are encountered on the Land that are (i) subsurface or otherwise concealed physical conditions that differ materially
from those indicated in the Contract Documents or (ii) unknown physical conditions of an unusual nature that differ materially from those ordinarily found to exist and generally recognized as inherent in 
  

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 construction activities of the character provided for in the Construction Documents, and if, as a result of such
conditions a Change Order increasing the Contract Sum is required and funds are not available in the Project Fund established under the Indenture to pay for the increased cost, the Developer from its own funds will deposit with the Trustee for
deposit in the Project Fund the amount necessary to increase the funds available to pay for such increase in the Contract Sum. Developer also agrees that the discovery of such conditions shall not be an “Excused Delay” under this Agreement
or a defense to the Developer’s obligation to pay liquidated damages under Section 8.4(d) of this Agreement, if as a result of such conditions, the Project does not reach Substantial Completion on or before the ICE Contract Completion
Date. 
  
 (f) Developer agrees that it will not amend the
Design/Build Contract or suspend or abandon the Work or direct the General Contractor to suspend or abandon the Work or terminate or give notice of termination of the Design/Build Contract, without the prior written approval of the Bond Insurer and
that it will not approve any Change Order or issue any Construction Change Directive or confirm that Substantial Completion or Final Completion has been achieved or change the Required Substantial Completion Date, without the written approval or
concurrence of the Independent Construction Monitor. Developer also agrees not to approve any change to the insurance policies (other than extensions of their terms) or any change to the payment bonds or performance bonds without the prior written
consent of the Bond Insurer. Developer will not assign its rights under the Design/Build Contract and will not agree to any assignment by the General Contractor of its rights under the Design/Build Contract without the consent of the Bond Insurer.
Developer will give the Bond Insurer notice of default under the Design/Build Contract within one Business Day of receipt or delivery thereof by the Developer. 
  

7.2 Owner. 
  
 (a) Owner shall use reasonably diligent efforts to furnish Developer with any and all information and documents available to Owner and cooperation and
assistance as may be reasonably required by Developer to fulfill its obligations in connection with the Project. 
  
 (b) Owner shall use reasonably diligent efforts to respond to all written requests submitted by Developer, and to make all necessary decisions required in
those requests, (a) within ten (10) business days after Owner’s receipt of the request; it being agreed by Owner and Developer that, notwithstanding anything to the contrary contained herein, (i) if Owner does not provide its written approval
or disapproval of any schedule or budget (or proposed revision or change thereto or deviation therefrom) submitted by Developer within ten (10) business days after Owner’s receipt of Developer’s submittal and request for approval, then
Owner shall be deemed to have approved the schedule or budget (or proposed revision or change thereto or deviation therefrom) as submitted by Developer. 
  
 (c) Owner shall not amend or modify the Design/Build Contract in any manner, or grant any waivers thereunder, without first obtaining the written consent
and approval of the Developer and the Bond Insurer. 
  
 (d) Owner
shall not terminate the Design/Build Contract or discontinue to the services of the General Contractor thereunder with without first obtaining the written consent and approval of the Developer and the Bond Insurer. 
  

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 (e) Owner shall not agree to any amendments or modifications to the Indenture that would have the affect
of adversely affecting the rights or the obligations of the Developer hereunder or thereunder, without the prior written consent of the Developer and the Bond Insurer. 
  
 ARTICLE 8 
  
 COMPENSATION, TIME OF COMPLETION 
  
 8.1 Development Fee. Subject to the terms of this Agreement, the Developer shall be entitled to receive from the Project Fund established
under the Indenture a development fee (the “Development Fee”) in the amount of $600,000 (Six Hundred Thousand Dollars) for the performance of its services hereunder. 
  
 8.2 Payment of Development Fee. Subject to (a) the Developer’s compliance with its obligations under
Section 5.1of this Agreement, and (b) the availability of funds in the Project Fund for such payment, the Development Fee shall be paid to the Developer upon (i) Final Completion of the Project and (ii) occupancy by ICE; provided
however that the Development Fee shall not be paid to the Developer from the Project Fund unless and until (i) the Developer shall have deposited the full amount of the First Subordinated Loan and the Second Subordinated Loan with the Trustee
and (ii) the balance in the Operating Reserve Fund established under the Indenture shall be equal to at least the Operating Reserve Requirement, the balance in the Major Maintenance Reserve Fund shall be equal to at least the Major Maintenance
Reserve Requirement and the Insurance and Property Tax Fund shall be fully funded as provided in the Indenture; and provided further that the Developer hereby agrees that, notwithstanding anything contained herein to the contrary, the full
amount of the Development Fee payable to the Developer hereunder, or so much thereof as may be necessary, may be applied by the Trustee in accordance with the Indenture to the Operating Reserve Fund and/or the Major Maintenance Reserve Fund in order
to meet the Operating Reserve Requirement and/or the Major Maintenance Reserve Requirement, if, and to the extent that funds otherwise available therefor under the Indenture, including the proceeds of the Second Subordinated Loan, are insufficient
to meet those requirements as of the date of Substantial Completion or the date of occupancy of by the Developer as operator, whichever occurs earlier. Notwithstanding the foregoing, however, Developer hereby agrees that the Owner’s obligation
to make payments to the General Contractor under the Design/Build Contract and any other contractor engaged by the Developer for the Project is superior to the Owner’s obligation to make payments of the Development Fee hereunder, and that, if
at any time there shall be insufficient funds in the Project Fund under the Indenture to enable Owner to make payments of both the Development Fee and payments required or anticipated to be required under the Design/Build Contract or any other
contract entered into by Developer on behalf of Owner, the Owner shall have the right to apply payments due to Developer on account of the Development Fee to payments due under the Design/Build Contract or any other such contract. 
  

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 8.3 Reimbursement for Expenses Incurred by Developer. 
  
 (a) In addition to the Development Fee, and subject to the terms of this
Agreement and the Indenture, the Developer shall be reimbursed solely from the “General Project Costs Account” in the Project Fund established under the Indenture for any and all costs and expenses reasonably incurred by the Developer in
accordance with the Project Budget in connection with the Project. Such costs and expenses shall be reimbursed to the Developer promptly upon presentation by the Developer to the Trustee of a requisition as required under the Indenture, including a
reasonably detailed invoice outlining such costs and expenses in accordance with the terms of the Indenture. 
  
 8.4 Time of Completion. 
  
 (a) (1) Time of Completion. Subject to Excused Delays (as hereafter defined), and unless otherwise approved or extended by ICE, Developer
shall cause (i) the Project to be completed substantially in accordance with the Final Project Plans and the ICE Contract, and (ii) the necessary governmental authority having jurisdiction over the occupancy of the Project to issue or be willing to
issue, a certificate of occupancy (whether permanent, temporary or provisional) permitting the use and occupancy of the entire Detention Complex for the purposes for which it is designed pursuant to the Final Project Plans and the ICE Contract (the
“Certificate of Occupancy”) on or before the date specified in the ICE Contract for the commencement of services by the Developer as the service provider thereunder (which is currently June 23, 2005) (the “ICE
Contract Completion Date”). The Project shall be Substantially Complete (provided it is constructed in substantial conformance with the Final Project Plans and the ICE Contract) on the date when the Project is sufficiently accessible
and complete in accordance with the Final Project Plans and the ICE Contract so that the Project can be occupied and used for its intended purposes and the Certificate of Occupancy for the Detention Complex has issued (“Substantial
Completion”). 
  
 (2) Excused Delay(s).
For purposes of this Agreement, an “Excused Delay” shall mean a delay in the completion of the development, construction and equipping of the Project that is caused by a “Force Majeure Event. The term “Force
Majeure Event” means any act or event that materially adversely affects the performance by the Developer of its obligations under this Agreement, if (a) such act or event is beyond the reasonable control of and not the fault of the
Developer and (b) the Developer could not have avoided or overcome such act or event or the effects thereof by the exercise of due diligence or commercially reasonable planning, or, without limitation, otherwise taking reasonable and necessary
safety precautions and/or other actions for environmental protection, including but not limited to: extraordinary flood, wind or lightning; earthquake; fire; explosion; epidemic; quarantine; hurricane; sabotage; military invasion of or near the
Project site; strikes or other labor disputes (including lockouts but excluding all disputes involving the Developer and excluding any other labor dispute at the Project site to the extent that the Developer fails to take immediate or appropriate
action to mitigate or end the effects of such dispute); riot or similar civil disturbance; act of God (including extraordinary weather conditions); act of the public enemy; and action of a court, regulatory body or other public authority having a
direct effect on the Work or the Project; any breach of an obligation under the Design/Build Contract by the General Contractor that directly 
  

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 prevents the Developer from performing its obligations under this Agreement, including without limitation any breach by
the Design/Builder of its obligations to obtain applicable permits. Late delivery of equipment or materials for which the Developer is not responsible under the Design/Build Contract (except to the extent due to a Force Majeure Event otherwise
excusable hereunder), economic hardship, Project site labor disputes, late issuance of any applicable permit attributable to the failure by the Developer to apply for such applicable permit in a timely manner and to attempt diligently to obtain such
applicable permit and reasonably foreseeable weather conditions are explicitly excluded from this definition of a Force Majeure Event. 
  
 (b) If Developer, the General Contractor or any other Contractor is delayed, at any time, in the progress of the Work as a result of an Excused Delay,
then only the Required Substantial Completion Date and the applicable elements of the Project Schedule, shall be equitably adjusted as hereafter provided in this Agreement. Any such change in the Project Schedule or the Required Substantial
Completion Date will not necessarily be on a day-for-day basis, but shall be determined on the basis of actual effect which the applicable Excused Delay has on the over-all schedule for designing and constructing the Project, taking into account
seasonal conditions and the coordination or sequencing of architects, engineers, trades and required permit applications. 
  
 (c) Developer shall notify Owner, the Trustee, the Independent Construction Monitor and the Bond Insurer, in writing, as promptly as possible, but in any
event no later than fifteen (15) days following the date Developer knew or should have known of the occurrence of any Excused Delay, the notice shall contain Developer’s good faith estimate of the change, if any, in the Required Substantial
Completion Date resulting therefrom, which shall be confirmed by the Independent Construction Monitor. Any failure of Developer to so notify Owner of any such occurrence within said fifteen (15) days shall be deemed to be Developer’s waiver of
an extension of the Required Substantial Completion Date as a result of the occurrence. In the event of a continuing Excused Delay as aforesaid, only one notice shall be required from Developer. 
  
 (d) Developer acknowledges that time is of the essence with respect to the
Project and that Owner will suffer financial loss if the Work is not substantially completed on or before the ICE Contract Completion Date. Developer also acknowledges the delays, expenses and difficulties that will be incurred in proving the actual
loss suffered by the Owner if the Work is not completed on time. Accordingly, instead of requiring any such proof, Developer agrees that if Substantial Completion is not achieved by the ICE Contract Completion Date and (i) the General Contractor
does not make any payment of liquidated damages payable by the General Contractor pursuant to Article 14 of the Design/Build Contract with respect to the period from and after the ICE Contract Completion Date and such payment is not covered by a
draw on the Contractor Letter of Credit, or (ii) the General Contractor’s limit of liability under Article 14 of the Design/Build Contract has been reached or the Contractor Letter of Credit has been exhausted or has terminated or expired, or
(iii) the issuer of the Contractor Letter of Credit does not for any reason honor a proper draw on the Contractor Letter of Credit with respect to the period from and after the ICE Contract Completion Date, Developer shall pay to the Trustee, for
and on behalf of the Owner, as liquidated damages and not as a penalty, the amount of $16,500 per day for each full day that expires after the ICE Contract Completion Date until the Developer 
  

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 achieves Substantial Completion of the Project; provided however, that the Developer’s total aggregate liability for
liquidated damages under this Section 8.4(d) shall be limited to $3 million. Developer further agrees that the foregoing amount of liquidated damages represents a reasonable approximation of the actual damages that the Owner will incur as a result
of any delay in Substantial Completion beyond the ICE Contract Completion Date. 
  
 (e) To secure the Developer’s obligation to pay any of the foregoing liquidated damages, Developer will provide for the delivery of a stand-by letter of credit in the amount of three million dollars ($3,000,000)
in form and substance and from a bank approved by the Bond Insurer, which shall name and be payable directly to the Trustee. Only the Developer will be responsible for reimbursing the issuer of the letter for draws made thereon. 
  
 ARTICLE 9 
  
 EVENTS OF DEFAULT AND TERMINATION 
  
 9.1 Events of Default. 
  
 (a) The following constitute “Events of Default” by the Developer
under this Agreement: 
  
 (i) the failure by the
Developer to maintain any insurance required to be maintained by the Developer under this Agreement; 
  
 (ii) the failure by the Developer to observe and perform any other covenant, condition or agreement contained herein or in any other
document or agreement executed in connection herewith on its part to be observed or performed for a period of fifteen (15) days after written notice is given to the Developer specifying such failure and requesting that it be remedied; provided,
however, that, if the failure stated in such notice cannot be corrected within such fifteen (15) day period, Owner will not reasonably withhold its consent to an extension of such time if corrective action is instituted by the Developer within the
applicable period and diligently pursued until the default is corrected; 
  
 (iii) the Developer shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Developer shall apply for or consent to
the appointment of any receiver, trustee or similar officer for it, or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Developer; or the
Developer shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Developer which is not dismissed or secured by the Developer within 60 days after the filing thereof against the Developer; 
  

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 (iv) Owner or the Bond Insurer shall determine that any material representation or
warranty made by the Developer herein or in any other document executed in connection herewith was untrue in any material respect when made; 
  
 (v) the occurrence of a default under the ICE Contract, which is not cured by the Developer to the satisfaction of ICE within the
time-frames provided in the ICE Contract; or 
  
 (vi) the occurrence of any default by the Developer under any of its loan agreements, lines of credit or other credit facilities or reimbursement agreements relating thereto. 
  
 (b) Whenever any Event of Default on the part of the Developer shall have occurred and be continuing, Owner, without any
further demand or notice, shall have the right (to be exercised only with the prior written consent of the Bond Insurer and which shall be exercised at the written direction of the Bond Insurer) to take any one or any combination of the following
remedial steps and such other steps which are accorded to the Owner by applicable law: 
  
 (i) terminate this Agreement and take possession and control of the Project, without any court order or other process of law and without
liability for entering the premises, in which event, except as provided in Section 9.2 below, all of the Developer’s obligations hereunder, including without limitation, all of Developer’s obligations hereunder to contribute to the
costs of the Project shall cease and terminate; and/or 
  
 (ii) if this Agreement is terminated by the Owner, recover from the Developer the actual costs incurred by the Owner, the Trustee and the Bond Insurer in identifying and engaging a replacement developer for the Project, and any other actual
damages incurred by the Owner, the Trustee and the Bond Insurer as a direct and proximate result of the default by the Developer hereunder; and/or 
  
 (iii) seek specific performance by the Developer of its obligations hereunder; and/or 
  
 (iv) recover from the Developer the reasonable and necessary
actual, out-of-pocket costs incurred by the Owner, including, without limitation, reasonable attorneys’ fees, in connection with enforcing its remedies hereunder; and/or 
  
 (v) take whatever action at law or in equity as may appear necessary or desirable to enforce its rights
hereunder or with respect to the Project; 
  
 No remedy herein
conferred upon or reserved to the Owner is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Owner to 
  

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 exercise any remedy reserved to it in this Section, it shall not be necessary to give any notice other than such notice
as may be required by this Section. All remedies herein conferred upon or reserved to the Owner shall survive the termination of this Agreement. 
  
