1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 29, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to COMMISSION FILE NUMBER 1-14260 WACKENHUT CORRECTIONS CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 65-0043078 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4200 Wackenhut Drive #100, Palm Beach Gardens, Florida 33410-4243 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (561) 622-5656 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At August 1, 1997, 21,984,142 shares of the registrant's Common Stock were issued and outstanding. Page 1 of 16

2 WACKENHUT CORRECTIONS CORPORATION PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following consolidated financial statements of Wackenhut Corrections Corporation, a Florida corporation (the "Corporation") have been prepared in accordance with the instructions to Form 10-Q and therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with generally accepted accounting principles. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial information for the interim periods reported have been made. Results of operations for the twenty-six weeks ended June 29, 1997 are not necessarily indicative of the results for the entire fiscal year ending December 28, 1997. Page 2 of 16

3 WACKENHUT CORRECTIONS CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRTEEN WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED) THIRTEEN WEEKS ENDED ------------------------------------------------- JUNE 29, 1997 JUNE 30, 1996 ----------------------- ---------------------- Revenues $ 51,509 $ 33,416 Operating expenses (including amounts related to Parent of $1,496 and $949) 43,166 28,660 Depreciation and amortization 1,510 770 ----------------------- ---------------------- Contribution from operations 6,833 3,986 G&A expense (including amounts related to Parent of $387 and $357) 3,044 2,073 ----------------------- ---------------------- Operating income 3,789 1,913 Interest income (including amounts related to Parent of ($42) and $0) 286 656 ----------------------- ---------------------- Income before income taxes and equity income of affiliate 4,075 2,569 Provision for income taxes 1,603 895 ----------------------- ---------------------- Income before equity income of affiliate 2,472 1,674 Equity income of affiliate, net of income tax provision of $157 and $88 251 140 ----------------------- ---------------------- Net income $ 2,723 $ 1,814 ======================= ====================== Earnings per share $ 0.12 $ 0.08 ======================= ====================== Weighted average shares outstanding 22,634 22,676 ======================= ====================== The accompanying notes to consolidated financial statements are an integral part of these statements. Page 3 of 16

4 WACKENHUT CORRECTIONS CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE TWENTY-SIX WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED) TWENTY-SIX WEEKS ENDED --------------------------------------------- JUNE 29, 1997 JUNE 30, 1996 ----------------------- ---------------------- Revenues $ 92,736 $ 62,850 Operating expenses (including amounts related to Parent of $2,727 and $1,604) 77,566 53,216 Depreciation and amortization 2,658 1,606 ----------------------- ---------------------- Contribution from operations 12,512 8,028 G&A expense (including amounts related to Parent of $775 and $716) 5,451 4,396 ----------------------- ---------------------- Operating income 7,061 3,632 Interest income (including amounts related to Parent of ($108) and $109) 818 1,297 ----------------------- ----------------------- Income before income taxes and equity income of affiliate 7,879 4,929 Provision for income taxes 3,072 1,829 ----------------------- ---------------------- Income before equity income of affiliate 4,807 3,100 Equity income of affiliate, net of income tax provision of $311 and $114 497 182 ----------------------- ---------------------- Net income $ 5,304 $ 3,282 ======================= ====================== Earnings per share $ 0.23 $ 0.15 ======================= ====================== Weighted average shares outstanding 22,613 21,767 ======================= ====================== The accompanying notes to consolidated financial statements are an integral part of these statements. Page 4 of 16

5 WACKENHUT CORRECTIONS CORPORATION CONSOLIDATED BALANCE SHEETS JUNE 29, 1997 AND DECEMBER 29, 1996 (IN THOUSANDS EXCEPT SHARE DATA) JUNE 29, 1997 DECEMBER 29, 1996 ----------------------- ------------------------ (UNAUDITED) ASSETS Current Assets: Cash $ 25,612 $ 44,368 Accounts receivable (net) 32,945 24,879 Other 7,142 6,066 ----------------------- ------------------------ Total current assets 65,699 75,313 Property and equipment, net 28,999 18,975 Investments in and advances to affiliates 4,812 1,810 Deferred charges, net 10,814 7,522 Unamortized cost in excess of net assets of acquired companies, net 1,955 2,224 Other 5,025 967 ----------------------- ------------------------ $ 117,304 $ 106,811 ======================= ======================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 4,622 $ 4,020 Accrued payroll and related taxes 5,629 4,558 Accrued expenses 3,967 3,717 Current portion of long-term debt 12 12 Deferred income tax liability, net 1,162 876 ----------------------- ------------------------ Total current liabilities 15,392 13,183 ----------------------- ------------------------ Deferred income taxes, net 8,497 5,434 ----------------------- ------------------------ Long-term debt 361 225 ----------------------- ------------------------ Shareholders' equity: Preferred stock, $.01 par value, 10,000,000 shares authorized --- --- Common stock, $.01 par value, 30,000,000 shares authorized, 21,969,272 and 21,937,992 shares issued and outstanding 220 219 Additional paid-in capital 73,397 72,986 Retained earnings 19,652 14,348 Cumulative translation adjustment (215) 416 ----------------------- ------------------------ Total shareholders' equity 93,054 87,969 ======================= ======================== $ 117,304 $ 106,811 ======================= ======================== The accompanying notes to consolidated financial statements are an integral part of these balance sheets. Page 5 of 16

6 WACKENHUT CORRECTIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (IN THOUSANDS) (UNAUDITED) TWENTY-SIX WEEKS ENDED --------------------------------------------------- JUNE 29, 1997 JUNE 30, 1996 ------------------------ ----------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,304 $ 3,282 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization expense 2,658 1,606 Equity income of affiliates (809) (296) Changes in assets and liabilities -- (Increase) decrease in assets: Accounts receivable (8,245) (3,175) Deferred income tax asset - current --- 51 Other current assets (1,112) (890) Other assets 399 99 Increase (decrease) in liabilities: Accounts payable and accrued expenses 1,052 (294) Accrued payroll and related taxes 1,153 763 Deferred income tax liability - current 286 63 Deferred income taxes - non-current 3,063 1,343 ------------------------ ----------------------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ 3,749 $ 2,552 ------------------------ ----------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in affiliates (2,193) --- Capital expenditures (11,764) (1,107) Deferred charge expenditures (8,789) (1,648) ------------------------ ----------------------- NET CASH USED IN INVESTING ACTIVITIES $ (22,746) $ (2,755) ------------------------ ----------------------- (Continued) The accompanying notes to consolidated financial statements are an integral part of these statements. Page 6 of 16

7 WACKENHUT CORRECTIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (IN THOUSANDS) (UNAUDITED) (Continued) TWENTY-SIX WEEKS ENDED ----------------------------------------------- JUNE 29, 1997 JUNE 30, 1996 --------------------- ---------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock $ --- $ 51,606 Proceeds from exercise of stock options 350 320 Retirement of debt (6) (779) Proceeds from debt 147 --- Advances from Parent 22,777 45,124 Repayments to Parent (22,777) (45,124) --------------------- ---------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES $ 491 $ 51,147 --------------------- ---------------------- Effect of exchange rate changes on cash (250) 162 Net (decrease) increase in cash (18,756) 51,106 Cash, beginning of period 44,368 909 --------------------- ---------------------- CASH, END OF PERIOD $ 25,612 $ 52,015 ===================== ====================== SUPPLEMENTAL DISCLOSURES: Impact on equity from tax benefit related to the exercise of options issued under the company's non- qualified stock option plan $ --- $ 636 ===================== ====================== The accompanying notes to consolidated financial statements are an integral part of these statements. Page 7 of 16

8 WACKENHUT CORRECTIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed for the quarterly financial reporting are the same as those disclosed in Note 2 of the Notes To Consolidated Financial Statements included in the Corporation's Form 10-K filed with the Securities and Exchange Commission on March 28, 1997 for the fiscal years ended December 29, 1996, December 31, 1995 and January 1, 1995. Certain prior year amounts have been reclassified to conform with current year financial statement presentation. 2. EARNINGS PER SHARE Statement of Financial Accounting Standards No. 128, "Earnings per Share" requires the disclosure of basic and diluted earnings per share for periods ending after December 15, 1997. The computation under SFAS No. 128 differs from the primary and fully diluted earnings per share computed under APB Opinion No. 15 primarily in the manner in which potential common stock is treated. Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding. In the computation of diluted earnings per share, the weighted-average number of common shares outstanding is adjusted for the effect of all potential common stock. The basic and diluted earnings per share computed according to SFAS No. 128 are as follows: PRO-FORMA THIRTEEN WEEKS ENDED -------------------- JUNE 29, 1997 JUNE 30, 1996 ------------- ------------- Basic earnings per share $ 0.12 $ 0.08 Diluted earnings per share 0.12 0.08 PRO-FORMA TWENTY-SIX WEEKS ENDED ---------------------- JUNE 29, 1997 JUNE 30, 1996 ------------- ------------- Basic earnings per share $ 0.24 $ 0.16 Diluted earnings per share 0.23 0.15 Page 8 of 16

9 WACKENHUT CORRECTIONS CORPORATION 3. DOMESTIC AND INTERNATIONAL OPERATIONS A summary of domestic and international operations is presented below: TWENTY-SIX WEEKS ENDED JUNE 29, 1997 JUNE 30, 1996 ----------------------- ----------------------- (in thousands) REVENUES Domestic operations $ 74,781 $ 48,218 International operations 17,955 14,632 ----------------------- ----------------------- Total revenues $ 92,736 $ 62,850 ======================= ======================= OPERATING INCOME Domestic operations $ 5,014 $ 2,203 International operations 2,047 1,429 ----------------------- ----------------------- Total operating income $ 7,061 $ 3,632 ======================= ======================= JUNE 29, 1997 DECEMBER 29, 1996 ----------------------- ----------------------- (in thousands) IDENTIFIABLE ASSETS Domestic operations $ 99,850 $ 96,872 International operations 17,454 9,938 ----------------------- ----------------------- Total identifiable assets $ 117,304 $ 106,811 ======================= ======================= 4. FINANCING INSTRUMENTS In June 1997, the Company entered into a $30 million multi-currency revolving credit facility with a syndicate of banks, the proceeds of which may be used for working capital, acquisitions and general corporate purposes. The credit facility also includes a letter of credit of up to $10 million for the issuance of standby letters of credit. As of August 1, 1997, no amounts were outstanding under this facility. In June 1997, the Company also entered into an $80 million operating lease facility that has been established to acquire and develop new correctional institutions used in its business. As a condition of this facility, the Company unconditionally agreed to guarantee certain obligations of First Security Bank, National Association, a party to the aforementioned operating lease facility. As of August 1, 1997, approximately $16 million of properties were under development. 5. SUBSEQUENT EVENT On July 18, 1997, Atlantic Shores Healthcare, Inc. a wholly-owned subsidiary of Wackenhut Corrections Corporation, completed the purchase of an 86-bed psychiatric hospital in Fort Lauderdale, Florida for $6 million. The hospital has been renamed Atlantic Shores Hospital. Page 9 of 16

10 WACKENHUT CORRECTIONS CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION In June 1997, the Company entered into a $30 million multi-currency revolving credit facility with a syndicate of banks, the proceeds of which may be used for working capital, acquisitions and general corporate purposes. The credit facility also includes a letter of credit of up to $10 million for the issuance of standby letters of credit. As of August 1, 1997, no amounts were outstanding under this facility. In June 1997, the Company also entered into an $80 million operating lease facility that has been established to acquire and develop new correctional institutions used in its business. As a condition of this facility, the Company unconditionally agreed to guarantee certain obligations of First Security Bank, National Association, a party to the aforementioned operating lease facility. As of August 1, 1997, approximately $16 million of properties were under development. In June 1997, the Company also purchased the Queens Private Correctional Facility, a 66,000 square foot building currently being used by the Company as a 200-bed federal detention facility, for $6.6 million. The Company also invested another $5.5 million to renovate the building. Reference is made to Item 7, Part II of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 29, 1996, filed with the Securities and Exchange Commission on March 28, 1997, for further discussion and analysis of information pertaining to the Corporation's results of operations, liquidity and capital resources. RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Corporation's consolidated financial statements and the notes thereto. COMPARISON OF THIRTEEN WEEKS ENDED JUNE 29, 1997 AND THIRTEEN WEEKS ENDED JUNE 30, 1996: Revenues increased by 54.1% to $51.5 million in the thirteen weeks ended June 29, 1997 ("Second Quarter 1997") from $33.4 million in the thirteen weeks ended June 30, 1996 ("Second Quarter 1996"). The increase in revenues in Second Quarter 1997 compared to Second Quarter 1996 is primarily attributable to increased compensated resident days resulting from the opening of two facilities in the first half of 1996 (Willacy County Unit, Willacy County, Texas in January 1996, and Marshall County Correctional Facility, Marshall County, Mississippi in June 1996), the opening of five facilities in the First Quarter of 1997 (South Bay Correctional Facility, South Bay, Florida in February 1997, Travis County Community Justice Center, Travis County, Texas in March 1997, Bayamon Regional Detention Center, Bayamon, Puerto Rico in March 1997, Queens Private Correctional Facility, Queens, New York in March 1997 and Fulham Correctional Center, Victoria, Australia in March 1997) and improved occupancy at the Central Texas Parole Violator Facility in San Antonio, Texas. Page 10 of 16

11 WACKENHUT CORRECTIONS CORPORATION The number of compensated resident days in domestic facilities increased to 1,141,607 in Second Quarter 1997 from 752,474 in Second Quarter 1996. In addition, compensated resident days in the Company's Australian facilities increased to 142,840 from 111,748 for the comparable periods. As a result of the increase in compensated resident days, average facility occupancy in domestic facilities increased to 96.4% of capacity in Second Quarter 1997 compared to 95.2% in the same period in Second Quarter 1996. Operating expenses increased by 50.6% to $43.2 million in Second Quarter 1996 compared to $28.7 million in Second Quarter 1996. The increase primarily reflected the seven facilities that opened in 1996 and 1997, as described above. Depreciation and amortization increased by 96.1% to $1.5 million in Second Quarter 1997 from $770,000 in Second Quarter 1996. This increase is due to deferred charge amortization attributable to the new facilities and depreciation associated with the purchase of two facilities. Contribution from operations increased 71.4% to $6.8 million in Second Quarter 1997 from $4.0 million in Second Quarter 1996 due primarily to the opening of the South Bay Correctional Facility in February 1997, the openings of the Queens Private Correctional Facility, Travis County Community Justice Center and Fulham Correctional Center in March 1997, improved occupancy at the Central Texas Parole Violator Facility, and a full six months of operating results at the Marshall County Correctional Facility which opened in June 1996. General and administrative expenses increased 46.8% to $3.0 million in Second Quarter 1997 from $2.1 million in Second Quarter 1996. This increase is primarily attributable to increased business development activities in response to additional interest in the Company's services. Operating income increased by 98.1% to $3.8 million in Second Quarter 1997 from $1.9 million in Second Quarter 1996. As described above, the opening of four facilities and improved occupancy at the Central Texas Parole Violator Facility were the principal factors contributing to the increase in operating income during Second Quarter 1997. Income before taxes and equity income of affiliate increased by 58.6% to $4.1 million in Second Quarter 1997 from $2.6 million in Second Quarter 1996 due to the factors described above, offset by lower interest income since the Company has deployed cash to strategic opportunities. Provision for income taxes increased to $1.6 million in Second Quarter 1997 from $895,000 in Second Quarter 1996 due to higher taxable income, and a higher effective tax rate. Equity income of affiliates increased by 79.39% to $251,000 in Second Quarter 1997 from $140,000 in Second Quarter 1996. This increase is due to two expansions at the H.M. Prison Doncaster (Doncaster, England) in June 1996 and March 1997, and income earned from two court escort contracts that commenced operations in May 1996. Net income increased by 50.1% to $2.7 million in Second Quarter 1997 from $1.8 million in Second Quarter 1996 as a result of the factors described above. Page 11 of 16

12 WACKENHUT CORRECTIONS CORPORATION COMPARISON OF TWENTY-SIX WEEKS ENDED JUNE 27, 1997 AND TWENTY-SIX WEEKS ENDED JUNE 30, 1996: Revenues increased by 47.6% to $92.7 million in the twenty-six weeks ended June 29, 1997 ("First Half 1997") from $62.9 million in the twenty-six weeks ended June 30, 1996 ("First Half 1996"). The increase in revenues in First Half 1997 compared to First Half 1996 is primarily attributable to increased compensated resident days resulting from the opening of two facilities in the first half of 1996 (Willacy County Unit, Willacy County, Texas in January 1996, and Marshall County Correctional Facility, Marshall County, Mississippi in June 1996), the assumption of operational responsibility for an existing facility (Delaware County Prison, Delaware County, Pennsylvania in April 1996), the opening of five facilities in the First Quarter of 1997 (South Bay Correctional Facility, South Bay, Florida in February 1997, Travis County Community Justice Center, Travis County, Texas in March 1997, Bayamon Regional Detention Center, Bayamon, Puerto Rico in March 1997, Queens Private Correctional Facility, Queens, New York in March 1997 and Fulham Correctional Center, Victoria,Australia in March 1997) and improved occupancy at the Central Texas Parole Violator Facility in San Antonio, Texas. The number of compensated resident days in domestic facilities increased to 2,105,395 in First Half 1997 from 1,389,295 in First Half 1996. In addition, compensated resident days in Australian facilities increased to 250,038 from 223,496 for the comparable periods. As a result of the increase in compensated resident days, average facility occupancy in domestic facilities increased to 96.9% of capacity in First Half of 1997 compared to 95.7% in First Half of 1996. Operating expenses increased by 45.8% to $77.6 million in First Half 1997 compared to $53.2 million in First Half 1996. This increase primarily reflected the eight facilities that opened in 1996 and 1997, as described above. Depreciation and amortization increased by 65.5% to $2.7 million in the First Half 1997 from $1.6 million in the First Half 1996. This increase is due to deferred charge amortization attributable to the new facilities and depreciation associated with the purchase of two facilities. Contributions from operations increased by 55.9% to $12.5 million in First Half 1997 from $8.0 million in First Half 1996 due primarily to the opening of the South Bay Correctional Facility in February 1997, the openings of the Queens Private Correctional Facility, Travis County Community Justice Center and Fulham Correctional Center in March 1997, improved occupancy at the Central Texas Parole Violator Facility, and a full six months of operating results at the Marshall County Correctional Facility which opened in June 1996. General and administrative expenses increased by 24% to $5.5 million in First Half 1997 from $4.4 million in First Half 1996. This increase is primarily attributable to increased business development activities in response to additional interest in the Company's services. Operating income increased by 94.4% to $7.1 million in First Half 1997 from $3.6 million in First Half 1996. As described above, the opening of four facilities and improved occupancy at the Central Texas Parole Violator Facility were the principal factors contributing to the increase in operating income during Second Quarter 1997. Page 12 of 16

13 WACKENHUT CORRECTIONS CORPORATION Income before taxes and equity loss increased by 59.9% to $7.9 million in First Half 1997 from $4.9 million in First Half 1996 due to the factors described above, offset by lower interest income since the Company has deployed cash to strategic opportunities. Provision for income taxes increased to $3.1 million in First Half 1997 from $1.8 million in First Half 1996 due to higher taxable income, and an increase in the Company's effective tax rate. Equity income of affiliates increased 173% to $497,000 for First Half 1997 from $182,000 in First Half 1996. The current year increase results from two expansions at the H.M. Prison Doncaster (Doncaster, England) in June 1996 and March 1997, and income earned from two court escort contracts that commenced operations in May 1996. Net income increased by 61.6% to $5.3 million in First Half 1997 from $3.3 million in First Half 1996 as a result of the factors described above. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. Page 13 of 16

14 WACKENHUT CORRECTIONS CORPORATION PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The nature of the Corporation's business results in claims or litigation against the Corporation for damages arising from the conduct of its employees or others. Except for routine litigation incidental to the business of the Corporation, there are no pending material legal proceedings to which the Corporation or any of its subsidiaries is a party or to which any of their property is subject. The Corporation believes that the outcome of the proceedings to which it is currently a party will not have a material adverse effect upon its operations or financial condition. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of the Corporation was held on April 24, 1997 in Palm Beach Gardens, Florida. All directors nominated for election were elected by a majority of the votes cast and the tabulation of the votes cast were as follows: VOTES FOR VOTES WITHHELD Norman A. Carlson 20,881,163 46,191 Benjamin R. Civiletti 20,847,433 79,921 Manuel J. Justiz 20,877,433 49,921 Floretta McKenzie 20,876,613 50,741 John Ruffle 20,880,233 47,121 Anthony P. Travisono 20,879,813 47,541 George R. Wackenhut 20,879,063 48,291 Richard R. Wackenhut 20,881,883 45,471 George C. Zoley 20,881,933 45,421 The second matter voted upon at the Annual Meeting was the ratification of the action of the Board of Directors appointing the firm of Arthur Andersen LLP to be the independent certified public accountants of the Corporation for the fiscal year 1997. The tabulation of the votes on this matter was as follows: For: 20,874,560 Against: 17,970 Abstain: 34,824 ITEM 5. OTHER INFORMATION Not applicable. Page 14 of 16

15 WACKENHUT CORRECTIONS CORPORATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - The following exhibits are filed as part of this quarterly report. Exhibit No. Description 4.1 Credit Agreement, dated as of June 19, 1997, by and among Wackenhut Corrections Corporation, as Borrower, NationsBank National Association, as Agent and as Lender, ScotiaBanc Inc. and Barnett Bank, N.A., as Co-Agents and as Lenders, and the Lenders Party thereto from time to time. 4.2 Participation Agreement, dated as of June 19, 1997, among Wackenhut Corrections Corporation, as Construction Agent and as Lessee, First Security Bank, National Association, as Owner Trustee under the Wackenhut Corrections Trust 1997-1, the Various Banks and Other Lending Institutions which are Parties thereto from time to time, as Holders, the Various Banks and Other Lending Institutions which are parties thereto from time to time, as the Lenders, and NationsBank, National Association, as Administrative Agent for the Lenders. 4.3 Credit Agreement, dated as of June 19, 1997, among First Security Bank, National Association, as Owner Trustee for Wackenhut Corrections Trust 1997, as Borrower, the Several Lenders from time to time parties thereto, and NationsBank, National Association, as Administrative Agent. 4.4 Second Amended and Restated Trust Agreement (Wackenhut Corrections Trust 1997-1), dated as of June 19, 1997, among NationsBank, National Association, and the other financial institutions parties thereto, as Holders, and First Security Bank, National Association, as Owner Trustee. 4.5 Security Agreement, dated as of June 19, 1997, between First Security Bank, National Association, as Owner Trustee under the Wackenhut Corrections Trust 1997-1, and NationsBank, National Association, as Agent for the Lenders and Holders. 4.6 Lease Agreement dated as of June 19, 1997, between First Security Bank, National Association, as Owner Trustee under the Wackenhut Corrections Trust 1997-1, as Lessor, and Wackenhut Corrections Corporation, as Lessee. 4.7 Agency Agreement, date as of June 19, 1997, between Wackenhut Corrections Corporation, as Construction Agent, and First Security Bank National Association, as Owner Trustee under the Wackenhut Corrections Trust 1997-1, as Lessor. 4.8 Guaranty Agreement (Series A Obligations), dated as of June 19, 1997, by and among Wackenhut Corrections Corporation, as guarantor to NationsBank, National Association, as Administrative Agent. 27 Financial Data Schedule (for S.E.C. use only). (b) Reports on Form 8-K - The Corporation did not file a Form 8-K during the first half of 1997. Page 15 of 16

16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. August 11, 1997 /s/ John G. O'Rourke -------------------------------- John G. O'Rourke Senior Vice President - Finance, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) Page 16 of 16

1 EXHIBIT 4.1 ================================================================================ CREDIT AGREEMENT by and among WACKENHUT CORRECTIONS CORPORATION as Borrower, NATIONSBANK, NATIONAL ASSOCIATION, as Agent and as Lender, SCOTIABANC INC. BARNETT BANK, N.A., as Co-Agents and as Lenders, and THE LENDERS PARTY HERETO FROM TIME TO TIME June 19, 1997 ================================================================================

2 TABLE OF CONTENTS Page ARTICLE I Definitions and Terms 1.1. Definitions..............................................................................................2 1.2. Rules of Interpretation.................................................................................24 ARTICLE II The Revolving Credit Facility 2.1. Revolving Loans.........................................................................................26 2.2. Payment of Interest.....................................................................................30 2.3. Payment of Principal....................................................................................30 2.4. Non-Conforming Payments.................................................................................30 2.5. Notes...................................................................................................31 2.6. Pro Rata Payments.......................................................................................31 2.7. Reductions..............................................................................................31 2.8. Conversions and Elections of Subsequent Interest Periods................................................32 2.9. Increase and Decrease in Amounts........................................................................32 2.10. Facility Fees...........................................................................................33 2.11. Deficiency Advances.....................................................................................33 2.12. Use of Proceeds.........................................................................................33 2.13. Extension of Stated Termination Date....................................................................33 2.14. Swing Line..............................................................................................34 ARTICLE III Letters of Credit 3.1. Letters of Credit.......................................................................................36 3.2. Reimbursement...........................................................................................36 3.3. Letter of Credit Facility Fees..........................................................................40 3.4. Administrative Fees.....................................................................................40 ARTICLE IV Change in Circumstances 4.1. Increased Cost and Reduced Return.......................................................................41 4.2. Limitation on Types of Loans............................................................................42 i

3 4.3. Illegality..............................................................................................42 4.4. Treatment of Affected Loans.............................................................................43 4.5. Compensation............................................................................................43 4.6. Taxes...................................................................................................44 4.7. Replacement Banks.......................................................................................45 4.8. Lending Office..........................................................................................46 ARTICLE V Conditions to Making Loans and Issuing Letters of Credit 5.1. Conditions of Initial Advance..........................................................................47 5.2. Conditions of Revolving Loans and Letter of Credit......................................................49 ARTICLE VI Representations and Warranties 6.1. Organization and Authority..............................................................................51 6.2. Loan Documents..........................................................................................51 6.3. Solvency................................................................................................52 6.4. Subsidiaries and Stockholders...........................................................................52 6.5. Ownership Interests.....................................................................................52 6.6. Financial Condition.....................................................................................52 6.7. Title to Properties.....................................................................................53 6.8. Taxes...................................................................................................53 6.9. Other Agreements........................................................................................53 6.10. Litigation..............................................................................................53 6.11. Margin Stock............................................................................................54 6.12. Investment Company......................................................................................54 6.13. Patents, Etc............................................................................................54 6.14. No Untrue Statement.....................................................................................54 6.15. No Consents, Etc........................................................................................54 6.16. Employee Benefit Plans..................................................................................55 6.17. No Default..............................................................................................56 6.18. Hazardous Materials.....................................................................................56 6.19. Employment Matters......................................................................................56 6.20. RICO....................................................................................................56 ARTICLE VII Affirmative Covenants 7.1. Financial Reports, Etc..................................................................................58 7.2. Maintain Properties.....................................................................................59 ii

4 7.3. Existence, Qualification, Etc...........................................................................59 7.4. Regulations and Taxes...................................................................................59 7.5. Insurance...............................................................................................60 7.6. True Books..............................................................................................60 7.7. Right of Inspection.....................................................................................60 7.8. Observe all Laws........................................................................................60 7.9. Governmental Licenses...................................................................................60 7.10. Covenants Extending to Other Persons....................................................................60 7.11. Officer's Knowledge of Default..........................................................................60 7.12. Suits or Other Proceedings..............................................................................61 7.13. Notice of Discharge of Hazardous Material or Environmental Complaint....................................61 7.14. Environmental Compliance................................................................................61 7.15. Indemnification.........................................................................................61 7.16. Further Assurances......................................................................................62 7.17. Employee Benefit Plans..................................................................................62 7.18. Continued Operations....................................................................................62 7.19. Additional Support Documents............................................................................63 ARTICLE VIII Negative Covenants 8.1. Financial Covenants.....................................................................................64 8.2. Acquisitions............................................................................................65 8.3. Capital Expenditures....................................................................................65 8.4. Liens...................................................................................................65 8.5. Indebtedness............................................................................................66 8.6. Transfer of Assets......................................................................................67 8.7. Investments.............................................................................................67 8.8. Merger or Consolidation.................................................................................67 8.9. Restricted Payments.....................................................................................68 8.10. Transactions with Affiliates............................................................................68 8.11. Compliance with ERISA...................................................................................68 8.12. Fiscal Year.............................................................................................69 8.13. Dissolution, etc........................................................................................69 8.14. Limitations on Sales and Leasebacks.....................................................................69 8.15. Change in Control.......................................................................................69 8.16. [Reserved] 8.17. Negative Pledge Clauses................................................................................69 8.18. Prepayments, Etc. of Indebtedness.......................................................................70 iii

5 ARTICLE IX Events of Default and Acceleration 9.1. Events of Default.......................................................................................71 9.2. Agent to Act............................................................................................74 9.3. Cumulative Rights.......................................................................................74 9.4. No Waiver...............................................................................................74 9.5. Allocation of Proceeds..................................................................................74 9.6. Limitation..............................................................................................75 ARTICLE X The Agent 10.1. Appointment, Powers, and Immunities.....................................................................76 10.2. Reliance by Agent.......................................................................................76 10.3. Defaults................................................................................................77 10.4. Rights as Lender........................................................................................77 10.5. Indemnification.........................................................................................77 10.6. Non-Reliance on Agent and Other Lenders.................................................................78 10.7. Resignation of Agent....................................................................................78 10.8. Sharing of Payments, etc................................................................................78 10.9. Fees....................................................................................................79 ARTICLE XI Miscellaneous 11.1. Assignments and Participations..........................................................................80 11.2. Notices.................................................................................................82 11.3. Right of Set-off; Adjustments...........................................................................83 11.4. Survival................................................................................................84 11.5. Expenses................................................................................................84 11.6. Amendments and Waivers..................................................................................84 11.7. Counterparts............................................................................................85 11.8. Termination.............................................................................................85 11.9. Indemnification.........................................................................................85 11.10. Severability............................................................................................86 11.11. Entire Agreement........................................................................................86 11.12. Agreement Controls......................................................................................86 11.13. Usury Savings Clause....................................................................................86 11.14. Governing Law; Waiver of Jury Trial.....................................................................87 11.15. Judgment Currency.......................................................................................88 11.16. Economic and Monetary Union in the European Community...................................................88 iv

6 11.17. Confidentiality.........................................................................................89 EXHIBIT A Applicable Revolving Credit Commitment Percentages...................................................A-1 EXHIBIT B Form of Assignment and Acceptance....................................................................B-1 EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative...................................C-1 EXHIBIT D-1 Form of Borrowing Notice..........................................................................D-1-1 EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans........................................................D-2-1 EXHIBIT E Form of Interest Rate Selection Notice................................................................E-1 EXHIBIT F-1 Form of Revolving Note............................................................................F-1-1 EXHIBIT F-2 Form of Swing Line Note...........................................................................F-2-1 EXHIBIT G Form of Opinion of Borrower's Counsel.................................................................G-1 EXHIBIT H Compliance Certificate................................................................................H-1 EXHIBIT I Form of Facility Guaranty.............................................................................I-1 EXHIBIT J Form of LC Account Agreement..........................................................................J-1 Schedule 6.4 Subsidiaries and Investments in Other Persons......................................................S-1 Schedule 6.6 Indebtedness.......................................................................................S-2 Schedule 6.7 Liens..............................................................................................S-3 Schedule 6.10 Litigation........................................................................................S-4 Schedule 7.5 Insurance.........................................................................................S-5 v

7 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of June __, 1997 (the "Agreement"), is made by and among WACKENHUT CORRECTIONS CORPORATION, a Florida corporation having its principal place of business in Palm Beach Gardens, Florida (the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, in its capacity as a Lender ("NationsBank"), and each other financial institution executing and delivering a signature page hereto and each other financial institution which may hereafter execute and deliver an instrument of assignment with respect to this Agreement pursuant to Section 11.1 (hereinafter such financial institutions may be referred to individually as a "Lender" or collectively as the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, in its capacity as agent for the Lenders (in such capacity, and together with any successor agent appointed in accordance with the terms of Section 10.7, the "Agent"); WITNESSETH: WHEREAS, the Borrower has requested that the Lenders make available to the Borrower a multi-currency revolving credit facility of up to $30,000,000, the proceeds of which are to be used for working capital, acquisitions, and general corporate purposes and which shall include a letter of credit facility of up to $10,000,000 for the issuance of standby letters of credit; and WHEREAS, the Lenders are willing to make such revolving credit and letter of credit facilities available to the Borrower upon the terms and conditions set forth herein; NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as follows:

8 ARTICLE I Definitions and Terms 1.1. Definitions. For the purposes of this Agreement, in addition to the definitions set forth above, the following terms shall have the respective meanings set forth below: "Acquisition" means the acquisition of (i) a controlling equity interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person. "Advance" means a borrowing under the Revolving Credit Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan. "Advance Date Exchange Rate" means, with respect to a specified Advance or Loan in an Alternative Currency, the Spot Rate of Exchange as of the date two Business Days preceding the date such Advance is originally made, provided that, if such Advance or Loan is Continued for a subsequent Interest Period or Converted pursuant to Section 2.8, the Advance Date Exchange Rate with respect to such Loan shall be the Spot Rate of Exchange two Business Days preceding the effective date of the latest Continuation or Conversion of such Advance or Loan, and the Dollar Value of such Advance or Loan shall be adjusted as set forth in Section 2.1(b). "Affiliate" means any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with the Borrower; or (ii) which beneficially owns or holds 5% or more of any class of the outstanding voting stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of the Borrower; or 5% or more of any class of the outstanding voting stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by the Borrower. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting stock, by contract or otherwise. "Alternative Currency" means Pounds Sterling, Australian Dollars, Canadian Dollars, Euro Currency and with the prior written consent of all Lenders and the Agent, any other lawful currency other than Dollars which is freely transferable and convertible into Dollars in the United States currency market; provided, however, that an Alternative Currency shall only be available to the Borrower if each Lender shall have determined (which determination shall be conclusive) that it has access to such Alternative Currency on terms reasonably acceptable to such Lender and that the Alternative Currency is freely transferable and convertible into Dollars. 2

9 "Alternative Currency Equivalent Amount" means with respect to a specified Alternative Currency and a specified Dollar amount, the amount of such Alternative Currency into which such Dollar amount would be Converted, based on the applicable Advance Date Exchange Rate. "Applicable Commitment Percentage" means, with respect to each Lender at any time, a fraction, the numerator of which shall be such Lender's Revolving Credit Commitment and the denominator of which shall be the Total Revolving Credit Commitment, which Applicable Commitment Percentage for each Lender as of the Closing Date is as set forth in Exhibit A; provided that the Applicable Commitment Percentage of each Lender shall be increased or decreased to reflect any assignments to or by such Lender effected in accordance with Section 11.1. "Applicable Lending Office" means, for each Lender and for each Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such Lender) designated for such Type of Loan on the signature pages hereof or such other office of such Lender (or an affiliate of such Lender) as such Lender may from time to time specify to the Agent and the Borrower by written notice in accordance with the terms hereof as the office by which its Loans of such Type are to be made and maintained. "Applicable Margin" means for each Eurodollar Rate Loan, or Swing Line Loan, that percent per annum set forth below, which shall be based upon the Consolidated Debt Service Coverage Ratio for the Four-Quarter Period most recently ended as specified below: - -------------------------------------------------------------------------------- Tier Consolidated Debt Service Applicable Margin Coverage Ratio - -------------------------------------------------------------------------------- I Equal to or greater than 4.00 to 1.00 0.375% - -------------------------------------------------------------------------------- II Equal to or greater than 3.25 to 1.00 0.450% and less than 4.00 to 1.00 - -------------------------------------------------------------------------------- III Equal to or greater than 2.75 to 1.00 0.625% and less than 3.25 to 1.00 - -------------------------------------------------------------------------------- IV Equal to or greater than 2.00 to 1.00 0.875% and less than 2.75 to 1.00 - -------------------------------------------------------------------------------- The Applicable Margin shall be established at the end of each fiscal quarter of the Borrower (each, a "Determination Date"). Any change in the Applicable Margin following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Agent pursuant to Section 7.1(a)(ii) and Section 7.1(b)(ii), subject to review and approval of such computations by the Agent, and shall be effective commencing on the date following the date such certificate is received (or, if earlier, the date such certificate was required to be delivered) until the date following the date on which a 3

10 new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if the Borrower shall fail to deliver any such certificate within five (5) days after the time period required by Section 7.1, then the Applicable Margin shall be Tier IV from the date such certificate was required to be delivered until the appropriate certificate is so delivered. From the Closing Date to the date following the date on which the compliance certificate required by Section 7.1(b)(ii) is delivered for the third (3rd) quarter of fiscal year 1997, the Applicable Margin shall be Tier II. "Applicable Unused Fee" means that percent per annum set forth below, which shall be based upon the Consolidated Debt Service Coverage Ratio for the Four-Quarter Period most recently ended as specified below: - -------------------------------------------------------------------------------- Tier Consolidated Debt Service Applicable Unused Fee Coverage Ratio - -------------------------------------------------------------------------------- I Equal to or greater than 4.00 to 1.00 0.125% - -------------------------------------------------------------------------------- II Equal to or greater than 3.25 to 1.00 0.150% and less than 4.00 to 1.00 - -------------------------------------------------------------------------------- III Equal to or greater than 2.75 to 1.00 0.200% and less than 3.25 to 1.00 - -------------------------------------------------------------------------------- IV Equal to or greater than 2.00 to 1.00 0.250% and less than 2.75 to 1.00 - -------------------------------------------------------------------------------- The Applicable Unused Fee shall be established on each Determination Date. Any change in the Applicable Unused Fee following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Agent pursuant to Section 7.1(a)(ii) and Section 7.1(b)(ii), subject to review and approval of such computations by the Agent and shall be effective commencing on the date following the date such certificate is received (or, if earlier, the date such certificate was required to be delivered) until the date following the date on which a new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if the Borrower shall fail to deliver any such certificate within five (5) days after the time period required by Section 7.1, then the Applicable Unused Fee shall be Tier IV from the date such certificate was required to be delivered until the appropriate certificate is so delivered. From the Closing Date to the date following the date on which the compliance certificate required by Section 7.1(b)(ii) is delivered for the third (3rd) quarter of fiscal year 1997, the Applicable Margin shall be Tier II. "Applications and Agreements for Letters of Credit" means, collectively, the Applications and Agreements for Letters of Credit, or similar documentation, executed by the Borrower from time to time and delivered to the Issuing Bank to support the issuance of Letters of Credit. 4

11 "Assessment Rate" means, for any day, the annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) which is payable by the Agent (in its individual capacity) to the Federal Deposit Insurance Corporation (or any successor) for deposit insurance for Dollar time deposits with the Agent (in its individual capacity) at its Principal Office as determined by the Agent. The CD Rate shall be adjusted automatically on and as of the effective date of any change in the Assessment Rate. "Assignment and Acceptance" shall mean an Assignment and Acceptance in the form of Exhibit B (with blanks appropriately filled in) executed and delivered to the Agent by the parties thereto in connection with an assignment of a Lender's interest under this Agreement pursuant to Section 11.1. "Australian Dollars" means the official currency of Australia. "Authorized Representative" means any of the Chief Executive Officer, President, any Senior Vice President or Controller of the Borrower or, with respect to financial matters, the chief financial officer or Controller of the Borrower, or any other Person expressly designated by the Board of Directors of the Borrower (or the appropriate committee thereof) as an Authorized Representative of the Borrower, as set forth from time to time in a certificate in the form of Exhibit C. "Base Rate" means, for any day, the rate per annum equal to the higher of (a) the Federal Funds Rate for such day plus one-half of one percent (0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate. "Base Rate Loan" means a Dollar denominated Loan for which the rate of interest is determined by reference to the Base Rate. "Base Rate Refunding Loan" means a Base Rate Loan made either to (i) satisfy Reimbursement Obligations arising from a drawing under a Letter of Credit or (ii) pay NationsBank in respect of Swing Line Outstandings. "Board" means the Board of Governors of the Federal Reserve System (or any successor body). "Borrower's Account" means a demand deposit account number [_____________________] or any successor account with the Agent, which may be maintained at one or more offices of the Agent or an agent of the Agent. "Borrowing Notice" means the notice delivered by an Authorized Representative in connection with an Advance under the Revolving Credit Facility or a Swing Line Loan, in the forms of Exhibits D-1 and D-2, respectively. 5