 If an Event of Default occurs hereunder, the Owner and the Trustee at the direction of the Bond Insurer may communicate with the ICE and its
representatives regarding the Event of Default, and may negotiate with the ICE regarding the Complex, the ICE Contract and the use and operation of the Complex; and none of those actions or any related actions or communications shall be deemed to
constitute interference, intentional or otherwise, by Owner with the ICE Contract or Developer’s relationship with the ICE or be deemed to be disclosure of any information which arguably may be considered confidential. However, neither the
Trustee, the Bond Insurer nor the Owner shall be under any obligation to take any of the foregoing actions. 
  
 9.2 Actions Upon Termination. If Owner terminates Developer’s engagement hereunder with the prior written consent of or at the
direction of the Bond Insurer following an Event of Default hereunder, upon termination of this Agreement, Developer shall immediately, in accordance with Owner’s instructions (which shall be given only with the prior written consent of or at
the direction of the Bond Insurer), proceed with performance of the following duties: 
  
 (a) Discontinue operations as directed by Owner; 
  
 (b) Take all other action as may be necessary or requested by Owner for the protection and preservation of the terminated Work. 
  

(c) Promptly upon the date of the termination, deliver or cause to be delivered to the Trustee with respect to the terminated services, all Work
Product, as defined in Section 11.1 below, in Developer’s possession or control and other reports, documents, agreements and other information prepared by Developer. 
  
 9.3 Possession of Project. If Owner terminates Developer’s engagement hereunder with the prior written
consent of or at the direction of the Bond Insurer, the Trustee may take possession of the Project and of all materials, equipment, tools, construction equipment and machinery thereon owned by Developer, and the Trustee thereafter may, with the
prior written consent of or at the direction of the Bond Insurer, cause the Work to be finished by whatever method it may deem expedient in a commercially reasonable manner. 
  
 9.4 Assignment; Limitation of Owner’s Remedies. 
  
 (a) The Owner acknowledges that, other than the Corporation’s
Unassigned Rights, all of the Owners rights and interests in, under and pursuant to this Agreement will be assigned to the Trustee pursuant to the Indenture. Without in any way limiting the rights of the Trustee, as assignee of the Owner or
otherwise, or of the Bond Insurer, the Owner acknowledges that, subsequent to such assignment, the Owner shall have no right to exercise remedies under this Article 9, which remedies shall be exercised by the Trustee pursuant to the Indenture,
subject to the rights of the Bond Insurer hereunder and under the Indenture; provided, that the foregoing limitation shall not be construed to limit the rights of the Owner to enforce Developer’s indemnity obligations under Section 10.4 hereof.

  

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 (b) Notwithstanding anything contained herein that may suggest otherwise, in no event shall the rights
and remedies of the Owner hereunder be construed as creating any liability whatsoever on the part of the Developer to pay or become liable for, whether directly or indirectly, as part of the Owner’s damage calculations or otherwise, any of the
principal or interest obligations on the Bonds, any Reimbursement Obligations or any other debt service requirements under the Indenture; provided, this Section 9.4(b) shall not in any way limit any express obligations of Developer hereunder or
under any other document, including any Corporation Document to which Developer is a party. 
  
 9.5 Termination. 
  
 This Agreement may be terminated at any time upon the mutual consent of the Developer and the Owner (which may only be given with the prior written approval of the Bond Insurer), and, at the election of the Developer, in the event the ICE
Contract is the subject of a termination for convenience, in whole or in part, pursuant to FAR 52-249-2. If the ICE Contract is the subject of a termination for convenience, in whole or in part, pursuant to FAR 52-249-2 during the Term of this
Agreement, the Developer agrees to seek as part of any claim resulting from a termination for convenience an amount equal to all debt service on the Bonds and, to the extent received from ICE, to remit such amounts to the Trustee for application in
accordance with the terms of the Indenture. 
  
 ARTICLE
10 
  
 INSURANCE AND INDEMNITY 

 
 10.1 Developer’s Insurance. 
  
 (a) Developer agrees to obtain and maintain, or to cause the General
Contractor to obtain and maintain, during the construction of the Project all of the insurance coverage required in the Design/Build Contract and in Schedule 10.1 to this Agreement. All such insurance shall be (i) written on an occurrence
basis, (ii) issued by commercial carriers rated at least “A” by Best or in the two highest rating categories of Moody’s and Standard & Poors, and (iii) primary to, and non-contributory with, any other insurance or self-insurance
of Developer. All insurance shall remain uninterrupted, in full force and effect, during the entire duration of the construction of the Project. The Trustee and the Owner shall be additional insureds on all policies of liability insurance maintained
by the Developer hereunder, with the exception of Developer’s worker’s compensation insurance. Self-insurance shall be permitted only with the prior written consent of the Bond Insurer in accordance with conditions specified by the Bond
Insurer; it being understood and accepted by the Bond Insurer that the Developer (a) maintains, and will be permitted to maintain, a $100,000 per occurrence self-insured retention under its existing general liability and civil rights liability
insurance program; (b) shall be permitted to increase its self-insured retention per occurrence under its general liability and civil rights liability insurance program to not more than $250,000 per occurrence, without the consent of the Bond
Insurer, if 
  

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 the Developer reasonably deems such increase necessary in order to obtain or maintain such insurance coverage or in order
to maintain the affordability of such coverage; and (c) is “self-insured” for a portion of claims covered under its existing worker’s compensation program, subject to a “stop-loss” on such claims and shall be permitted to
maintain coverage on this basis during the term of this Agreement and to increase the amounts of its self-insurance or stop-loss thereunder if the Developer reasonably deems such increase necessary in order to obtain or maintain such insurance
coverage or in order to maintain the affordability of such coverage. 
  
 (b) Any premiums incurred or paid for any insurance procured and maintained by Developer shall be included as an expense item in the Project Budget and reimbursed to the Developer from the Project Fund. 
  
 (c) Developer shall deliver to Owner and the Bond Insurer, prior to any
equipment or personnel being brought onto the Project site, certificates of insurance evidencing the insurance coverage required of Developer and the General Contractor. Insurance certificates evidencing the insurance coverage required of Developer
and the General Contractor and evidencing exclusive coverage (whether or not provided under a master policy) for the builder’s risk insurance to be maintained by the General Contractor must be provided to the Bond Insurer within one Business
Day after Developer receives such certificates under the Design/Build Contract. 
  
 (d) Prior to the expiration of any required insurance, due to the attainment of a normal expiration date or renewal date, Developer shall supply Owner, the Bond Insurer and the Trustee with certificates of insurance
and certified copies of amendatory riders or endorsements that clearly evidence the continuation of all coverage in the same manner, limits of protection, and scope of coverage as was provided by the previous policy. Within one Business Day of
receipt by the Developer of any notice of cancellation of any policy or surety bond required hereunder or under the Design/Build Contract, the Developer shall deliver a copy thereof to the Bond Insurer. 
  
 10.2 Builder’s Risk Insurance; Contractor’s Performance
Bond. Developer shall cause the General Contractor to purchase and maintain, in a company or companies lawfully authorized to do business in the State of Texas, reasonable and customary property and casualty insurance written on a
builder’s risk “all-risk” or equivalent policy form insuring the value of the Complex at 100% replacement cost, on an all-risk policy form, which shall include business interruption coverage (including soft costs) for a period of not
less than two years, with a waiting period of no more than 30 days or a deductible of not more than $100,000, and which, without limitation, shall insure against the perils of fire and extended coverage and physical loss or damage, including,
without duplication of coverage, subsidence and land movement, theft, vandalism, malicious mischief and collapse. Such insurance must apply exclusively to the Detention Complex under all circumstances after the occurrence of an insured peril. Full
payment of insurance proceeds up to the required policy dollar limit in connection with damage to the Complex shall, under no circumstances, be contingent on the degree of damage sustained at other facilities constructed or being constructed by the
General Contractor. The policy must explicitly waive any co-insurance penalty. The Trustee shall be a beneficiary and the loss payee for the insureds in accordance with their interests under the builder’s risk policy of insurance required to be
maintained by the General Contractor. 
  

 Page 25 of 35 

 Any payments made under the General Contractor’s performance bond shall be paid to the Trustee and
shall be deposited to the Performance Bond and Letter of Credit Proceeds Fund. Any payments made under the business interruption coverage shall be paid to the Trustee and deposited in the Business Interruption Insurance Proceeds Fund. 
  
 10.3 Title Insurance. The Developer shall procure for the
Trustee and the Bond Insurer a policy of title insurance in the customary form insuring the Deed of Trust as first lien on the Complex, subject only to Permitted Exceptions, in an amount equal to the par value of the Bonds, together with a boundary
survey, the costs of which shall, subject to the terms of this Agreement, be reimbursed to the Developer as a Project Cost. No self-insurance will be permitted with respect to the above requirements for title insurance. 
  
 10.4 Indemnification. DEVELOPER SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS THE OWNER, THE COUNTY, THE TRUSTEE, THE BOND INSURER AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, SHAREHOLDERS, AND MEMBERS FROM AND AGAINST ANY AND ALL LOSS, COST, DAMAGE, LIABILITY AND EXPENSE (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES AND EXPENSES) INCURRED OR SUSTAINED BY ANY OF THOSE PARTIES AND ARISING OUT OF ANY BODILY INJURY, PROPERTY DAMAGE OR DEATH ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF DEVELOPER, ITS OFFICERS, AGENTS, OR
EMPLOYEES IN THE PERFORMANCE OF THIS AGREEMENT OR THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF DEVELOPER OR ANY OF ITS AGENTS, EMPLOYEES OR CONTRACTORS. DEVELOPER SHALL ALSO INDEMNIFY, DEFEND AND HOLD HARMLESS THE OWNER AND THE COUNTY,
FROM AND AGAINST ANY AND ALL LOSS, COST, DAMAGE, LIABILITY AND EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND EXPENSES) INCURRED OR SUSTAINED BY EITHER THE OWNER OR THE COUNTY AND ARISING OUT OF (I) ANY ACT OF DEVELOPER
BEYOND THE SCOPE OF DEVELOPER’S AUTHORITY UNDER THIS AGREEMENT (TO THE EXTENT NOT AUTHORIZED OR RATIFIED IN WRITING BY OWNER), WHERE DEVELOPER DID NOT HAVE REASONABLE CAUSE TO BELIEVE THAT DEVELOPER WAS ACTING WITHIN THE SCOPE OF ITS AUTHORITY
UNDER THIS AGREEMENT; AND/OR (II) ANY CLAIM ASSERTED AGAINST THE OWNER OR THE COUNTY BY ANY CONTRACTOR, INCLUDING THE GENERAL CONTRACTOR UNDER THE DESIGN/BUILD CONTRACT, EXCEPT FOR CLAIMS ASSERTED AGAINST THE COUNTY OR THE OWNER SEEKING RECOVERY
LOSS OR DAMAGE ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF THE COUNTY OR THE OWNER OR THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE COUNTY OR THE OWNER OR ANY OF THEIR AGENTS OR EMPLOYEES. 
  
 10.5 Waivers of Subrogation. Owner and Developer waive all
rights against each other for damages caused by fire or other perils to the extent covered by property insurance 
  

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 applicable to the Work, except those rights which they have to proceeds of such insurance held by the other. The
foregoing waiver shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise; did not pay the insurance premium directly or indirectly; and whether or not the
person or entity had an insurable interest in the property damaged. 
  
 ARTICLE 11 
  
 WORK PRODUCT

  
 11.1 Work Product. All proposals, research,
records, reports, recommendations, manuals, findings, drawings, specifications, samples, product data, evaluations, forms, reviews, information, data and any other materials and documents that were originated, prepared or received by, or on behalf
of, Developer or Owner in the performance of services (collectively, “Work Product”) are hereby deemed the exclusive property of Owner. Developer hereby transfers to Owner all right, title, interest and control in and to all Work Product,
without the payment of any royalty, license fee or other compensation. Upon the request of Owner, Developer shall give Owner and its attorneys all reasonable and requested assistance, and shall execute all papers and documents required, to assign or
transfer all of Developer’s right, title and interest in and to the Work Product to Owner. All copyrightable materials that were produced by, or on behalf of, Developer pursuant to the Agreement shall belong to and be the sole and exclusive
property of Owner, including any copyright and the right to register the copyright with respect thereto. Developer hereby assigns to Owner any copyright Developer may have to any and all of those materials. 
  
 ARTICLE 12 
  
 DAMAGE, DESTRUCTION, CONDEMNATION OR LOSS OF PROPERTY

  
 12.1 Damage, Destruction, Condemnation or Loss of
Property. 
  
 (a) If, during the Term of this Agreement,
and prior to full payment of all Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) or if any Reimbursement Obligations remain unpaid, the Land or the Detention Complex or any other property
located thereon or therein (the “Property”), or any part or component of the Property, shall be damaged or destroyed, by whatever cause, or shall be taken by any public authority or entity in the exercise of or acquired under the threat of
the exercise of its power of eminent domain, the Owner and the Developer will apply or cause to be applied any insurance proceeds or condemnation awards resulting from claims for such losses or takings as provided in this Section 12.1.

  
 (b) If the Property, or any part or component of the Property
shall be damaged or destroyed, the Developer shall promptly give, or cause to be given, written notice thereof to the Owner, the Bond Insurer and the Trustee, and the Developer shall cause the insurance proceeds to be deposited in a separate account
in the Project Fund in accordance with Sections 5.04 and 5.05 of the Indenture. Following consultation with the Bond Insurer, the Developer shall either 
  

 Page 27 of 35 

 (i) submit requisitions to the Trustee pursuant to Section 5.05(c) of the Indenture and cause the General Contractor to
proceed, with the proceeds of any insurance award available therefor, to repair, rebuild, restore or replace the property damaged or destroyed; or (ii) exercise its rights under Section 3.03(b) of the Indenture (subject to the consent of the Bond
Insurer); and, upon redemption of the Bonds in whole pursuant to Section 3.03(b) of the Indenture and payment of all Reimbursement Obligations, this Agreement shall terminate and become null and void and of no further force or effect. 
  