12 "Business Day" means, (i) with respect to any Floating Rate Loan, any day which is not a Saturday, Sunday or a day on which banks in the States of New York and North Carolina are authorized or obligated by law, executive order or governmental decree to be closed, and (ii) with respect to any Eurodollar Rate Loan, any day which is a Business Day, as described above, and on which the relevant international financial markets are open for the transaction of business contemplated by this Agreement in London, England, New York, New York and Charlotte, North Carolina. "Canadian Dollar" means the official currency of Canada. "Capital Expenditures" means, with respect to the Borrower and its Subsidiaries, for any period the sum of (without duplication) (i) all expenditures (whether paid in cash or accrued as liabilities) by the Borrower or any Subsidiary during such period for items that would be classified as "property, plant or equipment" or comparable items on the consolidated balance sheet of the Borrower and its Subsidiaries, including without limitation all transactional costs incurred in connection with such expenditures provided the same have been capitalized, excluding, however, the amount of any Capital Expenditures paid for with proceeds of casualty insurance as evidenced in writing and submitted to the Agent together with any compliance certificate delivered pursuant to Section 7.1(a) or (b), and (ii) with respect to any Capital Lease entered into by the Borrower or its Subsidiaries during such period, the present value of the lease payments due under such Capital Lease over the term of such Capital Lease applying a discount rate equal to the interest rate provided in such Capital Lease (or in the absence of a stated interest rate, that rate used in the preparation of the financial statements described in Section 7.1(a)), all the foregoing in accordance with GAAP applied on a Consistent Basis. "Capital Leases" means all leases which have been or should be capitalized in accordance with GAAP as in effect from time to time including Statement No. 13 of the Financial Accounting Standards Board and any successor thereof. "CD Rate" means the interest rate per annum calculated according to the following formula: CD = Floating CD Rate + Assessment + Applicable ----------------------- Rate 1 - Reserve Requirement Rate Margin "CD Rate Loans" means Loans that bear interest at rates based upon the CD Rate. "Change of Control" means, at any time: (i) any "person" or "group" (each as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) either (A) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act ), directly or indirectly, of Voting Stock of the Borrower (or securities convertible into or exchangeable for such Voting Stock) 6

13 representing 20% or more of the combined voting power of all Voting Stock of the Borrower (on a fully diluted basis) or (B) otherwise has the ability, directly or indirectly, to elect a majority of the board of directors of the Borrower; provided, however, that this subsection shall apply only to any "person" or "group" (each as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) who does not qualify hereunder as of the Closing Date. (ii) during any period of up to 24 consecutive months, commencing on the Closing Date, individuals who at the beginning of such 24-month period were directors of the Borrower shall cease for any reason (other than the death, disability or retirement of an officer of the Borrower that is serving as a director at such time so long as another officer of the Borrower replaces such Person as a director) to constitute a majority of the board of directors of the Borrower; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence on the management or policies of the Borrower. "Closing Date" means the date as of which this Agreement is executed by the Borrower, the Lenders and the Agent and on which the conditions set forth in Section 5.1 have been satisfied. "Code" means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. "Consistent Basis" in reference to the application of GAAP means the accounting principles observed in the period referred to are comparable in all material respects to those applied in the preparation of the audited financial statements of the Borrower referred to in Section 6.6(a). "Consolidated Debt Service" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without duplication, (i) Consolidated Interest Expense and (ii) Consolidated Lease Payments for such period, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Debt Service Coverage Ratio" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter-Period ending on the date of computation thereof, the ratio of (i) Consolidated EBITDA plus Consolidated Lease Payments for such period to (ii) Consolidated Debt Service for such period. "Consolidated EBITDA" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without 7

14 duplication, (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income, (iv) amortization, and (v) depreciation, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Fixed Charge Coverage Ratio" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the ratio of (i) Consolidated EBITDA plus Consolidated Lease Payments for such period to (ii) Consolidated Fixed Charges for such period. "Consolidated Fixed Charges" means, with respect to Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without duplication, (i) Consolidated Interest Expense, (ii) required principal payments of Consolidated Indebtedness, (iii) Consolidated Lease Payments for such period and (iv) all Restricted Payments, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Indebtedness" means all Indebtedness for Money Borrowed of the Borrower and its Subsidiaries plus all TROL Indebtedness, all determined on a consolidated basis. "Consolidated Interest Expense" means, with respect to any period of computation thereof, the gross interest expense of the Borrower and its Subsidiaries, including without limitation (i) the current amortized portion of debt discounts to the extent included in gross interest expense, (ii) the current amortized portion of all fees (including fees payable in respect of any Swap Agreement and Letters of Credit) payable in connection with the incurrence of Indebtedness to the extent included in gross interest expense and (iii) the portion of any payments made in connection with Capital Leases allocable to interest expense, in each of the foregoing cases determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; provided that Consolidated Interest Expense shall not include payments with respect to the TROL Leases. "Consolidated Lease Payments" means the gross amount of all lease or rental payments, whether or not characterized as rent, including rental payments under TROL Leases of the Borrower and its Subsidiaries, excluding payments in respect of Capital Leases constituting Indebtedness, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Leverage Ratio" means, as of the date of computation thereof, the ratio of (i) Consolidated Indebtedness (determined as at such date) to (ii) Consolidated EBITDA plus all payments with respect to TROL Indebtedness which are in the nature of interest (for the Four-Quarter Period ending on (or most recently ended prior to) such date). "Consolidated Net Income" means, for any period of computation thereof, the gross revenues from operations of the Borrower and its Subsidiaries (including payments received by the Borrower and its Subsidiaries of (i) interest income, and (ii) dividends and 8

15 distributions, including management fees, made in the ordinary course of their businesses by a Special Purpose Subsidiary or other Persons in which investment is permitted pursuant to this Agreement, less all operating and non-operating expenses of the Borrower and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; but excluding (for all purposes other than compliance with Section 8.1(a) hereof) as income: (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Borrower or its Subsidiaries, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up of any asset, and (v) any other net gain or loss or credit or debit of an extraordinary nature as determined in accordance with GAAP applied on a Consistent Basis. "Consolidated Net Worth" means, as of any date on which the amount thereof is to be determined, Consolidated Shareholders' Equity minus (without duplication of deductions in respect of items already deducted in arriving at surplus and retained earnings) all reserves (other than contingency reserves not allocated to any particular purpose), including without limitation reserves for depreciation, depletion, amortization, obsolescence, deferred income taxes, insurance and inventory valuation all as determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Shareholders' Equity" means, as of any date on which the amount thereof is to be determined, the sum of the following in respect of the Borrower and its Subsidiaries (determined on a consolidated basis and excluding any upward adjustment after the Closing Date due to revaluation of assets): (i) the amount of issued and outstanding share capital, plus (ii) the amount of additional paid-in capital and retained earnings (or, in the case of a deficit, minus the amount of such deficit), plus (iii) the amount of any foreign currency translation adjustment (if positive, or, if negative, minus the amount of such translation adjustment), minus (iv) the amount of any treasury stock, all as determined in accordance with GAAP applied on a Consistent Basis. "Consolidated Total Assets" means, as of the date on which the amount thereof is to be determined, the net book value of all assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Total Capitalization" means, as of any date on which the amount thereof is to be determined, the sum of Consolidated Indebtedness plus Consolidated Shareholders' Equity. "Contingent Obligation" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other 9

16 Person. The amount of any Person's obligation under any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness guaranteed thereby). "Continue", "Continuation", and "Continued" shall refer to the continuation pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of one Type as a Eurodollar Rate Loan of the same Type from one Interest Period to the next Interest Period. "Convert", "Conversion", and "Converted" shall refer to a conversion pursuant to Section 2.8 or Article IV of one Type of Loan into another Type of Loan. "Cost of an Acquisition" means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (i) the value of the capital stock, warrants or options to acquire capital stock of Borrower or any Subsidiary to be transferred in connection therewith, (ii) the amount of any cash and fair market value of other property (excluding property described in clause (i) and the unpaid principal amount of any debt instrument) given as consideration, (iii) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Indebtedness incurred, assumed or acquired by the Borrower or any Subsidiary in connection with such Acquisition, (iv) all additional purchase price amounts in the form of earnouts and other contingent obligations that should be recorded on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of covenants not to compete, consulting agreements that should be recorded on financial statements of the Borrower and its Subsidiaries in accordance with GAAP, (vi) the aggregate fair market value of all other consideration given by the Borrower or any Subsidiary in connection with such Acquisition, and (vii) out of pocket transaction costs for the services and expenses of attorneys, accountants and other consultants incurred in effecting such transaction, and other similar transaction costs so incurred. "Default" means any event or condition which, with the giving or receipt of notice or lapse of time or both, would constitute an Event of Default hereunder. "Default Rate" means (i) with respect to each Eurodollar Rate Loan, until the end of the Interest Period applicable thereto, a rate of two percent (2%) above the Eurodollar Rate applicable to such Loan, and thereafter at a rate of interest per annum which shall be two percent (2%) above the Base Rate, (ii) with respect to Floating Rate Loans, at a rate of interest per annum which shall be two percent (2%) above the Base Rate, and (iii) in any case, the maximum rate permitted by applicable law, if lower. "Direct Foreign Subsidiary" means any Subsidiary of the Borrower that is not a Domestic Subsidiary a majority of whose outstanding Voting Stock is owned by the Borrower or a Domestic Subsidiary. 10

17 "Dollar Equivalent Amount" means, with respect to a specified Alternative Currency amount, the amount of Dollars into which the Alternative Currency amount would be converted, based on the applicable Advance Date Exchange Rate. "Dollar Value" of an Advance or a Loan in an Alternative Currency means the Dollar Equivalent Amount of the principal amount of such Advance or Loan based on the Advance Date Exchange Rate with respect to such Advance or Loan, as recorded in the Agent's records pursuant to Section 2.1. "Dollars" and the symbol "$" means dollars constituting legal tender for the payment of public and private debts in the United States of America. "Domestic Subsidiary" means any Subsidiary of the Borrower organized under the laws of the United States of America or a state or territory thereof. "Eligible Assignee" means (i) a Lender; (ii) an affiliate of a Lender; and (iii) any other Person approved by the Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 11.1; the Borrower, such approval not to be unreasonably withheld or delayed by the Borrower, it being agreed that Borrower may withhold its approval if as a result of such assignment the Borrower incurs increased cost under Section 4.6; provided, however, that neither the Borrower nor an affiliate of the Borrower shall qualify as an Eligible Assignee. "Eligible Securities" means the following obligations and any other obligations previously approved in writing by the Agent: (a) Government Securities; (b) obligations of any corporation organized under the laws of any state of the United States of America or under the laws of any other nation, payable in the United States of America, expressed to mature not later than 270 days following the date of issuance thereof and rated in an investment grade rating category by S&P and Moody's; (c) interest bearing demand or time deposits issued by any Lender or certificates of deposit maturing within one year from the date of issuance thereof and issued by a bank or trust company organized under the laws of the United States or of any state thereof having capital surplus and undivided profits aggregating at least $400,000,000 and being rated "A-3" or better by S&P or "A" or better by Moody's; (d) Repurchase Agreements; (e) Municipal Obligations; (f) Pre-Refunded Municipal Obligations; 11

18 (g) shares of mutual funds which invest in obligations described in paragraphs (a) through (f) above, the shares of which mutual funds are at all times rated "AAA" by S&P; (h) tax-exempt or taxable adjustable rate preferred stock issued by a Person having a rating of its long term unsecured debt of "A" or better by S&P or "A- 3" or better by Moody's; and (i) asset-backed remarketed certificates of participation representing a fractional undivided interest in the assets of a trust, which certificates are rated at least "A-1" by S&P and "P-1" by Moody's. "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (i) is maintained for employees of the Borrower or any of its ERISA Affiliates or is assumed by the Borrower or any of its ERISA Affiliates in connection with any Acquisition or (ii) has at any time been maintained for the employees of the Borrower or any current or former ERISA Affiliate. "Environmental Laws" means any federal, state or local statute, law, ordinance, code, rule, regulation, order, decree, permit or license regulating, relating to, or imposing liability or standards of conduct concerning, any environmental matters or conditions, environmental protection or conservation, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended; the Superfund Amendments and Reauthorization Act of 1986, as amended; the Resource Conservation and Recovery Act, as amended; the Toxic Substances Control Act, as amended; the Clean Air Act, as amended; the Clean Water Act, as amended; together with all regulations promulgated thereunder, and any other "Superfund" or "Superlien" law." "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder. "ERISA Affiliate", as applied to the Borrower, means any Person or trade or business which is a member of a group which is under common control with the Borrower, who together with the Borrower, is treated as a single employer within the meaning of Section 414(b) and (c) of the Code. "Euro Currency" means the official currency, if any, of the European Union. "Eurodollar Rate Loan" means Loans that bear interest at rates based upon the Eurodollar Rate. 12

19 "Eurodollar Rate" means the interest rate per annum calculated according to the following formula: Eurodollar = Interbank Offered Rate + Applicable ------------------------ Rate 1 - Reserve Requirement Margin "Event of Default" means any of the occurrences set forth as such in Section 9.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. "Facility Guaranty" means each Guaranty and Suretyship Agreement between one or more Guarantors and the Agent for the benefit of the Lenders, delivered as of the Closing Date and otherwise pursuant to Section 7.19, as the same may be amended, modified or supplemented. "Facility Termination Date" means the date on which the Revolving Credit Termination Date shall have occurred, no Letters of Credit shall remain outstanding and the Borrower shall have fully, finally and irrevocably paid and satisfied all Obligations. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Agent (in its individual capacity) on such day on such transactions as determined by the Agent. "Fiscal Year" means the twelve month fiscal period of the Borrower and its Subsidiaries commencing on the Monday after the Sunday closest to the calendar year end of each calendar year and ending on the Sunday closest to the calendar year end of each calendar year. "Floating CD Rate" means, for any CD Rate Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be the average of the bid rates quoted to the Agent at approximately 10:00 a.m. (or as soon thereafter as practicable) by two (2) or more certificate of deposit dealers of recognized national standing selected by the Agent for the purchase at face value of certificates of deposit of the Agent having a term of ninety (90) days and in an amount comparable to the principal amount of the CD Loan to be made by the Agent. "Floating Rate Loan" means Base Rate Loans or CD Rate Loans or both. 13

20 "Foreign Benefit Law" means any applicable statute, law, ordinance, code, rule, regulation, order or decree of any foreign nation or any province, state, territory, protectorate or other political subdivision thereof regulating, relating to, or imposing liability or standards of conduct concerning, any Employee Benefit Plan. "Four-Quarter Period" means a period of four full consecutive fiscal quarters of the Borrower and its Subsidiaries, taken together as one accounting period. "Funding Bank" means any banking institution approved by the Agent located within a country which country's currency has been approved by the Lenders as an Alternative Currency. "GAAP" or "Generally Accepted Accounting Principles" means generally accepted accounting principles, being those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the date of a report. "Government Securities" means direct obligations of, or obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by, the United States of America. "Governmental Authority" shall mean any Federal, state, municipal, national or other governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government. "Guarantors" means, at any date, the Subsidiaries who are required to be parties to a Facility Guaranty at such date. "Hazardous Material" means and includes any pollutant, contaminant, or hazardous, toxic or dangerous waste, substance or material (including without limitation petroleum products, asbestos-containing materials and lead), the generation, handling, storage, transportation, disposal, treatment, release, discharge or emission of which is subject to any Environmental Law. "Indebtedness" means with respect to any Person, without duplication, all Indebtedness for Money Borrowed, all indebtedness of such Person for the acquisition of property or arising under Rate Hedging Obligations, all indebtedness secured by any Lien on the property of such Person whether or not such indebtedness is assumed, all liability of such Person by way of endorsements (other than for collection or deposit in the ordinary course of business), all Contingent Obligations, including letters of credit, that portion of obligations with respect to Capital Leases and other items which in accordance with GAAP is required 14

21 to be classified as a liability on a balance sheet; but excluding all accounts payable and accruals in the ordinary course of business so long as payment therefor is due within one year; provided that in no event shall the term Indebtedness include surplus and retained earnings, lease obligations (other than pursuant to Capital Leases), reserves for deferred income taxes and investment credits, other deferred credits or reserves. "Indebtedness for Money Borrowed" means with respect to any Person, without duplication, all indebtedness in respect of money borrowed, including without limitation all Capital Leases and the deferred purchase price of any property or asset, evidenced by a promissory note, bond, debenture or similar written obligation for the payment of money (including conditional sales or similar title retention agreements), other than trade payables and short-term accounts payable incurred in the ordinary course of business. "Interbank Offered Rate" means, for any Eurodollar Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). "Interest Period" means, for each Eurodollar Rate Loan, a period commencing on the date such Eurodollar Rate Loan is made or Converted and ending, at the Borrower's option, on the date one, two, three or six months and nine months, if available, thereafter as notified to the Agent by the Authorized Representative three (3) Business Days prior to the beginning of such Interest Period; provided, that, (i) if the Authorized Representative fails to notify the Agent of the length of an Interest Period three (3) Business Days prior to the first day of such Interest Period, the Loan for which such Interest Period was to be determined shall be deemed to be a Base Rate Loan as of the first day thereof; (ii) if an Interest Period for a Eurodollar Rate Loan would end on a day which is not a Business Day, such Interest Period shall be extended to the next Business Day (unless such extension would cause the applicable Interest Period to end in the succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); 15

22 (iii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (iv) no Interest Period shall extend past the Stated Termination Date; and (v) there shall not be more than seven (7) Interest Periods in effect on any day. "Interest Rate Selection Notice" means the written notice delivered by an Authorized Representative in connection with the election of a subsequent Interest Period for any Eurodollar Rate Loan or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit E. "Issuing Bank" means initially NationsBank and thereafter any Lender which is successor to NationsBank as issuer of Letters of Credit under Article III. "LC Account Agreement" means the LC Account Agreement dated as of the date hereof between the Borrower and the Agent, as amended, modified or supplemented from time to time. "Letter of Credit" means a standby letter of credit issued by the Issuing Bank for the account of the Borrower in favor of a Person advancing credit or securing an obligation on behalf of the Borrower. "Letter of Credit Commitment" means, with respect to each Lender, the obligation of such Lender to acquire Participations in respect of Letters of Credit and Reimbursement Obligations up to an aggregate amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Letter of Credit Commitment as the same may be increased or decreased from time to time pursuant to this Agreement. "Letter of Credit Facility" means the facility described in Article III hereof providing for the issuance by the Issuing Bank for the account of the Borrower of Letters of Credit in an aggregate stated amount at any time outstanding not exceeding the Total Letter of Credit Commitment. "Letter of Credit Outstandings" means, as of any date of determination, the aggregate amount remaining undrawn under all Letters of Credit plus Reimbursement Obligations then outstanding. "Lien" means any interest in property securing any obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the lien or security interest arising 16

23 from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purposes of this Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, financing lease, or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes. "Loan" or "Loans" means any borrowing pursuant to an Advance under the Revolving Credit Facility. "Loan Documents" means this Agreement, the Notes, the Pledge Agreements, the Facility Guaranties, the LC Account Agreement, the Applications and Agreements for Letter of Credit, and all other instruments and documents heretofore or hereafter executed or delivered to or in favor of any Lender or the Agent in connection with the Loans made and transactions contemplated under this Agreement, as the same may be amended, supplemented or replaced from time to time. "Loan Parties" means the Borrower and the Guarantors. "Material Adverse Effect" means a material adverse effect on (i) the business, properties, operations or condition, financial or otherwise, of the Borrower and any of its Subsidiaries, taken as a whole, (ii) the ability of the Loan Parties to pay or perform their respective obligations, liabilities and indebtedness under the Loan Documents as such payment or performance becomes due in accordance with the terms thereof, or (iii) the rights, powers and remedies of the Agent or any Lender under any Loan Document or the validity, legality or enforceability thereof. "Material Subsidiary" means Domestic Subsidiaries and Direct Foreign Subsidiaries of Borrower existing on the Closing Date and in the case of any Domestic Subsidiary or Direct Foreign Subsidiary acquired or created after the Closing Date any direct or indirect Domestic Subsidiary or Direct Foreign Subsidiary of the Borrower which (i) has total assets equal to or greater than 5% of Consolidated Total Assets (calculated as of the most recent fiscal period with respect to which the Agent shall have received financial statements required to be delivered pursuant to Sections 8.01(a) or (b) (or if prior to delivery of any financial statements pursuant to such Sections, then calculated with respect to the Fiscal Year end financial statements referred in Section 7.01(f) (the "Required Financial Information")) or (ii) has revenues equal to or greater than 5% of total revenues of the Borrower and its Subsidiaries (calculated for the most recent period for which the Agent has received the Required Financial Information); provided, however, that notwithstanding the foregoing, the term "Material Subsidiaries" shall mean Domestic Subsidiaries and Direct Foreign Subsidiaries of the Borrower that together with the Borrower have assets equal to not less than 80% of Consolidated Total Assets (calculated as described above) and revenues of not less than 80% of total revenues of the Borrower and its Subsidiaries (calculated as described above); provided further that if more than one combination of Domestic Subsidiaries and Direct Foreign Subsidiaries satisfies such threshold, then those Domestic Subsidiaries and 17

24 Direct Foreign Subsidiaries determined by the Borrower to be "Material Subsidiaries" shall be specified by the Borrower. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, contributions or has made, or been obligated to make, contributions within the preceding six (6) Fiscal Years. "Municipal Obligations" means general obligations issued by, and supported by the full taxing authority of, any state of the United States of America or of any municipal corporation or other public body organized under the laws of any such state which are rated in the highest investment rating category by both S&P and Moody's. "NationsBank" means NationsBank, National Association. "NCMI" means NationsBanc Capital Markets, Inc. and its successors. "Non-Recourse Indebtedness" means Indebtedness of a Special Purpose Subsidiary the source of payment of which as it relates to such Special Purpose Subsidiary is limited to the assets of such Special Purpose Subsidiary or any other Special Purpose Subsidiary. "Notes" means, collectively, the promissory notes of the Borrower evidencing (i) Revolving Loans executed and delivered to the Lenders substantially in the form of Exhibit F- 1, and (ii) Swing Line Loans executed and delivered to the NationsBank substantially in the form of Exhibit F-2. "Obligations" means the obligations, liabilities and Indebtedness of the Borrower with respect to (i) the principal and interest on the Loans as evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in respect of the Letters of Credit, (iii) all liabilities of Borrower to any Lender which arise under a Swap Agreement, and (iii) the payment and performance of all other obligations, liabilities and Indebtedness of the Borrower to the Lenders, the Agent or NCMI hereunder, under any one or more of the other Loan Documents or with respect to the Loans. "Outstandings" means, collectively, at any date, the Letter of Credit Outstandings, Swing Line Outstandings, and Revolving Credit Outstandings on such date. "Participation" means, (i) with respect to any Lender (other than the Issuing Bank) and a Letter of Credit, the extension of credit represented by the participation of such Lender hereunder in the liability of the Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in accordance with the terms hereof and (ii) with respect to any Lender (other than NationsBank) and a Swing Line Loan, the extension of credit represented by the 18

25 participation of such Lender hereunder in the liability of NationsBank in respect of a Swing Line Loan made by NationsBank in accordance with the terms hereof. "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Pension Plan" means any employee pension benefit plan within the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (i) is maintained for employees of the Borrower or any of its ERISA Affiliates or is assumed by the Borrower or any of its ERISA Affiliates in connection with any Acquisition or (ii) has at any time been maintained for the employees of the Borrower or any current or former ERISA Affiliate. "Person" means an individual, partnership, corporation, trust, limited liability company, unincorporated organization, association, joint venture or a government or agency or political subdivision thereof. "Pledge Agreement" means a Pledge Agreement, Share Charge, Debenture or similar instrument whereby the Borrower or Domestic Subsidiary creates a security interest in favor of the Agent in 65% of the outstanding capital stock of a Material Subsidiary that is a Direct Foreign Subsidiary. "Pledged Stock" means the ownership interest in a Direct Foreign Subsidiary which is pledged to the Agent pursuant to a Pledge Agreement. "Pounds Sterling" means the official currency of the United Kingdom. "Pre-Refunded Municipal Obligations" means obligations of any state of the United States of America or of any municipal corporation or other public body organized under the laws of any such state which are rated, based on the escrow, in the highest investment rating category by both S&P and Moody's and which have been irrevocably called for redemption and advance refunded through the deposit in escrow of Government Securities or other debt securities which are (i) not callable at the option of the issuer thereof prior to maturity, (ii) irrevocably pledged solely to the payment of all principal and interest on such obligations as the same becomes due, and (iii) in a principal amount and bear such rate or rates of interest as shall be sufficient to pay in full all principal of, interest, and premium, if any, on such obligations as the same becomes due as verified by a nationally recognized firm of certified public accountants. "Prime Rate" means the per annum rate of interest established from time to time by NationsBank as its prime rate, which rate may not be the lowest rate of interest charged by NationsBank to its customers. "Principal Office" means the principal office of NationsBank, presently located at, Independence Center, 15th Floor, NC1 001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services. 19

26 "Rate Hedging Obligations" means any and all obligations of the Borrower or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, Dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts, warrants and those commonly known as interest rate "swap" agreements; and (ii) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. "Regulation D" means Regulation D of the Board as the same may be amended or supplemented from time to time. "Reimbursement Obligation" shall mean at any time, the obligation of the Borrower with respect to any Letter of Credit to reimburse the Issuing Bank and the Lenders to the extent of their respective Participations (including by the receipt by the Issuing Bank of proceeds of Loans pursuant to Section 3.2) for amounts theretofore paid by the Issuing Bank pursuant to a drawing under such Letter of Credit. "Repurchase Agreement" means a repurchase agreement entered into with any financial institution whose debt obligations or commercial paper are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's. "Required Lenders" means, as of any date, Lenders on such date having Credit Exposures (as defined below) aggregating at least 51% of the aggregate Credit Exposures of all Lenders on such date; provided, however, that to the extent NationsBank has more than 51% of the aggregate Credit Exposures, Required Lenders means Lenders on such date having Credit Exposures of 80% of the aggregate Credit Exposures of all Lenders. For purposes of the preceding sentence, the amount of the "Credit Exposure" of each Lender shall be equal to the aggregate principal amount of the Loans owing to such Lender plus the aggregate unutilized amounts of such Lender's Revolving Credit Commitment (without regard to any Swing Line Outstandings) plus the amount of such Lender's Applicable Commitment Percentage of Letter of Credit Outstandings; provided that, (i) if any Lender shall have failed to pay to the Issuing Bank its Applicable Commitment Percentage of any drawing under any Letter of Credit resulting in an outstanding Reimbursement Obligation, such Lender's Credit Exposure attributable to Letters of Credit and Reimbursement Obligations shall be deemed to be held by the Issuing Bank for purposes of this definition and (ii) if any Lender shall have failed to pay to NationsBank its Applicable Commitment Percentage of any Swing Line Loan, such Lender's Credit Exposure attributable to all Swing Line Outstandings shall be deemed to be held by NationsBank for purposes of this definition. "Reserve Requirement" means, at any time, the maximum rate at which reserves (including, without limitation, any marginal, special, supplemental, or emergency reserves) 20

27 are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System against (a) in the case of Eurodollar Rate Loans, "Eurocurrency liabilities" (as such term is used in Regulation D) or (b) in the case of CD Rate Loans, non-personal Dollar time deposits in an amount of $100,000 or more. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the Eurodollar Rate or CD Rate (as the case may be) is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans or CD Rate Loans. The Eurodollar Rate and the CD Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement. "Restricted Payment" means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Borrower or any of its Subsidiaries (other than those payable or distributable solely to the Borrower) now or hereafter outstanding, except a dividend payable solely in shares of a class of stock to the holders of that class; (b) any redemption, conversion, exchange, retirement or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Borrower or any of its Subsidiaries (other than those payable or distributable solely to the Borrower) now or hereafter outstanding; (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Borrower or any of its Subsidiaries now or hereafter outstanding; and (d) any issuance and sale of capital stock of any Subsidiary of the Borrower (or any option, warrant or right to acquire such stock) other than to the Borrower. "Revolving Credit Commitment" means, with respect to each Lender, the obligation of such Lender to make Revolving Loans to the Borrower up to an aggregate principal amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Revolving Credit Commitment. "Revolving Credit Facility" means the facility described in Article II hereof providing for Loans to the Borrower by the Lenders in the aggregate principal amount of the Total Revolving Credit Commitment. "Revolving Credit Outstandings" means, as of any date of determination, the aggregate principal amount of all Revolving Loans made pursuant to Section 2.1 then outstanding. "Revolving Credit Termination Date" means (i) the Stated Termination Date or (ii) such earlier date of termination of Lenders' obligations pursuant to Section 9.1 upon the occurrence of an Event of Default, or (iii) such date as the Borrower may voluntarily and permanently terminate the Revolving Credit Facility by payment in full of all Revolving Credit Outstandings, Swing Line Outstandings and Letter of Credit Outstandings and cancellation of all Letters of Credit. 21

28 "Revolving Loan" means any borrowing pursuant to an Advance under the Revolving Credit Facility in accordance with Article II. "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill. "Single Employer Plan" means any employee pension benefit plan covered by Title IV of ERISA in respect of which the Borrower or any Subsidiary is an "employer" as described in Section 4001(b) of ERISA and which is not a Multiemployer Plan. "Solvent" means, when used with respect to any Person, that at the time of determination: (i) the fair value of its assets (both at fair valuation and at present fair saleable value on an orderly basis) is in excess of the total amount of its liabilities, including Contingent Obligations; and (ii) it is then able and expects to be able to pay its debts as they mature; and (iii) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. "Special Purpose Subsidiary" means a Subsidiary of the Borrower or another Subsidiary no portion of whose obligations or liabilities are payable, directly or indirectly by the Borrower or any other Subsidiary. "Spot Rate of Exchange" means (i) in determining the Dollar Equivalent Amount of a specified Alternative Currency amount as of any date, the spot exchange rate determined by the Agent in accordance with its usual procedures for the purchase by the Agent of Dollars with such Alternative Currency at approximately 10:00 A.M. on the business Day that is two (2) Business Days prior to such date, and (ii) in determining the Alternative Currency Equivalent Amount of a specified Dollar amount on any date, the spot exchange rate determined by the Agent in accordance with its usual procedures for the purchase by the Agent of such Alternative Currency with Dollars at approximately 10:00 A.M. on the Business Day that is two (2) Business Days prior to such date. "Stated Termination Date" means [____________], 2000 or such later date as the parties may agree pursuant to Section 2.13. "Subsidiary" means any corporation or other entity, other than a Special Purpose Subsidiary, in which more than 50% of its outstanding voting stock or more than 50% of all equity interests is owned directly or indirectly by the Borrower and/or by one or more of the Borrower's Subsidiaries. 22

29 "Swap Agreement" means one or more agreements between the Borrower and any Person with respect to Indebtedness evidenced by any or all of the Notes, on terms mutually acceptable to Borrower and such Person and approved by the Agent, which agreements create Rate Hedging Obligations; provided, however, that no such approval of the Agent shall be required to the extent such agreements are entered into between the Borrower and any Lender. "Swing Line" means the revolving line of credit established by NationsBank in favor of the Borrower pursuant to Section 2.14. "Swing Line Loans" means loans made by NationsBank to the Borrower pursuant to Section 2.14. "Swing Line Outstandings" means, as of any date of determination, the aggregate principal amount of all Swing Line Loans then outstanding. "Termination Event" means: (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (unless the notice requirement has been waived by applicable regulation); or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA; or (iii) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the PBGC; or (v) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Total Letter of Credit Commitment" means an amount not to exceed $10,000,000. "Total Revolving Credit Commitment" means a principal amount equal to $30,000,000, as reduced from time to time in accordance with Section 2.7. "TROL Indebtedness" means the aggregate amount of liabilities (including obligations to purchase or repurchase or other Contingent Obligations) arising under TROL Leases. 23

30 "TROL Leases" means all tax retention operating lease agreements between the Borrower or any Subsidiary, as Lessee, and First Security Bank, N.A., as Lessor, as amended, supplemented or modified from time to time. "Type" shall mean any type of Loan (i.e., a Base Rate Loan, CD Rate Loan, or Eurodollar Rate Loan). "Voting Stock" means shares of capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 1.2. Rules of Interpretation. (a) All accounting terms not specifically defined herein shall have the meanings assigned to such terms and shall be interpreted in accordance with GAAP applied on a Consistent Basis. (b) Each term defined in Article 1 or 9 of the Florida Uniform Commercial Code shall have the meaning given therein unless otherwise defined herein, except to the extent that the Uniform Commercial Code of another jurisdiction is controlling, in which case such terms shall have the meaning given in the Uniform Commercial Code of the applicable jurisdiction. (c) The headings, subheadings and table of contents used herein or in any other Loan Document are solely for convenience of reference and shall not constitute a part of any such document or affect the meaning, construction or effect of any provision thereof. (d) Except as otherwise expressly provided, references herein to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules are references to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules in or to this Agreement. (e) All definitions set forth herein or in any other Loan Document shall apply to the singular as well as the plural form of such defined term, and all references to the masculine gender shall include reference to the feminine or neuter gender, and vice versa, as the context may require. (f) used herein or in any other Loan Document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof. 24

31 (g) References to "including" means including without limiting the generality of any description preceding such term, and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. (h) All dates and times of day specified herein shall refer to such dates and times at Charlotte, North Carolina. (i) Each of the parties to the Loan Documents and their counsel have reviewed and revised, or requested (or had the opportunity to request) revisions to, the Loan Documents, and any rule of construction that ambiguities are to be resolved against the drafting party shall be inapplicable in the construing and interpretation of the Loan Documents and all exhibits, schedules and appendices thereto. (j) Any reference to an officer of the Borrower or any other Person by reference to the title of such officer shall be deemed to refer to each other officer of such Person, however titled, exercising the same or substantially similar functions. (k) All references to any agreement or document as amended, modified or supplemented, or words of similar effect, shall mean such document or agreement, as the case may be, as amended, modified or supplemented from time to time only as and to the extent permitted therein and in the Loan Documents. 25

32 ARTICLE II The Revolving Credit Facility 2.1. Revolving Loans. (a) Commitment. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Advances in Dollars or an Alternative Currency (as specified in the respective Borrowing Notice) to the Borrower under the Revolving Credit Facility from time to time from the Closing Date until the Revolving Credit Termination Date on a pro rata basis as to the total borrowing requested by the Borrower on any day determined by such Lender's Applicable Commitment Percentage up to but not exceeding a Dollar Value equal to the Revolving Credit Commitment of such Lender, provided, however, that the Lenders will not be required and shall have no obligation to make any such Advance (i) so long as a Default or an Event of Default has occurred and is continuing or (ii) if the Agent has accelerated the maturity of any of the Notes as a result of an Event of Default; provided further, however, that immediately after giving effect to each such Advance, the Dollar Value of the principal amount of Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings shall not exceed the Total Revolving Credit Commitment. Within such limits, the Borrower may borrow, repay and reborrow under the Revolving Credit Facility on a Business Day from the Closing Date until, but (as to borrowings and reborrowings) not including, the Revolving Credit Termination Date; provided, however, that (y) no Eurodollar Rate Loan shall be made which has an Interest Period that extends beyond the Stated Termination Date and (z) each Eurodollar Rate Loan may, subject to the provisions of Section 2.7, be repaid only on the last day of the Interest Period with respect thereto unless such payment is accompanied by the additional payment, if any, required by Section 4.5. The Borrower agrees that if at any time the Outstandings shall exceed the Total Revolving Credit Commitment, the Borrower shall immediately reduce the outstanding principal amount of the Loans such that, as a result of such reduction, the Outstandings shall not exceed the Total Revolving Credit Commitment. (b) Amounts. (i) Each request for an Advance of an Alternative Currency under a Borrowing Notice shall constitute the Borrower's request for a Loan of the Dollar Value of the amount of the Alternative Currency specified in such Borrowing Notice and for such Loan to be made available by the Lenders to the Borrower in the Alternative Currency Equivalent Amount of such Dollar Value (determined based on the Advance Date Exchange Rate applicable to such Advance). The principal amount outstanding on any Loan shall be recorded in the Agent's records in Dollars (in the case of an Advance of an Alternative Currency as if the Loan had initially been made in Dollars), based on the amount of any Eurodollar Rate Loan Advance and on the Dollar Value of the initial Advance of an Alternative Currency, as reduced from time to time by the Dollar Equivalent Amount (based on the Advance Date Exchange Rate applicable to such Advance) of any principal payments with respect to such Advance. Advances in an Alternative Currency shall be limited to Eurodollar Rate Loans. In the event a Eurodollar Rate Loan of an Alternative Currency is Continued, such election to Continue the Eurodollar Rate Loan shall be treated as an Advance and the Agent shall notify the Borrower and the Lenders of the Advance Date Exchange Rate, Interest Period and the Eurodollar Rate for such Continued Eurodollar Rate Loan. The Lenders shall each be deemed to have made an Advance to the Borrower of its Applicable Commitment Percentage of 26

33 such Loan of an Alternative Currency and the Agent shall apply the Advance Date Exchange Rate for such new Interest Period to such Continued Alternative Currency Equivalent Amount to determine the new Dollar Value of such Eurodollar Rate Loan and shall adjust its books and the Revolving Credit Outstandings. In the event that such adjustment with respect to a Continued Loan would cause the total Dollar Value of Outstandings to exceed the Total Revolving Credit Commitment, the Borrower shall, immediately on the effective date of such Continuation, repay (a "Rate Adjustment Payment") the portion of such Continued Loan (applying the new Advance Date Exchange Rate) necessary to ensure that the total Dollar Value of all Outstandings does not exceed the Total Revolving Credit Commitment, provided, however, that the Borrower shall not be required to pay any additional compensation pursuant to Section 4.5 with respect to a prepayment of a Loan required by this sentence if such prepayment is made immediately on the effective date of the Continuation giving rise to such prepayment and no notice of such prepayment shall be required. For the purposes of determining the maximum amount of Outstandings hereunder, it is intended by the parties that all Loans shall be the functional equivalent of Loans made and repaid (based on the applicable Advance Date Exchange Rate for each Advance) in Dollars. It is recognized that one or more Lenders may elect to record Loans or Advances in Alternative Currencies. The Agent shall maintain records sufficient to identify at any time, (A) the Advance Date Exchange Rate with respect to each Advance, and (B) the portion of the Revolving Credit Outstanding attributable to each Advance. (ii) Except as otherwise permitted by the Lenders from time to time, the aggregate unpaid principal amount (including with respect to Loans of Alternative Currencies the total Dollar Value) of the Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings shall not exceed at any time the Total Revolving Credit Commitment, and, in the event there shall be outstanding any such excess, the Borrower shall immediately make such payments and prepayments as shall be necessary to comply with this restriction. Each Loan hereunder, other than Base Rate Refunding Loans, and each Conversion under Section 2.8, shall be (A) in the case of Loans made in Dollars, in an amount of at least $2,000,000, and, if greater than $2,000,000, an integral multiple of $100,000, and (B) in the case of Loans made in an Alternative Currency, in an amount of at least $2,000,000 (or the equivalent thereof in any Alternative Currency), and, if greater than $2,000,000, an integral multiple of $100,000 (or the equivalent thereof if in any Alternative Currency). (c) Advances and Rate Selection. (i) An Authorized Representative shall give the Agent (A) at least three (3) Business Days' irrevocable written notice by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection Notice (as applicable) with appropriate insertions, effective upon receipt, of each Eurodollar Rate Loan (whether representing an additional borrowing hereunder or the Conversion of a borrowing hereunder) prior to 11:00 A.M. and (B) irrevocable written notice by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection Notice (as applicable) with appropriate insertions, effective upon receipt, of each Revolving Loan (other than Base Rate Refunding Loans to the extent the same are effected without notice pursuant to Section 2.1(c)(iv)) that is a Base Rate Loan (whether representing an additional borrowing hereunder or the Conversion of borrowing hereunder) prior to 11:00 A.M. on the day of such proposed Base Rate Loan. Each such notice shall specify the amount of the borrowing, whether Dollar or Alternative Currency, the type of Loan (Base Rate or Eurodollar Rate), the date of borrowing and, 27