 (c) If any part or component of the Property shall be taken by any public
authority or entity in the exercise of or acquired under the threat of the exercise of its power of eminent domain, the Developer shall promptly give, or cause to be given, written notice thereof to the Owner, the Bond Insurer and the Trustee, and
the Developer shall cause the condemnation award or payment in lieu of condemnation to be deposited in a separate account of the Project Fund in accordance with Sections 5.04 and 5.05 of the Indenture. If the Developer shall have determined in the
exercise of its professional judgment in consultation with the Bond Insurer that the Detention Complex either may be constructed in accordance with the Final Project Plans notwithstanding any such taking or that the Final Project Plans can be
modified in order to take into account any such taking such that the Detention Complex could be completed and would remain suitable for its intended purposes, then the Developer shall submit requisitions to the Trustee pursuant to Section 5.05(c) of
the Indenture and cause the proceeds of any award made to the Developer and/or the Owner on account of such taking to be applied to the payment for any additional costs of the Project necessitated thereby. In the alternative, if the Developer shall
have determined in the exercise of its professional judgment in consultation with the Bond Insurer that any such taking would have a material adverse effect on the ability of the Developer to complete the Project in accordance with the ICE Contract,
the Developer shall exercise its rights under Section 3.03(b) of the Indenture (subject to the consent of the Bond Insurer), and, upon redemption of the Bonds in whole pursuant to Section 3.03(b) of the Indenture and payment of all Reimbursement
Obligations, this Agreement shall terminate and become null and void and of no further force or effect. 
  
 ARTICLE 13 
  
 GENERAL 
  
 13.1
Assignments. Neither Owner nor Developer shall have the right to assign or transfer all or any part of their respective rights, powers, duties or obligations hereunder without the prior written consent of the other and the Bond
Insurer, except that, without the consent of Developer or the Bond Insurer, Owner may assign its rights (other than its right to indemnification) and powers hereunder to the Trustee as collateral for its obligations under the Indenture, and
Developer hereby consents to such collateral assignment; and agrees that, so long as all fees and other amounts owing to Developer hereunder on account of activities of Developer from and after the date the Trustee exercises its rights under the
collateral assignment are satisfied when due, Developer shall perform its duties and obligations hereunder for the benefit of the Trustee if the Trustee exercises those rights. 
  

 Page 28 of 35 

 13.2 No Partnership or Joint Venture. Nothing contained in this Agreement shall constitute
or be construed to be or create a partnership or joint venture between Owner or Trustee, their successors or assigns, and Developer, or its successors or assigns. 
  
 13.3 No Interest in Project. It is specifically agreed that this Agreement shall not constitute a covenant
running with the Land, and Developer shall have no lien rights or other interest in the Project, or any part thereof, under any of the provisions hereof. Developer shall not place this Agreement, or any memorandum or evidence thereof, or any
reference thereto, of record. 
  
 13.4 Successors and
Assigns. Subject to the provisions of Section 12.1 above, this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. 
  
 13.5 Notice. Except as otherwise set forth herein, all notices,
demands, requests, consents, approvals and other communications required or permitted to be given hereunder, or which are to be given with respect to this Agreement, shall be in writing, and shall be deemed to have been delivered on the day
personally delivered or on the second business day following its mailing by registered or certified mail, postage prepaid, return receipt requested, or on the date of receipt from a nationally recognized overnight courier for guaranteed next
business day delivery, addressed to the party to be so notified as follows: 
  

	 	If to Owner:	Southwest Texas Detention Complex Local 

	 	 	Development Corporation 

	 	 	500 East San Antonio 

	 	 	Pearsall, Texas 78061 

	 	 	Attention: President 

  

	 	If to Developer:	Correctional Services Corporation 

	 	 	1819 Main Street 

	 	 	Suite 1000 

	 	 	Sarasota, Florida 34236 

	 	 	Attention: President and Chief Executive Officer 

  

	 	If to the Trustee:	U.S. Bank National Association 

	 	 	950 17th Street, Suite 300

	 	 	Mail Stop DN-CO-T3CT 

	 	 	Denver, CO 80202 

	 	 	Attention: Corporate Trust 

  

	 	If to the Bond Insurer:	MBIA Insurance Corporation 

	 	 	113 King Street 

	 	 	Armonk, New York 10504 

	 	 	Attention: Insured Portfolio Management 

  
 Any party may at any time change the address for notice of such party by mailing a notice as aforesaid. 
  

 Page 29 of 35 

 13.6 Amendments. 
  
 This Agreement may be amended only by a written instrument executed on behalf of both Developer and the Owner; provided
that, so long as any of the Bonds shall remain outstanding or any Reimbursement Obligations (as defined in the Indenture) are due, the prior written consent of the Bond Insurer shall be required for any amendment to this Agreement. For so long as
any of the Bonds remain outstanding, a copy of any amendment shall be provided to the Trustee. 
  
 13.7 Relationship of the Parties. 
  
 The relationship of Developer and the Owner hereunder shall be solely that of independent contractors and nothing herein shall be construed to create or imply any relationship of employment, agency or partnership or
any relationship other than that of independent contractors and landlord and tenant. Developer and the Owner acknowledge and agree that each of them is engaged in a separate and independent business and neither shall state, represent or imply any
control over the business of the other. 
  
 13.8. Governing
Law and Interpretation. 
  
 This Agreement shall be
governed by and construed in accordance with the internal laws of State of Texas without giving effect to the principles of conflict of laws. If for any reason any of the terms hereof shall be deemed by a court of competent jurisdiction to be
legally invalid or unenforceable, the validity of the remainder of the terms hereof shall not be affected and the invalid or unenforceable terms shall be deemed modified to the minimum extent necessary to make those terms consistent with applicable
law, and, in their modified form, those terms shall then be enforceable and enforced. The recitals to this Agreement are to be considered a substantive part of this Agreement. This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which shall constitute one and the same instrument. With respect to each and every term and provision in this Agreement, the parties understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and that if at any time the parties hereto desire or are required to interpret or construe any such term or provision, no consideration shall be given to the issue of which party hereto actually prepared, drafted or requested
any term or condition of this Agreement. The captions of Articles and Sections are for convenience of reference only and shall not affect the construction to be given any provision hereof. 
  
 13.9 Entire Agreement. 
  
 This Agreement constitutes the entire agreement of the parties hereto and
supersedes all prior agreements and understandings, written or oral, between the parties relating to the subject matter hereof. 
  
 13.10 Owner Approvals. 
  
 For purposes of any approvals required to be given by Owner, approval may be given from time to time by such person or persons as may be designated in a
written instrument signed and dated by the Board of Directors of Owner and delivered to Developer. Each such 
  

 Page 30 of 35 

 designation shall remain in effect until it is expressly revoked in a written instrument signed and dated by the Board of
Directors of Owner and delivered to Developer. Developer shall be entitled to rely on any such designation that Developer believes in good faith to meet the requirements of this Agreement. The person authorized to provide approvals on behalf of the
Owner as of the date of this Agreement and until such time of change is Jesus Salinas. 
  
 13.11 Waivers. 
  
 No waiver of any provision of this Agreement shall be deemed to constitute a waiver of any other provision. No such waiver shall be binding unless it is in writing and no waiver will be held to continue unless otherwise expressly stated by
the party waiving the provision. Waiver of a breach shall not constitute a waiver of any subsequent breach of that term or of any other term or provision. No extension of time for performance of any obligation or act hereunder shall be deemed an
extension of time for the performance of any other obligation or act, time being of the essence hereof. 
  
 13.12 Waiver of Jury Trial. 
  
 TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE DEVELOPER AND THE OWNER HEREBY IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE RELATED DOCUMENTS AND INSTRUMENTS AND THE ACTIONS OR INACTIONS OF THE OWNER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF. 
  
 13.13 Third Party
Beneficiaries. The terms and provisions of this Agreement shall be binding upon the Owner and the Developer and their respective successors and permitted assigns and shall benefit only the Owner and the Developer and their respective
successors and permitted assigns; provided, however, that the Bond Insurer and the Trustee are hereby named as third party beneficiaries of this Agreement. The parties do not intend to confer any benefits hereunder on any other person or that any
other party shall be a third party beneficiary of this Agreement. 
  
 13.14 No County Liability. The Developer acknowledges that it understands that the Owner has been formed by the County for the sole purpose of assisting Developer with the financing, development, construction and equipping of
the Project, and that, although the Owner shall be controlled by the County, the County shall have no liability whatsoever hereunder for the obligations and duties of the Owner under this Agreement. 
  
 13.15 Indenture Controlling. In the event of any ambiguity
created by a conflict between the terms hereof and the terms of the Indenture, the terms of the Indenture shall control. All payments to the Developer from any fund or account established under the Indenture shall be subject to the terms and
conditions of the Indenture. 
  
 13.16 Conditions
Precedent. It shall be a condition precedent to the obligations and liabilities of the parties hereto that the Owner shall have issued the Bonds and the Trustee shall 
  

 Page 31 of 35 

 have deposited in the Project Fund established under the Indenture the full amount required to be deposited therein from
the proceeds of the Bonds in accordance with the Indenture. If such condition is not satisfied on or before December 31, 2004, then this Agreement shall become null and void and of no further force or effect. 
  
 [SIGNATURE PAGE FOLLOWS] 
  

 Page 32 of 35 

 IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto under seal, as of the
day and year first above written. 
  

					
	OWNER:	 	 
		
	SOUTH TEXAS DETENTION	 	 
	COMPLEX LOCAL DEVELOPMENT	 	 
	CORPORATION	 	 
			
	 By:
	 	  

	 	[SEAL]
	 Name:
	 	 	 	 
	 Title:
	 	 	 	 
		
	DEVELOPER:	 	 
		
	CORRECTIONAL SERVICES	 	 
	CORPORATION,	 	 
			
	 By:
	 	  

	 	[SEAL]
	 Name:
	 	 	 	 
	 Title:
	 	 	 	 

  
 [SIGNATURE PAGE
TO DESIGN AND DEVELOPMENT AGREEMENT] 
 Approval of the Frio County Sheriff 
  
 The undersigned, being the duly elected and acting Sheriff of Frio County,
Texas, does hereby approve the foregoing Design and Development Agreement between South Texas Detention Complex Local Development Corporation and Correctional Services Corporation as required by Section 351.101 of the Texas Local Government Code.

  

			
	  

	Name:	 	  

	Sheriff of Frio County, Texas

  

 Page 33 of 35 

 Exhibit A 
 Site Plan

 Schedule 10.1 
 Developer
Insurance Requirements 
  

	1.	Commercial General Liability Insurance written on an occurrence basis and having limits of not less than $1,000,000 per occurrence and $3,000,000 annual aggregate, which shall
include coverage for claims for bodily injury, sickness, disease, or death of any person other than the Contractor’s employees; claims for damages, other than to the Project, because of damage to or destructions of tangible personal property,
including loss resulting from the use thereof; personal injury and advertising damages; claims for bodily injury, death or property damage arising out of completed operations; and claims involving contractual liability arising out of the
Contractor’s indemnity obligations under the Design/Build Contract; 

  

	2.	Worker’s Compensation insurance for its employees in amounts not less than the statutorily required amounts; and 

  

	3.	Automobile Liability Insurance written on an occurrence basis and having limits of not less than $1,000,000 per occurrence and $3,000,000 annual aggregate, which shall include
coverage for claims for damages arising out of the ownership, use or maintenance of a motor vehicle.Operating Agreement

 Exhibit 10.74.7 
  
 OPERATING AGREEMENT 
  
 between 
  
 SOUTH TEXAS DETENTION COMPLEX LOCAL DEVELOPMENT CORPORATION, 
 as Owner

  
 and 
  
 CORRECTIONAL SERVICES CORPORATION, 
 as Operator 
  
 Dated as of August 1, 2004 

 OPERATING AGREEMENT 
  
 THIS OPERATING AGREEMENT, was duly executed as of the 1st day of August, 2004, by and between SOUTH TEXAS
DETENTION COMPLEX LOCAL DEVELOPMENT CORPORATION (the “Owner”), a non-profit, local government corporation formed by Frio County, Texas (the “County”), and CORRECTIONAL SERVICES CORPORATION, a Delaware corporation
having its principal place of business in Sarasota, Florida (“Operator”). 
  
 Witnesseth: 
  
 WHEREAS, the former United States Immigration and Naturalization Service (the functions of which have been transferred to the United States Department of Homeland Security, Customs and Immigration Enforcement (hereafter referred to
as “ICE”)) has awarded to the Operator Contract No. ACD-4-C-001 (the “ICE Contract”) to provide for the temporary housing, safekeeping, transportation and stationary guard services for up to 1,020 adult and juvenile detainees in
ICE’s custody; and 
  
 WHEREAS, the County has formed
the Owner for the purposes of acquiring that certain parcel of real estate (the “Land”), outlined on the site plan attached as Exhibit A hereto and made a part hereof (the “Site Plan”), and has
retained the Operator, in its capacity as “Developer,” pursuant to the Design and Development Agreement dated of even date herewith, by and between Owner and Operator (the “Development Agreement”), to cause a detention complex to
be designed, developed, constructed and equipped on the Land as required in the ICE Contract (such detention complex and the site thereof being referred to hereinafter as the “Complex”); and 
  
 WHEREAS, pursuant to Subchapter F of Chapter 351 of the Texas Local
Government Code and an agreement between the Operator and Frio County, Texas, Owner will own the proposed Complex and the site thereof; and 
  
 WHEREAS, Owner has financed the costs of the design, construction, equipping and development of the Complex with the proceeds of the Owner’s
Taxable Revenue Bonds, Series 2004 (the “Bonds”) issued pursuant to that certain Indenture of Trust between the Issuer and U.S. Bank National Association, as Trustee, dated of even date herewith (the “Indenture”); and 

 
 WHEREAS, timely payment of scheduled principal and interest on the
Bonds are insured by MBIA Insurance Corporation (the “Bond Insurer”); and 
  
 WHEREAS, under the Indenture, Owner is obligated to pay the principal of and premium, if any, and interest on the Bonds and to cause Revenues (as defined in the Indenture) to be paid to the Trustee for deposit,
administration and disbursement under the terms of the Indenture; and 
  
 WHEREAS, pursuant to Subchapter F of Chapter 351 of the Texas Local Government Code, Owner further desires to provide the Operator with the exclusive right to operate the Complex in accordance with the terms and conditions set forth
herein; and 
  

 Page 1 of 33 

 WHEREAS, in consideration for the exclusive right to operate the Complex during the term hereof
and in consideration for the Owner’s agreement to undertake the acquisition of the site for the Complex and the financing for the design, development and construction of the Complex and the site thereof, Operator has agreed to pledge and assign
irrevocably all of the Facility Revenues (as defined in the Indenture) derived by the Operator from the Complex to the Trustee for the benefit of the Owner and the Bond Insurer as security for the Bonds and the Reimbursement Obligations; 

 
 NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual covenants contained herein, the Owner and the Operator hereby agree as follows: 
  
 1. Common Understandings. 
  
 Operator and the Owner both acknowledge and agree to the following as of the date of this Agreement: 
  
 (a) During the entire term of this Agreement, the Operator shall have the
sole and exclusive right to use, occupy, operate and manage the Complex. The Operator shall manage, supervise and operate the Complex for the Owner, and receive, supervise and care for each inmate or detainee that is assigned to the Complex by ICE
pursuant to the ICE Contract or by any other jurisdiction or agency pursuant to any agreement entered into by the Operator or by the Owner in accordance with Section 1(i) of this Agreement for the ongoing placement of inmates or detainees in the
Complex or for the placement of identified inmates or detainees in the Complex. (For purposes of this Agreement, each contract entered into by the Operator or the Owner with any jurisdiction or agency other than ICE for the ongoing placement of
inmates or detainees in the Complex or for placement of identified inmates or detainees in the Complex, if any, is referred to hereinafter as an “Agency Contract.”) 
  
 (b) For so long as any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the
Indenture or the Insurance Agreement, neither the Owner nor the Operator shall enter into any Agency Contract without the prior written approval of the Bond Insurer. 
  
 (c) For so long as the ICE Contract shall remain in effect, this Agreement and the rights and obligations of the parties
hereunder shall be subject to the terms, provisions and conditions of the ICE Contract, a true and correct copy of which is attached hereto and made a part hereof for all intents and purposes, and all amendments or renewals thereof. In the event of
a conflict between the terms of the ICE Contract and the terms hereof, the terms of the ICE Contract shall prevail. 
  
 (d) For so long as the ICE Contract shall remain in effect, the Complex shall be operated by the Operator in accordance with the requirements of the ICE
Contract. 
  
 (e) For so long as the ICE Contract shall remain in
effect, Operator shall maintain in full force and effect any licenses, certifications or permits required for the operation of the Complex as required by the ICE Contract, and, in all cases, as required by applicable law and by any Agency Contract.

  

 Page 2 of 33 

 (f) The Operator shall have the authority and responsibility to make contracts and leases in its own name
for the procurement of services, equipment and supplies necessary for operation of the Complex, subject to any limitations set forth in the ICE Contract or any other Agency Contract, provided that the terms thereof provide for termination
automatically or upon notice from the Operator in the event that this Agreement terminates. 
  
 (g) The Operator shall have considerable discretion in the exercise of its responsibilities under this Agreement in order to operate and manage the Complex. Subject to the limitations expressly set forth in this
Agreement or applicable by law, Operator shall be entitled to fulfill its obligations hereunder in the manner that it determines is appropriate or necessary within the policies established by ICE and in a manner consistent with the ICE Contract or
any other Agency Contract. 
  
 (h) The Operator shall be solely
responsible for the establishment of, and shall establish, policies and procedures for the Complex in a manner consistent with the policies of ICE and consistent with the terms of the ICE Contract or any other Agency Contract. 
  
 (i) The initial and principal purpose of this Agreement is to enable the
Operator to provide the services required under the ICE Contract; however, the Owner and the Operator agree that it shall be to their mutual benefit to maintain the population of the Complex at or near its full capacity throughout the term of this
Agreement and to limit potential vacancies in the Complex. Therefore, if (a) at any time during the term of this Agreement, ICE shall elect not to extend the ICE Contract and/or discontinue its utilization of the Complex, or (b) ICE shall not
utilize the full capacity of the Complex, then the Owner and the Operator shall cooperate and work together to locate and obtain additional or alternative sources of referrals to the Complex. Consistent therewith, the Owner agrees to process and
review promptly and diligently any and all joint powers, interlocal or intergovernmental agreements presented by the Operator to the Owner for this purpose, and, subject to the prior approval of the Bond Insurer if any Bonds remain Outstanding under
the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, shall enter into any and all intergovernmental agreements presented by the Operator to the Owner, for the use of the Complex by any agency
of the United States Government provided that the same are consistent with the terms of and the purposes of this Agreement. The Owner specifically reserves the right, however, in all circumstances to approve or reject, in the exercise of its
reasonable discretion, any joint powers, interlocal or intergovernmental agreements for the placement of inmates or detainees in the Complex by any agency, jurisdiction or subdivision of the State of Texas, any other state or any foreign government.
Following the execution of any joint powers, interlocal or intergovernmental agreements by the Owner, all offenders who shall be the subject of the agreement shall be placed in the Complex to the extent that space is available in the Complex.

  
 (h) Capitalized terms used herein without
further definition shall have the meanings assigned to such terms in the Indenture. 
  

 Page 3 of 33 

 2. Utilization; Management Services. 
  
 The Operator will utilize, manage and operate the Complex solely as a
correctional facility and in a manner consistent with the purposes and powers of the Owner, as set forth in Owner’s initial Articles of Incorporation, and otherwise in accordance with terms of this Agreement and applicable law, any Agency
Contract, and, for so long as the ICE Contract remains in effect, the ICE Contract (the “Applicable Standards”); it being understood, however, that, in accordance with the ICE Contract, the United States Public Health Service shall be
responsible for providing medical and healthcare services for ICE detainees in the Complex and that the Operator shall not have the right to control the delivery of medical or healthcare services for ICE detainees at the Complex or to ensure
compliance by the Public Health Service with NCCHC Standards for Health Services in Jails, and that the Operator shall not be deemed to be in breach or default of this Agreement as a result of any failure on the part of the Public Health Service to
comply with those standards at the Complex. The Operator shall not create or permit the Complex to be a public or private nuisance or use or allow the use of the Complex in any unlawful manner. In the event of any conflict between or amongst the
Applicable Standards, the higher or more stringent standard shall prevail. 
  
 Without limiting the generality of the foregoing, Operator shall provide or ensure the provision of the following services in connection with the Complex and its operations: 
  
 (a) Business administration, including budgeting, financial and other record
keeping, audits, and regulatory compliance; 
  
 (b) Acquisition of
instructional materials, equipment, and supplies; 
  
 (c) All
maintenance (including cleaning services), repair, replacement and renewal of Complex capital improvements, structures, furniture, fixtures, facilities and equipment, including, but not limited to, developing and implementing a preventive and
routine maintenance plan and the keeping of adequate maintenance records; 
  
 (d) Management of Complex affairs, including implementation of policies affecting prisoner welfare and safety, and visitor relations, 
  
 (e) Food service required by the ICE Contract or any other Agency Contract; 
  
 (f) Transportation services required by the ICE Contract or any other Agency
Contract; 
  
 (g) Guard services required by the ICE Contract or
any other Agency Contract; 
  
 (h) Staff training required by the
ICE Contract or any other Agency Contract; 
  
 (i) Recreation and
other program services required by the ICE Contract or any other Agency Contract; 
  
 (j) Other special detainee services required by the ICE Contract or any other Agency Contract; 
  

 Page 4 of 33 

 (k) Conduct of grievance procedures and due process hearings required by law; and 
  
 (l) All other services required to be provided by Operator in the ICE
Contract or any other Agency Contract or the Corporation Documents. 
  
 The parties further acknowledge and agree that, as provided in Section 511.0094 of Chapter 511 of the Texas Government Code, so long as the Complex is used to house only federal inmates pursuant to the ICE Contract, the Operator shall not
be required to comply with the standards adopted by the Texas Commission on Jail Standards in operating and managing the Complex, notwithstanding Section 351.103(1) of Subchapter F of Chapter 351 of the Texas Local Government Code, but shall
otherwise comply with Section 511.0094 of Chapter 511 of the Texas Government Code. If, and to the extent that, inmates or detainees in the custody of the State of Texas or any other state or jurisdiction shall ever be housed in the Complex during
the term of this Agreement, then the Operator shall comply with the minimum standards adopted by the Texas Commission on Jail Standards in operating and managing the Complex and shall obtain and retain during the term of this Agreement a
certification of compliance from the Texas Commission on Jail Standards. 
  
 3. Term. 
  
 (a)
The terms and conditions of this Agreement and the obligations and duties of the parties hereunder shall become effective upon the date of Substantial Completion of the Complex in accordance with the terms of the Development Agreement (the
“Service Commencement Date”). This Agreement shall then remain in effect continuously thereafter for twenty (20) years after such date or until the earlier termination of this Agreement (that entire period being referred to herein
as the “initial term”). The term of this Agreement shall be renewed for additional terms beyond the initial term without further action by any of the parties if, and to the extent that, ICE elects to renew and extend the ICE Contract
beyond the initial term, for additional periods of time co-terminus with any such extension. 
  
 (b) The Operator agrees to use commercially reasonable efforts to request from the ICE, and pursue in good faith, renewal(s) or extension(s) of the ICE Contract for additional periods beyond the base term of the ICE
Contract, and to use commercially reasonable efforts to request from ICE, and pursue in good faith, either an extension of the ICE Contract for a period of at least ten (10) years following the expiration of all option periods contained in the ICE
Contract or a new contract from ICE, having at least a 10-year term, to commence upon the expiration of all option periods contained in the ICE Contract, in each case on terms no less favorable to Operator than the current ICE Contract. For so long
as the Bond Insurer continues to provide insurance with respect to the payment of principal and interest on the Bonds or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Contract, no later than each anniversary of the
commencement of the term of this Agreement, the Operator will submit a written strategy to the Bond Insurer to obtain an extension of the ICE Contract on terms no less favorable to Operator than the current ICE Contract. 
  

 Page 5 of 33 

 4. Facility Revenues. 
  
 (a) For so long as any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the
Indenture or the Insurance Agreement, any and all Facility Revenues derived by the Operator from the operation and management of the Complex, including, without limitation, (1) any and all amounts due or to become due to the Operator from ICE as a
result of performance of the ICE Contract and any and all amounts now or hereafter due pursuant to any extensions, modifications, renewals or substitutions for that contract, and (2) any and all amounts due or to become due to the Operator under any
contract or agreement hereafter entered into by Operator for the housing of prisoners or detainees at the Complex and any extensions, modifications, renewals or substitutions of such contracts or agreements, shall be paid to and deposited with the
Trustee to be deposited in the “Revenue Fund” established under the Indenture, as and when received, including those covered by the Assignment of Claims by and between Operator and Trustee, and shall be administered and disbursed by the
Trustee as provided in the Indenture. 
  
 (b) In light of the
foregoing, the Operator hereby acknowledges that, so long as the any of the Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Contract, it shall be entitled to
reimbursement for Operating Costs incurred by the Operator and otherwise to receive distributions and disbursements from Facility Revenues only in accordance with the terms of the Indenture, and that disbursements to the Operator may by suspended in
accordance with the Indenture upon the occurrence of the Trapping Events. Furthermore, for so long as the any of the Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance
Contract, if the Rate Covenant shall not be satisfied, the Operator shall provide the Trustee and the Bond Insurer, within 30 days after the end of any Facility Revenue Collection Period in which the Rate Covenant has not been met, a written review
of Facility Revenues and Operating Costs and a written plan to meet the Rate Covenant. 
  
 (c) Notwithstanding the foregoing or any other provision of this Operating Agreement, in the event the amount of Facility Revenues is reduced because of any offset or reduction by ICE, and the amount of such offset or
reduction causes the amount of Facility Revenues received by the Trustee during such Facility Revenue Collection Period to be less than 1.25 times the amounts required to be disbursed by the Trustee pursuant to clauses FIRST through EIGHTH of
Section 5.04 of the Indenture, the Operator shall, from its own funds, pay to the Trustee for administration in accordance with the Indenture, an amount necessary to make the amount of Facility Revenues received by the Trustee during such Facility
Revenue Collection Period equal to 1.25 times the amounts required to be disbursed by the Trustee pursuant to clauses FIRST through EIGHTH of Section 5.04 of the Indenture. In any event, the Operator shall notify the Bond Insurer of any offset or
reduction of payments under the ICE Contract. 
  
 5.
Operating Costs and Expenses. 
  
 (a) As between the
Owner and the Operator, the Operator shall be solely responsible for all Operating Costs of the Complex, and, subject to the terms and conditions of the Indenture, so long as the any of the Bonds remain Outstanding under the Indenture or any
Reimbursement 
  

 Page 6 of 33 

 Obligations remain unpaid under the Indenture or the Insurance Contract, the Operator shall be entitled to reimbursement
for Operating Costs from the Revenue Fund established under the Indenture and to requisition Operating Costs from the Operating Reserve Fund and the Supplemental Reserve Fund established under the Indenture in accordance with the terms of the
Indenture. The Owner shall have no obligation, responsibility or liability for any Operating Costs associated with the Complex. All contracts or leases entered into by the Operator for the procurement of services, equipment and supplies necessary
for operation of the Complex shall be in the name of the Operator. The Operator shall pay or cause to be paid the Operating Costs of the Complex from available Facility Revenues. To the extent not paid from the Revenue Fund established under the
Indenture, or otherwise in accordance with the Indenture, the Operator also will pay all reasonable expenses incurred by the Owner, provided that the same have been approved in advance by the Operator, or the Trustee in connection with the Project.
For so long as any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Operator shall provide the Bond Insurer with copies of all requisitions submitted to
the Trustee for Operating Costs. 
  
 (b) Notwithstanding the
foregoing, pursuant to the Indenture, for so long as any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Trustee shall pay from the Insurance and
Property Taxes Fund established under the Indenture the costs of the property and casualty insurance required to be maintained by the Operator pursuant to Section 13(b) of this Agreement and all taxes coming due on the Complex and the site thereof
and/or payments in lieu of taxes agreed to in writing by the Operator, and such payments shall be a credit against the obligation of the Operator to pay such amounts as part of the Operating Costs. 
  
 (c) Pursuant to the provisions of the Indenture, if, and to the extent that,
Facility Revenues otherwise available to the Operator under the Indenture for the payment of Operating Costs shall be insufficient to enable the Operator to pay such Operating Costs, the Operator shall have the ability to requisition amounts on
deposit in the Operating Reserve Fund for the sole purpose of paying the Operating Costs of the Complex. If, and to the extent that, the balance in the Operating Reserve Fund shall ever be less than Operating Reserve Requirement, the Trustee shall
use Facility Revenues thereafter derived from the Complex to make deposits into the Operating Reserve Fund in accordance with the provisions of Section 5.04 of the Indenture until the balance on hand therein is at least equal to Operating Reserve
Requirement. In accordance with the terms of the Indenture, the Trustee shall replenish any such shortfall in the Operating Reserve Fund by making substantially equivalent, monthly deposits to the Operating Reserve Fund from Facility Revenues over
(a) a twelve (12) month period if such deficiency results from a withdrawal of funds by the Operator, or (b) over a four-month period if such deficiency results from calculation of the value of investments on deposit in the Operating Reserve Fund.

  
 (c) The Operator shall provide the Trustee and the Bond
Insurer an annual budget for Operating Costs each year prior to the anniversary date of this Agreement. 
  