34 if a Eurodollar Rate Loan, the Interest Period to be used in the computation of interest. Notice of receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case may be, together with the amount of each Lender's portion of an Advance requested thereunder, shall be provided by the Agent to each Lender by telefacsimile transmission with reasonable promptness, but (provided the Agent shall have received such notice by 11:00 A.M.) not later than 1:00 P.M. on the same day as the Agent's receipt of such notice. At approximately 10:00 A.M. two (2) Business Days preceding the date specified for an Advance of an Alternative Currency, the Agent shall determine the Advance Date Exchange Rate and the applicable Eurodollar Rate. Not later than 10:45 A.M. two (2) Business Days preceding the date specified for each Advance of an Alternative Currency, the Agent shall provide the Borrower and each Lender notice by telefacsimile transmission of the Advance Date Exchange Rate applicable to such Advance, and the applicable Alternative Currency Equivalent Amount of the Loan or Loans required to be made by each Lender on such date, and the Dollar Value of such Loan or Loans and the applicable Eurodollar Rate. (ii) (A) In the case of Advances in Dollars, not later than 2:00 P.M. on the date specified for each borrowing under this Section 2.1, each Lender shall, pursuant to the terms and subject to the conditions of this Agreement, make the amount of the Advance or Advances to be made by it on such day available by wire transfer to the Agent in the amount of its pro rata share, determined according to such Lender's Applicable Commitment Percentage of the Revolving Loan or Revolving Loans to be made on such day. Such wire transfer shall be directed to the Agent at the Principal Office and shall be in the form of Dollars constituting immediately available funds. The amount so received by the Agent shall, subject to the terms and conditions of this Agreement, be made available to the Borrower by delivery of the proceeds thereof to the Borrower's Account or otherwise as shall be directed in the applicable Borrowing Notice by the Authorized Representative and reasonably acceptable to the Agent. (B) In the case of Advances of an Alternative Currency, not later than 10:00 A.M. on the date specified for each Advance, each Lender shall, pursuant to the terms and subject to the conditions of this Agreement, make the amount of the Loan or Loans to be made by it on such day available to the Borrower at the Funding Bank, to the account of the Agent with the Funding Bank. The amount so received by the Funding Bank shall, subject to the terms and conditions of the Loan Documents and upon instruction from the Agent to the Funding Bank on the same day or immediately preceding day but no later than 10:00 A.M., be made available to the Borrower by delivery of the Alternative Currency Equivalent Amount to the Borrower's account with the Funding Bank. (iii) The Borrower shall have the option to elect the duration of the initial and any subsequent Interest Periods and to Convert the Loans in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be outstanding at the same time, provided, however, there shall not be outstanding at any one time Eurodollar Rate Loans having more than seven (7) different Interest Periods. If the Agent does not receive a Borrowing Notice or an Interest Rate Selection Notice giving notice of election of the duration of an Interest Period or of Conversion of any Loan to or Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by Section 2.1(c) or 28

35 2.8, the Borrower shall be deemed to have elected to Convert such Loans to (or continue such Loan as) a Base Rate Loan until the Borrower notifies the Agent in accordance with Section 2.8. (iv) Notwithstanding the foregoing, if a drawing is made under any Letter of Credit, such drawing is honored by the Issuing Bank prior to the Stated Termination Date, and the Borrower shall not immediately fully reimburse the Issuing Bank in respect of such drawing, (A) provided that the conditions to making a Loan as herein provided shall then be satisfied, the Reimbursement Obligation arising from such drawing shall be paid to the Issuing Bank by the Agent without the requirement of notice to or from the Borrower from immediately available funds which shall be advanced as a Base Rate Refunding Loan by each Lender under the Revolving Credit Facility in an amount equal to such Lender's Applicable Commitment Percentage of such Reimbursement Obligation, and (B) if the conditions to making a Revolving Loan as herein provided shall not then be satisfied, each of the Lenders shall fund by payment to the Agent (for the benefit of the Issuing Bank) in immediately available funds the purchase from the Issuing Bank of their respective Participations in the related Reimbursement Obligation based on their respective Applicable Commitment Percentages of the Total Letter of Credit Commitment. If a drawing is presented under any Letter of Credit in accordance with the terms thereof and the Borrower shall not immediately reimburse the Issuing Bank in respect thereof, then notice of such drawing or payment shall be provided promptly by the Issuing Bank to the Agent and the Agent shall provide notice to each Lender by telephone or telefacsimile transmission. If notice to the Lenders of a drawing under any Letter of Credit is given by the Agent at or before 12:00 noon on any Business Day, each Lender shall, pursuant to the conditions specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its Participation in the amount of such Lender's Applicable Commitment Percentage of such drawing or payment and shall pay such amount to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds before 2:30 P.M. on the same Business Day. If notice to the Lenders of a drawing under a Letter of Credit is given by the Agent after 12:00 noon on any Business Day, each Lender shall, pursuant to the conditions specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its Participation in the amount of such Lender's Applicable Commitment Percentage of such drawing or payment and shall pay such amount to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds before 12:00 noon on the next following Business Day. Any such Base Rate Refunding Loan shall be advanced as, and shall continue as, a Base Rate Loan unless and until the Borrower Converts such Base Rate Loan in accordance with the terms of Section 2.8. (d) Availability of Alternative Currency. If any Lender shall notify the Borrower and the Agent of its election not to fund in any Alternative Currency in accordance with the terms of this Agreement on or prior to two (2) Business Days preceding the first day of an Interest Period for which a Borrowing Notice or an Interest Rate Selection Notice, as the case may be, has been delivered to the Agent requesting an Advance in an Alternative Currency or a Continuation or Conversion of an Advance in an Alternative Currency, then such Lender shall be obligated to fund the requested Advance, Continuation or Conversion, as the case may be, in the Dollar Equivalent Amount of the amount of the Alternative Currency specified in such Borrowing Notice or Interest Rate Selection Notice and at the Eurodollar Rate specified by the Agent for such request. 29

36 2.2. Payment of Interest. (a) The Borrower shall pay interest to the Agent for the account of each Lender on the outstanding and unpaid principal amount of each Revolving Loan made by such Lender for the period commencing on the date of such Revolving Loan until such Revolving Loan shall be due (i) in the case of Loans made in Dollars, at the then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by the Authorized Representative pursuant to Section 2.1, such payments to be made in Dollars, and (ii) in the case of Loans made in Alternative Currencies, at the applicable Eurodollar Rate, such payments to be made in the appropriate Alternative Currency; provided, however, that if any amount shall not be paid when due (at maturity, by acceleration or otherwise), all amounts outstanding hereunder shall bear interest thereafter at the Default Rate. (b) Interest on each Revolving Loan shall be computed on the basis of a year of 360 days and calculated in each case for the actual number of days elapsed. Interest on each Revolving Loan shall be paid (i) quarterly in arrears on the last Business Day of each March, June, September and December, commencing June 30, 1997 for each Base Rate Loan, (ii) on the last day of the applicable Interest Period for each Eurodollar Rate Loan and, if such Interest Period extends for more than three (3) months, at intervals of three (3) months after the first day of such Interest Period, and (iii) upon payment in full of the principal amount of such Revolving Loan. 2.3. Payment of Principal. The principal amount of the Revolving Credit Outstandings shall be due and payable to the Agent for the benefit of each Lender in full on the Revolving Credit Termination Date, or earlier as specifically provided herein. Such principal amount shall be recorded in Dollars as set forth in Section 2.1. The repayment of such principal amount shall be made in the appropriate Alternative Currency as follows: the portion of the Revolving Credit Outstandings attributable to each specified Advance (or the Continuation or Conversion thereof) (as determined from the Agent's records) shall be repaid in the same Alternative Currency as such Advance. The principal amount of any Base Rate Loan may be prepaid in Dollars in whole or in part at any time. The principal amount of any Eurodollar Rate Loan may be prepaid only at the end of the applicable Interest Period unless the Borrower shall pay to the Agent for the account of the Lenders the additional amount, if any, required under Section 4.5. All prepayments of Revolving Loans made by the Borrower shall be in the amount of $1,000,000 (or the equivalent thereof in any Alternative Currency) or such greater amount which is an integral multiple of $100,000 (or the equivalent thereof in any Alternative Currency), or the amount equal to all Revolving Credit Outstandings, or such other amount as necessary to comply with Section 2.1(b) or Section 2.8. 2.4. Non-Conforming Payments. (a) Each payment of principal (including any prepayment) and payment of interest and fees, and any other amount required to be paid to the Lenders with respect to the Revolving Loans, shall be made to the Agent at the Principal Office, for the account of each Lender, in Dollars in the case Loans made in Dollars and in the same Alternative Currency in the case of Loans made in Alternative Currencies, in immediately available funds before 12:30 P.M. on the date such payment is due. The Borrower shall give the Agent one (1) Business Days prior written notice of any payment of principal, such notice to be given prior to 10:00 A.M. and to specify (i) the date the payment will be made and (ii) the Loan to which payment relates. The Agent may, at the election of the Borrower, but shall not be obligated to, debit the amount of any 30

37 such payment which is not made by such time to any ordinary deposit account, if any, of the Borrower with the Agent. (b) The Agent shall deem any payment made by or on behalf of the Borrower hereunder that is not made both (i) in Dollars in the case of Loans made in Dollars and in the required Alternative Currency in the case of Loans made in Alternative Currencies in immediately available funds and (ii) prior to 12:30 P.M. on the date payment is due to be a non-conforming payment. Any such payment shall not be deemed to be received by the Agent until the later of (i) the time such funds become available funds and (ii) the next Business Day. Any non-conforming payment may constitute or become a Default or Event of Default at the determination of the Agent. The Agent shall give prompt telephonic or telefacsimile notice to the Borrower if a non-conforming payment constitutes a Default or an Event of Default. Interest shall continue to accrue on any principal as to which a non-conforming payment is made until the later of (x) the date such funds become available funds or (y) the next Business Day at the Default Rate from the date such amount was due and payable. (c) In the event that any payment hereunder or under the Notes becomes due and payable on a day other than a Business Day, then such due date shall be extended to the next succeeding Business Day unless provided otherwise under clause (ii) of the definition of "Interest Period"; provided that interest shall continue to accrue during the period of any such extension and provided further, that in no event shall any such due date be extended beyond the Revolving Credit Termination Date. 2.5. Notes. Revolving Loans made by each Lender shall be evidenced by Notes in substantially the form set forth as Exhibit F-1 payable to the order of such Lender in the respective amount of its Applicable Commitment Percentage of the Revolving Credit Commitment, which Note shall be dated the Closing Date or a later date pursuant to an Assignment and Acceptance and shall be duly completed, executed and delivered by the Borrower. Swing Line Loans made by NationsBank shall be evidenced by a Note in substantially the form as set forth as Exhibit F-2 payable to the order of NationsBank. 2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each payment on account of the principal of and interest on the Revolving Loans and the fees described in Section 2.10 shall be made to the Agent for the account of the Lenders pro rata based on their Applicable Commitment Percentages, (b) all payments to be made by the Borrower for the account of each of the Lenders on account of principal, interest and fees, shall be made without diminution, setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute to the Lenders in immediately available funds payments received in fully collected, immediately available funds from the Borrower. 2.7. Reductions. The Borrower shall, by notice from an Authorized Representative, have the right from time to time but not more frequently than once each calendar month, upon not less than three (3) Business Days' written notice to the Agent, effective upon receipt, to reduce the Total Revolving Credit Commitment. The Agent shall give each Lender, within one (1) Business Day of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed in writing), of such 31

38 reduction. Each such reduction shall be in the aggregate amount of $5,000,000 or such greater amount which is in an integral multiple of $1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall permanently reduce the Total Revolving Credit Commitment. Each reduction of the Total Revolving Credit Commitment shall be accompanied by payment of the Revolving Loans to the extent that the principal amount of Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings exceeds the Total Revolving Credit Commitment after giving effect to such reduction, together with accrued and unpaid interest on the amounts prepaid. No such reduction shall result in the payment of any Eurodollar Rate Loan other than on the last day of the Interest Period of such Eurodollar Rate Loan unless such prepayment is accompanied by amounts due, if any, under Section 4.5. 2.8. Conversions and Elections of Subsequent Interest Periods. Provided that no Default or Event of Default shall have occurred and be continuing and subject to the limitations set forth below and in Article IV, the Borrower may: (a) upon delivery, effective upon receipt, of a properly completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and (b) upon delivery, effective upon receipt, of a properly completed Interest Rate Selection Notice to the Agent on or before 11:00 A.M. three (3) Business Days' prior to the date of such election or Conversion: (i) elect a subsequent Interest Period for all or a portion of Eurodollar Rate Loans to begin on the last day of the then current Interest Period for such Eurodollar Rate Loans; and (ii) Convert Base Rate Loans to Eurodollar Rate Loans on any Business Day; (iii) elect that any Eurodollar Rate Loan be converted from an Alternative Currency into another Alternative Currency on the last day of the Interest Period for any Eurodollar Rate Loan. Each election and Conversion pursuant to this Section 2.8 shall be subject to the limitations on Eurodollar Rate Loans set forth in the definition of "Interest Period" herein and in Sections 2.1, 2.3 and Article IV. The Agent shall give written notice to each Lender of such notice of election or Conversion prior to 3:00 P.M. on the day such notice of election or Conversion is received. All such Continuations or Conversions of Loans shall be effected pro rata based on the Applicable Commitment Percentages of the Lenders. 2.9. Increase and Decrease in Amounts. The amount of the Total Revolving Credit Commitment which shall be available to the Borrower as Advances shall be reduced by the aggregate amount of Outstanding Letters of Credit and Outstanding Swing Line Loans. 32

39 2.10. Facility Fees. Unused Fee. For the period beginning on the Closing Date and ending on the Revolving Credit Termination Date, the Borrower agrees to pay to the Agent, for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages, an unused fee equal to the Applicable Unused Fee multiplied by the average daily amount by which the Total Revolving Credit Commitment exceeds the sum of (i) Revolving Credit Outstandings without giving effect to Swing Line Outstandings (except in the case of NationsBank) plus (ii) Letter of Credit Outstandings. Such fees shall be due in arrears on the last Business Day of each March, June, September and December commencing June 30,1997 to the Revolving Credit Termination Date (but excluding such day for the purpose of computing such fee). Notwithstanding the foregoing, so long as any Lender fails to make available any portion of its Revolving Credit Commitment when requested, such Lender shall not be entitled to receive payment of its pro rata share of such fee until such Lender shall make available such portion. Such fee shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. 2.11. Deficiency Advances. No Lender shall be responsible for any default of any other Lender in respect to such other Lender's obligation to make any Loan or fund its purchase of any Participation hereunder nor shall the Revolving Credit Commitment of any Lender hereunder be increased as a result of such default of any other Lender. Without limiting the generality of the foregoing, in the event any Lender shall fail to advance funds to the Borrower as herein provided, the Agent may in its discretion, but shall not be obligated to, advance under the Note in its favor as a Lender all or any portion of such amount or amounts (each, a "deficiency advance") and shall thereafter be entitled to payments of principal of and interest on such deficiency advance in the same manner and at the same interest rate or rates to which such other Lender would have been entitled had it made such advance under its Note; provided that, upon payment to the Agent from such other Lender of the entire outstanding amount of each such deficiency advance, together with accrued and unpaid interest thereon, from the most recent date or dates interest was paid to the Agent by the Borrower on each Revolving Loan comprising the deficiency advance at the interest rate per annum for overnight borrowing by the Agent from the Federal Reserve Bank, then such payment shall be credited against the applicable Note of the Agent in full payment of such deficiency advance and the Borrower shall be deemed to have borrowed the amount of such deficiency advance from such other Lender as of the most recent date or dates, as the case may be, upon which any payments of interest were made by the Borrower thereon. 2.12. Use of Proceeds. The proceeds of the Loans made pursuant to the Revolving Credit Facility hereunder shall be used by the Borrower for general working capital needs and other corporate purposes, including the making of Acquisitions and Capital Expenditures permitted hereunder. 2.13. Extension of Stated Termination Date. At the request of the Borrower the Lenders may, in their sole discretion, elect to extend the Stated Termination Date then in effect for additional periods of one year upon each of the first and second anniversary of the Closing Date. The Borrower shall notify the Lenders of its request for such an extension by delivering to the Agent and the Lenders notice of such request signed by an Authorized Representative not more than ninety (90) 33

40 days nor less than sixty (60) days prior to either the first or second anniversary of the Closing Date, as the case may be. If the Lenders shall elect to so extend, the Agent shall notify the Borrower in writing within sixty (60) days of its receipt of such request for extension of the decision of the Lenders as to whether to extend the Stated Termination Date. Failure by any Lender to respond to a request for an extension shall constitute a refusal of such Lender to give its consent to such extension. Failure by the Agent to give such notice shall constitute refusal by the Lenders to extend the Stated Termination Date. 2.14. Swing Line. (a) Notwithstanding any other provision of this Agreement to the contrary, in order to administer the Revolving Credit Facility in an efficient manner and to minimize the transfer of funds between the Agent and the Lenders, NationsBank shall make available Swing Line Loans to the Borrower prior to the Revolving Credit Termination Date. NationsBank shall not make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of NationsBank the Borrower is not in compliance with all the conditions to the making of Revolving Loans set forth in this Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing Line Outstandings exceed $5,000,000, or (iii) if after giving effect to such Swing Line Loan, the sum of the Swing Line Outstandings, the Revolving Credit Outstandings and Letter of Credit Outstandings exceeds the Total Revolving Credit Commitment. Swing Line Loans shall be limited to CD Rate Loans. The Company may borrow, repay and reborrow under this Section 2.14. Unless notified to the contrary by NationsBank, borrowings under the Swing Line shall be made in the minimum amount of $200,000 or in the amount necessary to effect a Base Rate Refunding Loan, upon written request by telefacsimile transmission, effective upon receipt, by an Authorized Representative of the Borrower made to NationsBank not later than 12:30 P.M. on the Business Day of the requested borrowing. Each such Borrowing Notice shall specify the amount of the borrowing and the date of borrowing, and shall be in the form of Exhibit D-2, with appropriate insertions. If the Borrower instructs NationsBank to debit any demand deposit account of the Borrower in the amount of any payment with respect to a Swing Line Loan, or NationsBank otherwise receives repayment, after 1:00 P.M. on a Business Day, such payment shall be deemed received on the next Business Day. (b) Swing Line Loans shall bear interest at the CD Rate, the interest payable on Swing Line Loans is solely for the account of NationsBank, and all accrued and unpaid interest on Swing Line Loans shall be payable on the dates and in the time provided in Sections 2.2(b) and 2.4 with respect to interest on Base Rate Loans. The Swing Line Outstandings shall be evidenced by the Note delivered to NationsBank pursuant to Section 2.5. (c) Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from NationsBank a Participation therein in an amount equal to that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon demand made by NationsBank, each Lender shall, according to its Applicable Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank its purchase price therefor in an amount equal to its Participation therein. Any Advance made by a Lender pursuant to demand of NationsBank of the purchase price of its Participation shall be deemed (i) provided that the conditions to making Revolving Loans shall be satisfied, a Base Rate Refunding Loan under Section 2.1 until the Borrower Converts such Base Rate Loan in accordance with the terms of Section 2.8, and (ii) in all other cases, the funding by each Lender of the purchase price of its Participation in such Swing Line Loan. The obligation of each 34

41 Lender to so provide its purchase price to NationsBank shall be absolute and unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. The Borrower, at its option and subject to the terms hereof, may request an Advance pursuant to Section 2.1 in an amount sufficient to repay Swing Line Outstandings on any date and the Agent shall provide from the proceeds of such Advance to NationsBank the amount necessary to repay such Swing Line Outstandings (which NationsBank shall then apply to such repayment) and credit any balance of the Advance in immediately available funds in the manner directed by the Borrower pursuant to Section 2.1(c)(ii). The proceeds of such Advances shall be paid to NationsBank for application to the Swing Line Outstandings and the Lenders shall then be deemed to have made Loans in the amount of such Advances. The Swing Line shall continue in effect until the Revolving Credit Termination Date, at which time all Swing Line Outstandings and accrued interest thereon shall be due and payable in full. 35

42 ARTICLE III Letters of Credit 3.1. Letters of Credit. (a) The Issuing Bank agrees, subject to the terms and conditions of this Agreement, upon request of the Borrower to issue from time to time for the account of the Borrower Letters of Credit upon delivery to the Issuing Bank of an Application and Agreement for Letter of Credit relating thereto in form and content acceptable to the Issuing Bank; provided, that (i) the Letter of Credit Outstandings shall not exceed the Total Letter of Credit Commitment and (ii) no Letter of Credit shall be issued if, after giving effect thereto, Letter of Credit Outstandings plus the Revolving Credit Outstandings plus Swing Line Outstandings shall exceed the Total Revolving Credit Commitment. No Letter of Credit shall have an expiry date (including all rights of the Borrower or any beneficiary named in such Letter of Credit to require renewal) or payment date occurring later than the earlier to occur of one year after the date of its issuance or the fifth Business Day prior to the Stated Termination Date. (b) Subject to the approval by the Lenders of the making available of an Alternative Currency not otherwise provided for herein, upon completion of a proper Application and Agreement for Letter of Credit, NationsBank may issue upon request and for the account of Borrower Letters of Credit payable in such Alternative Currency. For purposes of determining Outstanding Letters of Credit, any Letter of Credit issued in an Alternative Currency shall be recorded in the Agent's account in Dollars based on the Alternative Currency Equivalent Amount on the date of issuance of such Letter of Credit; provided, however, that the Agent shall determine the Dollar Equivalent Amount of any Letter of Credit issued in an Alternative Currency on the date of any Advance or Conversion for the purpose of determining the amount of Outstandings. Any draw on a Letter of Credit issued in an Alternative Currency shall be repaid in the same Alternative Currency Equivalent Amount (determined based on the Spot Rate of Exchange on the date of drawing under the Letter of Credit). To the extent that the Agent shall determine at any time that the sum of (i) the Dollar Value of outstanding Loans and Outstanding Letters of Credit, in each case determined on the date of each Advance or issuance of a Letter of Credit, made or issued in Alternative Currencies and (ii) outstanding Loans and Outstanding Letters of Credit made or issued in Dollars exceeds the Total Revolving Credit Commitment, the Borrower shall immediately repay Loans so that after giving effect to such payment the outstanding Loans plus Outstanding Letters of Credit do not exceed the Total Revolving Credit Commitment. 3.2. Reimbursement. (a) The Borrower hereby unconditionally agrees to pay to the Issuing Bank immediately on demand at the Principal Office all amounts required to pay all drafts drawn or purporting to be drawn under the Letters of Credit and all reasonable expenses incurred by the Issuing Bank in connection with the Letters of Credit, and in any event and without demand to place in possession of the Issuing Bank (which shall include Advances under the Revolving Credit Facility if permitted by Section 2.1 and Swing Line Loans if permitted by Section 2.14) sufficient funds to pay all debts and liabilities arising under any Letter of Credit. The Issuing Bank agrees to give the Borrower prompt notice of any request for a draw under a Letter of Credit. The Issuing Bank may, at the 36

43 request of the Borrower, charge any account the Borrower may have with it for any and all amounts the Issuing Bank pays under a Letter of Credit, plus charges and reasonable expenses as from time to time agreed to by the Issuing Bank and the Borrower; provided that to the extent permitted by Section 2.1(c)(iv) and Section 2.14, amounts shall be paid pursuant to Advances under the Revolving Credit Facility or, if the Borrower shall elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank interest on any Reimbursement Obligations not paid when due hereunder at the Base Rate plus two percent (2.0%), or the maximum rate permitted by applicable law, if lower, such rate to be calculated on the basis of a year of 360 days for actual days elapsed. (b) In accordance with the provisions of Section 2.1(c), the Issuing Bank shall notify the Agent of any drawing under any Letter of Credit promptly following the receipt by the Issuing Bank of such drawing. (c) Each Lender (other than the Issuing Bank) shall automatically acquire on the date of issuance thereof, a Participation in the liability of the Issuing Bank in respect of each Letter of Credit in an amount equal to such Lender's Applicable Commitment Percentage of such liability, and to the extent that the Borrower is obligated to pay the Issuing Bank under Section 3.2(a), each Lender (other than the Issuing Bank) thereby shall absolutely, unconditionally and irrevocably assume, and shall be unconditionally obligated to pay to the Issuing Bank as hereinafter described, its Applicable Commitment Percentage of the liability of the Issuing Bank under such Letter of Credit. (i) Each Lender (including the Issuing Bank in its capacity as a Lender) shall, subject to the terms and conditions of Article II, pay to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds, an amount equal to its Applicable Commitment Percentage of any drawing under a Letter of Credit, such funds to be provided in the manner described in Section 2.1(c)(iv). (ii) Simultaneously with the making of each payment by a Lender to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender shall, automatically and without any further action on the part of the Issuing Bank or such Lender, acquire a Participation in an amount equal to such payment (excluding the portion thereof constituting interest accrued prior to the date the Lender made its payment) in the related Reimbursement Obligation of the Borrower. The Reimbursement Obligations of the Borrower shall be immediately due and payable whether by Advances made in accordance with Section 2.1(c)(iv), Swing Line Loans made in accordance with Section 2.14, or otherwise. (iii) Each Lender's obligation to make payment to the Agent for the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and this Section 3.2(c), and the right of the Issuing Bank to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and shall be made without any offset, abatement, withholding or reduction whatsoever. If any Lender is obligated to pay but does not pay amounts to the Agent for the account of the Issuing Bank in full upon such request as required by Section 2.1(c)(iv) or this 37

44 Section 3.2(c), such Lender shall, on demand, pay to the Agent for the account of the Issuing Bank interest on the unpaid amount for each day during the period commencing on the date of notice given to such Lender pursuant to Section 2.1(c) until such Lender pays such amount to the Agent for the account of the Issuing Bank in full at the interest rate per annum for overnight borrowing by the Agent from the Federal Reserve Bank. (iv) In the event the Lenders have purchased Participations in any Reimbursement Obligation as set forth in clause (ii) above, then at any time payment (in fully collected, immediately available funds) of such Reimbursement Obligation, in whole or in part, is received by the Issuing Bank from the Borrower, the Issuing Bank shall promptly pay to each Lender an amount equal to its Applicable Commitment Percentage of such payment from the Borrower. (d) Promptly following the end of each calendar quarter, the Issuing Bank shall deliver to the Agent a notice describing the aggregate undrawn amount of all Letters of Credit at the end of such quarter. Upon the request of any Lender from time to time, the Issuing Bank shall deliver to the Agent, and the Agent shall deliver to such Lender, any other information reasonably requested by such Lender with respect to each outstanding Letter of Credit. (e) The issuance by the Issuing Bank of each Letter of Credit shall, in addition to the conditions precedent set forth in Article V, be subject to the conditions that such Letter of Credit be in such form and contain such terms as shall be reasonably satisfactory to the Issuing Bank consistent with the then current practices and procedures of the Issuing Bank with respect to similar letters of credit, and the Borrower shall have executed and delivered such other instruments and agreements relating to such Letters of Credit as the Issuing Bank shall have reasonably requested consistent with such practices and procedures and shall not be in conflict with any of the express terms herein contained. All Letters of Credit shall be issued pursuant to and subject to the Uniform Customs and Practice for Documentary Credits, 1993 revision, International Chamber of Commerce Publication No. 500 and all subsequent amendments and revisions thereto. (f) The Borrower agrees that the Issuing Bank may, in its sole discretion, accept or pay, as complying with the terms of any Letter of Credit, any drafts or other documents otherwise in order which may be signed or issued by an administrator, executor, trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, liquidator, receiver, attorney in fact or other legal representative of a party who is authorized under such Letter of Credit to draw or issue any drafts or other documents. (g) Without limiting the generality of the provisions of Section 11.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing Bank, each other Lender and the Agent from and against any and all claims and damages, losses, liabilities, reasonable costs and expenses which the Issuing Bank, such other Lender or the Agent may incur (or which may be claimed against the Issuing Bank, such other Lender or the Agent) by any Person by reason of or in connection with the issuance or transfer of or payment or failure to pay under any Letter of Credit; provided that the Borrower shall not be required to indemnify the Issuing Bank, any other Lender or the Agent for any 38

45 claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, (i) caused by the willful misconduct or gross negligence of the party to be indemnified or (ii) caused by the failure of the Issuing Bank to pay under any Letter of Credit after the presentation to it of a request for payment strictly complying with the terms and conditions of such Letter of Credit, unless such payment is prohibited by any law, regulation, court order or decree. The indemnification and hold harmless provisions of this Section 3.2(g) shall survive repayment of the Obligations, occurrence of the Revolving Credit Termination Date and expiration or termination of this Agreement. (h) Without limiting the Borrower's rights as set forth in Section 3.2(g), the obligation of the Borrower to immediately reimburse the Issuing Bank for drawings made under Letters of Credit and the Issuing Bank's right to receive such payment shall be absolute, unconditional and irrevocable, and such obligations of the Borrower shall be performed strictly in accordance with the terms of this Agreement and such Letters of Credit and the related Applications and Agreement for any Letter of Credit, under all circumstances whatsoever, including the following circumstances: (i) any lack of validity or enforceability of the Letter of Credit, the obligation supported by the Letter of Credit or any other agreement or instrument relating thereto (collectively, the "Related LC Documents"); (ii) any amendment or waiver of or any consent to or departure from all or any of the Related LC Documents; (iii) the existence of any claim, setoff, defense (other than the defense of payment in accordance with the terms of this Agreement) or other rights which the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), the Agent, the Lenders or any other Person, whether in connection with the Loan Documents, the Related LC Documents or any unrelated transaction; (iv) any breach of contract or other dispute between the Borrower and any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom such beneficiary or any such transferee may be acting), the Agent, the Lenders or any other Person; (v) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (vi) any delay, extension of time, renewal, compromise or other indulgence or modification granted or agreed to by the Agent, with or without notice to or approval by the Borrower in respect of any of Borrower's Obligations under this Agreement; or 39

46 (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. Nothing contained in this clause (h) shall relieve the Issuing Bank of liability for its gross negligence or willful misconduct. 3.3. Letter of Credit Facility Fees. The Borrower shall pay to the Agent, (i) for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages, a fee on the aggregate amount available to be drawn on each outstanding Letter of Credit at a rate equal to the Applicable Margin, and (ii) for the Issuing Bank, 0.125% based on the aggregate amount available to be drawn on each outstanding Letter of Credit. Such fees shall be due with respect to each Letter of Credit quarterly in arrears on the last day of each March, June, September and December, the first such payment to be made on the date of issuance of a Letter of Credit. The fees described in this Section 3.3 shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. 3.4. Administrative Fees. The Borrower shall pay to the Issuing Bank such administrative fee and other fees, if any, in connection with the Letters of Credit in such amounts and at such times as the Issuing Bank and the Borrower shall agree from time to time. 40

47 ARTICLE IV Change in Circumstances 4.1. Increased Cost and Reduced Return. (a) If, after the date hereof, the adoption of any applicable law, rule, or regulation, or any change in any applicable law, rule, or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such governmental authority, central bank, or comparable agency: (i) shall subject such Lender (or its Applicable Lending Office) to any tax, duty, or other charge with respect to any Eurodollar Rate Loans, its Note, or its obligation to make Eurodollar Rate Loans, or change the basis of taxation of any amounts payable to such Lender (or its Applicable Lending Office) under this Agreement or its Note in respect of any Eurodollar Rate Loans (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office and franchise taxes); (ii) shall impose, modify, or deem applicable any reserve, special deposit, assessment, or similar requirement (other than the Reserve Requirement utilized in the determination of the Eurodollar Rate and the CD Rate) relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (or its Applicable Lending Office), including the Revolving Credit Commitment of such Lender hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting this Agreement or its Note or any of such extensions of credit or liabilities or commitments; and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, Converting into, Continuing, or maintaining any Eurodollar Rate Loans or to reduce any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or its Note with respect to any Eurodollar Rate Loans, then the Borrower shall pay to such Lender on demand such amount or amounts as will compensate such Lender for such increased cost or reduction. If any Lender requests compensation by the Borrower under this Section 4.1(a), the Borrower may, by notice to such Lender (with a copy to the Agent), suspend the obligation of such Lender to make or Continue Loans of the Type with respect to which such compensation is requested, or to Convert Loans of any other Type into Loans of such Type, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 4.4 shall be applicable); provided that such suspension shall not affect the right of such Lender to receive the compensation so requested. 41

48 (b) If, after the date hereof, any Lender shall have determined that the adoption of any applicable law, rule, or regulation regarding capital adequacy or any change therein or in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) Each Lender shall promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming compensation under this Section shall furnish to the Borrower and the Agent a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. 4.2. Limitation on Types of Loans. If on or prior to the first day of any Interest Period for any Eurodollar Rate Loan: (a) the Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or (b) the Required Lenders determine (which determination shall be conclusive) and notify the Agent that the Eurodollar Rate will not adequately and fairly reflect the cost to the Lenders of funding Eurodollar Rate Loans for such Interest Period; then the Agent shall give the Borrower prompt notice thereof specifying the relevant Type of Loans and the relevant amounts or periods, and so long as such condition remains in effect, the Lenders shall be under no obligation to make additional Loans of such Type, Continue Loans of such Type, or to Convert Loans of any other Type into Loans of such Type and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Loans of the affected Type, either prepay such Loans or Convert such Loans into another Type of Loan in accordance with the terms of this Agreement. 4.3. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such Lender shall promptly notify the Borrower thereof and such Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert other Types of 42

49 Loans into Eurodollar Rate Loans shall be suspended until such time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in which case the provisions of Section 4.4 shall be applicable). 4.4. Treatment of Affected Loans. If the obligation of any Lender to make a particular Type of Eurodollar Rate Loan or to Continue, or to Convert Loans of any other Type into, Loans of a particular Type shall be suspended pursuant to Section 4.1 or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such Type being herein called the "Affected Type"), such Lender's Affected Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for Affected Loans (or, in the case of a Conversion required by Section 4.3 hereof, on such earlier date as such Lender may specify to the Borrower with a copy to the Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist: (a) to the extent that such Lender's Affected Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender's Affected Loans shall be applied instead to its Base Rate Loans; and (b) all Loans that would otherwise be made or Continued by such Lender as Loans of the Affected Type shall be made or Continued instead as Base Rate Loans, and all Loans of such Lender that would otherwise be Converted into Loans of the Affected Type shall be Converted instead into (or shall remain as) Base Rate Loans. If such Lender gives notice to the Borrower (with a copy to the Agent) that the circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Loans of the Affected Type made by other Lenders are outstanding, such Lender's Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Loans of the Affected Type, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding Loans of the Affected Type and by such Lender are held pro rata (as to principal amounts, Types, and Interest Periods) in accordance with their respective Revolving Credit Commitments. 4.5. Compensation. Upon the request of any Lender, the Borrower shall pay to such Lender such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost, or expense (including loss of anticipated profits) incurred by it as a result of: (a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 9.1) on a date other than the last day of the Interest Period for such Loan; or (b) any failure by the Borrower for any reason (including, without limitation, the failure of any condition precedent specified in Article V to be satisfied) to borrow (other than by reason of the failure of a Lender or Lenders to make funds available without cause), 43

50 Convert, Continue, or prepay a Eurodollar Rate Loan on the date for such borrowing, Conversion, Continuation, or prepayment specified in the relevant notice of borrowing, prepayment, Continuation, or Conversion under this Agreement. Any Lender claiming compensation under this Section 4.5 shall furnish the Borrower and the Agent a statement setting forth in reasonable detail the amounts to be paid to it hereunder and the determination thereof shall be conclusive absent manifest error. 4.6. Taxes. (a) Any and all payments by the Borrower to or for the account of any Lender or the Agent hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or the Agent (as the case may be) is organized or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to any Lender or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.6) such Lender or the Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, and (iv) the Borrower shall furnish to the Agent, at its address referred to in Section 11.2, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) The Borrower agrees to indemnify each Lender and the Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 4.6) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto. (d) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Borrower or the Agent (but only so long as such Lender remains lawfully able to do so), shall provide the Borrower and the Agent with (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal 44

51 Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the Internal Revenue Service, and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is entitled to an exemption from or a reduced rate of tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) For any period with respect to which a Lender has failed to provide the Borrower and the Agent with the appropriate form pursuant to Section 4.6(d) (unless such failure is due to a change in treaty, law, or regulation occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 4.6(a) or 4.6(b) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes at such Lender's expense. (f) If the Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this Section 4.6, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (g) Within thirty (30) days after the date of any payment of Taxes, the Borrower shall furnish to the Agent evidence of such payment. (h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 4.6 shall survive the termination of the Revolving Credit Commitments and the payment in full of the Notes. 4.7. Replacement Banks. The Borrower may, in its sole discretion, on ten (10) Business Days' prior written notice to the Agent and a Lender, cause a Lender who has either (a) incurred increased costs or is unable to make Eurodollar Rate Loans, (b) failed to fund any requested Advance, (c) made any claim for taxes under Section 4.6, or (d) assigned a portion or all of its Revolving Credit Commitment and not assigned a pro rata portion of the TROL Indebtedness held by it, to (and such Lender shall) assign, pursuant to Section 11.1, all of its rights and obligations under this Agreement to an Eligible Assignee designated by the Borrower which is willing to become a Lender for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans, any accrued but unpaid fees with respect to such Lender's Revolving Credit Commitment and any other amount payable to such Lender under this Agreement; provided, however, that any 45

52 expenses or other amounts which would be owing to such Lender pursuant to any indemnification provision hereof (including, if applicable, Section 4.5) shall be payable by the Borrower as if the Borrower had prepaid the Loans of such Lender rather than such Lender having assigned its interest hereunder. The Borrower or the assignee shall pay the applicable processing fee under Section 11.1. 4.8. Lending Office. Without affecting its rights under this Article IV or any other provision of this Agreement, each Lender agrees that if there is any increase in cost to or reduction in an amount receivable by such Lender with respect to which the Borrower would be obligated to compensate such Lender pursuant to this Article IV, such Lender shall use reasonable efforts to elect an alternative lending office (to the extent such Lender has available to it such an office) which would not result in any such increase in any cost to or reduction in any amount receivable by such Lender; provided, however, that no Lender shall be obligated to select an alternative lending office if such Lender determines, in its sole discretion, that (i) as a result of such selection such Lender would be in violation of any applicable law, regulation, treaty, or guideline, or would incur additional costs or expenses or (ii) such selection would be inadvisable for regulatory reasons or would impose an unreasonable burden or additional costs on such Lender. 46

53 ARTICLE V Conditions to Making Loans and Issuing Letters of Credit 5.1. Conditions of Initial Advance. The obligation of the Lenders to make the initial Advance under the Revolving Credit Facility, and of the Issuing Bank to issue any Letter of Credit, and of NationsBank to make any Swing Line Loan, is subject to the conditions precedent that: (a) the Agent shall have received on the Closing Date, in form and substance satisfactory to the Agent and Lenders, the following: (i) executed originals of each of this Agreement, the Notes, the initial Facility Guaranties, the LC Account Agreement and the other Loan Documents, together with all schedules and exhibits thereto; (ii) the favorable written opinion or opinions with respect to the Loan Documents and the transactions contemplated thereby of special counsel to the Loan Parties dated the Closing Date, addressed to the Agent and the Lenders and satisfactory to Smith Helms Mulliss & Moore, L.L.P., special counsel to the Agent, substantially in the form of Exhibit G; (iii) resolutions of the boards of directors or other appropriate governing body (or of the appropriate committee thereof) of each of the Loan Parties certified by its secretary or assistant secretary as of the Closing Date, approving and adopting the Loan Documents to be executed by such Person, and authorizing the execution and delivery thereof; (iv) specimen signatures of officers of each of the Loan Parties executing the Loan Documents on behalf of such Person, certified by the secretary or assistant secretary of such Person; (v) the charter documents of each of the Loan Parties certified as of a recent date by the Secretary of State of its state of organization; (vi) the bylaws of each of the Loan Parties certified as of the Closing Date as true and correct by its secretary or assistant secretary; (vii) certificates issued as of a recent date by the Secretaries of State of the respective jurisdictions of formation of each of the Loan Parties as to the due existence and good standing of such Person; (viii) appropriate certificates of qualification to do business, good standing and, where appropriate, authority to conduct business under assumed name, issued in respect of each of the Loan Parties as of a recent date by the 47