 6. Security Interest. 
  
 In order to secure the payment and performance of all of its obligations under this Agreement, but only for so long as any Bonds remain Outstanding under
the Indenture or any 
  

 Page 7 of 33 

 Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, Operator hereby assigns, pledges
as collateral and grants to the Owner, the Bond Insurer and the Trustee a security interest in (1) all of the right, title and interest of the Operator in and to the Facility Revenues and substitutions therefore and the proceeds thereof; (2) all of
the right, title and interest of the Operator in and to the proceeds of any insurance maintained by the Operator with respect to the Complex; (3) all of the right, title and interest of the Operator in and to the proceeds of any condemnation awards
payable to the Operator with respect to the Complex, together with the proceeds thereof; and (4) if a court of competent jurisdiction shall determine that the Operator has any legal or equitable interest in any of the amounts on deposit from time to
time in the funds and accounts established under the Indenture, which would be considered the property of the Operator, all of the right, title and interest of the Operator in and to all amounts on deposit from time to time in the funds and accounts
established under the Indenture (collectively, the “Collateral”); it being understood and agreed that the Operator specifically disclaims any and all legal and equitable interests whatsoever in the “Bond Fund,” the “Costs of
Issuance Fund,” the “Debt Service Reserve Fund” and the “Insurance and Property Tax Fund” created under the Indenture, and specifically disclaims any and all legal and equitable interests in the “Project Fund,”
“Operating Reserve Fund,” “Major Maintenance Reserve Fund,” and the “Revenue Fund,” except for the Operator’s rights to receive and demand payments from such funds in accordance with the terms hereof and the
terms of the Indenture. In the event of any default hereunder, for so long as any Bonds remain outstanding under the Indenture, Owner and Trustee shall have, in addition to any other rights permitted by law, all of the rights of a secured party
under the Texas version of the Uniform Commercial Code to the extent applicable hereto. Operator authorizes Owner and Trustee to file any financing statements or further assurances as may be required in order to perfect the security interest granted
under this Section. The foregoing pledge, assignment and security interest shall become null and void upon the defeasance of, or the payment in full of all principal and interest due on, the Bonds issued pursuant to the Indenture and the payment in
full of all Reimbursement Obligations. Upon defeasance of, or the payment in full of all principal and interest due on, the Bonds issued pursuant to the Indenture and all Reimbursement Obligations, Owner shall execute and deliver to the Operator,
and cause the Trustee to execute and deliver to Operator, any termination statements, lien release(s) or similar documents or instruments reasonably requested by the Operator in order to evidence the release of the foregoing lien on and security
interest in the Collateral. 
  
 7. Personnel.

  
 (a) Except as otherwise required by law or as provided in
the ICE Contract, all personnel engaged to operate the Complex shall be employed or otherwise contracted for by Operator. Such personnel shall include, without limitation, front-line and supervisory correctional or detention officers,
administrators, and facilities maintenance staff. Except as provided in the ICE Contract, Operator shall pay all personnel costs, including but not limited to compensation, employment taxes, worker’s compensation and employee benefits, for
employees employed by Operator at the Complex. For so long as the ICE Contract shall remain in effect, Operator shall pay and provide to all personnel employed by the Operator at the Complex compensation and fringe benefits not less than as required
by the McNamara-O’Hara Service Contract Act and the applicable determinations and regulations of the United States Department of Labor, but, in all events, shall provide health care benefits for employees employed by the Operator at the Complex
comparable to or in excess of the health care benefits provided to employees of Frio County, Texas. 
  

 Page 8 of 33 

 (b) Personnel employed by Operator at the Complex who are issued firearms shall be trained in accordance
with the standards of ICE and must comply with applicable laws, rules, and regulations of ICE and the State of Texas. Each employee shall be recruited and hired by the Operator in accordance with the requirements set forth in the ICE Contract.
Subject to any limitations imposed by the ICE Contract or by applicable law, Operator shall make all decisions regarding hiring, compensation, termination of employment, assignments, and discipline of such personnel in its sole discretion.

  
 (c) The Operator will make accommodations for, cooperate with
and provide all assistance to ICE personnel at the Complex as shall be required by the ICE Contract. The Owner and the Operator will accommodate and work with ICE personnel at the Complex in accordance with the ICE Contract. 
  
 8. Monitoring by the Sheriff. 
  
 As required by Section 351.103(2) of Subchapter F of Chapter 351 of the
Local Government Code of the State of Texas, the Sheriff of Frio County shall have the right and obligation to monitor the performance by the Operator of its obligations under this Agreement on behalf of the County and the Owner. To that end, the
Sheriff shall be entitled to conduct on-site inspections of the Complex throughout the term of this Agreement, upon reasonable advance notice to the Operator, and shall be free to interview staff and inmates. Operator and its employees shall
cooperate fully with such inspections. It is expressly understood, however, that the Sheriff’s duties and authority hereunder shall be limited solely to monitoring the Operator’s performance of its obligations hereunder on behalf of the
County and the Owner, and that the Sheriff shall have no right or authority whatsoever to establish any policies or procedures with respect to the Complex, give the Operator any direction or instruction with respect to the day-to-day operation and
management of the Complex or otherwise interfere with the day-to-day operation and management of the Complex. In this regard, the Sheriff shall have no authority whatsoever to make any determination as to whether the Operator is operating the
Complex in compliance with the ICE Contract; such authority being reserved solely to ICE. The Operator shall have the sole discretion and authority to determine the manner in which the Complex shall be operated, provided that the same is done in
accordance with the ICE Contract and the terms of this Agreement and appropriate representatives of ICE shall have the sole authority to determine whether the Operator is operating the Complex in compliance with the ICE Contract. 
  
 9. Accreditation. 
  
 The Operator agrees to obtain and maintain ACA accreditation and NCCHC
accreditation of the Complex within the time frames set forth in the ICE Contract; provided, however, that, in light of the fact that, in accordance with the ICE Contract, the United States Public Health Service shall be responsible for
providing medical and healthcare services for ICE detainees in the Complex and that the Operator shall not have the right to control the delivery of medical or healthcare services for ICE detainees at the Complex or to ensure compliance by the
Public Health Service with ACA health care standards or NCCHC Standards for Health Services in 
  

 Page 9 of 33 

 Jails, the Operator shall not be deemed to be in breach or default of this Agreement if it shall be unable to obtain ACA
or NCCHC accreditation due to any failure on the part of the Public Health Service to comply with those standards at the Complex. 
  
 10. Equipment and Supplies. 
  
 The Owner shall provide to Operator and make available for Operator’s use in connection with the operation and management of the Complex during the
entire term of this Agreement all of the items of furniture, fixtures and equipment purchased by or on behalf of the Owner pursuant to the Development Agreement or otherwise. All furniture, fixtures and equipment provided by the Owner to Operator
hereunder shall be and remain the property of the Owner. The Operator shall be responsible, at its expense, to provide all replacements to the furniture, fixtures and equipment provided by the Owner hereunder and any supplies and additional or other
equipment, furniture and fixtures necessary for the continued operation of the Complex, except for equipment, furniture and fixtures provided by the ICE, the US Public Health Service or any other agency utilizing the Complex. Any additional or
replacement equipment, furniture, or fixtures provided by Operator and not permanently affixed to or incorporated into the Complex shall be and remain the property of the Operator. The Operator further acknowledges that, all other things being
equal, the Owner desires to support and utilize local service providers and suppliers in projects it is associated with in accordance with state and federal law and that goods and services necessary for the operation of the Complex be obtained or
procured from sources within the local community. Accordingly, to the extent consistent with operating efficiencies, the Operator shall use its good faith efforts to purchase services, furniture, fixtures, equipment, supplies and materials necessary
for the operation of the Complex from the local community, provided that the same are available at competitive prices, and to undertake an outreach program designed to ensure that local suppliers of goods and services are informed of the
opportunities available to them and are encouraged to submit competitive proposals for the procurement by the Operator of services, furniture, fixtures, equipment, supplies and materials. 
  
 11. Intellectual Property. 
  
 As between Operator and the Owner, all rights of any nature, including, without limitation, any copyrights and any trademark
or service mark rights (together with any goodwill appurtenant thereto) in and to administrative materials created by Operator, and all rights in and to materials created, adapted or modified by Operator for use in connection with the Complex, shall
be owned exclusively by Operator. 
  
 12. Assumption of
Liability and Indemnification. 
  
 THE OPERATOR HEREBY
ASSUMES RESPONSIBILITY AND LIABILITY FOR ALL CLAIMS ARISING OUT OF THE PERFORMANCE BY THE OPERATOR OF ITS OBLIGATIONS AND DUTIES UNDER THIS AGREEMENT, INCLUDING CLAIMS ALLEGING VIOLATIONS OF CIVIL RIGHTS, AND DOES HEREBY AGREE TO DEFEND, HOLD
HARMLESS AND INDEMNIFY THE COUNTY, THE OWNER, THE TRUSTEE, THE BOND INSURER AND THE DIRECTORS, OFFICERS AND EMPLOYEES OF EACH OF THEM (HEREAFTER REFERRED TO AS THE “INDEMNIFIED PARTIES”), FROM AND AGAINST: 
  

 Page 10 of 33 

 (A) ANY AND ALL CLAIMS ARISING OUT OF (I) THE PERFORMANCE BY THE OPERATOR OF ITS OBLIGATIONS AND
DUTIES UNDER THIS AGREEMENT; (II) A BREACH OR DEFAULT ON THE PART OF THE OPERATOR IN THE PERFORMANCE OF THIS AGREEMENT, THE ICE CONTRACT OR ANY AGENCY CONTRACT; (III) ANY SERVICES RENDERED BY OPERATOR, OR BY ANY PERSON OR FIRM PERFORMING OR
SUPPLYING SERVICES, MATERIALS OR SUPPLIES IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT; (IV) ANY BODILY INJURY, PROPERTY DAMAGE OR DEATH ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF OPERATOR, OR ITS SUBCONTRACTORS, OFFICERS, AGENTS, OR EMPLOYEES
IN THE PERFORMANCE OF THIS AGREEMENT; AND (V) ANY FAILURE BY OPERATOR, OR ITS SUBCONTRACTORS, OFFICERS, DIRECTORS, AGENTS, OR EMPLOYEES, TO OBSERVE THE CONSTITUTION, LAWS, REGULATIONS, ORDINANCES OR ORDERS OF THE UNITED STATES OR ICE; AND

  
 (B) ANY AND ALL COSTS, EXPENSES, INCLUDING REASONABLE
ATTORNEYS’ FEES, AND LIABILITIES INCURRED IN OR ABOUT SUCH CLAIM, ACTION, OR PROCEEDING BROUGHT THEREON. 
  
 provided however, that, except as provided in the foregoing clause (b), in no event shall the Operator be liable to the County or the Owner for any special, consequential or incidental damages; provided
further, that, without in any way limiting any express obligations of the Operator hereunder or under any other documents, including any Corporation Documents to which Operator is a party, in no event shall the foregoing indemnity obligation of
the Operator be construed as creating any liability whatsoever on the part of the Operator to pay or become liable for, whether directly or indirectly, as part of any Indemnified Party’s damage calculations or otherwise, any of the principal or
interest obligations on the Bonds, any Reimbursement Obligations or any other debt service requirements under the Indenture. 
  
 The foregoing indemnification obligation shall not be applicable to any claim, injury, death or damage to property arising out of any act or omission on
the part of any of the Indemnified Parties or independent contractors (other than Operator) who are directly responsible to the Owner. Further said indemnification will not be applicable to any events, circumstances, or occurrences that occur at the
Complex after the expiration of this Agreement. 
  
 In case any
action or proceeding is brought against the Indemnified Parties by reason of any above listed claim, the Indemnified Party against whom any such action or proceeding shall provide Operator with notice of the same within thirty (30) days of receipt
of same. Operator shall have the right to assume the defense of any such action or proceeding, and, upon request, shall defend against such action. Neither the Operator nor the Owner will enter into any settlement with respect to any claim without
first obtaining approval of the other party. 
  
 13.
Insurance. 
  
 (a) During the term of this Agreement,
Operator shall maintain an adequate plan of insurance designed to protect the Operator, the County and the Owner against all claims arising from the performance of services by Operator hereunder, including claims alleging violations of civil rights,
and to protect the Operator from actions by a third party against Operator, its 
  

 Page 11 of 33 

 officers, guards, employees and agents arising from the performance of services under this Agreement. To that end, the
Operator shall obtain and maintain in force during the term of this Agreement, beginning not later than the Service Commencement Date and thereafter,, at least the following insurance coverage: 
  
 (i) For so long as the ICE Contract shall remain in effect, Operator will
purchase and maintain, and cause its subcontractors to purchase and maintain, throughout the term of this Agreement, all insurance coverage required by the ICE Contract; 
  
 (ii) Operator will purchase and maintain, and cause its subcontractors to purchase and maintain, throughout the term of this
Agreement, all insurance coverage required by any Agency Contract; 
  
 (iii) Notwithstanding the ICE Contract or any Agency Contract requirements, during the entire term of this Agreement, Operator will purchase and maintain with well-rated insurers (rated at least “A” by Best or in the two highest
rating categories of Moody’s and Standard & Poors) licensed or admitted to underwrite such insurance in the State of Texas at least the following insurance coverage: 
  
 (1) commercial general liability insurance in the customary form, having limits of liability of not less
than $3,000,000 per occurrence for bodily injuries or death and not less than $500,000 per occurrence for property damage and $5,000,000 in the aggregate during any annual policy period; 
  
 (2) insurance against claims alleging the violation of the civil rights of detainees or inmates housed in
the Complex (which coverage may be maintained by the Operator as part of the general liability insurance to be maintained by the Operator); 
  
 (3) worker’s compensation and/or employer’s liability insurance (or its approved and authorized equivalent) in at least the
statutorily required amounts; and 
  
 (4)
automobile liability insurance in customary form, having limits of liability of not less than $3,000,000 per occurrence for bodily injuries or death and not less than $1,000,000 per occurrence for property damage and $5,000,000 in the aggregate
during any annual policy period. 
  
 (b) Beginning not later than
the Service Commencement Date, and thereafter at all times during the term of this Agreement, Operator also shall maintain property and casualty insurance insuring the value of the Complex at 100% replacement cost, on an all-risk policy form, which
shall include business interruption coverage sufficient to provide for the debt service obligations under the Bonds (including soft costs) for a period of not less than two years, with a waiting period of no more than 30 days or a deductible of not
more than $250,000, and which, without limitation, shall insure against the perils of fire and extended coverage and physical loss or damage, including, without duplication of coverage, subsidence and land movement, theft, vandalism, malicious
mischief and collapse. Operator may maintain such coverage under a blanket policy of property and casualty insurance covering the Complex as well as other facilities owned or operated by the Operator, provided that full payment of insurance proceeds
up to the 
  

 Page 12 of 33 

 required policy dollar limit in connection with damage to the Complex shall, under no circumstances, be contingent on the
degree of damage sustained at other facilities operated by the Operator. The policy must explicitly waive any co-insurance penalty. The policy shall be endorsed to provide that the Trustee shall be named as a beneficiary of and the “loss
payee” with respect to any property and casualty proceeds and business interruption proceeds payable thereunder with respect to the Complex, with the exception of (i) any proceeds payable thereunder to the officers or employees of the Operator
for the loss of personal effects and (ii) any business interruption proceeds payable thereunder to the Operator for loss of profits or for reimbursement of operating expenses. Any payments made to the Trustee under the business interruption coverage
of the policy shall be in the Business Interruption Proceeds Fund. 
  