54 Secretary of State or comparable official of each jurisdiction in which the failure to be qualified to do business or authorized so to conduct business could have a Material Adverse Effect; (ix) notice of appointment of the initial Authorized Representative(s); (x) certificate of an Authorized Representative dated the Closing Date demonstrating compliance with the financial covenants contained in Sections 8 .1(a) through 8.1(d) and Section 8.3 as of the most recent fiscal quarter ended, substantially in the form of Exhibit H; (xi) evidence of all insurance required by the Loan Documents; (xii) an initial Borrowing Notice, if any; (xiii) evidence that all fees payable by the Borrower on the Closing Date to the Agent, NCMI and the Lenders have been paid in full; (xiv) such other documents, instruments, certificates and opinions as the Agent or any Lender may reasonably request on or prior to the Closing Date in connection with the consummation of the transactions contemplated hereby; and (b) In the good faith judgment of the Agent and the Lenders: (i) there shall not have occurred or become known to the Agent or the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Borrower and its Subsidiaries delivered to the Agent prior to the Closing Date that has had or could reasonably be expected to result in a Material Adverse Effect; (ii) no litigation, action, suit, investigation or other arbitral, administrative or judicial proceeding shall be pending or threatened which could reasonably be likely to result in a Material Adverse Effect; and (iii) the Loan Parties shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under, conflict with or violation of (A) any applicable law, rule, regulation, order or decree of any Governmental Authority or arbitral authority or (B) any agreement, document or instrument to which any of the Loan Parties is a party or by which any of them or their properties is bound. 5.2. Conditions of Revolving Loans and Letter of Credit. The obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to issue Letters of Credit and 48

55 NationsBank to make Swing Line Loans, hereunder on or subsequent to the Closing Date are subject to the satisfaction of the following conditions: (a) the Agent or, in the case of Swing Line Loans, NationsBank shall have received a Borrowing Notice if required by Article II; (b) the representations and warranties of the Loan Parties set forth in Article VI and in each of the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance, Swing Line Loan or Letter of Credit issuance or renewal, with the same effect as though such representations and warranties had been made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date and except that the financial statements referred to in Section 6.6(a) shall be deemed to be those financial statements most recently delivered to the Agent and the Lenders pursuant to Section 7.1 from the date financial statements are delivered to the Agent and the Lenders in accordance with such Section; (c) in the case of the issuance of a Letter of Credit, the Borrower shall have executed and delivered to the Issuing Bank an Application and Agreement for Letter of Credit in form and content acceptable to the Issuing Bank together with such other instruments and documents as it shall request; (d) at the time of (and after giving effect to) each Advance, Swing Line Loan or the issuance of a Letter of Credit, no Default or Event of Default specified in Article IX shall have occurred and be continuing; and (e) immediately after giving effect to: (i) a Revolving Loan, the aggregate principal balance of all outstanding Revolving Loans for each Lender shall not exceed such Lender's Revolving Credit Commitment; (ii) a Letter of Credit or renewal thereof, the aggregate principal balance of all outstanding Participations in Letters of Credit and Reimbursement Obligations (or in the case of the Issuing Bank, its remaining interest after deduction of all Participations in Letters of Credit and Reimbursement Obligations of other Lenders) for each Lender and in the aggregate shall not exceed, respectively, (X) such Lender's Letter of Credit Commitment or (Y) the Total Letter of Credit Commitment; (iii) a Swing Line Loan, the Swing Line Outstandings shall not exceed $5,000,000; and (iv) a Revolving Loan, Swing Line Loan or a Letter of Credit or renewal thereof, the sum of Letter of Credit Outstandings plus Revolving Credit 49

56 Outstandings plus Swing Line Outstandings shall not exceed the Total Revolving Credit Commitment. 50

57 ARTICLE VI Representations and Warranties The Borrower represents and warrants with respect to itself and to its Subsidiaries (which representations and warranties shall survive the delivery of the documents mentioned herein and the making of Loans), that: 6.1. Organization and Authority. (a) The Borrower and each Subsidiary is a corporation or partnership duly organized and validly existing under the laws of the jurisdiction of its formation; (b) The Borrower and each Subsidiary (x) has the requisite power and authority to own its properties and assets and to carry on its business as now being conducted and as contemplated in the Loan Documents, and (y) is qualified to do business in every jurisdiction in which failure so to qualify would have a Material Adverse Effect; (c) The Borrower has the power and authority to execute, deliver and perform this Agreement and the Notes, and to borrow hereunder, and to execute, deliver and perform each of the other Loan Documents to which it is a party; (d) Each Guarantor has the power and authority to execute, deliver and perform the Facility Guaranty and each of the other Loan Documents to which it is a party; and (e) When executed and delivered, each of the Loan Documents to which any Loan Party is a party will be the legal, valid and binding obligation or agreement of such Loan Party, enforceable against such Loan Party in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity); 6.2. Loan Documents. The execution, delivery and performance by each Loan Party of each of the Loan Documents to which it is a party: (a) have been duly authorized by all requisite corporate action (including any required shareholder or partner approval) of such Loan Party required for the lawful execution, delivery and performance thereof; (b) do not violate any provisions of (i) applicable law, rule or regulation, (ii) any judgment, writ, order, determination, decree or arbitral award of any Governmental Authority or arbitral authority binding on such Loan Party or its properties, or (iii) the charter documents, partnership agreement or bylaws of such Loan Party; 51

58 (c) does not and will not be in conflict with, result in a breach of or constitute an event of default, or an event which, with notice or lapse of time or both, would constitute an event of default, under any contract, indenture, agreement or other instrument or document to which such Loan Party is a party, or by which the properties or assets of such Loan Party are bound; and (d) does not and will not result in the creation or imposition of any Lien upon any of the properties or assets of such Loan Party or any Subsidiary; 6.3. Solvency. Each Loan Party is Solvent after giving effect to the transactions contemplated by the Loan Documents; 6.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries other than those Persons listed as Subsidiaries in Schedule 6.4 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 7.19; Schedule 6.4 states as of the date hereof the organizational form of each entity, the authorized and issued capitalization of each Subsidiary listed thereon, the number of shares or other equity interests of each class of capital stock or interest issued and outstanding of each such Subsidiary and the number and/or percentage of outstanding shares or other equity interest (including options, warrants and other rights to acquire any interest) of each such class of capital stock or other equity interest owned by Borrower or by any such Subsidiary; the outstanding shares or other equity interests of each such Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable; and Borrower and each such Subsidiary owns beneficially and of record all the shares and other interests it is listed as owning in Schedule 6.4, free and clear of any Lien; 6.5. Ownership Interests. Borrower owns no interest in any Person other than the Persons listed in Schedule 6.4, equity investments in Persons not constituting Subsidiaries permitted under Section 8.7 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 7.19; 6.6. Financial Condition. (a) The Borrower has heretofore furnished to each Lender an audited consolidated balance sheet of the Borrower and its Subsidiaries as at December 29, 1996 and the notes thereto and the related consolidated statements of income, stockholders' equity and cash flows for the Fiscal Year then ended as examined and certified by Arthur Andersen LLP, and unaudited consolidated interim financial statements of the Borrower and its Subsidiaries consisting of a consolidated balance sheet and related consolidated statements of income and cash flows, in each case without notes, for and as of the end of the three month period ending March 30, 1997. Except as set forth therein, such financial statements (including the notes thereto) present fairly the financial condition of the Borrower and its Subsidiaries as of the end of such Fiscal Year and three month period and results of their operations and the changes in its stockholders' equity for the Fiscal Year and interim period then ended, all in conformity with GAAP applied on a 52

59 Consistent Basis, subject however, in the case of unaudited interim statements to year end audit adjustments; (b) since March 30, 1997 there has been no material adverse change in the condition, financial or otherwise, of the Borrower or any of its Subsidiaries or in the businesses, properties, performance, prospects or operations of the Borrower or its Subsidiaries, nor have such businesses or properties been materially adversely affected as a result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo or act of God; and (c) except as set forth in the financial statements referred to in Section 6.6(a) or in Schedule 6.6 or permitted by Section 8.5, neither Borrower nor any Subsidiary has incurred, other than in the ordinary course of business, any material Indebtedness, Contingent Obligation or other commitment or liability which remains outstanding or unsatisfied; 6.7. Title to Properties. The Borrower and each of its Subsidiaries has title to all its real and personal properties, subject to no transfer restrictions or Liens of any kind, except for the transfer restrictions and Liens described in Schedule 6.7 and Liens permitted by Section 8.4; 6.8. Taxes. The Borrower and each of its Subsidiaries has filed or caused to be filed all federal, state and local tax returns which are required to be filed by it and, except for taxes and assessments being contested in good faith by appropriate proceedings diligently conducted and against which reserves reflected in the financial statements described in Section 6.6(a) and satisfactory to the Borrower's independent certified public accountants have been established, have paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due; 6.9. Other Agreements. No Loan Party nor any Subsidiary is (a) a party to or subject to any judgment, order, decree, agreement, lease or instrument, or subject to other restrictions, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect; or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which the Borrower or any Subsidiary is a party, which default has, or if not remedied within any applicable grace period could reasonably be likely to have, a Material Adverse Effect; 6.10. Litigation. Except as set forth in Schedule 6.10, there is no action, suit, investigation or proceeding at law or in equity or by or before any governmental instrumentality or agency or arbitral body pending, or, to the knowledge of the Borrower, threatened by or against the Borrower or any Subsidiary or affecting the Borrower or any Subsidiary or any 53

60 properties or rights of the Borrower or any Subsidiary, which could reasonably be expected to have a Material Adverse Effect; 6.11. Margin Stock. The proceeds of the borrowings made hereunder will be used by the Borrower only for the purposes expressly authorized herein. None of such proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute any of the Loans under this Agreement a "purpose credit" within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any agent acting in its behalf has taken or will take any action which might cause this Agreement or any of the documents or instruments delivered pursuant hereto to violate any regulation of the Board or to violate the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or any state securities laws, in each case as in effect on the date hereof; 6.12. Investment Company. No Loan Party is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application of the proceeds of the Loans and repayment thereof by the Borrower and the performance by the Loan Parties of the transactions contemplated by the Loan Documents will not violate any provision of said Act, or any rule, regulation or order issued by the Securities and Exchange Commission thereunder, in each case as in effect on the date hereof; 6.13. Patents, Etc. The Borrower and each Subsidiary owns or has the right to use, under valid license agreements or otherwise, all material patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights necessary to or used in the conduct of its businesses as now conducted and as contemplated by the Loan Documents, in all cases without known conflict with any patent, license, franchise, trademark, trade secret, trade name, copyright, other proprietary right of any other Person, which conflict is reasonably likely to have a Material Adverse Effect; 6.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan Document or certificate or document executed and delivered by or on behalf of the Borrower or any Subsidiary in accordance with or pursuant to any Loan Document nor (b) any statement, representation, or warranty provided to the Agent in connection with the negotiation or preparation of the Loan Documents contains any misrepresentation or untrue statement of material fact or omits to state a material fact necessary, in light of the circumstance under which it was made, in order to make any such warranty, representation or statement contained therein not misleading; 6.15. No Consents, Etc. Neither the respective businesses or properties of the Loan Parties or any Subsidiary, nor any relationship among the Loan Parties or any Subsidiary and any other Person, nor any circumstance in connection with the execution, delivery and performance of the Loan Documents and the transactions contemplated thereby, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any 54

61 Governmental Authority or any other Person on the part of any Loan Party or any Subsidiary as a condition to the execution, delivery and performance of, or consummation of the transactions contemplated by the Loan Documents, which, if not obtained or effected, would be reasonably likely to have a Material Adverse Effect, or if so, such consent, approval, authorization, filing, registration or qualification has been duly obtained or effected, as the case may be; 6.16. Employee Benefit Plans. (a) The Borrower and each ERISA Affiliate is in compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder and in compliance with all Foreign Benefit Laws with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code. No material liability has been incurred by the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan; (b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in a nonexempt prohibited transaction described in Section 4975 of the Code or Section 406 of ERISA affecting any of the Employee Benefit Plans or the trusts created thereunder which could subject any such Employee Benefit Plan or trust to a material tax or penalty on prohibited transactions imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding deficiency with respect to any Employee Benefit Plan, whether or not waived, or any other material liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (iii) failed to make a required contribution or payment to a Multiemployer Plan, or (iv) failed to make a required installment or other required payment under Section 412 of the Code, Section 302 of ERISA or the terms of such Employee Benefit Plan; (c) No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan or Multiemployer Plan, and neither the Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal liability with respect to any Multiemployer Plan; (d) The present value of all vested accrued benefits under each Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of the most recent valuation date for each such plan, exceed the then current value of the assets of such Employee Benefit Plan allocable to such benefits; (e) To the best of the Borrower's knowledge, each Employee Benefit Plan subject to Title IV of ERISA, maintained by the Borrower or any ERISA Affiliate, has 55

62 been administered in accordance with its terms in all material respects and is in compliance in all material respects with all applicable requirements of ERISA and other applicable laws, regulations and rules; (f) The consummation of the Loans and the issuance of the Letters of Credit provided for herein will not involve any prohibited transaction under ERISA which is not subject to a statutory or administrative exemption; and (g) No material proceeding, claim, lawsuit and/or investigation exists or, to the best knowledge of the Borrower after due inquiry, is threatened concerning or involving any Employee Benefit Plan; 6.17. No Default. As of the date hereof, there does not exist any Default or Event of Default hereunder; 6.18. Hazardous Materials. The Borrower and each Subsidiary is in compliance with all applicable Environmental Laws in all material respects. Neither the Borrower nor any Subsidiary has been notified of any action, suit, proceeding or investigation which, and neither the Borrower nor any Subsidiary is aware of any facts which, (i) calls into question, or could reasonably be expected to call into question, compliance by the Borrower or any Subsidiary with any Environmental Laws, (ii) which seeks, or could reasonably be expected to form the basis of a meritorious proceeding, to suspend, revoke or terminate any license, permit or approval necessary for the generation, handling, storage, treatment or disposal of any Hazardous Material, or (iii) seeks to cause, or could reasonably be expected to form the basis of a meritorious proceeding to cause, any property of the Borrower or any Subsidiary to be subject to any restrictions on ownership, use, occupancy or transferability under any Environmental Law; 6.19. Employment Matters. (a) Except as set forth in Schedule 6.19, none of the employees of the Borrower or any Subsidiary is subject to any collective bargaining agreement and there are no strikes, work stoppages, election or decertification petitions or proceedings, unfair labor charges, equal opportunity proceedings, or other material labor/employee related controversies or proceedings pending or, to the best knowledge of the Borrower, threatened against the Borrower or any Subsidiary or between the Borrower or any Subsidiary and any of its employees, other than employee grievances arising in the ordinary course of business which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and (b) Except to the extent a failure to maintain compliance would not have a Material Adverse Effect, the Borrower and each Subsidiary is in compliance in all material respects with all applicable laws, rules and regulations pertaining to labor or employment matters, including without limitation those pertaining to wages, hours, occupational safety and taxation and there is neither pending or, to the knowledge of the Borrower, threatened any litigation, administrative proceeding nor, to the knowledge of the Borrower, any investigation, in respect of such matters which, if decided adversely, could reasonably be likely, individually or in the aggregate, to have a Material Adverse Effect; and 56

63 6.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or has engaged in any course of conduct that could subject any of their respective properties to any Lien, seizure or other forfeiture under any criminal law, racketeer influenced and corrupt organizations law, civil or criminal, or other similar laws. 57

64 ARTICLE VII Affirmative Covenants Until the Facility Termination Date, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and where applicable will cause each Subsidiary to: 7.1. Financial Reports, Etc. (a) As soon as practical and in any event within 90 days after the end of each Fiscal Year of the Borrower, deliver or cause to be delivered to the Agent and each Lender (i) consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and the related consolidated statements of income, stockholders' equity and cash flows, and the respective notes thereto, for such Fiscal Year, setting forth comparative financial statements for the preceding Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis and containing opinions of Arthur Andersen LLP, or other such independent certified public accountants selected by the Borrower and approved by the Agent, which are unqualified as to the scope of the audit performed and as to the "going concern" status of the Borrower and its Subsidiaries and without any exception not acceptable to the Lenders, and (ii) a certificate of an Authorized Representative demonstrating compliance with Sections 8.1(a) through 8.1(d) and 8.3, which certificate shall be in the form of Exhibit H; (b) as soon as practical and in any event within 45 days after the end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year), deliver to the Agent and each Lender (i) consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income and cash flows for such fiscal quarter and for the period from the beginning of the then current Fiscal Year through the end of such reporting period, and accompanied by a certificate of an Authorized Representative to the effect that such financial statements present fairly the financial position of the Borrower and its Subsidiaries as of the end of such fiscal period and the results of their operations and the changes in their financial position for such fiscal period, in conformity with the standards set forth in Section 6.6(a) with respect to interim financial statements, and (ii) a certificate of an Authorized Representative containing computations for such quarter comparable to that required pursuant to Section 7.1(a)(ii); (c) together with each delivery of the financial statements required by Section 7.1(a)(i), deliver to the Agent and each Lender a letter from the Borrower's accountants specified in Section 7.1(a)(i) stating that in performing the audit necessary to render an opinion on the financial statements delivered under Section 7.1(a)(i), they obtained no knowledge of any Default or Event of Default by the Borrower in the fulfillment of the terms and provisions of this Agreement insofar as they relate to financial matters (which at the date of such statement remains uncured); or if the accountants have obtained knowledge of such Default or Event of Default, a statement specifying the nature and period of existence thereof; (d) promptly upon their becoming available to the Borrower, the Borrower shall deliver to the Agent and each Lender a copy of (i) all regular or special reports or effective registration statements which Borrower or any Subsidiary shall file with the Securities and 58

65 Exchange Commission (or any successor thereto) or any securities exchange, (ii) any proxy statement distributed by the Borrower or any Subsidiary to its shareholders, bondholders or the financial community in general, and (iii) any management letter or other report submitted to the Borrower or any Subsidiary by independent accountants in connection with any annual, interim or special audit of the Borrower or any Subsidiary; and (e) not later than the last Business Day of each Fiscal Year, deliver to the Agent and each Lender a consolidated operating budget for the Borrower and its Subsidiaries for the next Fiscal Year, prepared in accordance with GAAP applied on a Consistent Basis; (f) promptly, from time to time, deliver or cause to be delivered to the Agent and each Lender such other information regarding Borrower's and any Subsidiary's operations, business affairs and financial condition as the Agent or such Lender may reasonably request; The Agent and the Lenders are hereby authorized to deliver a copy of any such financial or other information delivered hereunder to the Lenders (or any affiliate of any Lender) or to the Agent, to any Governmental Authority having jurisdiction over the Agent or any of the Lenders pursuant to any written request therefor or in the ordinary course of examination of loan files, or to any other Person who shall acquire or consider the assignment of, or acquisition of any participation interest in, any Obligation permitted by this Agreement; 7.2. Maintain Properties. Maintain all properties necessary to its operations in good working order and condition, ordinary wear and tear excepted, make all needed repairs, replace ments and renewals to such properties, and maintain free from Liens all trademarks, trade names, patents, copyrights, trade secrets, know-how, and other intellectual property and proprietary information (or adequate licenses thereto), in each case as are reasonably necessary to conduct its business as currently conducted or as contemplated hereby, all in accordance with customary and prudent business practices, except where such failure could not be reasonably expected to have a Material Adverse Effect; 7.3. Existence, Qualification, Etc. Except as otherwise expressly permitted under Section 8.8, do or cause to be done all things necessary to preserve and keep in full force and effect its existence and all material rights and franchises, and, except to the extent conveyed in connection with a transaction permitted under Section 8.6 hereof, maintain its license or qualification to do business as a foreign corporation and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary; 7.4. Regulations and Taxes. Comply in all material respects with or contest in good faith all statutes and governmental regulations and pay all taxes, assessments, governmental charges, claims for labor, supplies, rent and any other obligation which, if unpaid, would become a Lien against any of its properties except liabilities being contested in good faith by appropriate proceedings diligently conducted and against which adequate reserves acceptable to the Borrower's independent certified public accountants have been established unless and until any 59

66 Lien resulting therefrom attaches to any of its property and becomes enforceable against its creditors; 7.5. Insurance. (a) Keep all of its insurable properties adequately insured at all times with responsible insurance carriers against loss or damage by fire and other hazards, (b) maintain general public liability insurance at all times with responsible insurance carriers against liability on account of damage to persons and property and (c) maintain insurance under all applicable workers' compensation laws (or in the alternative, maintain required reserves if self-insured for workers' compensation purposes) and against loss by reason of business interruption such policies of insurance to have such limits, deductibles, exclusions, co-insurance and other provisions providing no less coverages than that specified in Schedule 7.5. Each of the policies of insurance described in this Section 7.5 shall provide that the insurer shall give the Agent not less than thirty (30) days' prior written notice before any such policy shall be terminated, lapse or be altered in any manner; 7.6. True Books. Keep true books of record and account in which full, true and correct entries will be made of all of its dealings and transactions, and set up on its books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes, assessments, charges, levies and claims and with respect to its business in general, and include such reserves in interim as well as year-end financial statements; 7.7. Right of Inspection. Permit any Person designated by the Agent, at the Agent's expense, to visit and inspect any of the properties, corporate books and financial reports of the Borrower or any Subsidiary and to discuss its affairs, finances and accounts with its principal officers and independent certified public accountants, all at reasonable times, at reasonable intervals and with reasonable prior notice and permit any Lender to discuss the Borrower's affairs, finances and accounts with its principal officers all at reasonable times, at reasonable intervals and with reasonable prior notice; 7.8. Observe all Laws. Conform to and duly observe in all material respects all laws, rules and regulations and all other valid requirements of any Governmental Authority with respect to the conduct of its business; 7.9. Governmental Licenses. Obtain and maintain all licenses, permits, certifications and approvals of all applicable Governmental Authorities as are required for the conduct of its business as currently conducted and as contemplated by the Loan Documents; 7.10. Covenants Extending to Other Persons. Cause each of its Subsidiaries to do with respect to itself, its business and its assets, each of the things required of the Borrower in Sections 7.2 through 7.9, and 7.18 inclusive; 7.11. Officer's Knowledge of Default. Upon any officer of the Borrower obtaining knowledge of any Default or Event of Default hereunder or under any other obligation of the Borrower or any Subsidiary to any Lender, or any event, development or occurrence which could reasonably be expected to have a Material Adverse Effect, cause such officer or an Authorized 60

67 Representative to promptly notify the Agent of the nature thereof, the period of existence thereof, and what action the Borrower or such Subsidiary proposes to take with respect thereto; 7.12. Suits or Other Proceedings. Upon any officer of the Borrower obtaining knowledge of any litigation or other proceedings being instituted against the Borrower or any Subsidiary or any attachment, levy, execution or other process being instituted against any assets of the Borrower or any Subsidiary making a claim or claims which is likely to result in damages in an aggregate amount greater than $[1,000,000] not otherwise covered by insurance, promptly deliver to the Agent written notice thereof stating the nature and status of such litigation, dispute, proceeding, levy, execution or other process; 7.13. Notice of Discharge of Hazardous Material or Environmental Complaint. Promptly provide to the Agent true, accurate and complete copies of any and all notices, complaints, orders, directives, claims, or citations received by the Borrower or any Subsidiary relating to any (a) violation or alleged violation by the Borrower or any Subsidiary of any applicable Environmental Law; (b) release or threatened release by the Borrower or any Subsidiary, or at any facility or property owned or leased or operated by the Borrower or any Subsidiary, of any Hazardous Material, except where occurring legally; or (c) liability or alleged liability of the Borrower or any Subsidiary for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials; 7.14. Environmental Compliance. If the Borrower or any Subsidiary shall receive any letter, notice, complaint, order, directive, claim or citation alleging that the Borrower or and Subsidiary has violated any Environmental Law or is liable for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials, the Borrower shall, within the time period permitted by the applicable Environmental Law or the Governmental Authority responsible for enforcing such Environmental Law, either (i) remove or remedy, or cause the applicable Subsidiary to remove or remedy, such violation or release or satisfy such liability or (ii) contest in good faith such violation so long as no remedial action shall be required to be taken during the period of such contest; 7.15. Indemnification. Without limiting the generality of Section 11.9, the Borrower hereby agrees to indemnify and hold the Agent, the Lenders and NCMI, and their respective officers, directors, employees and agents, harmless from and against any and all claims, losses, penalties, liabilities, damages and expenses (including assessment and cleanup costs and reasonable attorneys' fees and disbursements) arising directly or indirectly from, out of or by reason of (a) the violation of any Environmental Law by the Borrower or any Subsidiary or with respect to any property owned, operated or leased by the Borrower or any Subsidiary or (b) the handling, storage, treatment, emission or disposal of any Hazardous Materials by or on behalf of the Borrower or any Subsidiary or on or with respect to property owned or leased or operated by the Borrower or any Subsidiary. The provisions of this Section 7.15 shall survive the Facility Termination Date and expiration or termination of this Agreement; 7.16. Further Assurances. At the Borrower's cost and expense, upon request of the Agent, duly execute and deliver or cause to be duly executed and delivered, to the Agent such 61

68 further instruments, documents, certificates, financing and continuation statements, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Agent to carry out more effectively the provisions and purposes of this Agreement and the other Loan Documents; 7.17. Employee Benefit Plans. (a) With reasonable promptness, and in any event within thirty (30) days thereof, give notice to the Agent of (a) the establishment of any new Pension Plan (which notice shall include a copy of such plan), (b) the commencement of contributions to any Employee Benefit Plan to which the Borrower or any of its ERISA Affiliates was not previously contributing, (c) any material increase in the benefits of any existing Employee Benefit Plan, (d) each funding waiver request filed with respect to any Employee Benefit Plan and all communications received or sent by the Borrower or any ERISA Affiliate with respect to such request and (e) the failure of the Borrower or any ERISA Affiliate to make a required installment or payment under Section 302 of ERISA or Section 412 of the Code by the due date; (b) Promptly and in any event within fifteen (15) days of becoming aware of the occurrence or forthcoming occurrence of any (a) Termination Event or (b) nonexempt "prohibited transaction," as such term is defined in Section 406 of ERISA or Section 4975 of the Code, in connection with any Pension Plan or any trust created thereunder, deliver to the Agent a notice specifying the nature thereof, what action the Borrower or any ERISA Affiliate has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (c) With reasonable promptness but in any event within fifteen (15) days for purposes of clauses (a), (b) and (c), deliver to the Agent copies of (a) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code, (b) all notices received by the Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (c) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan and (d) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA. The Borrower will notify the Agent in writing within five (5) Business Days of the Borrower or any ERISA Affiliate obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; 7.18. Continued Operations. Continue at all times to conduct its business and engage principally in the same or complementary line or lines of business substantially as heretofore conducted; 62

69 7.19. Additional Support Documents. The Borrower will cause (i) every Material Subsidiary, whether on the Closing Date or thereafter, to execute and deliver, as promptly as practicable but in any event within 30 days after the creation or Acquisition of any such Subsidiary, or such Subsidiary becoming a Material Subsidiary, (a) in the case of a Material Subsidiary that is a Domestic Subsidiary a Guaranty of such Subsidiary and (b) in the case of a Material Subsidiary that is a Direct Foreign Subsidiary 65% of the issued and outstanding capital stock of such Subsidiary together with stock powers (to the extent certificates exist) executed in blank and a Pledge Agreement covering such stock duly executed by the owner of such stock, (ii) to be delivered to the Agent an opinion of counsel to the Material Subsidiary dated as of the date of delivery of the Facility Guaranty or Pledged Stock addressed to the Agent and the Lenders, in form and substance reasonably acceptable to the Agent (which opinion may include assumptions and qualifications of similar effect to those contained in the opinions of counsel delivered pursuant to Section 5.1(a) and such others that are appropriate at the time such opinion is to be given, to the effect) that: (A) such Material Subsidiary is duly organized, validly existing and in good standing in the jurisdiction of its formation, has the requisite power and authority to own its properties and conduct its business as then owned and then conducted and proposed to be conducted, and is duly qualified to transact business and is in good standing as a foreign corporation or partnership in each other jurisdiction in which the character of the properties owned or leased, or the business carried on by it, requires such qualification and the failure to be so qualified would reasonably be likely to result in a Material Adverse Effect; (B) the execution, delivery and performance of the Facility Guaranty or Pledge Agreement, as the case may be, described in this Section 7.19 to which such Material Subsidiary, Borrower or Domestic Subsidiary is a signatory have been duly authorized by all requisite corporate or partnership action (including any required shareholder or partner approval), such agreement has been duly executed and delivered and constitutes the valid and binding agreement of such Material Subsidiary, Borrower or Domestic Subsidiary, enforceable against such Material Subsidiary, Borrower or Domestic Subsidiary in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity); and (iii) current copies of the charter documents, including partnership agreements and certificate of limited partnership, if applicable, and bylaws of such Material Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the Board of Directors, partners, or appropriate committees thereof (and, if required by such charter documents, bylaws or by applicable law, of the shareholders) of such Material Subsidiary authorizing the actions and the execution and delivery of documents described in this Section 7.19. 63

70 ARTICLE VIII Negative Covenants Until the Obligations have been paid and satisfied in full, no Letters of Credit remain outstanding and this Agreement has been terminated in accordance with the terms hereof, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, nor will it permit any Subsidiary to: 8.1. Financial Covenants. (a) Consolidated Net Worth. Permit Consolidated Net Worth to be less than (i) $75,000,000 at the Closing Date and (ii) as at the last day of each succeeding fiscal quarter of the Borrower and until (but excluding) the last day of the next following fiscal quarter of the Borrower, the sum of (A) the amount of Consolidated Net Worth required to be maintained pursuant to this Section 8.1(a) as at the end of the immediately preceding fiscal quarter, plus (B) 50% of Consolidated Net Income (with no reduction for net losses during any period) for the fiscal quarter of the Borrower ending on such day (including within "Consolidated Net Income" certain items otherwise excluded, as provided for in the definition of "Consolidated Net Income"). (b) Consolidated Leverage Ratio. Permit at any time during the respective periods set forth below the Consolidated Leverage Ratio to be more than that set forth opposite each such period: - ------------------------------------------------------------------------------- Four Quarter Period Ending Consolidated Leverage Ratio Covenant - ------------------------------------------------------------------------------- 6/30/97 3.75:1.00 - ------------------------------------------------------------------------------- 9/30/97 3.75:1.00 - ------------------------------------------------------------------------------- 12/31/97 3.75:1.00 - ------------------------------------------------------------------------------- 3/31/98 3.75:1.00 - ------------------------------------------------------------------------------- 6/30/98 3.75:1.00 - ------------------------------------------------------------------------------- 9/30/98 3.75:1.00 - ------------------------------------------------------------------------------- 12/31/98 and thereafter 3.50:1.00 - ------------------------------------------------------------------------------- (c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any Four-Quarter Period to be less than 2.00 to 1.00. (d) Consolidated Total Capitalization. Permit at any time Consolidated Indebtedness to be greater than fifty-five percent (55%) of Consolidated Total Capitalization. 64

71 8.2. Acquisitions. Enter into any agreement, contract, binding commitment or other arrangement providing for any Acquisition, or take any action to solicit the tender of securities or proxies in respect thereof in order to effect any Acquisition, unless (i) the Person to be (or whose assets are to be) acquired does not oppose such Acquisition and the line or lines of business of the Person to be acquired are substantially the same as one or more line or lines of business conducted by the Borrower and its Subsidiaries, (ii) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such Acquisition, (iii) the Cost of an Acquisition does not exceed 25% of Consolidated Net Worth, (iv) the Borrower shall have furnished to the Agent (A) pro forma historical financial statements as of the end of the most recently completed Fiscal Year of the Borrower and most recent interim fiscal quarter, if applicable, giving effect to such Acquisition and (B) a certificate in the form of Exhibit H prepared on a historical pro forma basis giving effect to such Acquisition, which certificate shall demonstrate that no Default or Event of Default would exist immediately after giving effect thereto, (v) the Person acquired shall be a wholly-owned Subsidiary, or be merged into the Borrower or a wholly-owned Subsidiary, immediately upon consummation of the Acquisition (or if assets are being acquired, the acquiror shall be the Borrower or a wholly-owned Subsidiary), and (vi) if the Cost of Acquisition shall exceed 25% of Consolidated Net Worth, the Required Lenders shall consent to such Acquisition in their discretion; 8.3. Capital Expenditures. Make Capital Expenditures, which exceed in the aggregate in any Fiscal Year of the Borrower described below (on a limited cumulative basis, with the effect that amounts not expended in the Fiscal Year set forth below may be carried forward to the next Fiscal Year), the amount set forth opposite each such period: Capital Expenditures -------------------- Fiscal Year Ending: Not to Exceed: ------------------- -------------- December 31, 1997 $85,000,000 December 31, 1998 $75,000,000 Each Fiscal Year ending on or after December 31, 1999 $60,000,000; 8.4. Liens. Incur, create or permit to exist any Lien, charge or other encumbrance of any nature whatsoever with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary, other than (a) Liens existing as of the date hereof and as set forth in Schedule 6.7; (b) Liens imposed by law for taxes, assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith 65

72 by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP. (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law or created in the ordinary course of business and in existence less than 90 days from the date of creation thereof for amounts not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP. (d) Liens incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (e) easements (including reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, reservations, encroachments, variations and zoning and other restrictions, charges or encumbrances (whether or not recorded), which do not interfere materially with the ordinary conduct of the business of the Borrower or any Subsidiary and which do not materially detract from the value of the property to which they attach or materially impair the use thereof to the Borrower or any Subsidiary; and (f) Liens on assets of a Special Purpose Subsidiary securing Non-Recourse Indebtedness; 8.5. Indebtedness. Incur, create, assume or permit to exist any Indebtedness of the Borrower, howsoever evidenced, except: (a) Indebtedness existing as of the Closing Date as set forth in Schedule 6.6; provided, none of the instruments and agreements evidencing or governing such Indebtedness shall be amended, modified or supplemented after the Closing Date to change any terms of subordination, repayment or rights of conversion, put, exchange or other rights from such terms and rights as in effect on the Closing Date; (b) Indebtedness owing to the Agent or any Lender in connection with this Agreement, any Note or other Loan Document; (c) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (d) additional unsecured Indebtedness for Money Borrowed not otherwise covered by clauses (a) through (c) above, provided that the aggregate outstanding 66

73 principal amount of all such other Indebtedness permitted under this clause (d) shall in no event exceed $15,000,000 at any time; (e) TROL Indebtedness; and (f) Non-Recourse Indebtedness; 8.6. Transfer of Assets. Sell, lease, transfer or otherwise dispose of any assets of Borrower or any Subsidiary other than (a) dispositions of assets in the ordinary course of business, (b) dispositions of property that is substantially worn, damaged, obsolete or, in the judgment of the Borrower, no longer best used or useful in its business or that of any Subsidiary, (c) transfers of assets necessary to give effect to merger or consolidation transactions permitted by Section 8.8, (d) the disposition of Eligible Securities in the ordinary course of management of the investment portfolio of the Borrower and its Subsidiaries and (e) the transfer of assets to any Person during any Fiscal Year which assets have a net book value not exceeding ten percent (10%) of Consolidated Total Assets so long as Borrower or its Subsidiary shall be paid not less than the net book value of such asset in cash; 8.7. Investments. Purchase, own, invest in or otherwise acquire, directly or indirectly, any stock or other securities, or make or permit to exist any interest whatsoever in any other Person or permit to exist any loans or advances to any Person, except that Borrower may maintain investments or invest in: (a) of any Person acquired in an Acquisition permitted hereunder; (b) Eligible Securities; (c) investments existing as of the date hereof and as set forth in Schedule 6.4; (d) accounts receivable arising and trade credit granted in the ordinary course of business and any securities received in satisfaction or partial satisfaction thereof in connection with accounts of financially troubled Persons to the extent reasonably necessary in order to prevent or limit loss; (e) investments in Domestic Subsidiaries which are Guarantors or Direct Foreign Subsidiaries who have complied with Section 7.19; and (f) other investments, loans or advances (including, without limitation, loans or advances in or to Special Purpose Subsidiaries) not exceeding in the aggregate at any time 20% of Consolidated Total Assets; 8.8. Merger or Consolidation. (a) Consolidate with or merge into any other Person, or (b) permit any other Person to merge into it, or (c) liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a substantial part of its assets (other than sales permitted under Section 6.6); provided, however, (i) any Subsidiary of the Borrower may merge 67

74 or transfer all or substantially all of its assets into or consolidate with the Borrower or any wholly-owned Subsidiary of the Borrower, and (ii) any other Person may merge into or consolidate with the Borrower or any wholly-owned Subsidiary and any Subsidiary may merge into or consolidate with any other Person in order to consummate an Acquisition permitted by Section 8.2, provided further, that any resulting or surviving entity shall execute and deliver such agreements and other documents, including a Facility Guaranty, and take such other action as the Agent may require to evidence or confirm its express assumption of the obligations and liabilities of its predecessor entities under the Loan Documents; 8.9. Restricted Payments. Make any Restricted Payment or apply or set apart any of their assets therefor or agree to do any of the foregoing; 8.10. Transactions with Affiliates. Other than transactions permitted under Sections 8.7 and 8.8, and transactions with Subsidiaries enter into any transaction after the Closing Date, including, without limitation, the purchase, sale, lease or exchange of property, real or personal, or the rendering of any service, with any Affiliate of the Borrower, except (a) that such Persons may render services to the Borrower or its Subsidiaries for compensation at the same rates generally paid by Persons engaged in the same or similar businesses for the same or similar services, (b) that the Borrower or any Subsidiary may render services to such Persons for compensation at the same rates generally charged by the Borrower or such Subsidiary and (c) in either case in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's) business consistent with past practice of the Borrower and its Subsidiaries and upon fair and reasonable terms no less favorable to the Borrower (or any Subsidiary) than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate; 8.11. Compliance with ERISA. With respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan: (a) permit the occurrence of any Termination Event which would result in a liability on the part of the Borrower or any ERISA Affiliate to the PBGC; or (b) permit the present value of all benefit liabilities under all Pension Plans to exceed the current value of the assets of such Pension Plans allocable to such benefit liabilities; or (c) permit any accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code) with respect to any Pension Plan, whether or not waived; or (d) fail to make any contribution or payment to any Multiemployer Plan which the Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; or 68

75 (e) engage, or permit any Borrower or any ERISA Affiliate to engage, in any prohibited transaction under Section 406 of ERISA or Sections 4975 of the Code for which a civil penalty pursuant to Section 502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be imposed; or (f) permit the establishment of any Employee Benefit Plan providing post-retirement welfare benefits or establish or amend any Employee Benefit Plan which establishment or amendment could result in liability to the Borrower or any ERISA Affiliate or increase the obligation of the Borrower or any ERISA Affiliate to a Multiemployer Plan; or (g) fail, or permit the Borrower or any ERISA Affiliate to fail, to establish, maintain and operate each Employee Benefit Plan in compliance in all material respects with the provisions of ERISA, the Code, all applicable Foreign Benefit Laws and all other applicable laws and the regulations and interpretations thereof; 8.12. Fiscal Year. Change its Fiscal Year other than to a calendar year; 8.13. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or involuntarily) or commence or suffer any proceedings seeking any such winding up, liquidation or dissolution, except in connection with a merger or consolidation permitted pursuant to Section 8.8; 8.14. Limitations on Sales and Leasebacks. Except to the extent permitted under Section 8.6(e), enter into any arrangement with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property, whether now owned or hereafter acquired in a related transaction or series of related transactions, which has been or is to be sold or transferred by the Borrower or any Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or any Subsidiary; 8.15. Change in Control. Cause, suffer or permit to exist or occur any Change of Control; 8.16. [RESERVED] 8.17. Negative Pledge Clauses. Enter into or cause, suffer or permit to exist any agreement with any Person other than the Agent and the Lenders pursuant to this Agreement or any other Loan Documents which prohibits or limits the ability of any of the Borrower or any Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, provided that the Borrower and any Subsidiary may enter into such an agreement in connection with property acquired with the proceeds of purchase money Indebtedness permitted hereunder; 69

76 8.18. Prepayments, Etc. of Indebtedness. (a) Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness; or (b) amend, modify or change in any manner any term or condition of any Indebtedness described in Section 8.5(a) or any lease so that the terms and conditions thereof are less favorable to the Agent and the Lenders than the terms of such Indebtedness or leases as of the Closing Date; 70