 (c) Self-insurance shall permitted only with the prior written consent of the Bond Insurer in accordance with conditions specified by the Bond Insurer; it being understood and accepted by the Bond Insurer that the Operator (a) maintains,
and shall be permitted to maintain, a $100,000 per occurrence self-insured retention under its existing general liability and civil rights liability insurance program; (b) shall be permitted to increase its self-insured retention per occurrence
under its general liability and civil rights liability insurance program to not more than $250,000 per occurrence, without the consent of the Bond Insurer, if the Operator reasonably deems such increase necessary in order to obtain or maintain such
insurance coverage or in order to maintain the affordability of such coverage; and (c) is “self-insured” for a portion of claims covered under its existing worker’s compensation program, subject to a “stop-loss” on such
claims and shall be permitted to maintain coverage on this basis during the term of this Agreement and to increase the amounts of its self-insurance or stop-loss thereunder if the Operator reasonably deems such increase necessary in order to obtain
or maintain such insurance coverage or in order to maintain the affordability of such coverage. 
  
 (d) The cost of all such insurance will be paid by the Operator as an Operating Cost; provided however, that, as provided in Section 5(b) above and
in the Indenture, for the purpose of assuring that funds are available for the purchase of the insurance required to be maintained by the Operator under Section 13(b) above, for so long as any Bonds remain outstanding under the Indenture or any
Reimbursement Obligations remain unpaid, the Trustee shall pay for the costs of such insurance from the Insurance and Property Taxes Fund established under the Indenture to the extent required by and in accordance with the terms of the Indenture;
and the Trustee shall pay the costs of such insurance, as well as taxes or payments in lieu of taxes coming due on the Complex and the site thereof, from the Insurance and Property Taxes Fund, and such payments shall be a credit against the
obligation of the Operator to pay such amounts under this Agreement. For so long as any Bonds remain outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, to the extent that
the amount on deposit in the Insurance and Property Tax Fund is insufficient to purchase such insurance, the Operator shall immediately pay the amount of such deficiency to the Trustee or, at the Operator’s expense, the Trustee shall
immediately procure such insurance directly; and the Operator shall be responsible for replenishing the Insurance and Property Taxes Fund to the extent required under the terms of the Indenture. 
  
 (e) Operator will provide evidence satisfactory to the Owner, the Bond
Insurer and the Trustee of such insurance, including without limitation, a certificate of insurance or a copy of such insurance policy. Each policy of insurance shall provide that it shall not be cancelled 
  

 Page 13 of 33 

 without at least 30 days’ prior written notice to Owner, the Trustee and the Bond Insurer. In particular, insurance
certificates evidencing the property and casualty coverage provided for the Complex in accordance with Section 13(b) of this Agreement (whether or not provided under a master policy) must be provided to the Bond Insurer prior to the Service
Commencement Date and annually thereafter to the Bond Insurer’s Insured Portfolio Management Department. Original copies of all insurance policies must be delivered annually to the Bond Insurer’s Insured Portfolio Management Department
within 30 days of purchase or renewal. 
  
 (f) The Owner and, for
so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Trustee and the Bond Insurer, shall be named as an additional insured under all liability insurance policies
purchased and maintained by the Operator with the exception of worker’s compensation insurance, and, for so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the
Trustee shall be named as an insured mortgagee and loss payee, as its interests may appear, on all property and casualty insurance policies maintained by the Operator for the Complex. 
  
 14. Cooperation. 
  
 The Owner agrees to cooperate with Operator and the Trustee at no cost to Owner in filing all forms, notifications, reports and information necessary to
obtain all consents, authorizations and approvals required or desirable in connection with this Agreement. The Owner agrees to act promptly in the event of an emergency or in the event that a major decision with respect to any aspect of the Complex
must be made immediately. 
  
 15. Records and Reports.

  
 (a) Operator shall keep current, complete and accurate
books, accounts and records in connection with the operation and management of the Complex. The original records necessary for the operation and management of the Complex shall be the property of the Owner, but shall be in the possession of Operator
during the term of this Agreement. Operator, the Owner, the Bond Insurer, the Independent Contract Monitor and the Trustee shall be entitled to inspect and make copies of such records at any time upon reasonable advance notice to the Operator. All
books, accounts and records shall be retained in accordance with Operator’s record retention policy, subject to the requirements set forth in the ICE Contract and any legal requirements imposed upon the Owner but only if and to the extent that
the Owner notifies the Operator of such requirements. 
  
 (b) For
so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, on or before, but in no event later than one Business Day after, the date on which the same are required to be
filed by the Operator with the Securities and Exchange Commission, the Operator shall send to the Trustee and the Bond Insurer a copy of the audited financial statements of the Operator (with supplemental information regarding the Complex) and on or
before, but in no event later than one Business Day after, the date on which the same are required to be filed by the Operator with the Securities and Exchange Commission, the Operator shall send to the Trustee and the Bond Insurer a copy of the
unaudited quarterly financial statements of the Operator. In addition, on or 
  

 Page 14 of 33 

 before the end of each month, to the extent not submitted with a requisition submitted to the Trustee for Operating
Costs, the Operator shall provide the Bond Insurer a copy of the Operator’s internal operating expense reports for the Complex for the immediately preceding month. 
  
 (c) For so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the
Insurance Agreement, the Trustee and the Bond Insurer shall have the right to receive such additional information pertaining to the Operator or the Complex as it may reasonably request, and the Operator will permit the Trustee and/or the Bond
Insurer to discuss the affairs, finances and accounts of the Operator or any information the Trustee or the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Operator, and will grant the
Trustee and the Bond Insurer access to the Complex and the books and records of the Operator pertaining to the Complex on any business day upon reasonable prior notice. 
  
 (d) For so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the
Insurance Agreement, the Operator shall provide the Bond Insurer and the Independent Contract Monitor with copies of and/or written notice of the following within the time-frames set forth below: 
  
 (i) within two Business Days of submission, copies of all
invoices for services rendered by the Operator pursuant to the ICE Contract; 
  
 (ii) within two Business Days of receipt, a copy of any notice of default received by the Operator under any of its loan agreements, lines of credit or credit facilities or reimbursement agreements relating thereto;

  
 (iii) within two Business Days of receipt, a
copy of any notice of termination received by the Operator from ICE in the event the ICE Contract is the subject of a termination for convenience; 
  
 (iv) within two Business Days of receipt, any notice of default, including any show-cause or show-cure notice relating thereto, or any
notice of termination, in whole or in part, issued in connection with the ICE Contract; 
  
 (v) within two Business Days of receipt, a copy of any report issued in connection with any audit of the Complex or audit of CSC conducted
by (A) the Contracting Officer’s Technical Representative (as defined in the ICE Contract), (B) any independent auditor acting at the direction of or pursuant to a contract with ICE, or (C) such other audit of the Complex or the Operator as may
be directed by the Contracting Officer (as defined in the ICE Contract); 
  
 (vi) within two Business Days of submission, a copy of all documents submitted by the Operator in response to any audit or similar review conducted by any of the parties identified in subclauses (v)(A) through (C) of
this Section 15(d) requesting corrective action; 
  

 Page 15 of 33 

 (vii) within two Business Days after receipt, a copy of the notice to proceed issued
pursuant to the ICE Contract; 
  
 (viii) within
two Business Days after submission, evidence satisfactory to the Bond Insurer that the Operator has submitted its formal application for accreditation of the Complex to the ACA within the timeframe specified by the ICE Contract; 
  
 (ix) within two Business Days after receipt, evidence
satisfactory to the Bond Insurer that the Operator has received ACA accreditation of the Complex within the timeframe specified by the ICE Contract for attainment of such ACA accreditation, and, every three years thereafter, evidence satisfactory to
the Bond Insurer of then-current ACA accreditation; 
  
 (x) within two Business Days following execution, a copy of any modification or amendment of or to the ICE Contract; 
  
 (xi) any successor provider under the ICE Contract approved by ICE, whether as a result of a merger or consolidation of the Operator or
otherwise; and 
  
 (xii) within two Business Days
of receipt, any notice received by the Operator of any reduction of payment or offsets under the ICE Contract. 
  
 In addition, the Operator shall provide the Owner with copies of any notices described in the foregoing clauses (iii) and (iv) at the same time they are
provided by the Operator to the Bond Insurer. 
  
 (e) For so long
as any Bonds remain Outstanding, the Operator shall arrange for an audit of the books and financial records of the Owner and shall prepare and provide to the Owner such information pertaining to the Complex and the Operator and other assistance as
may be necessary for purposes of enabling the Owner to comply with its (1) continuing disclosure obligations with respect to the Bonds under Rule 15c2-12 promulgated by the Securities and Exchange Commission and (2) obligations under the Continuing
Disclosure Certificate attached hereto as Appendix A. 
  
 (f) For
so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Operator shall provide the Bond Insurer with copies of any notices received by the Operator from ICE to the
effect that ICE intends to exercise any option to extend the term of the ICE Contract within three (3) Business Days after the receipt by the Operator. 
  
 (g) For so long as any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance
Agreement, the Operator shall provide the Independent Contract Monitor with such data, financial and other information pertaining to the ICE Contract and the operation of the Complex as may be reasonably requested by the Independent Contract Monitor
in order to enable the Independent Contract Monitor to provide reports to the Bond Insurer concerning the status of pre-opening activities of the Operator, the commencement of operations by the Operator at the Complex, the existing and projected
detainee population at the Complex, payments made or to be made by ICE 
  

 Page 16 of 33 

 under the ICE Contract or by other agencies under any Agency Contract and Operating Costs, and such other data, financial
and information as may be reasonably requested by the Bond Insurer or the Independent Contract Monitor in order to enable the Independent Contract Monitor to provide requested reports to the Bond Insurer concerning the Complex and the ICE Contract.

  
 (h) For so long as any Bonds remain Outstanding under the
Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Operator with shall deliver to the Bond Insurer and the Independent Contract Monitor monthly calculations of the ratio that the Facility
Revenues received by the Trustee for each Facility Revenue Collection Period, less the Operating Costs for the same Facility Revenue Collection Period, bears to the amounts required to be disbursed by the Trustee pursuant to clauses FIRST through
EIGHTH of Section 5.04 of the Indenture, showing, in particular, whether or not the Rate Covenant was met for the applicable Facility Revenue Collection Period, together with back-up financial information to support such calculations. 
  
 16. Confidentiality. 
  
 Operator shall maintain all confidential personnel and detainee records in
the manner required by law and shall obtain all necessary approvals and consents for access to such records. The Owner agrees to cooperate with and assist Operator in obtaining such approvals and consents. 
  
 17. Maintenance and Repairs. 
  
 (a) Operator shall maintain the Complex, including the roof, foundation, all
outside utilities, the plumbing, electrical and heating/air conditioning systems, including replacement of any components not covered by any existing warranty, and the structural soundness of the Complex in good repair, reasonable wear and tear
excepted. Such maintenance includes the duty to repair and/or replace components of any building that may (i) be damaged due to neglect, (ii) have any structural defect, (iii) be physically obsolete, (iv) be functionally obsolete, (v) be required by
ICE or under an Agency Contract, (vi) be required by law or change in law, or (vii) otherwise be required to maintain operation of the Complex as a detention facility in accordance with the Applicable Standards. 
  
 (b) Operator also shall maintain all interior walls and ceilings of the
building and all interior windows, window glass, doors, electrical fixtures, and plumbing fixtures in good repair and condition; paint all interior walls as required, furnish and regularly replace furnace filters consistent with heating/air
conditioning systems manufacturer specifications. Operator’s duties shall include all usual janitorial and maintenance service, including sweeping and waxing of floors, vacuuming, trash collection and disposal, the cleaning of windows, dusting,
and the replacement of light bulbs or fluorescent tubes in the light fixtures will be the responsibility of Operator. Operator shall maintain all grounds, including but not limited to mowing, trimming, watering of plants and lawn as to maintain a
good cosmetic look to the grounds. All maintenance and upkeep required by the Operator shall be made in accordance with the manufacturer’s recommendations. In the event Operator fails to comply with any of the requirements of this Section, the
Owner shall have the right, but the Owner shall not have the obligation, to cause repairs or corrections to be made, and any reasonable cost therefore shall be 
  

 Page 17 of 33 

 payable as provided in this Section. Operator shall repair any damage caused by its negligence or default hereunder, or
the negligence of its invitees, employees or customers, and, upon the termination of this Agreement, shall deliver the Complex to the Owner in good repair and condition, reasonable wear and tear excepted. Operator will periodically fumigate and
spray the Complex for insects and rodents, as needed. 
  
 (c) For
so long as any Bonds remain Outstanding or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, pursuant to the provisions of the Indenture, the Operator shall have the ability to requisition amounts on deposit
in the Major Maintenance Reserve Fund for the sole purpose of paying for the costs of the repair and replacement of capital items of the Complex if, and to the extent that, Facility Revenues otherwise available to the Operator under the Indenture
for such purpose are insufficient. If, and to the extent that, the balance in the Major Maintenance Reserve Fund shall ever be less than Major Maintenance Reserve Requirement, the Trustee shall use Facility Revenues thereafter derived from the
Complex to make deposits into the Major Maintenance Reserve Fund until the balance on hand therein is at least equal to Major Maintenance Reserve Requirement. The Trustee shall replenish any such shortfall in the Major Maintenance Reserve Fund by
making substantially equivalent, monthly deposits to the Major Maintenance Reserve Fund over (a) a twelve (12) month period if such deficiency results from a withdrawal of funds by the Operator, or (b) over a four-month period if such deficiency
results from calculation of the value of investments on deposit in the Major Maintenance Reserve Fund. 
  