77 ARTICLE IX Events of Default and Acceleration 9.1. Events of Default. If any one or more of the following events (herein called "Events of Default") shall occur for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Authority), that is to say: (a) if default shall be made in the due and punctual payment of the principal of any Loan, Reimbursement Obligation or other Obligation, when and as the same shall be due and payable whether pursuant to any provision of Article II or Article III, at maturity, by acceleration or otherwise and; or (b) if default shall be made in the due and punctual payment of any amount of interest on any Loan, Reimbursement Obligation or other Obligation or of any fees or other amounts payable to any of the Lenders or the Agent on the date on which the same shall be due and payable and such default shall continue for three (3) or more days; or (c) if default shall be made in the performance or observance of any covenant set forth in Section 7.7, 7.11, 7.12, 7.19 or Article VIII (other than Section 8.4 and 8.11; (d) if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in this Agreement or the Notes (other than as described in clauses (a), (b) or (c) above) and such default shall continue for thirty (30) or more days after the earlier of receipt of notice of such default by the Authorized Representative from the Agent or an Authorized Representative of the Borrower becomes aware of such default, or if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in any of the other Loan Documents (beyond any applicable grace period, if any, contained therein) or in any instrument or document evidencing or creating any obligation, guaranty, or Lien in favor of the Agent or any of the Lenders or delivered to the Agent or any of the Lenders in connection with or pursuant to this Agreement or any of the Obligations, or if any Loan Document ceases to be in full force and effect (other than by reason of any action by the Agent or any Lender), or if without the written consent of the Lenders, this Agreement or any other Loan Document shall be disaffirmed or shall ter minate, be terminable or be terminated or become void or unenforceable for any reason whatsoever (other than in accordance with its terms in the absence of default or by reason of any action by the Lenders or the Agent); or (e) if there shall occur (i) a default, which is not waived, in the payment of any principal, interest, premium or other amount with respect to any Indebtedness or Rate Hedging Obligation (other than the Loans and other Obligations) of the Borrower or any Subsidiary in an amount not less than $2,500,000 in the aggregate outstanding, or (ii) a 71

78 default, which is not waived, in the performance, observance or fulfillment of any term or covenant contained in any agreement or instrument under or pursuant to which any such Indebtedness or Rate Hedging Obligation referred to in clause (i) may have been issued, created, assumed, guaranteed or secured by the Borrower or any Subsidiary, or (iii) any other event of default as specified in any agreement or instrument under or pursuant to which any such Indebtedness or Rate Hedging Obligation may have been issued, created, assumed, guaranteed or secured by the Borrower or any Subsidiary, and any such default or event of default specified in clauses (i), (ii) or (iii) shall continue for more than the period of grace, if any, therein specified, or such default or event of default shall permit the holder of any such Indebtedness (or any agent or trustee acting on behalf of one or more holders) to accelerate the maturity thereof; or (f) if any representation, warranty or other statement of fact contained in any Loan Document or in any writing, certificate, report or statement at any time furnished to the Agent or any Lender by or on behalf of the Borrower pursuant to or in connection with any Loan Document, or otherwise, shall be false or misleading in any material respect when given; or (g) if the Borrower or any Subsidiary shall be unable to pay its debts generally as they become due; file a petition to take advantage of any insolvency statute; make an assignment for the benefit of its creditors; commence a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or any substantial part of its property; file a petition or answer seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute; or (h) if a court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of the Borrower or any Subsidiary or of the whole or any substantial part of its properties and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days, or approve a petition filed against the Borrower or any Subsidiary seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, which petition is not dismissed within sixty (60) days; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of the Borrower or any Subsidiary or of the whole or any substantial part of its properties, which control is not relinquished within sixty (60) days; or if there is commenced against the Borrower or any Subsidiary any proceeding or petition seeking reorganization, arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state which proceeding or petition remains undismissed for a period of sixty (60) days; or if the Borrower or any Subsidiary takes any action to indicate its consent to or approval of any such proceeding or petition; or 72

79 (i) if (i) one or more judgments or orders where the amount not covered by insurance (or the amount as to which the insurer is found not to be liable for) is in excess of $1,000,000 is rendered against the Borrower or any Subsidiary, or (ii) there is any attachment, injunction or execution against any of the Borrower's or Subsidiaries' properties for any amount in excess of $1,000,000 in the aggregate; and such judgment, attachment, injunction or execution remains unpaid, unstayed, undischarged, unbonded or undismissed for a period of thirty (30) days; or (j) if the Borrower or any Material Subsidiary shall, other than in the ordinary course of business (as determined by past practices), suspend all or any part of its operations material to the conduct of the business of the Borrower or such Material Subsidiary for a period of more than sixty (60) days; or (k) if at any time less than 80% of Consolidated Total Assets are attributable to the operations and assets of the Borrower, Guarantors and Direct Foreign Subsidiaries who have complied with the requirements of Section 7.19; or (l) if there shall occur and not be waived an Event of Default as defined in any of the other Loan Documents; then, and in any such event and at any time thereafter, if such Event of Default or any other Event of Default shall have not been waived, (A) either or both of the following actions may be taken: (i) the Agent, with the consent of the Required Lenders, may, and at the direction of the Required Lenders shall, declare any obligation of the Lenders and the Issuing Bank to make further Revolving Loans and Swing Line Loans or to issue additional Letters of Credit terminated, whereupon the obligation of each Lender to make further Revolving Loans, of NationsBank to make further Swing Line Loans, and of the Issuing Bank to issue additional Letters of Credit, hereunder shall terminate immediately, and (ii) the Agent shall at the direction of the Required Lenders, at their option, declare by notice to the Borrower any or all of the Obligations to be immediately due and payable, and the same, including all interest accrued thereon and all other obligations of the Borrower to the Agent and the Lenders, shall forthwith become immediately due and payable without presentment, demand, protest, notice or other formality of any kind, all of which are hereby expressly waived, anything contained herein or in any instrument evidencing the Obligations to the contrary notwithstanding; provided, however, that notwithstanding the above, if there shall occur an Event of Default under clause (g) or (h) above, then the obligation of the Lenders to make Revolving Loans, of NationsBank to make Swing Line Loans, and of the Issuing Bank to issue Letters of Credit hereunder shall automatically terminate and any and all of the Obligations shall be immediately due and payable without the necessity of any action by the Agent or the Required Lenders or notice to the Agent or the Lenders; 73

80 (B) The Borrower shall, upon demand of the Agent or the Required Lenders, deposit cash with the Agent in an amount equal to the amount of any Letter of Credit Outstandings, as collateral security for the repayment of any future drawings or payments under such Letters of Credit, and such amounts shall be held by the Agent pursuant to the terms of the LC Account Agreement; and (C) the Agent and each of the Lenders shall have all of the rights and remedies available under the Loan Documents or under any applicable law. 9.2. Agent to Act. In case any one or more Events of Default shall occur and not have been waived or cured, the Agent may, and at the direction of the Required Lenders shall, proceed to protect and enforce their rights or remedies either by suit in equity or by action at law, or both, whether for the specific performance of any covenant, agreement or other provision contained herein or in any other Loan Document, or to enforce the payment of the Obligations or any other legal or equitable right or remedy. 9.3. Cumulative Rights. No right or remedy herein conferred upon the Lenders or the Agent is intended to be exclusive of any other rights or remedies contained herein or in any other Loan Document, and every such right or remedy shall be cumulative and shall be in addition to every other such right or remedy contained herein and therein or now or hereafter existing at law or in equity or by statute, or otherwise. 9.4. No Waiver. No course of dealing between the Borrower and any Lender or the Agent or any failure or delay on the part of any Lender or the Agent in exercising any rights or remedies under any Loan Document or otherwise available to it shall operate as a waiver of any rights or remedies and no single or partial exercise of any rights or remedies shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or of the same right or remedy on a future occasion. 9.5. Allocation of Proceeds. If an Event of Default has occurred and not been waived, and the maturity of the Notes has been accelerated pursuant to Article IX hereof, all payments received by the Agent hereunder, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder, shall be applied by the Agent in the following order: (a) amounts due to the Lenders pursuant to Sections 2.10, 3.3, 3.4 and 11.5; (b) amounts due to the Agent pursuant to Section 10.9; (c) payments of interest on Loans, Swing Line Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders (with amounts payable in respect of Swing Line Outstandings being included in such calculation and paid to NationsBank); 74

81 (d) payments of principal of Loans, Swing Line Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders (with amounts payable in respect of Swing Line Outstandings being included in such calculation and paid to NationsBank); (e) payments of cash amounts to the Agent in respect of outstanding Letters of Credit pursuant to Section 9.1(l)(B); (f) amounts due to the Lenders pursuant to Sections 3.2(g), 7.15 and 11.9; (g) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; (h) amounts due to any of the Lenders in respect of Obligations consisting of liabilities under any Swap Agreement with any of the Lenders on a pro rata basis according to the amounts owed; and (i) any surplus remaining after application as provided for herein, to the Borrower or otherwise as may be required by applicable law. 9.6. Limitation. The Agent and the Lenders shall have no right to accelerate any of the Loans upon, or to institute any action or proceeding before any court to realize upon collateral as a result of, the occurrence of any Default which shall not also constitute an Event of Default; provided however, nothing contained in this sentence shall in any respect impair or adversely affect the right, power and authority of the Agent and the Lenders (i) to take any action expressly required or permitted to be taken under the Loan Documents upon the occurrence of any Default; and (ii) to take any action provided under the Loan Documents or otherwise available by statute, at law or in equity upon the occurrence of any Default. 75

82 ARTICLE X The Agent 10.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent under this Agreement and the other Loan Documents with such powers and discretion as are specifically delegated to the Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. The Agent (which term as used in this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof shall include its affiliates and its own and its affiliates' officers, directors, employees, and agents): (a) shall not have any duties or responsibilities except those expressly set forth in this Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recital, statement, representation, or warranty (whether written or oral) made in or in connection with any Loan Document or any certificate or other document referred to or provided for in, or received by any of them under, any Loan Document, or for the value, validity, effectiveness, genuineness, enforceability, or sufficiency of any Loan Document, or any other document referred to or provided for therein or for any failure by any Loan Party or any other Person to perform any of its obligations thereunder; (c) shall not be responsible for or have any duty to ascertain, inquire into, or verify the performance or observance of any covenants or agreements by any Loan Party or the satisfaction of any condition or to inspect the property (including the books and records) of any Loan Party or any of its Subsidiaries or affiliates; (d) shall not be required to initiate or conduct any litigation or collection proceedings under any Loan Document; and (e) shall not be responsible for any action taken or omitted to be taken by it under or in connection with any Loan Document, except for its own gross negligence or willful misconduct. The Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. Each Lender hereby irrevocably designates and appoints NationsBank as the Agent for the Lenders under this Agreement, and each of the Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers as are expressly delegated to the Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. The Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any of the Lenders, and no implied covenants, functions, respon sibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 10.2. Reliance by Agent. The Agent shall be entitled to rely upon any certification, notice, instrument, writing, or other communication (including, without limitation, any thereof by telephone or telefacsimile) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (including counsel for any Loan Party), independent accountants, and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until the Agent receives and accepts an 76

83 Assignment and Acceptance executed in accordance with Section 11.1 hereof. As to any matters not expressly provided for by this Agreement, the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding on all of the Lenders; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to any Loan Document or applicable law or unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking any such action. 10.3. Defaults. The Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Agent has received written notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a "Notice of Default". In the event that the Agent receives such a notice of the occurrence of a Default or Event of Default, the Agent shall give prompt notice thereof to the Lenders. The Agent shall (subject to Section 10.2 hereof) take such action with respect to such Default or Event of Default as shall reasonably be directed by the Required Lenders, provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Lenders. 10.4. Rights as Lender. With respect to its Revolving Credit Commitment and the Loans made by it, NationsBank (and any successor acting as Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Agent in its individual capacity. NationsBank (and any successor acting as Agent) and its affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, make investments in, provide services to, and generally engage in any kind of lending, trust, or other business with any Loan Party or any of its Subsidiaries or affiliates as if it were not acting as Agent, and NationsBank (and any successor acting as Agent) and its affiliates may accept fees and other consideration from any Loan Party or any of its Subsidiaries or affiliates for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. 10.5. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed under Section 11.9 hereof, but without limiting the obligations of the Borrower under such Section) ratably in accordance with their respective Revolving Credit Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys' fees), or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Agent (including by any Lender) in any way relating to or arising out of any Loan Document or the transactions contemplated thereby or any action taken or omitted by the Agent under any Loan Document; provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any costs 77

84 or expenses payable by the Borrower under Section 11.5, to the extent that the Agent is not promptly reimbursed for such costs and expenses by the Borrower. The agreements contained in this Section shall survive payment in full of the Loans and all other amounts payable under this Agreement. 10.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Loan Parties and their Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under the Loan Documents. Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition, or business of any Loan Party or any of its Subsidiaries or affiliates that may come into the possession of the Agent or any of its affiliates. 10.7. Resignation of Agent. The Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent meeting the requirements set forth herein. The Borrower shall have the right to approve such Agent so long as no Default or Event of Default exist. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a commercial bank organized under the laws of the United States of America having combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor, such successor shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. 10.8. Sharing of Payments, etc. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, set-off, counterclaim or otherwise, obtain payment with respect to its Obligations (other than pursuant to Article IV) which results in its receiving more than its pro rata share of the aggregate payments with respect to all of the Obligations (other than any payment expressly provided hereunder to be distributed on other than a pro rata basis and payments pursuant to Article IV), then (a) such Lender shall be deemed to have simultaneously purchased from the other Lenders a share in their Obligations so that the amount of the Obligations held by each of the Lenders shall be pro rata and (b) such other adjustments shall be made from time to time as shall be equitable to insure that the Lenders share such payments ratably; provided, however, that for purposes of this Section 10.8 the term "pro rata" shall be determined with respect to the Revolving Credit Commitment of each Lender and to the Total Revolving Credit Commitments after subtraction in each case of amounts, if any, by which any 78

85 such Lender has not funded its share of the outstanding Loans and Obligations. If all or any portion of any such excess payment is thereafter recovered from the Lender which received the same, the purchase provided in this Section 10.8 shall be rescinded to the extent of such recovery, without interest. The Borrower expressly consents to the foregoing arrangements and agrees that each Lender so purchasing a portion of the other Lenders' Obligations may exercise all rights of payment (including, without limitation, all rights of set-off, banker's lien or counterclaim) with respect to such portion as fully as if such Lender were the direct holder of such portion. 10.9. Fees. The Borrower agrees to pay to the Agent, for its individual account, an annual Agent's fee as from time to time agreed to by the Borrower and Agent in writing. 79

86 ARTICLE XI Miscellaneous 11.1. Assignments and Participations. (a) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans, its Note, and its Revolving Credit Commitment); provided, however, that (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or an assignment of all of a Lender's rights and obligations under this Agreement, any such partial assignment shall be in an amount at least equal to $5,000,000 or an integral multiple of $1,000,000 in excess thereof; (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all of its rights and obligations under this Agreement and the Note; and (iv) the parties to such assignment shall execute and deliver to the Agent for its acceptance an Assignment and Acceptance in the form of Exhibit B hereto, together with any Note subject to such assignment and a processing fee of $3,500. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section, the assignor, the Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Agent certification as to exemption from deduction or withholding of Taxes in accordance with Section 4.6. (b) The Agent shall maintain at its address referred to in Section 11.2 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Revolving Credit Commitment of, and principal amount of the Loans owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (c) Upon its receipt of an Assignment and Acceptance executed by the parties thereto, together with any Note subject to such assignment and payment of the processing fee, the Agent 80

87 shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the parties thereto. (d) Each Lender may sell participations at its expense to one or more Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and its Loans); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Borrower shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to its Loans and its Note and to approve any amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Note, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Note, or extending its Revolving Credit Commitment) and (iv) the sale of any such participation which requires the Borrower to file a registration statement with federal or state regulatory authorities shall not be permitted. (e) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge all or any portion of its Loans and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (f) Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants) so long as such Lender shall require in writing (which writing names the Borrower as a third party beneficiary thereof) any such assignee or participant or perspective assignee or participant to maintain the confidentiality of any information delivered to it which is not publicly available. (g) The Borrower may not assign, nor shall it cause, suffer or permit any Guarantor to assign any rights, powers, duties or obligations under this Agreement of the other Loan Documents without the prior written consent of all the Lenders. (h) Notwithstanding the fact that a Lender holding TROL Indebtedness may assign all or a portion of its interest therein without the assignment of a pro rata portion of its Revolving Credit Commitment, the Agent shall encourage Lenders assigning a portion of its rights and obligations under this Agreement who hold TROL Indebtedness to assign a like pro rata portion of its TROL Indebtedness to the same Eligible Assignee. Should any Lender fail to make a pro rata assignment of TROL Indebtedness held by it, the Agent shall, at the request of the Borrower, assist the Borrower in locating an Eligible Assignee pursuant to Section 4.7 to replace such assigning Lender. 81

88 11.2. Notices. Any notice shall be conclusively deemed to have been received by any party hereto and be effective (i) on the day on which delivered (including hand delivery by commercial courier service) to such party (against receipt therefor), (ii) on the date of receipt at such address, telefacsimile number or telex number as may from time to time be specified by such party in written notice to the other parties hereto or otherwise received), in the case of notice by telegram or telefacsimile, respectively (where the receipt of such message is verified by return), or (iii) on the fifth Business Day after the day on which mailed, if sent prepaid by certified or registered mail, return receipt requested, in each case delivered, transmitted or mailed, as the case may be, to the address or telefacsimile number, as appropriate, set forth below or such other address or number as such party shall specify by notice hereunder: (a) if to the Borrower: Wackenhut Corrections Corporation 4200 Wackenhut Drive, #100 Palm Beach Gardens, Florida 33410 Attention: Mr. David Watson, Controller and Chief Accounting Officer Telephone: (800) 666-5640 ext. 6646 Telefacsimile: (561) 691-6473 With a copy to: Ackerman Senterfitt & Edison, P.A. One Southeast Third Avenue, 28th Floor Miami, Florida 33131-1704 Attention: Bruce S. Marks, Esq. Telephone: (305) 374-5600 Telefacsimile:(305) 374-5095 (b) if to the Agent: NationsBank, National Association Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telephone: (704) 388-2374 Telefacsimile:(704) 386-9923 82

89 with a copy to: NationsBank, National Association 100 S.E. 2nd Street, 14th Floor Miami, Florida 33131 Attention: Maria Conroy Telephone: (305) 533-2420 Telefacsimile: (305) 533-2437 (c) if to the Lenders: At the addresses set forth on the signature pages hereof and on the signature page of each Assignment and Acceptance; (d) if to any Guarantor, at the address set forth on the signature page of the Facility Guaranty or other Loan Document executed by such Guarantor, as the case may be. 11.3. Right of Set-off; Adjustments. (a) Upon the occurrence and during the continuance of any Event of Default, each Lender (and each of its affiliates) is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender (or any of its affiliates) to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the Note held by such Lender, irrespective of whether such Lender shall have made any demand under this Agreement or such Note and although the payment of such obligations may not have been accelerated. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender may have. (b) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of the Loans owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans owing to it, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loans owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that any Lender so purchasing a participation from a Lender pursuant to this Section 11.3 may, to the 83

90 fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Person were the direct creditor of the Borrower in the amount of such participation. 11.4. Survival. All covenants, agreements, representations and warranties made herein shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit and the execution and delivery to the Lenders of this Agreement and the Notes and shall continue in full force and effect so long as any of Obligations remain outstanding or any Lender has any commitment hereunder or the Borrower has continuing obligations hereunder unless otherwise provided herein. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and permitted assigns of such party and all covenants, provisions and agreements by or on behalf of the Borrower which are contained in the Loan Documents shall inure to the benefit of the successors and permitted assigns of the Lenders or any of them. 11.5. Expenses. The Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the syndication, preparation, execution, delivery, modification, and amendment of this Agreement, the other Loan Documents, and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Loan Documents. The Borrower further agrees to pay on demand all reasonable costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable attorneys' fees and expenses and the cost of internal counsel), in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of the Loan Documents and the other documents to be delivered hereunder. 11.6. Amendments and Waivers. Any provision of this Agreement or any other Loan Document may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Lenders (and, if Article X or the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by all the Lenders, (i) increase the Revolving Credit Commitments of the Lenders, (ii) reduce the principal of or rate of interest on any Loan or any fees or other amounts payable hereunder, (iii) postpone any date fixed for the payment of any scheduled installment of principal of or interest on any Loan or any fees or other amounts payable hereunder or for termination of any Revolving Credit Commitment, (iv) change the percentage of the Revolving Credit Commitments or of the unpaid principal amount of the Notes, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Section or any other provision of this Agreement or (v) release any Guarantor; and provided, further, that no such amendment or waiver which affects the rights, privileges, or obligations of NationsBank as provider of the Swing Loans or issuer of Letters of Credit, shall be effective unless signed in writing by NationsBank. Notwithstanding any provision of the other Loan Documents to the contrary, as between the Agent and the Lenders, execution by the Agent shall not be deemed conclusive evidence that the Agent has obtained the written consent of the Required Lenders. No notice to or demand on the 84

91 Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances, except as otherwise expressly provided herein. No delay or omission on any Lender's or the Agent's part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default. 11.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such fully- executed counterpart. 11.8. Termination. The termination of this Agreement shall not affect any rights of the Borrower, the Lenders or the Agent or any obligation of the Borrower, the Lenders or the Agent, arising prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into or rights created or obligations incurred prior to such termination have been fully disposed of, concluded or liquidated and the Obligations arising prior to or after such termination have been irrevocably paid in full. The rights granted to the Agent for the benefit of the Lenders under the Loan Documents shall continue in full force and effect, notwithstanding the termination of this Agreement, until all of the Obligations have been paid in full after the termination hereof (other than Obligations in the nature of continuing indemnities or expense reimbursement obligations not yet due and payable, which shall continue) or the Borrower has furnished the Lenders and the Agent with an indemnification satisfactory to the Agent and each Lender with respect thereto. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until payment in full of the Obligations unless otherwise provided herein. Notwithstanding the foregoing, if after receipt of any payment of all or any part of the Obligations, any Lender is for any reason compelled to surrender such payment to any Person because such payment is determined to be void or voidable as a preference, impermissible setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full force and the Borrower shall be liable to, and shall indemnify and hold the Agent or such Lender harmless for, the amount of such payment surrendered until the Agent or such Lender shall have been finally and irrevocably paid in full. The provisions of the foregoing sentence shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or the Lenders in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Agent or the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. 11.9. Indemnification. (a) The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their affiliates and their respective officers, directors and employees (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation, or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of 85

92 the proceeds of the Loans, except to the extent such claim, damage, loss, liability, cost, or expense is finally judicially determined to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 11.9(a) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. (b) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 11.9 shall survive the payment in full of the Loans and all other amounts payable under this Agreement. 11.10. Severability. If any provision of this Agreement or the other Loan Documents shall be determined to be illegal or invalid as to one or more of the parties hereto, then such provision shall remain in effect with respect to all parties, if any, as to whom such provision is neither illegal nor invalid, and in any event all other provisions hereof shall remain effective and binding on the parties hereto. 11.11. Entire Agreement. This Agreement, together with the other Loan Documents, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all previous proposals, negotiations, representations, commitments and other communications between or among the parties, both oral and written, with respect thereto. 11.12. Agreement Controls. In the event that any term of any of the Loan Documents other than this Agreement conflicts with any express term of this Agreement, the terms and provisions of this Agreement shall control to the extent of such conflict. 11.13. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged under any of the Notes, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate (as such term is defined below). If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as defined below), the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, the Borrower shall pay to the Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of the Lenders and the Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in 86

93 excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to the Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. 11.14. GOVERNING LAW; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. (B) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF BROWARD, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. (C) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN SECTION 11.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA. (D) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE 87

94 APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW. (E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING. 11.15. Judgment Currency. The Borrower, the Agent and each Lender hereby agree that if, in the event that a judgment is given in relation to any sum due to the Agent or any Lender hereunder, such judgment is given in a currency (the "Judgment Currency") other than that in which such sum was originally denominated (the "Original Currency"), the Borrower agrees to indemnify the agent or such Lender, as the case may be, to the extent that the amount of the Original Currency which could have been purchased by the Agent in accordance with normal banking procedures on the Business Day following receipt of such sum is less than the sum which could have been so purchased by the agent had such purchase been made on the day on which such judgment was given or, if such day is not a Business Day, on the Business Day immediately preceding the giving of such judgment, and if the amount so purchased exceeds the amount which could have been so purchased had such purchase been made on the day on which such judgment was given or, if such day is not a Business Day, on the Business Day immediately preceding such judgment, the Agent or the applicable Lenders agrees to remit such excess to the Borrower. The agreements in this Section shall survive payment of all other Obligations. 11.16. Economic and Monetary Union in the European Community. (a) The parties confirm that, except as provided in subsection (b) below of this Section 11.16, the occurrence or non-occurence of an event associated with economic and monetary union in the European Community will not have the effect of altering any term of, or discharging or excusing performance under, this Agreement, any other Loan Document, any Loan or any transaction contemplated by any of the foregoing, nor give a party the right unilaterally to alter or terminate this Agreement, any other Loan Document, any Loan or any transaction contemplated by any of the foregoing or give rise to an Event of Default or otherwise be the basis for the effective designation of the Revolving Credit Termination Date. 88

95 "An event associated with economic and monetary union in the European Community" includes, without limitation, each (and any combination) of the following: (i) the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise); (ii) the fixing of conversion rates between a member state's currency and the new currency or between the currencies of member states; (iii) the substitution of that new currency for the Euro Currency as the unit of account of the European Community; (iv) the introduction of that new currency as lawful currency in a member state; (v) the withdrawal from legal tender of any currency that, before the introduction of the new currency, was lawful currency in one of the member states; or (vi) the disappearance or replacement of a relevant price source for the Euro Currency or the national currency of any member state, or the failure of the agreed sponsor (or a successor sponsor) to publish or display a relevant rate, index, price, page or screen. (b) Any agreement between the parties that amends or overrides the provisions of this Section in respect of any Loan or any other transaction contemplated by this Agreement or any of the Loan Documents will be effective if it is in writing and expressly refers to this Section or to European monetary union or to an event associated with economic and monetary union in the European Community and would otherwise be effective in accordance with Section 11.6. (c) The Borrower agrees that, notwithstanding anything to the contrary contained in any agreement relating to "an event associated with economic and monetary union in the European Community", upon the occurrence of any such event, the Lenders shall have the right to convert any or all Loans in an Alternative Currency of a member of the European Union into Loans denominated in Dollars determined as of a date, as may be selected by the Agent in its sole discretion 11.17. Confidentiality. The Agent and each Lender (each, a "Lending Party") agrees to keep confidential any information furnished or made available to it by the Borrower pursuant to this Agreement that is marked confidential; provided that nothing herein shall prevent any Lending Party from disclosing such information (a) to any other Lending Party or any advisor of any Lending party or affiliate of any Lending Party, (b) to any other Person if reasonably incidental to the administration of the credit facility provided herein, (c) as required by any law, rule, or regulation, (d) upon the order of any court or administrative agency, (e) upon the request 89

96 or demand of any regulatory agency or authority, (f) that is or becomes available to the public or that is or becomes available to any Lending Party other than as a result of a disclosure by any Lending Party prohibited by this Agreement, (g) in connection with any litigation to which such Lending Party or any of its affiliates may be a party, (h) to the extent necessary in connection with the exercise of any remedy under this Agreement or any other Loan Document, and (i) subject to provisions substantially similar to those contained in this Section, to any actual or proposed participant or assignee. [Signatures on following pages] 90

97 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written. WACKENHUT CORRECTIONS CORPORATION WITNESS: By: - ------------------------------ ------------------------------ Name: ----------------------------- Title: - ------------------------------ ----------------------------- Signature Page 1 of 8

98 NATIONSBANK, NATIONAL ASSOCIATION, as Agent for the Lenders By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- Signature Page 2 of 8

99 NATIONSBANK, NATIONAL ASSOCIATION By: --------------------------------------- Name: ------------------------------------- Title: ------------------------------------- Domestic Lending Office: NationsBank, National Association Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: ------------------------------ Telephone: (704) 386- Telefacsimile: (704) 386- Wire Transfer Instructions: NationsBank, National Association ABA# ---------- Account No: ----------------------------- Reference: ----------------------------- Attention: ------------------------------ Eurodollar Lending Office: NationsBank, National Association Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: ------------------------------ Telephone: (704) 386- Telefacsimile: (704) 386- Wire Transfer Instructions: NationsBank, National Association ABA# ---------- Account No. ----------------------------- Reference: ----------------------------- Attention: ------------------------------ Signature Page 3 of 8

100 SCOTIABANC INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- Lending Office: 600 Peachtree Street, N.E. Suite 2700 Atlanta, Georgia 30308 Wire Transfer Instructions: The Bank of Nova Scotia New York, New York ABA #026002532 Account #0735639 Attention: D. Legista Reference: Wackehut Corrections Corporation Signature Page 4 of 8

101 BARNETT BANK, N.A. By: ----------------------------------------- Name: --------------------------------------- Title: ------------------------------------- Lending Office: 625 N. Flagler Drive 10th Floor West Palm Beach, Florida 33401 Wire Transfer Instructions: Barnett Technologies Jacksonville, Florida 32256 ABA #063000047 Account #0800053949 Attention: Commercial Loan Operations Reference: Wackenhut Corrections Corporation Signature Page 5 of 8

102 BANQUE PARIBAS By: ----------------------------------------- Name: --------------------------------------- Title: ------------------------------------- By: ----------------------------------------- Name: --------------------------------------- Title: ------------------------------------- Lending Office: 787 Seventh Avenue New York, New York 10019 Wire Transfer Instructions: Bankers Trust New York, New York ABA #021-001-033 Name of Account: Banque Paribas NY Account #04-202-195 Attention: Loan Servicing Reference: Wackenhut Corrections Corporation Signature Page 6 of 8

103 THE SAKURA BANK, LIMITED, ATLANTA AGENCY By: ----------------------------------------- Name: --------------------------------------- Title: ------------------------------------- Lending Office: 245 Peachtree Center Avenue, N.E. Suite 2703 Atlanta, Georgia 30303 Wire Transfer Instructions: Morgan Guaranty Trust Co. of New York New York, New York ABA #021 000 238 Account Name: The Sakura Bank, Ltd., New York Account #631-22-624 In favor of: MTKB, Atlanta A/C 8000100-1 Signature Page 7 of 8

104 SUMMIT BANK By: ----------------------------------------- Name: --------------------------------------- Title: ------------------------------------- Lending Office: 250 Moore Street, 2nd Floor Hackensack, New Jersey 07602 Wire Transfer Instructions: Summit Bank Ridgefield Park, New Jersey ABA #021202162 Account #47902 Attention: CLO2 Signature Page 8 of 8

105 EXHIBIT A Applicable Revolving Credit Commitment Percentages Lender Revolving Applicable - ------ Credit Commitment Commitment Percentage ---------- ---------- NationsBank, National Association $ % ScotiaBanc Inc. Barnett Bank, N.A. Banque Paribas The Sakura Bank, Limited, Atlanta Agency Summit Bank ----------- --------- $30,000,000 100% A-1

106 EXHIBIT B Form of Assignment and Acceptance DATED , -------------- -- Reference is made to the Credit Agreement dated as of June __, 1997 (the "Agreement") among WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association , as Agent for the Lenders ("Agent"). Unless otherwise defined herein, terms defined in the Agreement are used herein with the same meanings. The "Assignor" and the "Assignee" referred to on Schedule 1 agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, WITHOUT RECOURSE and without representation or warranty except as expressly set forth herein, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents as of the date hereof equal to the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents. After giving effect to such sale and assignment, the Assignee's Revolving Credit Commitment and the amount of the Loans owing to the Assignee will be as set forth on Schedule 1. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (iv) attaches the Note held by the Assignor and requests that the Agent exchange such Note for new Notes payable to the order of the Assignee in an amount equal to the Revolving Credit Commitment assumed by the Assignee pursuant hereto and to the Assignor in an amount equal to the Revolving Credit Commitment retained by the Assignor, if any, as specified on Schedule 1. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 7.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such B-1

107 powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service or other forms required under Section 4.6. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1. 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Florida. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telefacsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. B-2

108 SCHEDULE 1 to ASSIGNMENT AND ACCEPTANCE Percentage interest assigned: % -------- Assignee's Revolving Credit Commitment: $ Aggregate outstanding principal amount -------- of Loans assigned: $ -------- Principal amount of Note payable to Assignee: $ -------- Principal amount of Note payable to Assignor: $ -------- Effective Date (if other than date of acceptance by Agent): , 19 ------- -- [NAME OF ASSIGNOR], as Assignor By: -------------------------------- Title: Dated: , 19 _ -------------------- [NAME OF ASSIGNEE], as Assignee By: -------------------------------- Title: Domestic Lending Office: Eurodollar Lending Office: B-3

109 Accepted [and Approved] * this ___ day of __________, 19__ NATIONSBANK NATIONAL ASSOCIATION By: Title: [Approved this_____day of___________, 19__ WACKENHUT CORRECTIONS CORPORATION By:_________________________]* Title: * Required if the Assignee is an Eligible Assignee solely by reason of clause (iii) of the definition of "Eligible Assignee". B-4

110 EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative Reference is hereby made to the Credit Agreement dated as of June __, 1997 (the "Agreement") among WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower hereby nominates, constitutes and appoints each individual named below as an Authorized Representative under the Loan Documents, and hereby represents and warrants that (i) set forth opposite each such individual's name is a true and correct statement of such individual's office (to which such individual has been duly elected or appointed), a genuine specimen signature of such individual and an address for the giving of notice, and (ii) each such individual has been duly authorized by the Borrower to act as Authorized Representative under the Loan Documents: Name and Address Office Specimen Signature - ------------------------ --------------------- ---------------------------- - ------------------------ - ------------------------ - ------------------------ --------------------- ---------------------------- - ------------------------ - ------------------------ Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior appointment of ________________ as an Authorized Representative. This the day of , 19 . --- ------------------ -- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- C-1

111 EXHIBIT D-1 Form of Borrowing Notice To: NationsBank, National Association, as Agent Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telefacsimile: (704)386-9923 Reference is hereby made to the Credit Agreement dated as of June __, 1997 the "Agreement") among WACKENHUT CORRECTIONS CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby gives notice to the Agent that Loans of the type and amount set forth below be made on the date indicated: Type of Loan Interest Aggregate (check one) Period(1) Amount(2) Date of Loan(3) - ----------- --------- --------- --------------- Base Rate Loan ------ --------- ------------ Eurodollar Rate Loan ------ --------- ------------ Alternative Currency(4) ------ --------- ------------ - ----------------------- (1) For any Eurodollar Rate Loan, one, two, three or six months or nine months, if available. (2) Must be $2,000,000 or if greater an integral multiple of $100,000, unless a Base Rate Refunding Loan. (3) At least three (3) Business Days later if a Eurodollar Rate Loan; (4) Specify Pounds Sterling, Australian Dollars, or Canadian Dollars. The Borrower hereby requests that the proceeds of Loans described in this Borrowing Notice be made available to the Borrower as follows: [insert transmittal instructions] . D-1-1

112 The undersigned hereby certifies that: 1. No Default or Event of Default exists either now or after giving effect to the borrowing described herein; and 2. All the representations and warranties set forth in Article VI of the Agreement and in the Loan Documents (other than those expressly stated to refer to a particular date) are true and correct in all material respects as of the date hereof except that the reference to the financial statements in Section 6.6(a) of the Agreement are to those financial statements most recently delivered to you pursuant to Section 7.1 of the Agreement (it being understood that any financial statements delivered pursuant to Section 7.1(b) have not been certified by independent public accountants) and attached hereto are any changes to the Schedules referred to in connection with such representations and warranties. 3. All conditions contained in the Agreement to the making of any Loan requested hereby have been met or satisfied in full . WACKENHUT CORRECTIONS CORPORATION BY: --------------------------------------- Authorized Representative DATE: ------------------------------------ D-1-2

113 EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans To: NationsBank, National Association, Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telefacsimile: (704)386-9923 Reference is hereby made to the Credit Agreement dated as of June __, 1997(the "Agreement") among WACKENHUT CORRECTIONS CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby gives notice to NationsBank that a Swing Line Loan of the amount set forth below be made on the date indicated: Interest Amount(1) Period Date of Loan --------- ------ ------------ CD Rate Loan , --------- ---------- ---------- ---- - ------------------- (1) Must be a minimum of $200,000, unless a Base Rate Refunding Loan. The Borrower hereby requests that the proceeds of Swing Line Loans described in this Borrowing Notice be made available to the Borrower as follows: [insert transmittal instructions] . The undersigned hereby certifies that: 1. No Default or Event of Default exists either now or after giving effect to the borrowing described herein; and 2. All the representations and warranties set forth in Article VI of the Agreement and in the Loan Documents (other than those expressly stated to refer to a particular date) are true and correct in all material respects as of the date hereof except that the reference to the financial statements in Section 6.6(a) of the Agreement are to those financial statements most recently delivered to you pursuant to Section 7.1 of the Agreement (it being understood that any financial statements delivered pursuant to Section 7.1(b) have not been certified by independent public D-2-1

114 accountants) and attached hereto are any changes to the Schedules referred to in connection with such representations and warranties. 3. All conditions contained in the Agreement to the making of any Loan requested hereby have been met or satisfied in full . WACKENHUT CORRECTIONS CORPORATION BY: ---------------------------------- Authorized Representative DATE: --------------------------------- D-2-2

115 EXHIBIT E Form of Interest Rate Selection Notice To: NationsBank, National Association, as Agent Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telefacsimile: (704) 386-9923 Reference is hereby made to the Credit Agreement dated as of June __, 1997(the "Agreement") among WACKENHUT CORRECTIONS CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby gives notice to the Agent of the following selection of a type of Loan and Interest Period: Type of Loan Interest Aggregate (check one) Period(1) Amount(2) Date of Loan(3) - ----------- --------- --------- --------------- Base Rate Loan ------ --------- ------------ Eurodollar Rate Loan ------ --------- ------------ Alternative Currency(4) ------ --------- ------------ - ----------------------- (1) For any Eurodollar Rate Loan, one, two, three or six months or nine months, if available. (2) Must be $2,000,000 or if greater an integral multiple of $100,000, unless a Base Rate Refunding Loan. (3) At least three (3) Business Days later if a Eurodollar Rate Loan; (4) Specify Pounds Sterling, Australian Dollars, or Canadian Dollars. WACKENHUT CORRECTIONS CORPORATION BY: -------------------------------------- Authorized Representative DATE: ------------------------------------- E-1

116 EXHIBIT F-1 Form of Revolving Note Promissory Note (Revolving Loan) $30,000,000 Charlotte, North Carolina ________ __, 1997 FOR VALUE RECEIVED, WACKENHUT CORRECTIONS CORPORATION, a Florida corporation having its principal place of business located in Palm Beach Gardens, Florida (the "Borrower"), hereby promises to pay to the order of ________________________________ (the "Lender"), in its individual capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), located at One Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places as the Agent may designate in writing) at the times set forth in the Credit Agreement dated as of June __, 1997 among the Borrower, the financial institutions party thereto (collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement), in lawful money of the United States of America, in immediately available funds, the principal amount of THIRTY MILLION DOLLARS ($30,000,000) or, if less than such principal amount, the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrower pursuant to the Agreement on the Revolving Credit Termination Date or such earlier date as may be required pursuant to the terms of the Agreement, and to pay interest from the date hereof on the unpaid principal amount hereof, in like money, at said office, on the dates and at the rates provided in Article II of the Agreement. All or any portion of the principal amount of Loans may be prepaid or required to be prepaid as provided in the Agreement. If payment of all sums due hereunder is accelerated under the terms of the Agreement or under the terms of the other Loan Documents executed in connection with the Agreement, the then remaining principal amount and accrued but unpaid interest shall bear interest which shall be payable on demand at the rates per annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in the event of such acceleration, this Revolving Note shall become immediately due and payable, without presentation, demand, protest or notice of any kind, all of which are hereby waived by the Borrower. In the event this Revolving Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorneys' fees, and interest due hereunder thereon at the rates set forth above. Interest hereunder shall be computed as provided in the Agreement. F-1-1