 (d) If payment of all principal, interest and premium, if any, on the Bonds is made in accordance with the terms of the Indenture and all Reimbursement
Obligations are paid in full such that the liens, estates and security interests granted by and pursuant to the Indenture shall cease as provided in the Indenture, or if the Bonds shall otherwise be defeased in full prior to their stated maturity in
accordance with and subject to the terms of the Indenture and all Reimbursement Obligations have been paid in full, and the Operator shall not elect to purchase the Complex pursuant to the PILOT and Option Agreement, then the parties shall
establish a “Major Maintenance Reserve Fund” hereunder substantially similar to the “Major Maintenance Reserve Fund” established under the Indenture and the balance, if any, then existing in the “Major Maintenance Reserve
Fund” established under the Indenture shall be transferred as provided in the Indenture to the “Major Maintenance Reserve Fund” established hereunder, and thereafter the Operator shall use Facility Revenues thereafter derived from the
Complex to make deposits into the Major Maintenance Reserve Fund until the balance on hand therein is at least equal to Major Maintenance Reserve Requirement. The Operator shall replenish any shortfall in the Major Maintenance Reserve Fund by making
substantially equivalent, monthly deposits to the Major Maintenance Reserve Fund over (a) a twelve (12) month period if the balance on hand in the Major Maintenance Reserve Fund is less than the Major Maintenance Reserve Requirement at the time that
funds are transferred by the Trustee as contemplated by this paragraph or if the shortfall deficiency results from a withdrawal of funds by the Operator, or (b) over a four-month period if such deficiency results from calculation of the value of
investments on deposit in the Major Maintenance Reserve Fund. The Operator shall have the right to requisition amounts on deposit in the Major Maintenance Reserve Fund established hereunder for the sole purpose of paying for the costs of the repair
and replacement of capital items of the Complex. 
  

 Page 18 of 33 

 (e) Operator’s repair and maintenance obligations shall not be limited to amounts in the Major
Maintenance Reserve Fund. 
  
 18. Termination.

  
 (a) The Owner shall have the right to terminate this
Agreement unilaterally upon (i) the occurrence of an Event of Default by the Operator as defined in Section 19(a) of this Agreement; or (ii) as provided in Sections 20 and 22 of this Agreement; provided however that, for so long as any of the
Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Owner may only exercise the rights described in clauses (i) and (ii) of this Section 18(a) with the prior
written consent or at the written direction of the Bond Insurer, and shall exercise such right upon the written direction of the Bond Insurer. 
  
 (b) For so long as any of the Bonds remain Outstanding or any Reimbursement Obligations remain unpaid, the Operator shall have the right to terminate this
Agreement unilaterally only as follows: 
  
 (1) upon 60 days’
advance written notice to the Owner, the Trustee and the Bond Insurer in the event that the ICE Contract shall either be terminated, for any reason whatsoever, or if ICE shall fail to renew or extend the ICE Contract, for any reason whatsoever, at
the expiration of its then current term; provided however, that a condition precedent to the Operator’s rights to terminate this Agreement pursuant to this clause (2) shall be that the Operator shall have complied with its obligations
under Section 22 of this Agreement to the extent applicable; and 
  
 (2) the Operator shall have the right to terminate this Agreement unilaterally at any time, with or without cause, upon delivering to the Owner, the Trustee and the Bond Insurer written notice of its intention to terminate this Agreement at
least 180 days in advance of the date on which the Operator desires to terminate this Agreement; 
  
 provided however, that a condition precedent to the Operator’s rights to terminate this agreement pursuant to the foregoing clauses (1) or (2) shall be that the Operator shall have used its best efforts in
good faith to identify to the Owner, the Bond Insurer and the Trustee a successor operator for the Complex acceptable to ICE and reasonably acceptable to the Trustee and the Bond Insurer; and provided further that, if the ICE Contract or any
substitute or replacement for the ICE Contract is then in place, this Agreement will not terminate pursuant to the Operator’s notice given under clauses (1) or (2), unless and until a successor operator approved by ICE and the Bond Insurer has
undertaken management and operation responsibility for the Complex; it being understood that the approval ICE shall be required only if the ICE Contract or any or replacement for the ICE Contract is then in place and shall not be required if the ICE
Contract or any or replacement for the ICE Contract is not in place. 
  
 (c) This Agreement shall terminate automatically, without the need for further action or deed on the part of either the Owner or the Operator, if the Operator shall acquire the Complex from the Owner pursuant to the exercise by the Operator
of its option to purchase the Complex as provided for in the PILOT and Option Agreement, such termination to be effective simultaneously with the conveyance by the Owner to the Operator of the real and personal property described therein.

  

 Page 19 of 33 

 (d) If payment of all principal, interest and premium, if any, on the Bonds is made in accordance with
the terms of the Indenture and all Reimbursement Obligations are paid in full such that the liens, estates and security interests granted by and pursuant to the Indenture shall cease as provided in the Indenture, or if the Bonds shall otherwise be
defeased in full prior to their stated maturity in accordance with and subject to the terms of the Indenture and all Reimbursement Obligations have been paid in full, and the Operator shall not elect to purchase the Complex pursuant to the
PILOT and Option Agreement, the Operator shall have the right to terminate this Agreement unilaterally as follows: 
  
 (i) at any time, with or without cause, upon delivering to the Owner written notice of its intention to terminate this Agreement at least
90 days in advance of the date on which the Operator desires to terminate this Agreement; and 
  
 (ii) upon the occurrence of a default by the Owner that remains uncured by the Owner to the reasonable satisfaction of the Operator for a
period of thirty (30) days following delivery of written notice of such default from the Operator to the Owner. 
  
 19. Events of Default and Remedies. 
  
 (a) The following constitute “Events of Default” by the Operator under this Agreement: 
  
 (1) only for so long as any Bonds remain Outstanding or any
Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the failure by the Operator to remit Facility Revenues to the Trustee as provided in Section 4 of this Agreement; 
  
 (2) the failure by the Operator to maintain any insurance
required to be maintained by the Operator under this Agreement; 
  
 (3) the failure by the Operator to observe and perform any other covenant, condition or agreement contained herein or in any other document or agreement executed in connection herewith on its part to be observed or
performed for a period of forty-five (45) days after written notice is given to the Operator specifying such failure and requesting that it be remedied; provided, however, that, if the failure stated in such notice cannot be corrected within
such forty-five (45) day period, Owner will not reasonably withhold its consent to an extension of such time if corrective action is instituted by the Operator within the applicable period and diligently pursued until the default is corrected;

  
 (4) the Operator shall be or become
insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Operator shall apply for or consent to the appointment of any receiver, trustee or similar officer for it, or
for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Operator; or 
  

 Page 20 of 33 

 the Operator shall institute (by petition, application, answer, consent or otherwise) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise)
against the Operator which is not dismissed or secured by the Operator within sixty (60) days after the filing thereof against the Operator; 
  
 (5) Owner shall determine that any material representation or warranty made by the Operator or in any other document executed in
connection herewith was untrue in any material respect when made; 
  
 (6) the occurrence of a default under the ICE Contract, which is not cured by the Operator to the satisfaction of ICE within the time-frames provided in the ICE Contract; 
  
 (7) only for so long as any Bonds remain Outstanding or any
Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the occurrence of any default by the Operator under any of its loan agreements, lines of credit or other credit facilities or reimbursement agreements relating
thereto; or 
  
 (8) the occurrence of a default
under any Agency Contract, which is not cured by the Operator within the time-frames provided in such Agency Contract. 
  
 (b) Whenever any Event of Default on the part of the Operator shall have occurred and be continuing, Owner, without any further demand or notice, shall
have the right (to be exercised only with the prior written consent of the Bond Insurer and which shall be exercised at the written direction of the Bond Insurer), subject to the limitations on the Owner’s remedies set forth in Section
19(c) below, to take any one or any combination of the following remedial steps and such other steps which are accorded to the Owner by applicable law: 
  
 (1) terminate this Agreement and provide for a successor operator acceptable to the Bond Insurer and ICE to assume responsibility for the
operation and management of the Complex; 
  
 (2)
take possession of the Complex, without any court order or other process of law and without liability for entering the premises, and lease, sublease or make other disposition of the Complex for use over a term in a commercially reasonable manner,
all for the account of the Owner; 
  
 (3) subject
to the limitations imposed by Section 19(c) of this Agreement, proceed by appropriate court action to enforce specific performance by the Operator of the applicable covenants of this Agreement or to recover for the breach thereof, including the
payment of all amounts due from the Operator; and/or 
  
 (4) subject to the limitations imposed by Section 19(c) of this Agreement, take whatever action at law or in equity may appear necessary or desirable to enforce its rights hereunder and with respect to the Complex. 
  

 Page 21 of 33 

 No remedy herein conferred upon or reserved to the Owner is intended to be exclusive and every such
remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Owner to exercise any remedy reserved to it
in this Section, it shall not be necessary to give any notice other than such notice as may be required by this Section. All remedies herein conferred upon or reserved to the Owner shall survive the termination of this Agreement. 
  
 (c) The Owner acknowledges that, other than the Corporation’s Unassigned
Rights, all of the Owner’s rights and interests in, under and pursuant to this Agreement will be assigned to the Trustee pursuant to the Indenture. Without in any way limiting the rights of the Trustee, as assignee of the Owner or otherwise, or
of the Bond Insurer, the Owner acknowledges that, subsequent to such assignment, the Owner shall no right to exercise remedies under this Article 19, which remedies may be exercised by the Trustee pursuant to the Indenture, subject to the rights of
the Bond Insurer hereunder and under the Indenture; provided, that the foregoing limitation shall not be construed to limit the rights of the Owner to enforce the Operator’s indemnity obligations hereunder. In no event shall the the rights and
remedies of the Owner, the Trustee or the Bond Insurer hereunder or under the Indenture be construed as creating any liability whatsoever on the part of the Operator to pay or become liable for, whether directly or indirectly, as part of the
Owner’s damage calculations or otherwise, any of the principal or interest obligations on the Bonds, any Reimbursement Obligations or any other debt service requirements under the Indenture; provided that this Section 19(c) shall not in any way
limit any express obligations of the Operator hereunder or under any other documents, including any Corporation Documents to which Operator is a party. 
  
 (d) If an Event of Default occurs hereunder, the Bond Insurer, the Owner and/or the Trustee at the direction of the Bond Insurer may communicate with the
ICE and its representatives regarding the Event of Default, Operator, the operation of the Complex or any other matter and may negotiate with the ICE regarding the Complex, the ICE Contract and the use and operation of the Complex; and none of those
actions or any related actions or communications shall be deemed to constitute interference, intentional or otherwise, by Owner, the Bond Insurer or the Trustee with the ICE Contract or Operator’s relationship with the ICE or be deemed to be
disclosure of any information which arguably may be considered confidential. However, neither the Trustee, the Bond Insurer nor the Owner shall be under any obligation to take any of the foregoing actions. 
  
 (e) The Trustee, the Bond Insurer and the Owner and their respective agents
and representatives may from time to time enter the Complex to inspect and to assure that Operator is complying with its obligation under this Agreement. If Operator fails to satisfy any of its obligations hereunder, then, regardless of whether an
Event of Default has occurred or has been declared, Owner or the Trustee may cure the failure; and Operator, on demand, shall reimburse Owner or the Trustee for any cost and expense incurred by Owner or the Trustee in curing the failure. 

 

 Page 22 of 33 

 20. Bankruptcy of the Operator. 
  
 If the Operator shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or if any such proceeding shall be instituted (by
petition, application or otherwise) against the Operator, which is not dismissed or secured by the Operator within sixty (60) days after the filing thereof against the Operator, to the extent permitted by applicable bankruptcy law, Owner may, with
the prior written consent of the Bond Insurer, and, at the direction of the Bond Insurer shall, terminate and cancel this Agreement, and shall undertake its best efforts in good faith to find a substitute operator acceptable to ICE and the Bond
Insurer, and agrees to allow the assignment by Operator of this Agreement to such substitute operator or to enter into a substantially similar agreement with such substitute Operator for the continued operation and utilization of the Complex in
compliance with the terms of the ICE Contract, if assumed by such substitute Operator, or any similar agreement with ICE for the provision of services to ICE similar to those to be provided under the ICE Contract. 
  
 21. Effect of Termination. 
  
 Upon termination of this Agreement for any reason other than the exercise by
the Operator of its option to purchase the Complex, the Operator shall reasonably cooperate with the Owner and the Bond Insurer, and, if applicable, with ICE, in transferring custody of detainees housed in the Complex and the records of the Complex
to another party selected for the operation, management and supervision of the Complex, but shall be under no further obligation to begin, continue or complete any undertakings or activities contemplated by this Agreement, subject, however, to the
responsibility of Operator to provide continuous services under the ICE Contract. The termination of this Agreement shall in no way affect or impair any right which has accrued to either party hereto prior to the date when such termination shall
become effective. In order to facilitate an orderly transition, the parties agree that in the event of any such termination, the parties shall reasonably cooperate with each other to develop a mutually agreeable transition plan to assure minimal
disruption in the Complex and to cooperate in preparing for and addressing any termination proceedings. 
  
 In addition, upon the termination of this Agreement other than upon the exercise by the Operator of its option to purchase the Complex, the Operator
agrees that the Owner (or any substitute operator engaged by the Owner to operate and manage the Complex) may take control and ownership of all the property, materials, supplies and records within the Complex, and may, in its discretion, employ or
contract for personal services with any or all agents or employees of the Operator at the Complex. 
  
 22. Termination or Expiration of the ICE Contract. 
  

(a) In the event that (i) ICE elects to terminate the ICE Contract or the ICE Contract expires by its terms and is not renewed by ICE and (ii) ICE
notifies the Owner or the Operator that it does not desire to continue to utilize the Complex, the Owner and Operator shall use their best efforts to market the use of the Complex to other federal, state or local agencies and bodies in order
to maximize the revenues derived therefrom; provided however, that the foregoing obligation shall not be interpreted to prohibit or limit the Operator’s right in accordance with Section 18 to terminate this Agreement in such an event.

  

 Page 23 of 33 

 (b) In the event that (i) ICE elects to terminate the ICE Contract or the ICE Contract expires by its
terms and is not renewed by ICE and (ii) ICE desires to continue to utilize the Complex, but to replace the Operator as the operator of the Complex, then, with the consent of the Bond Insurer, the Owner shall have the right to terminate this
Agreement upon notice to the Operator and at the written direction of the Bond Insurer shall exercise the right to terminate this Agreement, and will undertake its best efforts in good faith to find a substitute operator for the Complex acceptable
to ICE and the Bond Insurer, and agrees to allow the assignment of this Agreement to such substitute operator or to enter into a substantially similar agreement with such substitute operator for the continued operation and utilization of the Complex
in compliance with the ICE Contract, if assumed by or novated with such substitute operator, or any similar agreement for the provision of services for ICE at the Complex. 
  
 (c) In the event the ICE Contract is the subject of a termination for convenience, in whole or in part, during such time as
any of the Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Operator agrees to seek as part of any claim resulting from a termination for convenience an
amount equal to all debt service on the Bonds and, to the extent received from ICE, to remit such amounts to the Trustee for application in accordance with the terms of the Indenture. 
  
 23. Renewal or Replacement of the ICE Contract. 
  
 In the event the ICE Contract is renewed or replaced, the Operator hereby agrees to execute an assignment of claims in favor
of the Trustee and take all necessary actions to effectively continue the assignment and pledge of all Facility Revenues to the Trustee in the manner contemplated by this Agreement and the Indenture. 
  