117 This Revolving Note is one of the Revolving Notes in the principal amount of $40,000,000 referred to in the Agreement and is issued pursuant to and entitled to the benefits and security of the Agreement to which reference is hereby made for a more complete statement of the terms and conditions upon which the Revolving Loans evidenced hereby were or are made and are to be repaid. This Revolving Note is subject to certain restrictions on transfer or assignment as provided in the Agreement. All Persons bound on this obligation, whether primarily or secondarily liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive to the full extent permitted by law the benefits of all provisions of law for stay or delay of execution or sale of property or other satisfaction of judgment against any of them on account of liability hereon until judgment be obtained and execution issues against any other of them and returned satisfied or until it can be shown that the maker or any other party hereto had no property available for the satisfaction of the debt evidenced by this instrument, or until any other proceedings can be had against any of them, also their right, if any, to require the holder hereof to hold as security for this Revolving Note any collateral deposited by any of said Persons as security. Protest, notice of protest, notice of dishonor, diligence or any other formality are hereby waived by all parties bound hereon. IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be made, executed and delivered by its duly authorized representative as of the date and year first above written, all pursuant to authority duly granted. WACKENHUT CORRECTIONS CORPORATION WITNESS: By: - -------------------------------- ------------------------------ Name: - -------------------------------- ---------------------------- Title: --------------------------- F-1-2

118 EXHIBIT F-2 Form of Swing Line Note Promissory Note (Swing Line Loan) $5,000,000 Charlotte, North Carolina __________ __, 1997 FOR VALUE RECEIVED, WACKENHUT CORRECTIONS CORPORATION, a Florida corporation having its principal place of business located in Palm Beach Gardens, Florida (the "Borrower"), hereby promises to pay to the order of NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) (the "Lender"), in its individual capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION, located at One Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places as the Agent may designate in writing) at the times set forth in the Credit Agreement dated as of June __, 1997 among the Borrower, the financial institutions party thereto (collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement), in lawful money of the United States of America, in immediately available funds, the principal amount of FIVE MILLION DOLLARS ($5,000,000) or, if less than such principal amount, the aggregate unpaid principal amount of all Swing Line Loans made by the Lender to the Borrower pursuant to the Agreement on the Revolving Credit Termination Date or such earlier date as may be required pursuant to the terms of the Agreement, and to pay interest from the date hereof on the unpaid principal amount hereof, in like money, at said office, on the dates and at the rates provided in Article II of the Agreement. All or any portion of the principal amount of Loans may be prepaid or required to be prepaid as provided in the Agreement. If payment of all sums due hereunder is accelerated under the terms of the Agreement or under the terms of the other Loan Documents executed in connection with the Agreement, the then remaining principal amount and accrued but unpaid interest shall bear interest which shall be payable on demand at the rates per annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in the event of such acceleration, this Revolving Note shall become immediately due and payable, without presentation, demand, protest or notice of any kind, all of which are hereby waived by the Borrower. In the event this Revolving Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorneys' fees, and interest due hereunder thereon at the rates set forth above. Interest hereunder shall be computed as provided in the Agreement. F-2-1

119 This Revolving Note is one of the Revolving Notes in the principal amount of $5,000,000 referred to in the Agreement and is issued pursuant to and entitled to the benefits and security of the Agreement to which reference is hereby made for a more complete statement of the terms and conditions upon which the Revolving Loans evidenced hereby were or are made and are to be repaid. This Revolving Note is subject to certain restrictions on transfer or assignment as provided in the Agreement. All Persons bound on this obligation, whether primarily or secondarily liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive to the full extent permitted by law the benefits of all provisions of law for stay or delay of execution or sale of property or other satisfaction of judgment against any of them on account of liability hereon until judgment be obtained and execution issues against any other of them and returned satisfied or until it can be shown that the maker or any other party hereto had no property available for the satisfaction of the debt evidenced by this instrument, or until any other proceedings can be had against any of them, also their right, if any, to require the holder hereof to hold as security for this Revolving Note any collateral deposited by any of said Persons as security. Protest, notice of protest, notice of dishonor, diligence or any other formality are hereby waived by all parties bound hereon. IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be made, executed and delivered by its duly authorized representative as of the date and year first above written, all pursuant to authority duly granted. WACKENHUT CORRECTIONS CORPORATION WITNESS: By: - -------------------------------- ------------------------------ Name: - -------------------------------- ----------------------------- Title: --------------------------- F-2-2

120 EXHIBIT G Form of Opinion of Borrower's Counsel June __, 1997 NationsBank, National Association, as Agent and Each of the Lenders Party to the Credit Agreement Referenced Below NationsBank Corporate Center Charlotte, North Carolina 28255-0065 RE: $30,000,000 REVOLVING CREDIT AND LETTER OF CREDIT FACILITIES AMONG NATIONSBANK, NATIONAL ASSOCIATION, AS AGENT, THE LENDERS PARTY THERETO AND WACKENHUT CORRECTIONS CORPORATION Ladies and Gentlemen: We have acted as counsel to WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Borrower"), and the Guarantors in connection with the Revolving Loan in the amount of $30,000,000 (the "Revolving Loan"), including the $10,000,000 Letter of Credit Facility constituting part of the Revolving Credit Facility (the "LC Facility"), each being made available to the Borrower by you on this date pursuant to the Credit Agreement of even date herewith among you, the Lenders and the Borrower (the "Credit Agreement"), and the other transactions contemplated under the Credit Agreement. This opinion is being delivered in accordance with the conditions set forth in Section 5.1 of the Credit Agreement. All capitalized terms not otherwise defined herein shall have the meanings provided therefor in the Credit Agreement. As such counsel, we have reviewed the following documents: 1. the Credit Agreement; 2. the Revolving Notes; 3. the Facility Guaranty; G-1

121 4. the LC Account Agreement. The documents described in items 1 through 4 immediately above are referred to herein as the "Loan Documents". For purposes of the opinions expressed below, we have assumed that all natural persons executing the Loan Documents have legal capacity to do so; that all signatures (other than those of representatives of the Borrower and the Guarantors on the Loan Documents) on all documents submitted to us are genuine; that all documents submitted to us as originals (other than the Loan Documents) are authentic; and that all documents submitted to us as certified copies or photocopies conform to the originals of such documents, which themselves are authentic. In addition, for purposes of giving this opinion, we have examined such corporate records of the Borrower and the Guarantors, certificates of public officials, certificates of appropriate officials of the Borrower and the Guarantors, and such other documents, and have made such inquiries as we have deemed appropriate. Based upon and subject to the foregoing, it is our opinion that: 1. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified to transact business as a foreign corporation and is in good standing in ___________________ and in all other jurisdictions in which the nature of its business requires such qualification. The Borrower has full corporate power and authority to own its assets and conduct the businesses in which it is now engaged and as are expressly contemplated by the Loan Documents, and has full corporate power and authority to enter into each of the Loan Documents to which it is a party and to perform its obligations thereunder. 2. Each of the Loan Documents to which the Borrower is a party has been duly authorized by the Board of Directors of the Borrower (and by any required shareholder action), has been duly executed and delivered by the Borrower, and constitutes the legal, valid and binding obligation, agreement, instrument or conveyance, as the case may be, of the Borrower, enforceable against the Borrower in accordance with its respective terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and other similar laws relating to or affecting creditors' rights generally and by the application of general equitable principles (whether considered in proceedings at law or in equity). 3. Each Guarantor is a corporation [or partnership, as the case may be] duly organized, validly existing and in good standing under the laws of its respective state of its formation and is duly qualified to transact business as a foreign entity and is in good standing in all jurisdictions in which the nature of its business requires such qualification[ and in which the failure to be so qualified would reasonably be likely to result in a Material Adverse Effect]. Each Guarantor has full corporate power and authority to own its assets and conduct the businesses in which it is now engaged and as expressly contemplated in the Loan Documents, and has full corporate power and authority to enter into each of the Loan Documents to which it is a party and to perform its obligations thereunder. G-2

122 4. Each of the Loan Documents to which each Guarantor is a party has been duly authorized by the Board of Directors of such Guarantor (and by any required shareholder action), has been duly executed and delivered by such Guarantor, and constitutes the legal, valid and binding obligation, agreement or instrument, as the case may be, of such Guarantor, enforceable against such Guarantor in accordance with its respective terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and other similar laws relating to or affecting creditors' rights generally and by the application of general equitable principles (whether considered in proceedings at law or in equity). 5. Neither the execution or delivery of, nor performance by the Borrower or any Guarantor of its obligations under, the Loan Documents (a) does or will conflict with, violate or con stitute a breach of (i) the charter[, partnership agreement] or bylaws of the Borrower or any Guarantor, (ii) any laws, rules or regulations applicable to the Borrower or any other Guarantor, or (iii) any contract, agreement, indenture, lease, instrument, other document, judgment, writ, determination, order, decree or arbitral award to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary or any Guarantor or any of their properties is bound, (b) requires the prior consent of, notice to, license from or filing with any Governmental Authority which has not been duly obtained or made on or prior to the date hereof, or (c) does or will result in the creation or imposition of any lien, pledge, charge or encumbrance of any nature upon or with respect to any of the properties of the Borrower or any Subsidiary or any Guarantor, except for the Liens in your favor expressly created pursuant to the Loan Documents. 6. There is no pending or, to the best of our knowledge, threatened, action, suit, investigation or proceeding (including, without limitation, any action, suit, investigation, or proceeding under any environmental or labor law), nor is there any basis therefor, before or by any court, or governmental department, commission, board, bureau, instrumentality, agency or arbitral authority, (i) which calls into question the validity or enforceability of any of the Loan Documents, or the titles to their respective offices or authority of any officers of the Borrower or any Guarantor or (ii) an adverse result in which would reasonably be likely to have a Material Adverse Effect. 7. Neither the Borrower nor any Subsidiary nor any Guarantor is subject to any charter, bylaw or other corporate [or partnership] restrictions nor, to the best of our knowledge, is the Borrower or any Subsidiary or any Guarantor party to or bound by any contract or agreement which (i) materially and adversely affects its business, properties or condition (financial or otherwise), or (ii) restricts, limits, or prohibits performance of any of their respective obligations pursuant to the terms of the Loan Documents. 8. To the best of our knowledge after due inquiry, neither the Borrower nor any Subsidiary nor any Guarantor (i) is in default (which default has not been waived) under any agreement, document or instrument to which it is a party or by which it or any of its assets is bound or (ii) is in violation of any law, rule, regulation, judgment, writ, determination, order, decree or arbitral award to which the Borrower or any Subsidiary or any Guarantor is a party or by which the Borrower or any Subsidiary or any Guarantor or any of their respective properties is bound, which default or violation, as the case may be, would constitute a Default or Event of Default under the Credit Agreement or otherwise could reasonably be likely to have a Material Adverse Effect. G-3

123 9. None of the transactions contemplated by the Credit Agreement, including, without limitation, the use of the proceeds of the Loans provided for in the Loan Documents, will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, any regulations issued pursuant thereto, or regulations G, T, U or X of the Board of Governors of the Federal Reserve System. Our opinions contained herein are rendered solely in connection with the transactions contemplated under the Loan Documents and may not be relied upon in any manner by any Person other than the addressees hereof, any successor or assignee of any addressee (including successive assignees) and any Person who shall acquire a participation interest in the interest of any Lender (collectively, the "Reliance Parties"), or by any Reliance Party for any other purpose. Our opinions herein shall not be quoted or otherwise included, summarized or referred to in any publication or document, in whole or in part, for any purposes whatsoever, or furnished to any Person other than a Reliance Party (or a Person considering whether to become a Reliance Party), except as may be required of any Reliance Party by applicable law or regulation or in accordance with any auditing or oversight function or request of regulatory agencies to which a Reliance Party is subject. Very truly yours, G-4

124 EXHIBIT H Compliance Certificate NationsBank, National Association, as Agent Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telefacsimile: (704) 386-9923 Reference is hereby made to the Credit Agreement dated as of June __, 1997 (the "Agreement") among Wackenhut Corrections Corporation, a Florida corporation (the "Borrower"), the Lenders (as defined in the Agreement) and NationsBank, National Association (South), as Agent for the Lenders ("Agent"). Capitalized terms used but not otherwise defined herein shall have the respective meanings therefor set forth in the Agreement. The undersigned, a duly authorized and acting Authorized Representative, hereby certifies to you as of __________ (the "Determination Date") as follows: 1. Calculations: A. Calculation of Consolidated Debt Service Coverage Ratio 1. Consolidated EBITDA* $ -------------- 2. Consolidated Lease Payments $ -------------- 3. Sum of A.1 + A.2 $ -------------- 4. Consolidated Interest Expense $ -------------- 5. Consolidated Lease Payments $ -------------- 6. Sum of A.4 + A.5 $ -------------- 7. Ratio of A.3 to A.6 . to 1.00 -- -- B. Compliance with Section 8.1(a): Consolidated Net Worth 1. Required Consolidated Net Worth at the last day of the most recent fiscal quarter $ -------------- 2. Consolidated Net Income x 0.5 $ -------------- H-1

125 3. Sum of B.1 + B.2 $ -------------- 4. Actual Consolidated Net Worth $ -------------- REQUIRED: B.4 MUST NOT BE LESS THAN B.3 C. Compliance with Section 8.1(b): Consolidated Leverage Ratio 1. Consolidated Indebtedness $ -------------- 2. Consolidated EBITDA* $ -------------- 3. Interest on TROL Indebtedness $ -------------- 4. Sum of C.2 + C.3 $ ------------- 5. Ratio of C.1 to C.4 . to 1.00 -- -- REQUIRED: C.5 MUST NOT BE GREATER THAN 3.75:1.00 THROUGH 9/30/98 AND 3.50:1.00 THEREAFTER D. Compliance with Section 8.1(c): Consolidated Fixed Charge Coverage Ratio 1. Consolidated EBITDA* $ -------------- 2. Consolidated Lease Payments $ -------------- 3. Sum of D.1 + D.2 $ -------------- 4. Consolidated Interest Expense $ -------------- 5. Required principal payments of Consolidated Indebtedness $ -------------- 6. Consolidated Lease Payments $ -------------- 7. Restricted Payments $ -------------- 8. Sum of D.4 + D.5 + D.6 + D.7 $ -------------- 9. Ratio of D.3 to D.8 $ -------------- REQUIRED: D.9 MUST NOT BE LESS THAN 2.00 TO 1.00 H-2

126 E. Compliance with Section 8.1(d): Consolidated Total Capitalization 1. Consolidated Indebtedness $ -------------- 2. Consolidated Total Capitalization $ -------------- 3. E.1 / E.3 x 100 % -------------- REQUIRED: E.3 MUST NOT EXCEED 55% F. Compliance with Section 8.3: Capital Expenditures 1. Capital Expenditures $ -------------- REQUIRED: E.1 MUST NOT EXCEED $85,000,000 IN FISCAL YEAR 1997, $75,000,000 IN FISCAL YEAR 1998, AND $60,000,000 EACH FISCAL YEAR THEREAFTER. 2. No Default A. Since __________ (the date of the last similar certification), (a) the Borrower has not defaulted in the keeping, observance, performance or fulfillment of its obligations pursuant to any of the Loan Documents; and (b) no Default or Event of Default specified in Article IX of the Agreement has occurred and is continuing. B. If a Default or Event of Default has occurred since __________ (the date of the last similar certification), the Borrower proposes to take the following action with respect to such Default or Event of Default: ----------------- ------------------------------------------------------------- ------------------- . (Note, if no Default or Event of Default has occurred, insert "Not Applicable"). The Determination Date is the date of the last required financial statements submitted to the Lenders in accordance with Section 7.1 of the Agreement. * See attached Schedule 1 for EBITDA calculation. H-3

127 IN WITNESS WHEREOF, I have executed this Certificate this _____ day of __________, 19___. By: -------------------------------------- Authorized Representative Name: ------------------------------------ Title: ----------------------------------- H-4

128 Schedule 1 to Compliance Certificate [Insert Applicable Determination Date __, ____] Consolidated EBITDA Calculation: A. Consolidated Net Income $ ---------- B. Consolidated Interest Expense $ ---------- C. Taxes on income $ ---------- D. Amortization $ ---------- E. Depreciation $ ---------- F. Consolidated EBITDA $ (A + B + C + D + E) ---------- H-5

129 EXHIBIT I Form of Facility Guaranty GUARANTY AND SURETYSHIP AGREEMENT THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty Agreement" or this "Guaranty"), dated as of ________ __, 1997, is made by each of the undersigned (each a "Guarantor" and collectively the "Guarantors") to NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, as a Lender ("NationsBank"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent for the Lenders (in such capacity, and together with any successors in such capacity, the "Agent") party to the Credit Agreement (as defined below). WITNESSETH: WHEREAS, the Agent and the Lenders have agreed to provide Wackenhut Corrections Corporation, a Florida corporation (the "Borrower"), revolving credit and letter of credit facilities pursuant to the terms of that certain Credit Agreement dated as of the date hereof among the Borrower and the Agent (as from time to time amended, supplemented or restated, the "Credit Agreement"); and WHEREAS, each Guarantor is a Subsidiary of the Borrower and will materially benefit from the Loans to be made and the Letters of Credit to be issued under the Credit Agreement, and each Guarantor is willing to enter into this Guaranty Agreement to provide an inducement for the Lenders to make Loans and issue Letters of Credit thereunder; NOW, THEREFORE, in order to induce the Agent and the Lenders to enter into the Credit Agreement and the other Loan Documents and in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 1. DEFINITIONS. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. 2. GUARANTY. Each Guarantor hereby jointly and severally, unconditionally, absolutely, continually and irrevocably guarantees to the Agent and the Lenders the payment in full of the Borrower's Liabilities (as defined below). For all purposes of this Guaranty Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt payment in full, when due or declared due and at all such times, of all Obligations and all other amounts pursuant to the terms of the Credit Agreement, the Notes, and all other Loan Documents executed in connection with the Credit Agreement heretofore, now or at any time or times hereafter owing, arising, due or payable from the Borrower to any one or more of the Lenders, including without limitation principal, interest, premium or fee (including, but not limited to, loan fees and attorneys' fees and expenses). Each Guarantor agrees that it is jointly and severally, directly and primarily liable for the Borrower's Liabilities. I-1

130 3. LIMIT OF LIABILITY. The obligations of the Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law. 4. PAYMENT. If the Borrower shall default in payment or performance of any Borrower's Liabilities when and as the same shall become due, whether according to the terms of the Credit Agreement, by acceleration, or otherwise, or upon the occurrence of any other Event of Default under the Credit Agreement that has not been cured or waived, then each Guarantor, upon demand thereof by the Agent or its successors or assigns, will, as of the date of the Agent's demand, fully pay to the Agent, for the benefit of itself and the Lenders, subject to any restriction set forth in Section 3 hereof, an amount equal to all Guarantor's Obligations then due and owing. 5. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of collection. The Guarantors' Obligations under this Guaranty Agreement shall be joint and several, absolute and unconditional irrespective of the validity, legality or enforceability of the Credit Agreement, the Notes or any other Loan Document or any other guaranty of the Borrower's Liabilities, and shall not be affected by any action taken under the Credit Agreement, the Notes or any other Loan Document, any other guaranty of the Borrower's Liabilities, or any other agreement between the Agent or the Lenders and the Borrower or any other person, in the exercise of any right or power therein conferred, or by any failure or omission to enforce any right conferred thereby, or by any waiver of any covenant or condition therein provided, or by any acceleration of the maturity of any of the Borrower's Liabilities, or by the release or other disposal of any Collateral or other security for any of the Borrower's Liabilities, or by the dissolution of the Borrower or the combination or consolidation of the Borrower into or with another entity or any transfer or disposition of any assets of the Borrower or by any extension or renewal of the Credit Agreement, any of the Notes or any other Loan Document, in whole or in part, or by any modification, alteration, amendment or addition of or to the Credit Agreement, any of the Notes or any other Loan Document, any other guaranty of the Borrower's Liabilities, or any other agreement between the Agent or the Lenders and the Borrower or any other Person, or by any other circumstance whatsoever (with or without notice to or knowledge of any Guarantor) which may or might in any manner or to any extent vary the risks of any Guarantor, or might otherwise constitute a legal or equitable discharge of a surety or guarantor; it being the purpose and intent of the parties hereto that this Guaranty Agreement and the Guarantors' Obligations hereunder shall be absolute and unconditional under any and all circumstances and shall not be discharged except by payment as herein provided. 6. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees that the Guarantors' Obligations will be paid in (i) the same Alternative Currency in the case of Loans made and Letters of Credit drawn in Alternative Currencies, and (ii) in Dollars in all other cases and in immediately available funds, regardless of any law, regulation or decree now or hereafter in effect that might in any manner affect the Borrower's Liabilities, or the rights of the Agent or any Lender with respect thereto as against the Borrower, or cause or permit to be invoked any alteration in the time, amount or manner of payment by the Borrower of any or all of the Borrower's Liabilities. I-2

131 7. EVENTS OF DEFAULT. In the event that (a) any Guarantor shall file a petition to take advantage of any insolvency statute; (b) any Guarantor shall commence or suffer to exist a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or substantially all of its property; (c) any Guarantor shall file a petition or answer seeking reorganization or arrangement or similar relief under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state or similar law of any other country; (d) a court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of any Guarantor or of the whole or substantially all of its properties, or approve a petition filed against any Guarantor seeking reorganization or arrangement or similar relief under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state or similar law of any other country, or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of any Guarantor or of the whole or substantially all of its properties and such order, judgment, decree, approval or assumption remains unstayed or undismissed for a period of thirty (30) consecutive days; (e) there is commenced against any Guarantor any proceeding or petition seeking reorganization, arrangement or similar relief under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, which proceeding or petition remains unstayed or undismissed for a period of thirty (30) consecutive days; (f) there shall occur an Event of Default under the Credit Agreement; (g) any default shall occur in the payment of amounts due hereunder; or (h) any other default in compliance with the terms hereof shall occur which remains uncured or unwaived for a period of thirty (30) days after the earlier of notice of such default from the Agent or an officer of a Guarantor becomes aware of such default (each of the foregoing an "Event of Default" hereunder), then notwithstanding any Collateral or other security that the Agent or any Lender may process from Borrower or any Guarantor or any other guarantor of the Borrower's Liabilities, or any other party, at the Agent's election and without notice thereof or demand therefor, so long as such Event of Default shall be continuing, the Guarantors' Obligations shall immediately become due and payable. 8. SUITS. Each Guarantor from time to time shall pay to the Agent for the benefit of itself and the Lenders, on demand, at the Agent's place of business set forth in the Credit Agreement, the Guarantors' Obligations as they become or are declared due, and in the event such payment is not made forthwith, the Agent or any Lender or any of them may proceed to suit against any one or more or all of the Guarantors. At the Agent's election, one or more and successive or concurrent suits may be brought hereon by the Agent against any one or more or all of the Guarantors, whether or not suit has been commenced against the Borrower, any other guarantor of the Borrower's Liabilities, or any other Person and whether or not the Agent or Lender has taken or failed to take any other action to collect all or any portion of the Borrower's Liabilities. 9. SET-OFF AND WAIVER. Each Guarantor waives any right to assert against the Agent or Lender as a defense, counterclaim, set-off or cross claim, any defense (legal or equitable) or other claim which such Guarantor may now or at any time hereafter have against the Borrower, the Agent or the Lenders, without waiving any additional defenses, set-offs, counterclaims or other claims otherwise available to such Guarantor. If at any time hereafter the Agent or any Lender employs counsel for advice or other representation to enforce the Guarantors' Obligations that arise out of an Event of Default, then, in any of the foregoing events, all of the reasonable attorneys' fees arising I-3

132 from such services and all expenses, costs and charges in any way or respect arising in connection therewith or relating thereto shall be jointly and severally paid by the Guarantors to the Agent, for the benefit of itself and the Lenders, on demand. 10. WAIVER; SUBROGATION; SUBORDINATION. (a) Each Guarantor hereby waives notice of the following events or occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii) the Lenders' heretofore, now or from time to time hereafter loaning monies or giving or extending credit to or for the benefit of the Borrower, whether pursuant to the Credit Agreement or the Notes or any amendments, modifications, or supplements thereto, or replacements or extensions thereof; (iii) the Agent or the Lenders or the Borrower heretofore, now or at any time hereafter, obtaining, amending, substituting for, releasing, waiving or modifying the Credit Agreement, the Notes or any other Loan Documents; (iv) presentment, demand, notices of default, non-payment, partial payment and protest; (v) the Agent or the Lenders heretofore, now or at any time hereafter granting to the Borrower (or any other party liable to the Lenders on account of the Borrower's Liabilities) any indulgence or extensions of time of payment of the Borrower's Liabilities; and (vi) the Agent or the Lenders heretofore, now or at any time hereafter accepting from the Borrower or any other person, any partial payment or payments on account of the Borrower's Liabilities or any collateral securing the payment thereof or the Agent settling, subordinating, compromising, discharging or releasing the same. Each Guarantor agrees that the Agent and each Lender may heretofore, now or at any time hereafter do any or all of the foregoing in such manner, upon such terms and at such times as Agent or such Lender, in its sole and absolute discretion, deems advisable, without in any way or respect impairing, affecting, reducing or releasing such Guarantor from the Guarantors' Obligations, and each Guarantor hereby consents to each and all of the foregoing events or occurrences. (b) Each Guarantor hereby agrees that payment or performance by such Guarantor of the Guarantors' Obligations under this Guaranty Agreement may be enforced by the Agent on behalf of itself and the Lenders upon demand by the Agent to such Guarantor without the Agent being required, each Guarantor expressly waiving any right it may have to require the Agent, to (i) prosecute collection or seek to enforce or resort to any remedies against the Borrower or any other Guarantor or any other guarantor of the Borrower's Liabilities, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY EACH GUARANTOR THAT DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT, or (ii) seek to enforce or resort to any remedies with respect to any, Liens or encumbrances granted to the Agent by the Borrower or any other Person on account of the Borrower's Liabilities or any guaranty thereof. Neither the Agent nor any Lender shall have any obligation to protect, secure or insure any of the foregoing security interests, Liens or encumbrances on the properties or interests in properties subject thereto. The Guarantors' Obligations shall in no way be impaired, affected, reduced, or released by reason of the Agent's or any Lender's failure or delay to do or take any of the acts, actions or things described in this Guaranty Agreement including, without limiting the generality of the foregoing, those acts, actions and things described in this Section 10. I-4

133 (c) Each Guarantor further agrees with respect to this Guaranty Agreement that it shall have no right of subrogation, reimbursement or indemnity, nor any right of recourse to security for the Borrower's Liabilities in each case until after all the Borrower's Liabilities have been paid in full. This waiver is expressly intended to prevent the existence of any claim in respect to such reimburse ment by the Guarantor against the estate of Borrower within the meaning of Section 101 of the Bankruptcy Code, and to prevent the Guarantor from constituting a creditor of Borrower in respect of such reimbursement within the meaning of Section 547(b) of the Bankruptcy Code in the event of a subsequent case involving the Borrower. (d) Until the Guarantors' Obligations are paid in full and the Lenders are under no further obligation to lend or extend funds or credit which would constitute Guarantors' Obligations, each Guarantor hereby unconditionally subordinates all present and future debts, liabilities or obligations of the Borrower to the Guarantor to the Guarantors' Obligations, and all amounts due under such debts, liabilities, or obligations shall, upon the occurrence and during the continuance of an Event of Default, be collected and paid over forthwith to the Lenders on account of the Guarantors' Obligations and, pending such payment, shall be held by each Guarantor as agent and bailee of the Lenders separate and apart from all other funds, property and accounts of the Guarantor. Each Guarantor, at the reasonable request of the Lenders, shall execute such further documents in favor of the Lenders to further evidence and support the purpose of this Section 10(d). 11. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be effective as of the date of the initial Advance under the Credit Agreement and shall continue in full force and effect until the Borrower's Obligations are fully paid and the Credit Agreement has terminated. The Agent shall give each Guarantor written notice of such termination at each Guarantor's address set forth below such Guarantor's execution hereof on the signature pages of this Guaranty or such other address for the Guarantor as such Guarantor shall give notice to the Agent in the manner provided for the giving of notices under the Credit Agreement (the "Guarantor's Address"). This Guaranty Agreement shall be binding upon and inure to the benefit of each Guarantor, the Agent and the Lenders and their respective successors and assigns. Notwithstanding the foregoing, no Guarantor may, without the prior written consent of the Agent, assign any rights, powers, duties or obligations hereunder. Any claim or claims that the Agent and the Lenders may at any time hereafter have against any Guarantor under this Guaranty Agreement may be asserted by the Agent or any Lender by written notice directed to any one or more or all of the Guarantors at the applicable Guarantor's Address. 12. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and warrants to the Agent for the benefit of itself and the Lenders that it is duly authorized to execute, deliver and perform this Guaranty Agreement, that this Guaranty Agreement is legal, valid, binding and enforceable against such Guarantor in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles; and that such Guarantor's execution, delivery and performance of this Guaranty Agreement do not violate or constitute a breach of its certificate of incorporation or charter or governance documents or any agreement to which such Guarantor is a party, or any applicable laws. I-5

134 13. EXPENSES. Each Guarantor agrees to be jointly and severally liable for the payment of all reasonable fees and expenses, including attorney's fees, incurred by the Agent in connection with the enforcement of this Guaranty Agreement. 14. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement shall continue to be effective or be reinstated, as the case may be, at any time payment received by the Agent under the Credit Agreement or this Guaranty Agreement is rescinded or must be restored for any reason. 15. COUNTERPARTS. This Guaranty Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall constitute one and the same instrument. 16. RELIANCE. Each Guarantor represents and warrants to the Agent, for the benefit of the Agent and the Lenders, that: (a) such Guarantor has adequate means to obtain from Borrower, on a continuing basis, information concerning Borrower and Borrower's financial condition and affairs and has full and complete access to Borrower's books and records; (b) such Guarantor is not relying on the Agent or any Lender, its or their employees, agents or other representatives, to provide such information, now or in the future; (c) such Guarantor is executing this Guaranty Agreement freely and deliberately, and understands the obligations and financial risk undertaken by providing this Guaranty; (d) such Guarantor has relied solely on the Guarantor's own independent investigation, appraisal and analysis of Borrower and Borrower's financial condition and affairs in deciding to provide this Guaranty and is fully aware of the same; and (e) such Guarantor has not depended or relied on the Agent or any Lender, its or their employees, agents or representatives, for any information whatsoever concerning Borrower or Borrower's financial condition and affairs or other matters material to such Guarantor's decision to provide this Guaranty or for any counseling, guidance, or special consideration or any promise therefor with respect to such decision. Each Guarantor agrees that neither the Agent nor any Lender has any duty or responsibility whatsoever, now or in the future, to provide to any Guarantor any information concerning Borrower or Borrower's financial condition and affairs, other than as expressly provided herein, and that, if such Guarantor receives any such information from the Agent or any Lender, its or their employees, agents or other representatives, such Guarantor will independently verify the information and will not rely on the Agent or any Lender, its or their employees, agents or other representatives, with respect to such information. 17. NOTICES. Any notice shall be conclusively deemed to have been received by any party hereto and be effective (i) on the day on which delivered (including hand delivery by commercial courier service) to such party (against receipt therefor), (ii) on the date of receipt at such telefacsimile number for such party and the receipt of such message is verified by the sender's telefacsimile machine, (iii) on the fifth Business Day after the day on which mailed, if sent prepaid by certified or registered mail, return receipt requested, in each case delivered, transmitted or mailed, as the case may be, to the Guarantor's Address or telefacsimile number, as appropriate. 18. TERMINATION. This Guaranty Agreement and all obligations of the Guarantors hereunder shall terminate without delivery of any instrument or performance of any act by any party I-6

135 on the date when all of the Obligations have been fully paid and the Credit Agreement has terminated. 19. GOVERNING LAW; WAIVERS OF TRIAL BY JURY, ETC. (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. (B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF BROWARD, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. (C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE GUARANTOR'S ADDRESS (AS HEREIN DEFINED) OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA. (D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT. (E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR I-7

136 ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT OR DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. [SIGNATURES ON FOLLOWING PAGE] I-8

137 IN WITNESS WHEREOF, the parties have duly executed this Guaranty Agreement on the day and year first written above. GUARANTORS: WITNESS: By: - ------------------------- ------------------------------- Name: ------------------------------ Title: - ------------------------- ----------------------------- Address for Notices: ----------------------------------- ----------------------------------- ----------------------------------- Telefacsimile: -------------------- WITNESS: By: - ------------------------- ------------------------------- Name: ------------------------------ Title: - ------------------------- ----------------------------- Address for Notices: ----------------------------------- ----------------------------------- ----------------------------------- Telefacsimile: -------------------- I-9

138 WITNESS: NATIONSBANK, NATIONAL ASSOCIATION, as Agent By: - ------------------------- ------------------------------- Name: ------------------------------ Title: - ------------------------- ----------------------------- I-10

139 EXHIBIT J Form of LC Account Agreement LC ACCOUNT AGREEMENT THIS LC ACCOUNT AGREEMENT (the "Agreement") dated as of June __, 1997, and made between WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Pledgor"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, as a Lender ("NationsBank") and as Agent (in such capacity herein and together with any successors in such capacity, the "Agent") for the lenders (the "Lenders") party to the Credit Agreement (as hereinafter defined). WITNESSETH: WHEREAS, the Pledgor, the Lenders, and the Agent have entered into that certain Credit Agreement dated as of the date hereof (as may hereafter be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and in effect, hereinafter referred to as the "Credit Agreement"); WHEREAS, as a condition precedent to the Lenders' obligations to make the Loans or to issue Letters of Credit, the Pledgor is required to execute and deliver to the Agent a copy of this Agreement on or before the Closing Date; NOW, THEREFORE, in consideration of the foregoing and the agreements, provisions and covenants contained herein, the Pledgor and the Agent hereby agree as follows: Section 1. Definitions. Capitalized terms used in this Agreement shall have the following meanings: "Collateral" means (a) all funds from time to time on deposit in the LC Account; (b) all Investments and all certificates and instruments from time to time representing or evidencing such Investments; (c) all notes, certificates of deposit, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Agent for or on behalf of the Pledgor in substitution for or in addition to any or all of the Collateral described in clause (a) or (b) above; (d) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Collateral described in clause (a), (b) or (c) above; and (e) to the extent not covered by clauses (a) through (d) above, all proceeds of any or all of the foregoing Collateral. "Investments" means those investments, if any, made by the Agent pursuant to Section 5 hereof. J-1

140 "LC Account" means the cash collateral account established and maintained pursuant to Section 2 hereof. "Secured Obligations" means (i) all obligations of the Pledgor now existing or hereafter arising under or in respect of the Credit Agreement or the Notes (including, without limitation, the Pledgor's obligation to pay principal and interest and all other charges, fees, expenses, commissions, reimbursements, indemnities and other payments related to or in respect of the obligations contained in the Credit Agreement or the Notes) or any documents or agreement related to the Credit Agreement or the Notes; and (ii) without duplication, all obligations of the Pledgor now or hereafter existing under or in respect of this Agreement, including, without limitation, with respect to all charges, fees, expenses, commissions, reimbursements, indemnities and other payments related to or in respect of the obligations contained in this Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Credit Agreement. Section 2. LC Account; Cash Collateralization of Letters of Credit. (i) From and after the occurrence of an Event of Default, the Agent shall establish and maintain at the offices of NationsBank, N.A. at 101 North Tryon Street, Charlotte, North Carolina, in the name of the Agent and under the sole dominion and control of the Agent, a cash collateral account designated as Wackenhut Corrections Cash LC Account (the "LC Account"). (ii) In accordance with Article IX of the Credit Agreement, in the event that an Event of Default has occurred and shall not have been waived pursuant to Section 11.6 of the Credit Agreement and the Pledgor is required to pay to Agent an amount equal to the maximum amount remaining undrawn or unpaid under the Letters of Credit, the Agent shall, upon receipt of any such amounts, exercise the remedies set forth in Section 12 hereof and shall apply the proceeds as provided in Article IX of the Credit Agreement. Any such amounts received by the Agent shall be deposited in the LC Account. Upon a drawing under the Letters of Credit in respect of which any amounts described above have been deposited in the LC Account, the Agent shall apply such amounts to reimburse NationsBank for the amount of such drawing. In the event the Letters of Credit are canceled or expire or in the event of any reduction in the maximum amount available at any time for drawing under such Letters of Credit (the "Maximum Available Amount"), the Agent shall apply the amount then in the LC Account designated to reimburse NationsBank for any drawings under the Letters of Credit less the Maximum Available Amount immediately after such cancellation, expiration or reduction, if any, first, to the cash collateralization of the Letters of Credit if the Pledgor has failed to pay all or a portion of the maximum amounts described above, second, to the payment in full of the outstanding Secured Obligations and third, the balance, if any, to the Pledgor. (iii) Interest received in respect of Investments of any amounts deposited in the LC Account pursuant to clause (ii) of this Section 2 shall be delivered by Agent to the J-2

141 Pledgor on the last Business Day of each calendar month or, if earlier, upon cancellation or expiration of or drawing of the Maximum Available Amount for drawing under the Letters of Credit, as the case may be, in respect of which such amounts were so deposited; provided, however, that the Agent shall not deliver to the Pledgor any such interest received in respect of Investments of any amounts deposited in the LC Account pursuant to this Section 2 if an Event of Default has occurred and shall not have been waived pursuant to Section 11.6 of the Credit Agreement or unless all outstanding Secured Obligations have been indefeasibly paid in full in cash. Section 3. Pledge; Security for Secured Obligations. The Pledgor hereby pledges to the Agent (for itself and on behalf of the Lenders) a first priority lien and security interest in, the Collateral, as collateral security for the prompt payment in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy or the operation of the automatic stay under Section 362(a) of the Bankruptcy Code), of all Secured Obligations. Section 4. Delivery of Collateral. All certificates or instruments, if any, representing or evidencing the Collateral shall be delivered to and held by the Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Agent. In the event any Collateral is not evidenced by a certificate, a notation, reflecting title in the name of the Agent or the security interest of the Agent, shall be made in the records of the issuer of such Collateral or in such other appropriate records as the Agent may require, all in form and substance reasonably satisfactory to the Agent. The Agent shall have the right, at any time and without notice to the Pledgor, to transfer to or to register in the name of the Agent or any of its nominees any or all of the Collateral. In addition, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations. Section 5. Investing of Amounts in the LC Account; Amounts held by the Agent. Cash held by the Agent in the LC Account shall not be invested or reinvested except as provided in this Section 5. (i) Except as otherwise provided in Section 12 hereof, any funds on deposit in the LC Account shall be invested by the Agent so long as no Default or Event of Default shall have occurred and shall not have been waived pursuant to Section 11.6 of the Credit Agreement, in cash equivalents. (ii) The Agent is hereby authorized to sell, and shall sell, all or any designated part of the Collateral (A) so long as no Default or Event of Default shall have occurred and shall not have been waived pursuant to Section 11.6 of the Credit Agreement, upon the receipt of appropriate written instructions from an Authorized Representative or (B) in any event if such sale is necessary to permit the Agent to perform its duties hereunder or under the Credit Agreement. The Agent shall have no responsibility for any loss in the value of the J-3

142 Collateral resulting from a fluctuation in interest rates or otherwise. Any interest on securities constituting part of the Collateral and the net proceeds of the sale or payment of any such securities shall be held in the LC Account by the Agent. Section 6. Representations and Warranties. In addition to its representations and warranties made pursuant to Article VI of the Credit Agreement, the Pledgor represents and warrants to the Agent (for itself and as agent on behalf of the Lenders), that the following statements are true, correct and complete: (i) The Pledgor will be the legal and beneficial owner of the Collateral free and clear of any Lien except for the lien and security interest created by this Agreement and the Credit Agreement; (ii) The pledge and assignment of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment of the Secured Obligations. Section 7. Further Assurances. The Pledgor agrees that at any time and from time to time, at the Pledgor's expense, the Pledgor will promptly execute and deliver to the Agent any further instruments and documents, and take any further actions, that may be necessary or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Section 8. Transfers and Other Liens. The Pledgor agrees that it will not (a) sell or otherwise dispose of any of the Collateral, or (b) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the lien and security interest created by this Agreement. Section 9. The Agent Appointed Attorney-in Fact. The Pledgor hereby appoints the Agent as its attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in the Agent's reasonable discretion to take any action and to execute any instrument which the Agent may reasonably deem necessary or advisable to accomplish the purposes of the Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Pledgor or either of them representing any payment, dividend, or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. In performing its functions and duties under this Agreement, the Agent shall act solely for itself and as the agent of the Lenders and the Agent has not assumed nor shall be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Pledgor. Section 10. The Agent May Perform. If the Pledgor fails to perform any agreement contained herein, after notice to the Pledgor, the Agent may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by the Pledgor under Section 13 hereof. J-4

143 Section 11. Standard of Care; No Responsibility For Certain Matters. In dealing with the Collateral in its possession, the Agent shall exercise the same care which it would exercise in dealing with its own property of a similar nature, but it shall not be responsible for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, (b) taking any steps to preserve rights against any parties with respect to any Collateral (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Collateral), (c) the collection of any proceeds, (d) any loss resulting from Investments made pursuant to Section 5 hereof, or (e) determining (x) the correctness of any statement or calculation made by the Pledgor in any written or telex (tested or otherwise) instructions, or (y) whether any deposit in the LC Account is proper. Section 12. Remedies upon Default; Application of Proceeds. If any Event of Default shall have occurred and shall not have been waived pursuant to Section 11.6 of the Credit Agreement: (i) The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code (the "Code") as in effect in the State of North Carolina at that time, and the Agent may, without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices, and upon such other terms as the Agent may reasonably deem commercially reasonable. The Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (ii) Subject to the provisions of Section 2(ii) hereof, any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or part of the Collateral shall be applied (after payment of any amounts payable to the Agent pursuant to Section 13 hereof) by the Agent to pay the Secured Obligations pursuant to Article IX of the Credit Agreement. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all Secured Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus. Section 13. Expenses. In addition to any payments of expenses of Agent pursuant to the Credit Agreement or the other Loan Documents, the Pledgor agrees to pay promptly to the Agent all the costs and expenses, including reasonable attorneys fees and expenses, which the Agent may reasonably incur in connection with (a) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (b) the exercise or enforcement of any of the rights J-5

144 of the Agent hereunder, or (c) the failure by the Pledgor to perform or observe any of the provisions hereof. Section 14. No Delays; Waiver, etc. No delay or failure on the part of the Agent in exercising, and no course of dealing with respect to, any power or right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Agent of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. The remedies herein provided are to the fullest extent permitted by law cumulative and are not exclusive of any remedies provided by law. Section 15. Amendments, Etc. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by the Pledgor therefrom, shall in any event be effective without the written concurrence of the Agent. Section 16. Notices. Except as otherwise specifically provided herein, all notices which are to be sent to the Pledgor or Agent shall be given in accordance with the Credit Agreement. Section 17. Continuing Security Interest; Termination. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until all Secured Obligations (other than Secured Obligations in the nature of continuing indemnities or expense reimbursement obligations not yet due and payable) shall have been indefeasibly paid in full in cash, the commitments or other obligations of the Agent or any Lender to make any Loan under the Credit Agreement shall have expired and the Letters of Credit shall have expired, (b) be binding upon Pledgor, its successors and assigns, and (c) inure to the benefit of the Agent, the Lenders and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c) and subject to the provisions of the Credit Agreement, any Lender may assign or otherwise transfer any Note held by it to any other person or entity, and such other person or entity shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon the indefeasible payment in full in cash of the Secured Obligations (other than Secured Obligations in the nature of continuing indemnities or expense reimbursement obligations not yet due and payable) and the cancellation or expiration of the Letters of Credit and termination or expiration of all commitments and other obligations of the Agent and any Lender to make any Loan, Pledgor shall be entitled, subject to the provisions of Section 12 hereof, to the return, upon its request and at its expense, of such of the Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. Section 18. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF FLORIDA. UNLESS OTHERWISE DEFINED HEREIN OR IN THE J-6

145 CREDIT AGREEMENT, TERMS DEFINED IN ARTICLE 9 OF THE CODE ARE USED HEREIN AS THEREIN DEFINED. Section 19. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF FLORIDA AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY AND JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT SUBJECT TO RIGHT OF APPEAL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION. Section 20. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party and all covenants, promises, and agreements by or on behalf of the Pledgor or by and on behalf of the Agent shall bind and inure to the benefit of the successors and assigns of the Pledgor, the Agent and the Lenders. Section 21. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall for all purposes be deemed an original, but all such counterparts shall together constitute but one and the same Agreement. The Pledgor and the Agent hereby acknowledge receipt of a true, correct, and complete counterpart of this Agreement. Section 22. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Section 23. Headings. This section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. J-7

146 IN WITNESS WHEREOF, The Pledgor and the Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. WITNESS: WACKENHUT CORRECTIONS CORPORATION By: - ----------------------------- --------------------------------- Name: Title: - ----------------------------- WITNESS: NATIONSBANK, NATIONAL ASSOCIATION, as Agent By: - ----------------------------- --------------------------------- Name: Title: - ----------------------------- J-8

147 Schedule 6.4 Subsidiaries and Investments in Other Persons S-1

148 Schedule 6.6 Indebtedness S-2

149 Schedule 6.7 Liens S-3

150 Schedule 6.10 Litigation S-4

151 Schedule 7.5 Insurance S-5

1 EXHIBIT 4.2 - -------------------------------------------------------------------------------- PARTICIPATION AGREEMENT Dated as of June 19, 1997 among WACKENHUT CORRECTIONS CORPORATION, as Construction Agent, WACKENHUT CORRECTIONS CORPORATION, as Lessee, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM TIME TO TIME, as the Holders THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM TIME TO TIME, as the Lenders and NATIONSBANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders - --------------------------------------------------------------------------------

2 Page ---- TABLE OF CONTENTS SECTION 1. THE LOANS........................................................1 SECTION 2. HOLDER FUNDINGS..................................................2 SECTION 3. SUMMARY OF TRANSACTIONS..........................................2 3.1. Operative Agreements.............................................2 3.2. Property Purchase................................................2 3.3. Construction of Improvements; Lease or Disposition of Properties........................................2 SECTION 4. THE CLOSINGS.....................................................3 4.1. Initial Closing Date.............................................3 4.2. Initial Closing Date; Property Closing Dates; Construction Fundings............................................3 SECTION 5. FUNDINGS; REPORTING REQUIREMENTS ON COMPLETION DATE; LESSEE DELIVERY OF NOTICES.................................3 5.1. General..........................................................3 5.2. Procedures for Funding...........................................4 5.3. Conditions to the Holders' and the Lenders' Obligations to advance funds on the Initial Closing Date or funds for the Acquisition of Property.........................................................5 5.4. Conditions to the Holders' and the Lenders' Obligations to Make Construction Fundings for the Commencement of Construction of any Improvements.....................................................9 5.5. Conditions to the Holders' and the Lenders' Obligations to Make Construction Fundings for the Ongoing Construction on any Property Prior to the Construction Period Termination Date.....................11 5.6. Reporting and Delivery Requirements on Completion Date and on Construction Period Termination Date................................................12 5.7. Construction Agent Delivery of Allocation Notice; Notice Regarding the Holder Construction Property Cost and Construction Budget Modifications............................................13 5.8. Inspection of Documents; Hold Harmless; Removal of Properties...................................................14 SECTION 6. CONDITIONS OF THE INITIAL CLOSING...............................14 6.1. Conditions to the Lessor's and the Holders' Obligations.....................................................14 6.2. Conditions to the Lessee's Obligations..........................16 6.3. Conditions to the Agent's Obligations...........................18 i

3 Page ---- SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE INITIAL CLOSING DATE....................................................18 7.1. Representations and Warranties of the Initial Holders.........................................................18 7.2. Representations and Warranties of the Owner Trustee.........................................................20 7.3. Representations and Warranties of the Construction Agent and the Lessee...............................23 7.4. Representations and Warranties of the Agent.....................29 SECTION 8. REPRESENTATIONS AND WARRANTIES ON FUNDING DATES...........................................................30 8.1. Representations and Warranties on Property Closing Dates...................................................30 8.2. Representations and Warranties Upon Initial Construction Fundings...........................................32 8.3. Representations and Warranties Upon the Date of Each Construction Funding that is not an Initial Construction Funding....................................34 8.4. Certain Construction Fundings During Defaults...................35 SECTION 9. PAYMENT OF CERTAIN EXPENSES.....................................35 9.1. Transaction Expenses............................................35 9.2. Certain Fees and Expenses.......................................37 9.3. Unused Fee and Holder Unused Fee. ..............................37 SECTION 10. OTHER COVENANTS AND AGREEMENTS..................................37 10.1. Cooperation with the Construction Agent or the Lessee..........................................................37 10.2. Covenants of the Owner Trustee and the Holders.........................................................38 10.3. Lessee Covenants, Consent and Acknowledgment; Construction Agent Covenants....................................41 10.4. Sharing of Certain Payments.....................................42 10.5. Grant of Easements, Voting at Meetings, etc.....................42 SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT............................43 11.1. Construction Agent's and Lessee's Credit Agreement Rights................................................43 11.2. Construction Agent's and Lessee's Trust Agreement Rights................................................44 SECTION 12. TRANSFER OF INTEREST............................................44 12.1. Restrictions on Transfer........................................44 12.2. Effect of Transfer..............................................45 SECTION 13. INDEMNIFICATION.................................................45 13.1. General Indemnity...............................................45 13.2. General Tax Indemnity...........................................48 13.3. Environmental Indemnity.........................................53 ii

4 Page ---- SECTION 14. MISCELLANEOUS...................................................54 14.1. Survival of Agreements..........................................54 14.2. No Broker, etc..................................................54 14.3. Notices.........................................................54 14.4. Counterparts....................................................56 14.5. Amendments and Termination......................................56 14.6. Headings, etc...................................................56 14.7. Parties in Interest.............................................56 14.8. GOVERNING LAW; WAIVERS OF JURY TRIAL............................57 14.9. Submission to Jurisdiction; Waivers.............................57 14.10. Severability....................................................57 14.11. Liability Limited...............................................58 14.12. Rights of Lessee................................................59 14.13. Further Assurances..............................................59 14.14. Calculations under Operative Agreements.........................60 14.15. Confidentiality.................................................60 14.16. Calculation of Rent, Interest, Holder Yield and Fees............................................................61 Schedule 1 Initial Holders ........................................Schedule-1 EXHIBIT A REQUISITION FORM...............................................A-1 Schedule 1 Legal Description of Land.................................A-3 Schedule 2 Description of Improvements...............................A-4 Schedule 3 Description of Equipment..................................A-5 Schedule 4 Work......................................................A-6 EXHIBIT B WACKENHUT CORRECTIONS CORPORATION OFFICER'S CERTIFICATE....................................................B-1 Schedule 1 [itemized expenditures]...................................B-3 EXHIBIT C FORM OF OPINION OF COUNSEL TO WACKENHUT CORRECTIONS CORPORATION..............................C-1 EXHIBIT D WACKENHUT CORRECTIONS CORPORATION OFFICER'S CERTIFICATE....................................................D-1 EXHIBIT E WACKENHUT CORRECTIONS CORPORATION SECRETARY'S CERTIFICATE....................................................E-1 EXHIBIT F FIRST SECURITY BANK, NATIONAL ASSOCIATION OFFICER'S CERTIFICATE..........................................F-1 EXHIBIT G FIRST SECURITY BANK, NATIONAL ASSOCIATION CERTIFICATE OF ASSISTANT SECRETARY.............................G-1 EXHIBIT H FORM OF OPINION OF COUNSEL TO FIRST SECURITY BANK, NATIONAL ASSOCIATION ....................................H-1 Appendix A Rules of Usage and Definitions........................Appendix A-1 iii

5 PARTICIPATION AGREEMENT THIS PARTICIPATION AGREEMENT, dated as of June 19, 1997 (as amended, modified, restated or supplemented from time to time, this "Agreement"), is by and among WACKENHUT CORRECTIONS CORPORATION, a Florida corporation ("Wackenhut" or the "Construction Agent"); WACKENHUT CORRECTIONS CORPORATION, as Lessee (the "Lessee"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not individually (in its individual capacity, the "Trust Company"), except as expressly stated herein, but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 (the "Owner Trustee" or the "Lessor"); NATIONSBANK, NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the "Agent") for the Lenders; NATIONSBANK, NATIONAL ASSOCIATION, a national banking association and the various other banks and lending institutions which are parties hereto from time to time as Holders; NATIONSBANK, NATIONAL ASSOCIATION and the various other banks and lending institutions which are parties hereto from time to time as Lenders. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth in Appendix A hereto. In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. THE LOANS. The Lenders have agreed to make Loans to the Lessor from time to time in an aggregate principal amount of up to the aggregate amount of the Commitments of the Lenders in order for the Lessor to acquire the Properties and certain Improvements and to develop and construct certain Improvements in accordance with the Agency Agreement and the terms and provisions hereof, and in consideration of the receipt of the proceeds of such Loans, the Lessor will issue the Notes (together with any note or notes issued in exchange or substitution therefor in accordance with the Credit Agreement, the "Notes"). The Loans shall be made and the Notes shall be issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from time to time upon the appropriate submission by the Construction Agent of a Requisition and borrowing request therefor, in accordance with this Agreement and the other Operative Agreements. The Loans and the obligations of the Lessor under the Credit Agreement shall be secured by the Collateral. The Lessee and the Construction Agent agree that each Property shall be improved for business purposes and shall not merely be held as unimproved Land for speculative purposes.

6 SECTION 2. HOLDER FUNDINGS. Subject to the terms and conditions of this Agreement and in reliance on the representations and warranties of each of the parties hereto contained herein or made pursuant hereto on each date Fundings are made in accordance with Section 5 hereof, each Holder shall make a Holder Funding on a pro rata basis to the Owner Trustee with respect to the Wackenhut Corrections Trust 1997-1 based on its Holder Commitment in an amount in immediately available funds such that the aggregate of all Holder Fundings shall be three percent (3%) of the amount of the Funding being funded on such date; provided, no Holder shall be obligated for any Holder Funding in excess of its pro rata share of the Available Holder Commitment. The aggregate amount of Holder Fundings shall be up to the aggregate amount of the Holder Commitments. No prepayment or any other payment with respect to any Funding shall be permitted such that the Holder Funding with respect to such Funding is less than 3% of the outstanding amount of such Funding, except in connection with termination or expiration of the Term or in connection with the exercise of remedies relating to the occurrence of a Lease Event of Default. The representations, warranties, covenants and agreements of the Holders herein and in the other Operative Agreements are several, not joint, and not joint and several. SECTION 3. SUMMARY OF TRANSACTIONS. 3.1. Operative Agreements. On the date hereof (the "Initial Closing Date"), each of the respective parties hereto and thereto shall execute and deliver this Agreement, the Lease, the Agency Agreement, the Credit Agreement, the Notes, the Certificates, the Trust Agreement, the Security Agreement and such other documents, instruments, certificates and opinions of counsel as agreed to by the parties hereto. 3.2. Property Purchase. On each Property Closing Date and subject to the terms and conditions of this Agreement (a) the Holders will each make a Holder Funding in accordance with Sections 2 and 5 of this Agreement and the terms and provisions of the Trust Agreement, (b) the Lenders will make Loans in accordance with Sections 1 and 5 of this Agreement and the terms and provisions of the Credit Agreement, and (c) the Lessor will purchase, or lease pursuant to a Ground Lease, the applicable Property identified by the Construction Agent, and grant the Agent a Lien on such Property by execution of the required Security Documents. 3.3. Construction of Improvements; Lease or Disposition of Properties. Construction Fundings will be made with respect to particular Improvements to be constructed and with respect to ongoing Work regarding the Equipment and ongoing construction of particular Improvements, in each case, pursuant to the terms and conditions of this Agreement and the Agency Agreement. The 2

7 Construction Agent will act as a construction agent on behalf of the Lessor respecting such Work and the construction of such Improvements and the expenditures of the Construction Fundings related thereto. The Construction Agent shall promptly notify the Lessor upon Completion of the Improvements and at such time Lessee shall execute and deliver to Lessor a Lease Supplement relating to the particular Property and thereupon the Term shall commence with respect to such Property. SECTION 4. THE CLOSINGS. 4.1. Initial Closing Date. All documents and instruments required to be delivered on the Initial Closing Date shall be delivered at the offices of Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina, or at such other location as may be determined by the Lessor, the Agent and the Lessee. 4.2. Initial Closing Date; Property Closing Dates; Construction Fundings. The Construction Agent shall deliver to the Lessor and the Agent a requisition (a "Requisition"), in the form attached hereto as Exhibit A or in such other form as is reasonably satisfactory to the Lessor, the Construction Agent and the Agent, in connection with (a) the Initial Closing Date relating to the Transaction Expenses and other fees, expenses and disbursements payable by the Lessor pursuant to Section 9.1(a) with invoices (in form and substance reasonably acceptable to the Agent and the Lessor) for such Transaction Expenses and other fees, expenses and disbursements attached to such Requisition, (b) each Property Closing Date relating to each Acquisition Funding pursuant to Section 5.3 and (c) each date of a Construction Funding pursuant to Sections 5.4 or 5.5. SECTION 5. FUNDINGS; REPORTING REQUIREMENTS ON COMPLETION DATE; LESSEE DELIVERY OF NOTICES. 5.1. General. To the extent funds have been made available to the Lessor as Loans by the Lenders and Holder Fundings by the Holders, the Lessor will use such funds from time to time in accordance with the terms and conditions of this Agreement and the other Operative Agreements (i) to pay interest regarding the Loans relating to a Property and to pay the Holder Yield regarding the Holder Fundings relating to a Property, in each case to the extent accrued under the Credit Agreement or Trust Agreement (as the case may be) during the period prior to the Term Commencement Date with respect to such Property, (ii) at the direction of the Construction Agent to acquire Properties in accordance with the terms of this Agreement, the Agency Agreement, the Lease and the other Operative Agreements, (iii) to make advances to the Construction Agent to permit the testing, engineering, installation, development, construction, modification, design and renovation, as applicable, of Improvements in accordance with the terms of the Agency Agreement, the Lease and the other Operative Agreements, and (iv) 3

8 to pay Transaction Expenses, fees, expenses and other disbursements payable by the Lessor under Sections 9.1(a) and (b). 5.2. Procedures for Funding. (a) The Construction Agent shall designate the date for Fundings hereunder in accordance with the terms and provisions hereof; provided, however, it is understood and agreed that no more than four (4) Fundings (of which only one (1) may be a Eurodollar Funding) may be requested during any calendar month. Not less than (i) one (1) Business Day prior to the date of any requested Base Rate Funding and (ii) three (3) Business Days prior to the date of any requested Eurodollar Funding, the Construction Agent shall deliver to the Lessor and the Agent, (A) with respect to the Initial Closing Date and each Property Closing Date, a Requisition as described in Section 4.2 hereof (including without limitation a legal description of the Land, a schedule of the Improvements, if any, and a schedule of the Equipment, if any, to be acquired on such date, and a schedule of the Work, if any, to be performed, each of the foregoing in a form reasonably acceptable to the Lessor and the Agent) and (B) with respect to each Construction Funding, a Requisition identifying (among other things) the Property to which such Work relates. (b) Each Requisition shall: (i) be irrevocable, (ii) request funds in an amount that is not in excess of the total aggregate of the Available Commitments plus the Available Holder Commitments at such time, and (iii) request that the Holders make Holder Fundings and that the Lenders make Loans to the Lessor for the payment of the Property Acquisition Costs (in the case of an Acquisition Funding) or other Property Costs, including the cost of Improvements (in the case of a Construction Funding) that have previously been incurred and were not subject to a prior Requisition, in each case as specified in the Requisition. (c) Subject to the terms and conditions of the Credit Agreement and the Trust Agreement and subject to the satisfaction of the conditions precedent set forth in Sections 5.3, 5.4 or 5.5, as applicable, on each Property Closing Date or the date on which the Construction Funding is to be made, as applicable, (i) the Lenders shall make Loans to the Lessor in an aggregate amount equal to 97% of the Requested Funds specified in any Requisition (such loans to be apportioned 88% to Series A Loans and 9% to Series B Loans), up to aggregate principal amount equal to the Available Commitments, (ii) each Holder shall make a pro rata Holder Funding based on its Holder Commitment in an amount such that the aggregate of all Holder Fundings at such time shall be 3% of the balance of the Requested Funds 4

9 specified in such Requisition, provided no such Holder Funding shall exceed such Holder's pro rata share of the Available Holder Commitments; and (iii) the total amount of such Loans and Holder Fundings made on such date shall (w) be used by the Lessor to pay the Property Acquisition Costs within three (3) Business Days of the receipt by the Lessor of such Funding (in the case of a Property Closing Date), (x) be used by the Lessor on the date of such Funding to pay interest regarding the Loans relating to a Property and to pay the Holder Yield regarding the Holder Fundings relating to a Property, in each case to the extent accrued under the Credit Agreement or Trust Agreement (as the case may be) during the period prior to the Term Commencement Date with respect to such Property, (y) be used by the Lessor to pay Transaction Expenses, fees, expenses and other disbursements to the extent permitted under Sections 5.3, 5.4 or 5.5, or (z) be disbursed by the Lessor, on the date of such Funding, to the Construction Agent or the Lessee to pay Property Costs, as applicable. Any such amounts held by the Lessor (or the Agent on behalf of the Lessor) shall be subject to the lien of the Security Agreement. 5.3. Conditions to the Holders' and the Lenders' Obligations to advance funds on the Initial Closing Date or funds for the Acquisition of Property. (a) The obligations of each Holder to make Holder Fundings, and of each Lender to make Loans, to the Lessor on the Initial Closing Date for the purpose of providing funds to the Lessor necessary to pay Transaction Expenses, fees, expenses and other disbursements payable by the Lessor under Section 9.1 of this Agreement, are subject to the prior or contemporaneous satisfaction or waiver of the following conditions precedent: (i) the correctness in all material respects on the Initial Closing Date of the representations and warranties of the Owner Trustee, the Construction Agent, the Lessee and the Holders (other than such Holder) contained herein and in each of the other Operative Agreements; (ii) the performance in all material respects by the Construction Agent and the Lessee of their respective agreements contained herein and in the other Operative Agreements which covenants are to be performed by them on or prior to the Initial Closing Date; (iii) the satisfaction of all conditions to any such Holder Funding or Loan set forth in any Operative Agreement; 5

10 (iv) the Agent and the Owner Trustee shall have received a fully executed copy of a counterpart of the respective Requisition, appropriately completed; and (v) no Default or Event of Default under any of the Operative Agreements shall have occurred after giving effect to the Funding requested by such Requisition. (b) The obligations of each Holder to make Holder Fundings, and of each Lender to make Loans, to the Lessor on a Property Closing Date for the purpose of providing funds to the Lessor necessary to pay the Transaction Expenses, fees, expenses and other disbursements payable by Lessor under Section 9.1 (b) of this Agreement and to acquire a Property, are subject to the prior or contemporaneous satisfaction or waiver of the following conditions precedent: (i) the correctness in all material respects on such Property Closing Date of the representations and warranties of the Owner Trustee, the Construction Agent, the Lessee and the Holders (other than such Holder) contained herein and in each of the other Operative Agreements; (ii) the performance in all material respects by the Construction Agent and the Lessee of their respective agreements contained herein and in the other Operative Agreements which covenants are to be performed by them on or prior to each such Property Closing Date; (iii) the satisfaction of all conditions to any such Holder Funding or Loan set forth in any Operative Agreement; (iv) the Agent and the Owner Trustee shall have received a fully executed copy of a counterpart of the respective Requisition, appropriately completed; (v) title to each Property being acquired on such Property Closing Date shall conform to the representations and warranties set forth in Section 8.1(c) hereof; (vi) the Construction Agent shall have delivered to the Lessor a copy of the Deed with respect to the Land and existing Improvements (if any), a copy of the Ground Lease (if any) with respect to the Land, and a copy of the Bill of Sale with respect to the Equipment, in each case for such of the foregoing as are being 6

11 acquired on such Property Closing Date; and such Land and existing Improvements shall be located in an Approved State; (vii) there shall not have occurred and be continuing any Default or Event of Default under any of the Operative Agreements and no Default or Event of Default under any of the Operative Agreements shall have occurred after giving effect to the Funding requested by such Requisition; (viii) the Construction Agent shall have delivered to the Agent and the Owner Trustee, title insurance commitments to issue policies in favor of the Owner Trustee and the Agent with respect to each Property being acquired on such Property Closing Date, such policies being in form and substance reasonably acceptable to the Owner Trustee and the Agent, with such title exceptions thereto as are reasonably acceptable to the Owner Trustee and the Agent; and the Construction Agent shall deliver to the Owner Trustee and the Agent, as soon as possible after such Property Closing Date, the final title insurance policies for each such Property, taking no specific exception for any Lien filed on account of materials furnished or labor performed in connection with the Property, and otherwise showing no additional exceptions to coverage; (ix) the Construction Agent shall have delivered to the Agent and the Owner Trustee a "Phase I" environmental site assessment with respect to each such Property, prepared by an independent recognized professional reasonably acceptable to the Agent and the Owner Trustee and in a form and substance that is reasonably acceptable to the Agent and the Owner Trustee; (x) the Construction Agent shall have delivered to the Agent and the Owner Trustee a survey of each such Property, prepared by an independent recognized professional meeting the then current minimum standard detail requirements for American Land Title Association/American Congress of Surveying and Mapping (ALTA/ACSM) Land Title Surveys certified to the Agent and otherwise reasonably acceptable to the Agent; (xi) the Construction Agent shall have caused to be delivered to the Agent and the Owner Trustee a legal opinion (in form and substance reasonably satisfactory to the Agent and the Owner Trustee) from counsel located in the state where each such Property is located or, if the Agent and the Owner Trustee have previously received an opinion from counsel in such 7

12 state, the Agent and the Owner Trustee (in their discretion) may accept an update or a reaffirmation of the previous opinion, in each case addressed to each Lender; (xii) the Owner Trustee and the Agent shall be satisfied, in their sole discretion, that the acquisition or ground leasing of each such Property and the execution of the Mortgage Instrument and the other Security Documents will not adversely affect in any material respect the rights of the Owner Trustee, the Holders, the Agent or the Lenders under or with respect to the Operative Agreements in effect as of such Property Closing Date (it being understood and acknowledged that the Agent and the Owner Trustee may require that the Construction Agent deliver an acceptable legal opinion in connection with this condition); (xiii) the Construction Agent shall have determined (as set forth in the related Requisition) that such Property is appropriate for its business operations; and the Agent shall have consented to the Lessor's acquisition of such Property, which consent (subject to clause (xii) above) shall not be unreasonably withheld or delayed; (xiv) the Construction Agent shall have delivered to the Agent and the Owner Trustee, respecting each such Property, invoices for the various Transaction Expenses and other fees, expenses and disbursements referenced in Section 9.1 (a) or (b) of this Agreement; (xv) the Lessor shall have delivered to the Agent a Mortgage Instrument and Lender Financing Statements with respect to each such Property in a form reasonably acceptable to the Agent and Lessee; (xvi) the Construction Agent shall have delivered to the Lessor (A) with respect to each such Completed Property, a Lease Supplement and a memorandum regarding the Lease and such Lease Supplement, and (B) with respect to each such Property (other than a Completed Property), a memorandum regarding the Lease (such memoranda referenced in the foregoing (A) and (B) to be substantially in the forms attached to the Lease as Exhibit C-1 or Exhibit C-2 as appropriate, and in each case, in form suitable for recording); (xvii) the Construction Agent shall have delivered to the Lessor with respect to each such Property Lessor Financing Statements executed by the Lessee and the Lessor; 8

13 (xviii) if any such Property is subject to a Ground Lease, the Construction Agent shall have caused a lease memorandum (in form and substance satisfactory to the Agent) to be delivered to the Agent for such Ground Lease; (xix) counsel for the ground lessor of each such Property subject to a Ground Lease shall have issued to the Lessor, the Agent and the Holders, an opinion satisfactory to the Agent; (xx) all necessary (or in the reasonable opinion of the Owner Trustee, the Agent, or their respective counsel, advisable) Governmental Actions, in each case required by any law or regulation enacted, imposed or adopted on or prior to each such date or by any change in facts or circumstances on or prior to each such date, shall have been obtained or made and be in full force and effect; (xxi) the Construction Agent shall cause (i) Uniform Commercial Code lien searches, tax lien searches and judgment lien searches regarding each of the Lessee and the Lessor to be conducted (and copies thereof to be delivered to the Agent and the Owner Trustee) in the state and county (or other jurisdiction) in which such Property is located, by a nationally recognized search company acceptable to the Owner Trustee and the Agent and (ii) the liens referenced in such lien searches which are objectionable to the Owner Trustee or the Agent to be either removed or otherwise handled in a manner reasonably satisfactory to the Owner Trustee and the Agent; and (xxii) the Agent shall have received an Appraisal for such Property showing that such Property has a value at least equal to eighty-five percent (85%) of the expected total Property Cost of such Property and all Improvements constructed or expected to be constructed thereon (based on a Construction Budget satisfying the requirements of Section 5.4(e)). 5.4. Conditions to the Holders' and the Lenders' Obligations to Make Construction Fundings for the Commencement of Construction of any Improvements. The obligations of each Holder to make Holder Fundings, and of each Lender to make Loans, to the Lessor for the purpose of providing funds to the Lessor necessary to pay the Transaction Expenses, fees, expenses and other disbursements payable by Lessor under Section 9.1(b) of this Agreement, to make an advance for the commencement of construction of any Improvements on a Property, or to pay interest regarding the Loans relating to a Property and to pay 9

14 the Holder Yield regarding the Holder Fundings relating to a Property, in each case regarding such interest and Holder Yield to the extent accrued and payable under the Credit Agreement or Trust Agreement (as the case may be), in each case during the period prior to the Term Commencement Date with respect to such Property, are subject to the satisfaction or waiver of the following conditions precedent: (a) the correctness in all material respects on the date of such Holder Fundings and Loans of the representations and warranties of the Owner Trustee, the Construction Agent, the Lessee and the Holders (other than such Holder) contained herein and in each of the other Operative Agreements; (b) the performance in all material respects by the Construction Agent and the Lessee of their respective agreements contained herein and in the other Operative Agreements and to be performed by them on or prior to each such date; (c) the satisfaction of all conditions to any such Holder Funding or Loan set forth in any Operative Agreement; (d) the Agent and the Owner Trustee shall have received a copy of a fully executed counterpart of the respective Requisition appropriately completed, together with copies of all Bills of Sale with respect to any Equipment acquired as a part of any Improvements; (e) with respect to each Initial Construction Funding, the Agent and the Owner Trustee shall have received a copy of the Construction Budget for the completion of the Improvements to which such Funding relates, which Construction Budget shall indicate a total Property Cost for such Improvements and the Land on which such Improvements are to be constructed of not less than $5,000,000; (f) with respect to each Initial Construction Funding, (i) the title insurance commitments to issue policies (and any policies) delivered in connection with the requirements of Section 5.3(b)(viii) shall provide for (or shall be endorsed to provide for) insurance in an amount at least equal to the maximum total Property Cost indicated by the Construction Budget referred to in subparagraph (e) above taking no specific exception for any Lien filed on account of materials furnished or labor performed in connection with the Property, and otherwise showing no additional exceptions to coverage, and (ii) all necessary recording fees, documentary stamp taxes or similar amounts will be paid in connection with the related Mortgage Instrument in an amount sufficient to cover such maximum total Property Cost; 10

15 (g) there shall not have occurred and be continuing any Event of Default or (except as permitted under Section 8.4) any Default under any of the Operative Agreements, and no Default or Event of Default under any of the Operative Agreements will have occurred after giving effect to the Funding requested by such Requisition; (h) with respect to each Initial Construction Funding, based upon Construction Budgets which satisfy the requirements of subparagraph (e) above, the Available Commitment and the Available Holder Commitment (after deducting the Unfunded Amount) will be sufficient to complete the Improvements; and (i) the Construction Agent shall have determined (as set forth in the related Requisition) that such Improvements are appropriate to its business; and the Agent shall have consented to such Improvements, which consent shall not be unreasonably withheld or delayed. 5.5. Conditions to the Holders' and the Lenders' Obligations to Make Construction Fundings for the Ongoing Construction on any Property Prior to the Construction Period Termination Date. The obligations of each Holder to make Holder Fundings, and of each Lender to make Loans, to the Lessor (i) in connection with all subsequent requests for Fundings to pay the Transaction Expenses, fees, expense and other disbursements payable by Lessor under Section 9.1(b) of this Agreement, (ii) to pay interest regarding the Loans relating to a Property and to pay the Holder Yield regarding the Holder Fundings relating to a Property, in each case regarding such interest and Holder Yield to the extent accrued and payable under the Credit Agreement or Trust Agreement (as the case may be), during the period prior to the Term Commencement Date with respect to such Property, and (iii) to pay for the construction of Improvements with respect to any Property, in each case prior to the Construction Period Termination Date are subject to the satisfaction or waiver of the following conditions precedent: (a) the correctness in all material respects on the date of such Holder Fundings and Loans of the representations and warranties of the Owner Trustee, the Construction Agent, the Lessee and the Holders (other than such Holder) contained herein and in each of the other Operative Agreements; (b) the performance in all material respects by the Construction Agent and the Lessee hereto of their respective agreements contained herein and in the other Operative Agreements and to be performed by them on or prior to each such date; 11

16 (c) the satisfaction of all conditions to any such Holder Funding or Loan set forth in any Operative Agreements; (d) the Agent and the Owner Trustee shall have received a copy of a fully executed counterpart of the respective Requisition, appropriately completed; (e) there shall not have occurred and be continuing any Event of Default or (except as permitted under Section 8.4) any Default under any of the Operative Agreements, and no Default or Event of Default under any of the Operative Agreements will have occurred after giving effect to the Construction Funding requested by such Requisition; (f) (with respect to each Construction Funding) based upon Construction Budgets which satisfy the requirements of Section 5.4(e) of this Agreement, the Available Commitments and the Available Holder Commitment (after deducting the Unfunded Amount) will be sufficient to complete the Improvements; and (g) with respect to each Construction Funding, the title insurance commitments to issue policies (or any policies) delivered in connection with the requirements of Section 5.3(b)(iii)) shall provide for (or shall be endorsed to provide for) insurance in an amount at least equal to the maximum total Property Cost indicated by the Construction Budget referred to in Section 5.4(e) (and taking into account any additional Property Cost represented by such Construction Funding), taking no specific exception for any Lien filed on account of materials furnished or labor performed in connection with the Property (other than Permitted Liens which the title company insures as being junior to the Liens of the Lessor, the Administrative Agent, the Lenders and the Holders), and otherwise showing no additional exceptions to coverage. 5.6. Reporting and Delivery Requirements on Completion Date and on Construction Period Termination Date. On the Completion Date for each Property, the Construction Agent shall deliver to the Agent, and the Owner Trustee an Officer's Certificate in the form attached hereto as Exhibit B specifying (a) the Completion Date for the construction of Improvements at the Property, (b) the aggregate Property Cost for the Property and (c) if any of the Property consists of Tangible Personal Property, a separate statement of the Property Cost attributable to such Tangible Personal Property. Such Officer's Certificate shall also include, in form and in detail reasonably acceptable to the Agent and the Holders, a summary of the Property Cost figures and a certification to the effect that all Improvements have been made in accordance with all applicable material Legal Requirements, in a good and workmanlike manner and otherwise in substantial 12

17 compliance with the standards and practices of the Construction Agent with respect to properties and improvements owned by the Construction Agent, and that no consent or approval of any Person is required for such Improvements except for consents and approvals which have already been obtained. Furthermore, (i) on the Completion Date for each Property, the Construction Agent shall deliver or cause to be delivered originals of the following to the Agent (and copies thereof to the Owner Trustee) each of which shall be in a form reasonably acceptable to the Agent: (1) insurance certificates with respect to the Property as required under the Lease Agreement; (2) a Lease Supplement with respect to the Property, (3) a memorandum of the Lease and such Lease Supplement (in form suitable for recording), and (4) if requested by the Agent or the Owner Trustee, amendments or modifications to the Lessor Financing Statements executed by the Lessee and the Lessor; and (ii) within ninety (90) days after the Completion Date for each Property, the Construction Agent shall deliver or cause to be delivered originals of the following to the Agent (and copies thereof to the Owner Trustee) each of which shall be in a form reasonably acceptable to the Agent: (1) an as-built survey for the applicable Property, (2) an endorsement of the title insurance policy regarding such Property, amending the effective date of such policy to the date of such endorsement and taking no exception for any Lien on account of materials furnished or labor performed in connection with the Property (except for Liens which have been fully bonded by bonds acceptable to the Agent), and otherwise showing no additional exceptions to coverage, and (3) the final Plans and Specifications for such Property. In addition, on the Completion Date for such Property the Construction Agent covenants and agrees that the recording fees, documentary stamp taxes or similar amounts paid or required to be paid in connection with the related Mortgage Instrument shall be in an amount required by applicable law. 5.7. Construction Agent Delivery of Allocation Notice; Notice Regarding the Holder Construction Property Cost and Construction Budget Modifications. The Construction Agent covenants and agrees to deliver (i) to the Agent at least five (5) Business Days before any Scheduled Interest Payment Date during the Commitment Period the Allocation Notice referred to in the first sentence of Section 2.3(b) of the Credit Agreement, and (ii) to the Agent and the Owner Trustee each month any modification to any Construction Budget regarding any Property; provided, no Construction Budget may be amended unless (a) the title insurance policies referenced in Section 5.3(b)(viii) are also modified or endorsed, if necessary, to provide for insurance in an amount that satisfies the requirements of Section 5.4(f)(i) of this Agreement and, if necessary, any additional recording fees, documentary stamp taxes or similar amounts paid in connection with the related Mortgage Instrument in an amount sufficient to comply with the requirements of Section 5.4(f)(ii), and (b) after giving effect to any such amendment the 13

18 Construction Budget remains in compliance with the requirements of Section 5.4(e) of this Agreement. 5.8. Inspection of Documents; Hold Harmless; Removal of Properties. Any document or item (including without limitation any environmental report) delivered to the Agent shall be available for inspection at any time during ordinary business hours upon reasonable notice by any Lender or Holder. The Agent shall not incur any liability to any Lender, any Holder, the Owner Trustee or any other Person (and each Lender, each Holder, the Owner Trustee, the Lessee and the Construction Agent hereby holds the Agent harmless from any such liability) as a result of any such document or item, any information contained therein, the failure to receive any such document, or the Agent's approval of any Property. In the event the Majority Lenders determine that any environmental site assessment reveals an Environmental Violation and they or the Agent so notify the Lessee, then the Lessee shall remedy or purchase such Property in accordance with Sections 15.2, 16.1 and 16.2 of the Lease, provided that if the Property is a Construction Period Property, the Construction Agent shall be responsible for such remedy or purchase as if the Property were subject to the Lease. SECTION 6. CONDITIONS OF THE INITIAL CLOSING. 6.1. Conditions to the Lessor's and the Holders' Obligations. The obligations of the Lessor and the Holders to consummate the transactions contemplated by this Agreement, including the obligation to execute and deliver the applicable Operative Agreements to which each is a party on the Initial Closing Date, are subject to (i) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained herein, (ii) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained in any other Operative Agreement or certificate delivered pursuant hereto or thereto, (iii) the performance by the other parties hereto of their respective agreements contained herein and in the other Operative Agreements and to be performed by them on or prior to the Initial Closing Date and (iv) the satisfaction, or waiver by the Lessor and the Holders, of all of the following conditions on or prior to the Initial Closing Date: (a) Each of the Operative Agreements to be entered into on the Initial Closing Date shall have been duly authorized, executed and delivered by the parties thereto, other than the Lessor, and shall be in full force and effect, and no Default or Event of Default shall exist thereunder (both before and after giving effect to the transactions contemplated by the Operative Agreements), and the Lessor shall have received a fully executed copy of each of the Operative Agreements (other than the Notes of which it shall have received specimens). The Operative Agreements 14