 24. Damage, Destruction or Loss of Property; Obligation to Rebuild; Use
of Insurance Proceeds and Condemnation Awards. 
  
 (a) If,
prior to full payment of all Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) or if any Reimbursement Obligations remain unpaid, the site of the Complex as described in the Deed of Trust
(the “Project Site”) or the Complex or any other property located thereon (the “Property”), or any part or component of the Property, shall be damaged or destroyed, by whatever cause, or shall be taken by any public authority or
entity in the exercise of or acquired under the threat of the exercise of its power of eminent domain, the Owner and the Operator will cause the insurance proceeds or condemnation award or payment in lieu of condemnation to be deposited in a
separate account in the Project Fund in accordance with Sections 5.04 and 5.05 of the Indenture, and apply or cause to be applied any insurance proceeds or condemnation awards resulting from claims for such losses or takings as provided in this
Section. 
  
 (b) If, prior to full payment of all Bonds (or
provision for payment thereof having been made in accordance with the provisions of the Indenture), the Property, or any part or 
  

 Page 24 of 33 

 component of the Property shall be damaged or destroyed, and such damage or destruction will not cause a material
disruption to or suspension of services at the Complex, the Operator shall submit requisitions to the Trustee in accorind with the Indenture and, with the proceeds of any insurance award available therefor, or with funds made available under the
Major Maintenance Reserve Fund, or with its own funds, proceed promptly to repair, rebuild, restore or replace the property damaged or destroyed. 
  
 (c) If, prior to full payment of all Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) or if
any Reimbursement Obligations remain unpaid, the Property, or any part or component of the Property having a value of $100,000 or more shall be damaged or destroyed, or if such damage or destruction is reasonably likely to cause a material
disruption to or suspension of services at the Complex, the Operator shall promptly give, or cause to be given, written notice thereof to the Owner, the Bond Insurer and the Trustee, and if, after consultation between the Operator and the Bond
Insurer, it shall be determined that the damage or destruction to the Property the Operator shall demonstrate to the reasonable satisfaction of the Bond Insurer that (a) ICE (1) desires to and will continue to utilize the Complex following the
repair and restoration of the Complex, notwithstanding any material disruption in services or suspension of services at the Complex, and (2) will not exercise any right to terminate or cancel the ICE Contract on account thereof, and (b) the repair
and restoration will be completed within the period of time during which “delayed opening/business interruption” coverage will be provided under the insurance policy maintained by the Operator under Section 13(b) above, the Operator shall
have the right, but not the obligation, to direct that the proceeds of any insurance award available therefor be applied to repair, rebuild, restore or replace the property damaged or destroyed, and shall submit requisitions to the Trustee in
accordance with the Indenture and, with such proceeds and/or with funds made available under the Major Maintenance Reserve Fund, proceed promptly to repair, rebuild, restore or replace the property damaged or destroyed; 
  
 (d) If the Operator elects not to repair, rebuild, restore or replace the
property damaged or destroyed as provided in the foregoing subparagraph 24(c) or otherwise does not use the insurance proceeds to repair, rebuild, restore or replace the property damaged or destroyed, the Operator shall, with the consent of the Bond
Insurer, exercise its rights under Section 3.03(b) of the Indenture; whereupon, upon redemption of the Bonds in whole pursuant to Section 3.03(b) of the Indenture and the payment in full of all Reimbursement Obligations (if any), this Agreement
shall terminate and become null and void and of no further force or effect. 
  
 (e) If, prior to full payment of all Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) or if any Reimbursement Obligations remain unpaid, any part or
component of the Property shall be taken by any public authority or entity in the exercise of or acquired under the threat of the exercise of its power of eminent domain, the Operator shall promptly give, or cause to be given, written notice thereof
to the Owner, the Bond Insurer and the Trustee, and if the Operator shall have determined in the exercise of its professional judgment in consultation with the Bond Insurer that the Complex remains suitable for continued operation for its intended
purposes, the Owner and the Operator shall apply the proceeds of any award made to the Operator or the Owner on account of such taking to repairs, replacements or improvements to the Complex necessitated by such taking, and, if such award is
insufficient to complete such repairs, replacements or improvements, the 
  

 Page 25 of 33 

 Operator shall have the right to requisition from the Major Maintenance Reserve Fund such amount as may be necessary to
complete the same. If any part or component of the Property shall be taken by any public authority or entity in the exercise of or acquired under the threat of the exercise of its power of eminent domain, and the Operator shall have determined in
the exercise of its professional judgment (in consultation with the Bond Insurer if any Bonds remain Outstanding under the Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement) that the Complex does
not remain suitable for continued operation for its intended purposes, the Operator shall promptly give, or cause to be given, written notice thereof to the Owner, the Bond Insurer and the Trustee, and (a) if any Bonds remain Outstanding under the
Indenture or any Reimbursement Obligations remain unpaid under the Indenture or the Insurance Agreement, the Owner and the Operator shall remit to the Trustee for application in accordance with the Deed of Trust and the Indenture the proceeds of any
award made to the Operator on account of such taking and the Operator shall exercise its rights under Section 3.03(b) of the Indenture, in which event; and (b) if no Bonds remain Outstanding under the Indenture and all Reimbursement Obligations
under the Indenture and the Insurance Agreement have been satisfied in full, the Owner and the Operator shall each be entitled to apply for and retain, subject to, with respect to the Owner, its obligations under the Subordinated Note, any and all
awards to which they may be entitled on account of such taking. 
  
 25. Binding Effect and Third Party Rights. 
  
 Except as provided in this Section, the rights created by this Agreement shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors, heirs and assigns of the respective parties hereto. ICE, the
Bond Insurer and the Trustee are hereby specifically named as third party beneficiaries to this Agreement. The parties hereto expressly acknowledge that ICE shall maintain a high level of control over the operations and management of the Complex. To
that end, (i) to the extent of any conflict between the terms of this Agreement and the terms of the ICE Contract, the terms of the ICE Contract will prevail; and (ii) subject to the terms of this Agreement, the Owner may not terminate or replace
the Operator without the prior written consent of ICE and the Bond Insurer. The provisions of this Agreement are otherwise for the sole benefit of the parties hereto and shall not be construed as conferring any rights to any other person other than
ICE and the Trustee as specified herein. 
  
 26. Maturity or
Defeasance of the Bonds. If payment of all principal, interest and premium, if any, on the Bonds is made in accordance with the terms of the Indenture and all Reimbursement Obligations are paid in full such that the liens, estates and
security interests granted pursuant to the Indenture shall cease as provided in the Indenture, or if the Bonds shall otherwise be defeased in full prior to their stated maturity in accordance with and subject to the terms of the Indenture and all
Reimbursement Obligations have been paid in full, and the Operator shall not elect to purchase the Complex pursuant to the PILOT and Option Agreement, then this Agreement shall remain in full force and effect between the Owner and the Operator for
the remaining term hereof, provided that (a) all of the references herein to the Trustee and the Bond Insurer, and all rights provided to the Trustee and/or the Bond Insurer herein shall become null and void; (b) the parties shall establish an
“Insurance and Property Tax Fund” and a “Major Maintenance Reserve Fund” hereunder substantially similar to those established under the Indenture, with respect to which the Operator shall have substantially similar rights and
obligations, (c) the balances then existing in the “Insurance and Property Tax Fund” and “Major 
  

 Page 26 of 33 

 Maintenance Reserve Fund” established under the Indenture shall be transferred as provided in the Indenture to the
“Insurance and Property Tax Fund” and “Major Maintenance Reserve Fund” established hereunder, and (d) the parties shall take such actions as necessary to amend the terms of this Agreement in order to provide for (i) a primary
rental payment to be made by the Operator to the Owner for the Operator’s continued use of the Complex in a monthly amount equal to the amount due and payable each month by the Owner to the Operator pursuant to the Subordinated Notes (the
“Primary Rent”) and a supplemental rental of not less than $0.50 per detainee per day, (ii) the rights and obligations of the Owner and Operator in the event of a taking by condemnation or eminent domain of, or damage to or destruction of,
the Complex, and (iii) such other customary and reasonable matters. 
  
 27. Amendments. 
  
 This Agreement may be
amended only by a written instrument executed on behalf of both Operator and the Owner; provided that, so long as any of the Bonds shall remain outstanding or any Reimbursement Obligations remain unpaid, the prior written consent of the Bond Insurer
shall be required for any amendment to this Agreement. For so long as any of the Bonds remain outstanding, a copy of any amendment shall be provided to the Trustee. 
  
 28. Force Majeure. 
  

Notwithstanding any other provision of this Agreement, neither party hereto shall be liable, during the period of delay or inability to perform, for
any delay in performance or inability to perform due to acts of God or the public enemy, war, riot, embargo, fire, explosion, sabotage, flood, accident; or without limiting the foregoing any circumstances of like or different character beyond its
reasonable control; or labor trouble from whatever cause arising (other than the duty to pay Use Fees, utilities, taxes, insurance premiums and other costs and expenses associated with the Complex). 
  
 29. Relationship of the Parties. 
  
 The relationship of Operator and the Owner hereunder shall be solely that of
independent contractors and nothing herein shall be construed to create or imply any relationship of employment, agency or partnership or any relationship other than that of independent contractors and landlord and tenant. Operator and the Owner
acknowledge and agree that each of them is engaged in a separate and independent business and neither shall state, represent or imply any control over the business of the other. 
  
 30. Governing Law and Interpretation. 
  
 This Agreement shall be governed by and construed in accordance with the internal laws of State of Texas without giving
effect to the principles of conflict of laws. If for any reason any of the terms hereof shall be deemed by a court of competent jurisdiction to be legally invalid or unenforceable, the validity of the remainder of the terms hereof shall not be
affected and the invalid or unenforceable terms shall be deemed modified to the minimum extent necessary to make those terms consistent with applicable law, and, in their modified form, those terms shall then be enforceable and enforced. The
recitals to this Agreement are to be considered a substantive part of this Agreement. This Agreement may be executed in any number of counterparts, each of which 
  

 Page 27 of 33 

 shall be an original but all of which shall constitute one and the same instrument. With respect to each and every term
and provision in this Agreement, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties hereto desire or are required to interpret or construe any such term or
provision, no consideration shall be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement. 
  

31. Entire Agreement. 
  
 This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior agreements and understandings, written or oral, between the
parties relating to the subject matter hereof. 
  
 32. Owner
Approvals. 
  
 For purposes of any approvals required to
be given by Owner, approval may be given from time to time by such person or persons as may be designated in a written instrument signed and dated by the Board of Directors of Owner and delivered to Operator. Each such designation shall remain in
effect until it is expressly revoked in a written instrument signed and dated by the Board of Directors of Owner and delivered to Operator. Operator shall be entitled to rely on any such designation that Operator believes in good faith to meet the
requirements of this Agreement. The person authorized to provide approvals on behalf of the Owner as of the date of this Agreement and until such time of change is Jesus Salinas. 
  
 33. Notices. 
  
 All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if: (i) delivered by
hand, (ii) sent by overnight courier service, or (iii) sent by certified or registered mail, postage prepaid, return receipt requested, to the party to whom such notice is intended to be given at the addresses set forth herein. Any notice delivered
in the manner provided above will be deemed given at the time of receipt. Until changed by notice in the manner provided above, the addresses of the parties are as follows: 
  

			
	To the Owner:	    	Southwest Texas Detention Complex Local Development Corporation
	 	    	500 East San Antonio
	 	    	Pearsall, Texas 78061
	 	    	Attention: President
		
	To the Operator:	    	Correctional Services Corporation
	 	    	Suite 1000
	 	    	1819 Main Street
	 	    	Sarasota, FL 34236
	 	    	Attention: President
	 	    	Telephone: (941) 953-9199
	 	    	Facsimile: (941) 953-9198

  

 Page 28 of 33 

			
	To the Insurer:	  	MBIA Insurance Corporation
	 	  	113 King Street
	 	  	Armonk, New York 10504
	 	  	Attention: Insured Portfolio Management—Global Public Finance
	 	  	Telephone: (914) 765-3600

  
 34.
Assignments. 
  
 Except as provided below and the
assignment to the Trustee as contemplated in the Indenture and in the Assignment of Claims referenced herein, Operator shall not assign, subcontract or sublicense any of its rights or obligations hereunder without the prior written consent of the
Bond Insurer; provided, however, that Operator may, without the consent of the Owner or the Bond Insurer, subcontract for the performance of (but not responsibility for) any duties and obligations of Operator hereunder in a manner consistent
with the ICE Contract as provided above. 
  
 35.
Waivers. 
  
 No waiver of any provision of this
Agreement shall be deemed to constitute a waiver of any other provision. No such waiver shall be binding unless it is in writing and no waiver will be held to continue unless otherwise expressly stated by the party waiving the provision. Waiver of a
breach shall not constitute a waiver of any subsequent breach of that term or of any other term or provision. 
  
 36. Survival. 
  
 The provisions contained in paragraphs 11 (Intellectual Property), 12 (Assumption of Liability and Indemnification), 21 (Effect of Termination), and 38
(Waiver of Jury Trial) shall survive the termination of this Agreement and remain in full force and effect. 
  
 37. Further Assurances. 
  
 In order to more fully assure each party of the benefit of contracting hereunder, each party agrees to deliver to the other party such confirmations of
fact, records, certificates, instruments of assignment and other documents and things as may be reasonably requested by the other party to carry out the purposes of this Agreement. 
  
 38. Waiver of Jury Trial. 
  
 TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE OPERATOR AND THE OWNER HEREBY IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE RELATED DOCUMENTS AND INSTRUMENTS AND THE ACTIONS OR INACTIONS OF THE OWNER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. 
  

 Page 29 of 33 

 39. Indenture Controlling. For so long as any Bonds remain Outstanding under the Indenture
or any Reimbursement Obligations remain unpaid under the Indenture and the Insurance Agreement, all payments to the Operator hereunder from any Fund or Account established in the Indenture shall be subject to the terms and conditions of the
Indenture, and, in the event of any conflict between this Agreement and the Indenture, the Indenture shall control 
  
 [SIGNATURE PAGES FOLLOW] 
  

 Page 30 of 33 

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

			
	Operator:
	
	CORRECTIONAL SERVICES CORPORATION
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	Owner:
	SOUTH TEXAS DETENTION COMPLEX LOCAL DEVELOPMENT CORPORATION
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  
 [SIGNATURE PAGE
TO THE OPERATING AGREEMENT] 
  

 Page 31 of 33 

 Approval of the Frio County Sheriff 
  
 The undersigned, being the duly elected and acting Sheriff of Frio County,
Texas, does hereby approve the foregoing Operating Agreement between South Texas Detention Complex Local Government Corporation and Correctional Services Corporation as required by Section 351.101 of the Texas Local Government Code, and does hereby
acknowledge the rights and responsibilities of the Sheriff of Frio County, Texas with respect to the monitoring of the Complex as provided in Section 9 of the foregoing Operating Agreement 
  

			
	  

	Name:	 	  

	Sheriff of Frio County, Texas

  

 Page 32 of 33

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