19 (or memoranda thereof), any supplements thereto and any financing statements and fixture filings in connection therewith required under the Uniform Commercial Code shall have been filed or shall be promptly filed, if necessary, in such manner as to enable the Lessee's counsel to render its opinion referred to in Section 6.1(g) hereof; (b) All taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of the Operative Agreements shall have been paid or provision for such payment shall have been made to the reasonable satisfaction of the Lessor and the Agent; (c) No action or proceeding shall have been instituted, nor shall any action or proceeding be threatened, before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or prevent the full performance of this Agreement, any other Operative Agreement or any transaction contemplated hereby or thereby or (ii) which is reasonably likely to have a Material Adverse Effect; (d) In the reasonable opinion of the Lessor and the Holders and their counsel, the transactions contemplated by the Operative Agreements do not and will not violate any material Legal Requirements and do not and will not subject the Lessor or the Holders to any materially adverse regulatory prohibitions or constraints; (e) The Lessor and the Agent shall each have received an Officer's Certificate of the Lessee, dated as of the Initial Closing Date, in the form attached hereto as Exhibit D or in such other form as is reasonably acceptable to such parties stating that (i) each and every representation and warranty of the Lessee contained in the Operative Agreements to which it is a party is true and correct in all material respects on and as of the Initial Closing Date; (ii) no Default or Event of Default has occurred and is continuing under any Operative Agreement; (iii) each Operative Agreement to which Lessee is a party is in full force and effect with respect to it; and (iv) the Lessee has performed and complied with all covenants, agreements and conditions contained herein or in any Operative Agreement required to be performed or complied with by it on or prior to the Initial Closing Date; (f) The Lessor and the Agent shall each have received (i) a certificate of the Secretary or an Assistant Secretary of Lessee in the form attached hereto as Exhibit E or in such other form as is reasonably acceptable to such parties attaching and certifying as to (A) the resolutions of its Board of Directors duly authorizing the execution, delivery 15

20 and performance by Lessee of each of the Operative Agreements to which it is or will be a party, (B) its certificate of incorporation and by-laws, in each case certified as of a recent date by the Secretary of State of the State of its incorporation, and (C) the incumbency and signature of persons authorized to execute and deliver on its behalf the Operative Agreements to which it is a party and (ii) a good standing certificate from the appropriate officer of each state in which it is required to be qualified to do business as to its good standing in such state; (g) Counsel for the Lessee and the Guarantor reasonably acceptable to the other parties hereto shall have issued to the Lessor, the Agent, the Lenders and the Holders an opinion in the form attached hereto as Exhibit C or in such other form as is reasonably acceptable to such parties; and (h) As of the Initial Closing Date, there shall not have occurred any material adverse change in the consolidated assets, liabilities, operations, business or financial condition of the Lessee from that set forth in the audited financial statements of the Lessee dated December 29, 1996. 6.2. Conditions to the Lessee's Obligations. The obligation of the Lessee to consummate the transactions contemplated by this Agreement, including the obligation to execute and deliver the Operative Agreements to which it is a party on the Initial Closing Date, is subject to (i) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained herein, (ii) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained in any other Operative Agreement or certificate delivered pursuant hereto or thereto, (iii) the performance by the other parties hereto of their respective agreements contained herein and in the other Operative Agreements, in each case to be performed by them on or prior to the Initial Closing Date, and (iv) the satisfaction or waiver by the Lessee of all of the following conditions on or prior to the Initial Closing Date: (a) Each of the Operative Agreements to be entered into on the Initial Closing Date shall have been duly authorized, executed and delivered by the parties thereto, other than the Lessee, and shall be in full force and effect, and no Default, other than Defaults of the Lessee, shall exist thereunder, and the Lessee shall have received a fully executed copy of each of the Operative Agreements (other than Notes of which it shall have received a specimen); 16

21 (b) In the reasonable opinion of the Lessee and its counsel, the transactions contemplated by the Operative Agreements do not violate any material Legal Requirements and will not subject Lessee to any materially adverse regulatory prohibitions or constraints; (c) No action or proceeding shall have been instituted nor shall any action or proceeding be threatened, before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or prevent the full performance of this Agreement, any other Operative Agreement or any transaction contemplated hereby or thereby or (ii) which is reasonably likely to have a Material Adverse Effect; (d) The Lessee and the Agent shall each have received an Officer's Certificate of the Lessor dated as of such Closing Date in the form attached hereto as Exhibit F or in such other form as is reasonably acceptable to Lessee and the Agent, stating that (i) each and every representation and warranty of the Lessor contained in the Operative Agreements to which it is a party is true and correct on and as of the Initial Closing Date; (ii) each Operative Agreement to which the Lessor is a party is in full force and effect with respect to it, and (iii) the Lessor has duly performed and complied with all covenants, agreements and conditions contained herein or in any Operative Agreement required to be performed or complied with by it on or prior to the Initial Closing Date; (e) The Lessee and the Agent shall each have received (i) a certificate of the Secretary, an Assistant Secretary, Trust Officer or Vice President of the Trust Company in the form attached hereto as Exhibit G or in such other form as is reasonably acceptable to Lessee and the Agent, attaching and certifying as to (A) the signing resolutions, (B) its articles of incorporation or other equivalent charter documents, as the case may be, certified as of a recent date by an appropriate officer of the Trust Company, (C) its by-laws and (D) the incumbency and signature of persons authorized to execute and deliver on its behalf the Operative Agreements to which it is a party and (ii) a good standing certificate from the state of incorporation of the Trust Company; and (f) Counsel for the Lessor acceptable to the other parties hereto shall have issued to the Lessee, the Holders, the Lenders and the Agent an opinion in the form attached hereto as Exhibit H or in such other form as is reasonably acceptable to such parties. 17

22 6.3. Conditions to the Agent's Obligations. The obligation of the Agent to consummate the transactions contemplated by this Agreement on the Initial Closing Date, including the obligation to execute and deliver each of the Operative Agreements to which it is a party on the Initial Closing Date, is subject to (i) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained herein, (ii) the accuracy and correctness on the Initial Closing Date of the representations and warranties of the other parties hereto contained in any other Operative Agreement or certificate delivered pursuant hereto or thereto, (iii) the performance by the other parties hereto of their respective agreements contained herein and in the other Operative Agreements, in each case to be performed by them on or prior to the Initial Closing Date, and (iv) the satisfaction, or waiver by the Agent, of all of the following conditions on or prior to the Initial Closing Date: (a) Each of the Operative Agreements to be entered into on the Initial Closing Date shall have been duly authorized, executed and delivered by the parties thereto, other than the Agent, and shall be in full force and effect, and no Default or Event of Default shall exist thereunder (both before and after giving effect to the transactions contemplated by the Operative Agreements), and the Agent shall have received a fully executed copy of each of the Operative Agreements (including the Notes). The Operative Agreements (or memoranda thereof), any supplements thereto and any financing statements and fixture filings in connection therewith required under the Uniform Commercial Code shall have been filed or shall be promptly filed, if necessary, in such manner as to enable the Lessor's counsel to render its opinion referred to in Section 6.2(f) hereof; (b) The satisfaction of each of the conditions set forth in Sections 6.1(b), (c), (e), (f) and (h) and Sections 6.2(d), (e) and (f) hereof; and (c) In the reasonable opinion of the Agent and its counsel, the transactions contemplated by the Operative Agreements do not and will not violate any material Legal Requirements and do not and will not subject the Agent to any materially adverse regulatory prohibitions or constraints. SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE INITIAL CLOSING DATE. 7.1. Representations and Warranties of the Initial Holders. Effective as of the Initial Closing Date, each Holder on such date represents and warrants to each of the other parties hereto that: 18

23 (a) It is a national banking association, or a corporation that is a commercial finance company, in each case duly organized, validly existing and in good standing under the laws of the United States or the country or state of its organization and has the power and authority to carry on its business as now conducted and to enter into and perform its obligations under each Operative Agreement to which it is or will be a party and each other agreement, instrument and document to be executed and delivered by it on or before each Closing Date in connection with or as contemplated by each such Operative Agreement to which it is or will be a party; (b) The execution, delivery and performance of each Operative Agreement to which it is or will be a party have been duly authorized by all necessary action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (i) requires or will require any approval of the stockholders of, or approval or consent of any trustee or holder of any indebtedness or obligations of, such Holder which have not been obtained and in full force and effect, (ii) violates or will violate any Legal Requirement applicable to or binding on it (except no representation or warranty is made as to any Legal Requirement to which it may be subject solely as a result of the activities of the Lessee) as of the date hereof, (iii) violates or will violate or result in any breach of or constitute any default under, or result in the creation of any Lien upon any Property or any of the Improvements (other than Liens created by the Operative Agreements) under its certificate of incorporation or other equivalent charter documents, or any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which it is a party or by which it or its properties is bound or affected or (iv) requires or will require any Governmental Action by any Governmental Authority (other than arising solely by reason of the business, condition or activities of the Lessee or any Affiliate thereof or the construction or use of the Properties or the Improvements); (c) This Agreement and each other Operative Agreement to which it is or will be a party have been, or will be, duly executed and delivered by it and constitute, or upon execution and delivery will constitute, a legal, valid and binding obligation enforceable against it in accordance with the terms thereof, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity); 19

24 (d) There is no action or proceeding pending or, to its knowledge, threatened against it before any Governmental Authority that questions the validity or enforceability of any Operative Agreement to which it is or will become a party or that, if adversely determined, would materially and adversely affect its ability to perform its obligations under the Operative Agreements to which it is a party; (e) It has not assigned or transferred any of its right, title or interest in or under the Lease except in accordance with the Operative Agreements; (f) No Default or Event of Default under the Operative Agreements attributable to it has occurred and is continuing; (g) It is not a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or a "public utility" within the meaning of the Federal Power Act, as amended. It is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act or an "investment adviser" within the meaning of the Investment Advisers Act of 1940, as amended; and (h) It is acquiring its interest in the Trust Estate for its own account for investment and not with a view to any distribution (as such term is used in Section 2(11) of the Securities Act) thereof, and if in the future it should decide to dispose of its interest in the Trust Estate, it understands that it may do so only in compliance with the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder and any applicable state securities laws. Neither it nor anyone authorized to act on its behalf has taken or will take any action which would subject, as a direct result of such action alone, the issuance or sale of any interest in any Property, the Trust Estate or the Lease to the registration requirements of Section 5 of the Securities Act. No representation or warranty contained in this Section 7.1(i) shall include or cover any action or inaction of the Lessee or any Affiliate thereof whether or not purportedly on behalf of the Holders, the Owner Trustee or any of their Affiliates. 7.2. Representations and Warranties of the Owner Trustee. Effective as of the Initial Closing Date, Trust Company in its individual capacity and as the Owner Trustee, as indicated, represents and warrants to each of the other parties hereto as follows, provided, that the representations in paragraphs (h), 20

25 (i), (j) and (k) below are made solely in its capacity as the Owner Trustee: (a) It is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America and has the power and authority to enter into and perform its obligations under the Trust Agreement and (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) has the corporate and trust power and authority to act as the Owner Trustee and to enter into and perform the obligations under each of the other Operative Agreements to which Trust Company or the Owner Trustee, as the case may be, is or will be a party and each other agreement, instrument and document to be executed and delivered by it on or before each Closing Date in connection with or as contemplated by each such Operative Agreement to which Trust Company or the Owner Trustee, as the case may be, is or will be a party; (b) The execution, delivery and performance of each Operative Agreement to which it is or will be a party, either in its individual capacity or (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) as the Owner Trustee, as the case may be, has been duly authorized by all necessary action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (i) requires or will require any approval of its stockholders, or any approval or consent of any trustee or holders of any of its indebtedness or obligations, (ii) violates or will violate any current law, governmental rule or regulation relating to its banking or trust powers, (iii) violates or will violate or result in any breach of or constitute any default under, or result in the creation of any Lien upon any of its property under, (A) its charter or by-laws, or (B) any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which it is a party or by which it or its properties may be bound or affected, which violation, breach, default or Lien under clause (B) would materially and adversely affect its ability, in its individual capacity or as Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or (iv) requires or will require any Governmental Action by any Governmental Authority regulating its banking or trust powers; (c) The Trust Agreement and, assuming the Trust Agreement is the legal, valid and binding obligation of the Holders, each other Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is or will 21

26 be a party have been, or will be, duly executed and delivered by Trust Company or the Owner Trustee, as the case may be, and the Trust Agreement and each such other Operative Agreement to which Trust Company or the Owner Trustee, as the case may be, is a party constitutes, or upon execution and delivery will constitute, a legal, valid and binding obligation enforceable against Trust Company or the Owner Trustee, as the case may be, in accordance with the terms thereof; (d) There is no action or proceeding pending or, to its knowledge, threatened to which it is or will be a party, either in its individual capacity or as the Owner Trustee, before any Governmental Authority that, if adversely determined, would materially and adversely affect its ability, in its individual capacity or as Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or would question the validity or enforceability of any of the Operative Agreements to which it is or will become a party; (e) It has not assigned or transferred any of its right, title or interest in or under the Lease or the Agency Agreement except in accordance with the Operative Agreements; (f) No Default or Event of Default under the Operative Agreements attributable to it has occurred and is continuing; (g) Neither the Owner Trustee nor any Person authorized by the Owner Trustee to act on its behalf has offered or sold any interest in the Trust Estate or the Notes, or in any similar security relating to a Property, or in any security the offering of which for the purposes of the Securities Act would be deemed to be part of the same offering as the offering of the aforementioned securities to, or solicited any offer to acquire any of the same from, any Person other than, in the case of the Notes, the Lenders, and neither the Owner Trustee nor any Person authorized by the Owner Trustee to act on its behalf will take any action which would subject, as a direct result of such action alone, the issuance or sale of any interest in the Trust Estate or the Notes to the provisions of Section 5 of the Securities Act, or require the qualification of any Operative Agreement under the Trust Indenture Act of 1939, as amended; (h) The Owner Trustee's chief place of business, chief executive office and office where the documents, accounts and records relating to the transactions contemplated by this Agreement and each other Operative Agreement are kept 22

27 are located at 79 South Main Street, Salt Lake City, Utah 84111; (i) The Owner Trustee is not engaged principally in, and does not have as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States), and no part of the proceeds of the Loans or the Holder Fundings will be used by it to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulations G, T, U, or X of the Federal Reserve Board; and (j) The Owner Trustee is not a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or a "public utility" within the meaning of the Federal Power Act, as amended. The Owner Trustee is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act or an "investment adviser" within the meaning of the Investment Advisers Act of 1940, as amended. 7.3. Representations and Warranties of the Construction Agent and the Lessee. Effective as of the Initial Closing Date, the Construction Agent and the Lessee represent and warrant to each of the other parties hereto that: (a) Each of the Construction Agent and the Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida; each of their Subsidiaries is duly organized and validly existing under the laws of the jurisdiction of its organization; and each of the Construction Agent and the Lessee and each of their Subsidiaries is duly qualified to do business in each other jurisdiction where the nature of its business makes such qualification necessary, except where such failure to so qualify would not have a Material Adverse Effect. Each of the Construction Agent and the Lessee has the power and authority to carry on its business as now conducted and to enter into and perform its obligations under each Operative Agreement to which it is or will be a party and each other agreement, instrument and document to be executed and delivered by it on or before each Closing Date in connection with or as contemplated by each such Operative Agreement to which it is or will be a party; 23

28 (b) The execution, delivery and performance by each of the Construction Agent and the Lessee of this Agreement and the other Operative Agreements to which each is or will be a party have been duly authorized by all necessary corporate action on the part of each of the Construction Agent and the Lessee (including any necessary shareholder action), have received all necessary governmental approval, and do not and will not (i) violate any Legal Requirement, decree, judgment or award which is applicable to or binding on the Construction Agent or the Lessee or any of their Subsidiaries, (ii) violate or conflict with, or result in a breach of, any provision of the Certificate of Incorporation, By-Laws or other organizational documents of either the Construction Agent or the Lessee or any of their Subsidiaries, or any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan, credit agreement or other agreement, instrument or document to which either the Construction Agent or the Lessee or any of their Subsidiaries is a party or which is binding on either the Construction Agent or the Lessee or any of their Subsidiaries or any of their respective properties, or (iii) result in, or require, the creation or imposition of any Lien (other than pursuant to the terms of the Operative Agreements) on any asset of either of the Construction Agent or the Lessee or any of their Subsidiaries; (c) Each of this Agreement and each other Operative Agreement to which the Construction Agent or the Lessee is or will be a party has been, or will be, duly executed and delivered by it and constitutes, or upon execution and delivery will constitute, the legal, valid or binding obligation of the Construction Agent or the Lessee, as the case may be, enforceable against it in accordance with the terms thereof, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity). The Construction Agent and the Lessee have each executed the various Operative Agreements required to be executed as of the Initial Closing Date; (d) There are no actions, suits or proceedings (including, without limitation, any derivative action) pending or, to the knowledge of either the Construction Agent or the Lessee, threatened with respect to the Construction Agent or Lessee or any of their Subsidiaries which, if adversely decided, are reasonably likely to result, either individually or collectively, in a Material Adverse Effect. None of the Construction Agent, the Lessee nor any of their Subsidiaries has any material contingent liabilities not provided for or disclosed in the financial statements referred to in Section 7.3(f), which are required 24

29 in accordance with GAAP to be reported in such financial statements; (e) No Governmental Action by any Governmental Authority or authorization, registration, consent, approval, waiver, notice or other action by, to or of any other Person is required to authorize or is required in connection with (i) the execution, delivery or performance of any Operative Agreement or (ii) the legality, validity, binding effect or enforceability of any Operative Agreement, in each case, except those which have been obtained and are in full force and effect; (f) (i) The audited consolidated financial statements of each of the Construction Agent and the Lessee as at December 29, 1996, copies of which have been furnished to the Agent and the Owner Trustee, were prepared in accordance with GAAP and fairly present the financial condition of each of the Construction Agent and the Lessee and their Subsidiaries on a consolidated basis as of such date and their consolidated results of operations for the fiscal year then ended and (ii) the unaudited consolidated financial statements as at March 30, 1997, copies of which have been furnished to the Agent and the Owner Trustee, were prepared in accordance with GAAP (subject to normal year-end adjustments) and fairly present the financial condition of the Construction Agent and the Lessee and their Subsidiaries on a consolidated basis as of such date and their consolidated results of operations for the fiscal year then ended and such 13-week period, respectively; (g) Since the date of the audited financial statements described in Section 7.3(f), there has been no event or occurrence which has had or is reasonably likely to have a Material Adverse Effect; (h) Neither the Construction Agent nor the Lessee knows of any proposed material tax assessments against it. No extension of time for assessment or payment of any material federal, state or local tax by either the Construction Agent or the Lessee is in effect; (i) ERISA. (A) None of the employee benefit plans maintained at any time by the Construction Agent or the Lessee or the trusts created thereunder has engaged in a prohibited transaction which could subject any such employee benefit plan or trust to a material tax or penalty on prohibited transactions imposed under Code Section 4975 or ERISA; 25

30 (B) None of the employee benefit plans maintained at any time by the Construction Agent or the Lessee which are employee pension benefit plans and which are subject to Title IV of ERISA or the trusts created thereunder has been terminated nor has any such employee benefit plan of the Construction Agent or Lessee incurred any liability to the PBGC, other than for required insurance premiums which have been paid; neither the Construction Agent nor the Lessee has withdrawn from or caused a partial withdrawal to occur with respect to any Multi-employer Plan; the Construction Agent and the Lessee have made or provided for all contributions to all such employee pension benefit plans which they maintain and which are required as of the end of the most recent fiscal year under each such plan; neither the Construction Agent nor the Lessee has incurred any accumulated funding deficiency with respect to any such plan, whether or not waived; nor has there been any reportable event, or other event or condition, which presents a material risk of termination of any such employee benefit plan by the PBGC; (C) The present value of all vested accrued benefits under the employee pension benefit plans which are subject to Title IV of ERISA, maintained by the Construction Agent or the Lessee, did not, as of the most recent valuation date for each such plan, exceed the then current value of the assets of such employee benefit plans allocable to such benefits; (D) The consummation of the transactions contemplated by the Operative Agreements will not involve any prohibited transaction under ERISA; (E) To the best of the Construction Agent's and the Lessee's knowledge, each employee pension benefit plan subject to Title IV of ERISA, maintained by the Construction Agent or the Lessee, has been administered in accordance with its terms and is in compliance in all material respects with all applicable requirements of ERISA and other applicable laws, regulations and rules; (F) There has been no withdrawal liability incurred with respect to any Multi-employer Plan to which the Construction Agent or the Lessee is or was a contributor; (G) As used in this Agreement, the terms "employee benefit plan," "employee pension benefit plan," "accumulated funding deficiency," "reportable event," and "accrued benefits" shall have the 26

31 respective meanings assigned to them in ERISA, and the term "prohibited transaction" shall have the meaning assigned to it in Code Section 4975 and ERISA; (H) Neither the Construction Agent nor the Lessee has any liability, contingent or otherwise, under any plan or program or the equivalent for unfunded post-retirement benefits, including pension, medical and death benefits, which liability would have a Material Adverse Effect; (j) Upon the execution and delivery of each Lease Supplement to the Lease, (i) the Lessee will have unconditionally accepted the Property subject to the Lease Supplement and will have a valid and subsisting leasehold interest in the Property, subject only to the Permitted Exceptions, and (ii) no offset will exist with respect to any Rent or other sums payable under the Lease; (k) Neither the Construction Agent nor the Lessee has filed a voluntary petition in bankruptcy or been adjudicated bankrupt or insolvent, or filed any petition or answer seeking any reorganization, liquidation, receivership, dissolution or similar relief under any bankruptcy, receivership, insolvency, or other law relating to relief for debtors, or sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of all or any part of its properties or its interest in any Property. No court of competent jurisdiction has entered an order, judgment, or decree approving a petition filed against the Construction Agent or the Lessee seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any federal or state bankruptcy, receivership, insolvency or other law relating to relief for debtors, and no other liquidator has been appointed for the Construction Agent or the Lessee or all or any part of its properties or its interest in any Property, and no such action is pending. Neither the Construction Agent nor the Lessee has given notice to any Governmental Authority or any Person of insolvency or pending insolvency, or suspension or pending suspension of operations; (l) Each of the Construction Agent, the Lessee and their Subsidiaries owns marketable title to, or a subsisting leasehold interest in, all of its Properties free and clear of all Liens, except Permitted Liens; (m) Neither the Construction Agent, the Lessee nor any of their Subsidiaries is (a) an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act or an "investment adviser" within the meaning of the Investment Advisers Act 27

32 of 1940, as amended, or (b) a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", or a "public utility", within the meaning of the Public Utility Holding Company Act of 1935, as amended, or a "public utility" within the meaning of the Federal Power Act, as amended; (n) Neither the Construction Agent, the Lessee nor any of their Subsidiaries is engaged principally in, or has as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Federal Reserve Board), and no part of the proceeds of the Loans or the Holder Fundings will be used for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or maintaining or extending credit to others for such purpose, or for any purpose that violates, or is inconsistent with Regulations G, T, U, or X of the Federal Reserve Board; (o) Each of the Construction Agent, the Lessee and their Subsidiaries has filed all material tax returns and reports required by Law to have been filed by it and has paid all Taxes and governmental charges thereby shown to be owing, except any such Taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves shall in accordance with GAAP have been set aside on its books; (p) To the best of the knowledge of each of the Construction Agent and the Lessee, after inquiry it has deemed appropriate, each of the Construction Agent, the Lessee and their Subsidiaries is in material compliance with all Environmental Laws and Occupational Safety and Health Laws where failure to comply could have a Material Adverse Effect. None of the Construction Agent, the Lessee nor any of their Subsidiaries has received notice of any claims that any of them is not in compliance in all material respects with any Environmental Law where failure to comply could have a Material Adverse Effect; (q) Each of the Construction Agent, the Lessee and their Subsidiaries is in compliance with all statutes, judicial and administrative orders, permits and governmental rules and regulations which are material to its business or the non-compliance with which could result in Material Adverse Result; and (r) All information heretofore or contemporaneously herewith furnished by either the Construction Agent or the Lessee or any of their Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder for purposes of or in 28

33 connection with this Agreement and the transactions contemplated hereby is, and all information hereafter prepared and furnished by the Construction Agent, the Lessee or any of their Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and such information, taken as a whole, does not and will not omit to state any material fact necessary to make such information, taken as a whole, not misleading. 7.4. Representations and Warranties of the Agent. Effective as of the Initial Closing Date, the Agent represents and warrants to each of the other parties hereto that: (a) It is a national banking association duly organized and validly existing under the laws of the United States of America and has the full power and authority to enter into and perform its obligations under this Agreement and each other Operative Agreement to which it is or will be a party; (b) The execution, delivery and performance by the Agent of this Agreement and each other Operative Agreement to which it is or will be a party are not, and will not be, inconsistent with the articles of incorporation or by-laws or other charter documents of the Agent, do not and will not contravene any applicable Law of the State of Florida or of the United States of America governing its activities and will not contravene any provision of, or constitute a default under any indenture, mortgage, contract or other instrument to which it is a party or by which it or its properties are bound, or require any consent or approval of any Governmental Authority under any applicable law, rule or regulation of the State of Florida or any federal law, rule or regulation of the United States of America governing its activities; and (c) Each of this Agreement and each other Operative Agreement to which it is a party has been, or when executed and delivered will be, duly authorized by all necessary corporate action on the part of the Agent and has been, or on such Closing Date will be, duly executed and delivered by the Agent and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, will constitute a legal, valid and binding obligation enforceable against the Agent in accordance with the terms thereof. 29

34 SECTION 8. REPRESENTATIONS AND WARRANTIES ON FUNDING DATES. 8.1. Representations and Warranties on Property Closing Dates. The Construction Agent and the Lessee hereby represent and warrant as of each Property Closing Date as follows: (a) The representations and warranties of the Construction Agent and the Lessee set forth in the Operative Agreements are true and correct in all material respects on and as of such Property Closing Date as if made on and as of such date. The Construction Agent and the Lessee are in all material respects in compliance with their respective obligations under the Operative Agreements and there exists no Default or Event of Default under any of the Operative Agreements. No Default or Event of Default will occur under any of the Operative Agreements as a result of, or after giving effect to, the Funding requested by the Requisition on such Property Closing Date; (b) The Properties to be acquired are being acquired at a price that is not in excess of the price that would be obtained on an arm's-length basis between unrelated parties, and such Properties consist of (i) unimproved Land, or (ii) Land and existing Improvements thereon which Improvements are either suitable for occupancy at the time of acquisition or will be renovated or modified in accordance with the terms of this Agreement, or (iii) Equipment. Each of the Properties is located at the site set forth on the applicable Requisition, which is in one of the Approved States; (c) Upon the acquisition of each Property on such Property Closing Date, and at all times thereafter, the Lessor will have marketable title to such Property, subject only to Permitted Exceptions; (d) The execution and delivery of each Operative Agreement delivered by the Construction Agent or the Lessee on such Property Closing Date and the performance of the obligations of the Construction Agent and the Lessee under each Operative Agreement have been duly authorized by all requisite corporate action of the Construction Agent or the Lessee, as applicable; (e) Each Operative Agreement delivered on such Property Closing Date by the Construction Agent or the Lessee has been duly executed and delivered by the Construction Agent or the Lessee; (f) Each Operative Agreement delivered by the Construction Agent or the Lessee on such Property Closing Date is a legal, valid and binding obligation of the Construction Agent or the Lessee, as applicable, enforceable 30

35 against the Construction Agent or the Lessee, as applicable, in accordance with its respective terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity); (g) Upon filing of each of the UCC Financing Statements (with respect to the Property being acquired) in the filing offices designated by the Construction Agent or the Lessee, such UCC Financing Statements will have been filed with the appropriate Governmental Authorities in order to perfect a security interest in the Property described therein (to the extent perfection can be obtained by filing under the UCC); (h) Upon filing in the filing offices designated by the Construction Agent or the Lessee, the Lender Financing Statements, together with an assignment to the Agent of the filed Lessor Financing Statements, will perfect a valid first priority security interest in all Equipment and other collateral described therein in which a security interest or mortgage can be perfected by filing under the UCC, subject only to Permitted Exceptions, and upon filing, the Lessor Financing Statements will protect Lessor's interest under the Lease to the extent the Lease is a security agreement and mortgage; (i) No portion of any Property being acquired by the Lessor on such Property Closing Date is located in an area identified as a special flood hazard area by the Federal Emergency Management Agency or other applicable agency, or if any such Property is located in an area identified as a special flood hazard area by any such agency, then flood insurance has been obtained for such Property in accordance with Section 14.2(b) of the Lease and in accordance with the National Flood Insurance Act of 1968, as amended; (j) The Construction Agent has obtained insurance coverage for each Property being acquired by the Lessor on such Property Closing Date which meets the requirements of Article XIV of the Lease and all of such coverage is in full force and effect; (k) Each Property being acquired by the Lessor on such Property Closing Date complies with all Legal Requirements (including, without limitation, all zoning and land use laws and Environmental Laws), except to the extent that failure to comply therewith would not, individually or in the aggregate, have a Material Adverse Effect; and 31

36 (l) All utility services and facilities necessary for the construction of the Improvements existing on, or to be constructed after, such Property Closing Date (including, without limitation, gas, electrical, water and sewage services and facilities) are available at the boundaries of the real property upon which such Improvements exist or will be constructed on each such Property prior to the Completion Date for such Property. 8.2. Representations and Warranties Upon Initial Construction Fundings. The Construction Agent and the Lessee hereby represent and warrant as of each date on which an Initial Construction Funding is made as follows: (a) The representations and warranties of the Construction Agent and the Lessee set forth in the Operative Agreements are true and correct in all material respects on and as of the date of such Initial Construction Funding as if made on and as of such date. The Construction Agent and the Lessee are in all material respects in compliance with their respective obligations under the Operative Agreements and there does not exist any Event of Default or (except as permitted under Section 8.4 hereof) any Default under any of the Operative Agreements. No Default or Event of Default will occur under any of the Operative Agreements as a result of, or after giving effect to, the Funding requested by the Requisition on such date; (b) The Lessor has marketable title to each Property, subject only to Permitted Exceptions; (c) Upon filing in the filing offices designated by the Construction Agent or the Lessee, the Lender Financing Statements, together with an assignment of the filed Lessor Financing Statements, will perfect a valid first priority security interest in all the Properties and other collateral described therein in which a security interest can be perfected by filing under the UCC, subject only to Permitted Liens; (d) All consents, licenses, permits, authorizations, assignments and building permits required as of the date on which such Funding is made by all Legal Requirements or pursuant to the terms of any contract, indenture, instrument or agreement for construction, completion, occupancy, operation, leasing or subleasing of each Property with respect to which a Funding is being made have been obtained and are in full force and effect, except to the extent that the failure to so obtain would not, individually or in the aggregate, have a Material Adverse Effect; (e) The Construction Agent has obtained insurance coverage covering the Property which is the subject of such 32

37 Funding which coverage meets the requirements of Section 2.6 of the Agency Agreement before commencing construction, repairs or modifications, as the case may be, and such coverage is in full force and effect; (f) The Improvements which are the subject of the Funding, as improved in accordance with the Plans and Specifications, will comply as of the applicable Completion Date with all applicable Legal Requirements and Insurance Requirements (including, without limitation, all zoning and land use laws and Environmental Laws), except to the extent the failure to comply therewith would not, individually or in the aggregate, have a Material Adverse Effect. The Plans and Specifications have been or will be prepared in accordance with all applicable Legal Requirements (including, without limitation, all applicable Environmental Laws and building, planning, zoning and fire codes), except to the extent the failure to comply therewith would not, individually or in the aggregate, have a Material Adverse Effect, and upon completion of such Improvements in accordance with the Plans and Specifications, such Improvements will not encroach in any manner onto any adjoining land (except as permitted by express written easements) and such Improvements and the use thereof by the Lessee and its agents, assignees, employees, invitees, lessees, licensees and tenants will comply as of the applicable Completion Date in all respects with all applicable Legal Requirements (including, without limitation, all applicable Environmental Laws and building, planning, zoning and fire codes), except to the extent the failure to comply therewith would not, individually or in the aggregate, have a Material Adverse Effect. Upon completion of such Improvements in accordance with the Plans and Specifications, (i) there will be no material defects to such Improvements including, without limitation, the plumbing, heating, air conditioning and electrical systems thereof and (ii) all water, sewer, electric, gas, telephone and drainage facilities and all other utilities required to adequately service such Improvements for their intended use will be available pursuant to adequate permits (including any that may be required under applicable Environmental Laws), except to the extent that failure to obtain any such permit would not, individually or in the aggregate, have a Material Adverse Effect. There is no action, suit or proceeding (including any proceeding in condemnation or eminent domain or under any Environmental Law) pending or, to the best knowledge of the Lessee or the Construction Agent, threatened which adversely affects the title to, or the use, operation or value of, such Properties. No fire or other casualty with respect to such Properties has occurred which (y) has had a Material Adverse Effect or (2) is not fully covered by insurance. All utilities serving the related Properties, or proposed to serve the related 33

38 Properties in accordance with the Plans and Specifications, are located in (or will be located in) and vehicular access to such Improvements is provided by (or will be provided by), either public rights-of-way abutting the related Property or Appurtenant Rights. All licenses, approvals, authorizations, consents, permits (including, without limitation, building, demolition and environmental permits, licenses, approvals, authorizations and consents), easements and rights-of-way, including proof of dedication, required for (i) the use, treatment, storage, transport, disposal or disposition of any Hazardous Substance on, at, under or from the real property underlying such Improvements during the construction of such Improvements and the use and operation of such Improvements following such construction, (ii) the construction of such Improvements in accordance with the Plans and Specifications and the Agency Agreement and (iii) the use and operation of such Improvements following such construction with the applicable Equipment which such Improvements support for the purposes for which they were intended have either been obtained from the appropriate Governmental Authorities or from private parties, as the case may be, or will be obtained from the appropriate Governmental Authorities or from private parties, as the case may be, prior to commencing any such construction or use and operation, as applicable; and (g) All conditions precedent contained in this Agreement and in the other Operative Agreements relating to the Initial Construction Funding have been substantially satisfied. 8.3. Representations and Warranties Upon the Date of Each Construction Funding that is not an Initial Construction Funding. The Construction Agent and the Lessee hereby represent and warrant as of each date on which a Construction Funding is made, when such advance is not an Initial Construction Funding, as follows: (a) The representations and warranties of the Construction Agent and the Lessee set forth in the Operative Agreements (including the representations and warranties set forth in Section 8.2) are true and correct in all material respects on and as of the date of such Construction Funding as if made on and as of such date. The Construction Agent and the Lessee are in all material respects in compliance with their respective obligations under the Operative Agreements and there does not exist any Event of Default or (except as expressly permitted under Section 8.4 hereof) any Default under any of the Operative Agreements. No Default or Event of Default will occur under any of the Operative Agreements as a result of, or after giving effect to, the Funding requested by the Requisition on such date; 34

39 (b) Construction of the Improvements to date has been performed in a good and workmanlike manner, substantially in accordance with the Plans and Specifications and in compliance with all Insurance Requirements and Legal Requirements, except to the extent noncompliance with any Legal Requirements would not, individually or in the aggregate, have a Material Adverse Effect; (c) All consents, licenses, permits, authorizations, assignments and building permits required as of the date on which such Funding is made by all Legal Requirements or pursuant to the terms of any contract, indenture, instrument or agreement for construction, completion, occupancy, operation, leasing or subleasing of each Property have been obtained and are in full force and effect; (d) When completed, the Improvements shall be wholly within any building restriction lines (unless consented to by applicable Government Authorities), however established; and (e) The Funding is secured by the Lien of the Security Agreement, and there have been no Liens against the applicable Improvements other than Permitted Liens. 8.4. Certain Construction Fundings During Defaults. Notwithstanding any other provision of the Operative Agreements, unless an Event of Default has occurred and is continuing, the existence of a Default shall not prevent a Construction Funding with respect to an existing Property if (a) such Default does not relate to such Property and (b) the amount of such Funding, together with the amounts of any other Fundings (whether or not relating to such Property) made under the Operative Agreements during the period such Default has been continuing, do not exceed in the aggregate ten percent (10%) of the aggregate Commitments and Holder Commitments. The foregoing notwithstanding, no Acquisition Funding shall be made when any Default or Event of Default has occurred and is continuing. SECTION 9. PAYMENT OF CERTAIN EXPENSES. 9.1. Transaction Expenses. (a) Lessor agrees on the Initial Closing Date, to pay, or cause to be paid, all reasonable fees, expenses and disbursements of the various outside legal counsels for the Lessor and the Agent in connection with the transactions contemplated by the Operative Agreements and incurred in connection with the Initial Closing Date, including all Transaction Expenses (arising in connection with the Initial Closing Date), and all other reasonable fees, expenses and disbursements in connection with the Initial Closing Date, and including, without limitation, all fees, taxes and 35

40 expenses for the recording, registration and filing of documents; provided, however, that the Lessor shall pay such amounts described in this Section 9.1(a) only if (i) such amounts are properly described in a Requisition delivered on or before the Initial Closing Date, and (ii) funds are made available by the Lenders and the Holders in connection with such Requisition in an amount sufficient to allow such payment. On the Initial Closing Date, after delivery and receipt of the Requisition referenced in Section 4.2(a) hereof and satisfaction of the other conditions precedent for such date, the Holders shall make Holder Fundings and the Lenders shall make Loans to the Lessor to pay for the Transaction Expenses, fees, expenses and other disbursements referenced in this Section 9.1(a). The Lessee agrees to pay all amounts referred to in this Section 9.1(a) to the extent not paid by Lessor. (b) Lessor agrees on each Property Closing Date, on the date of any Construction Funding and on the Completion Date to pay, or cause to be paid, all reasonable fees, expenses and disbursements of the various outside legal counsels for the Lessor and the Agent in connection with the transactions contemplated by the Operative Agreements and billed in connection with such Property Closing Date, the date of such Funding, or such Completion Date, including all Transaction Expenses (arising with respect to the Initial Closing Date, such Property Closing Date, the date of such Funding or such Completion Date), all fees, expenses and disbursements incurred with respect to the various items referenced in Sections 5.3, 5.4, 5.5 or 5.6 (including without limitation the cost of any Appraisals or environmental site assessments, any developer's fees, any premiums for title insurance policies and charges for any updates to such policies) and all other reasonable fees, expenses and disbursements in connection with such Property Closing Date, the date of such Funding or such Completion Date including, without limitation, all expenses relating to and all fees (including brokers' fees), taxes (including any and all stamp, transfer or similar taxes) and expenses for the recording, registration and filing of documents; provided, however, the Lessor shall pay such amounts described in this Section 9.1(b) only if (i) such amounts are properly described in a Requisition delivered on the applicable date and (ii) funds are made available by the Lenders and the Holders in connection with such Requisition in an amount sufficient to allow such payment. On each Property Closing Date, on the date of any Construction Funding or any Completion Date, after delivery of the applicable Requisition in satisfaction of the other conditions precedent for such date, the Holders shall make a Holder Funding and the Lenders shall make Loans to the Lessor to pay for the Transaction Expenses, fees, expenses and other disbursements referenced in this Section 9.1(b). 36

41 The Lessee agrees to pay all amounts referred to in this Section 9.1(b) to the extent not paid by the Lessor. 9.2. Certain Fees and Expenses. Lessee agrees to pay or cause to be paid (i) the initial and annual Owner Trustee's fee and all reasonable expenses of the Owner Trustee and any necessary co-trustees (including reasonable outside counsel fees and expenses) or any successor owner trustee, for acting as owner trustee under the Trust Agreement, (ii) all reasonable costs and expenses (including reasonable counsel fees and expenses) incurred by the Construction Agent, the Lessee, the Agent, the Lenders, the Holders or the Lessor in entering into any future amendments or supplements requested by the Lessee with respect to any of the Operative Agreements, whether or not such amendments or supplements are ultimately entered into, or giving or withholding of waivers of consents hereto or thereto which have been requested by the Lessee, or any purchase of any Property by the Lessee pursuant to Article XX of the Lease, and (iii) all reasonable costs and expenses (including reasonable counsel fees and expenses) incurred by the Lessor, the Construction Agent, the Lessee, the Holders, the Lenders or the Agent in connection with the enforcement of any Operative Agreement or any exercise of remedies under any Operative Agreement. 9.3. Unused Fee and Holder Unused Fee. From the date hereof through the Expiration Date and thereafter so long as any Rent or other amounts remain outstanding under the Operative Agreements, the Lessee agrees to pay (a) to the Agent, for the pro rata benefit of the Lenders of each Category of Loans based on the Commitment Percentage of each such Lender during the period for which payment is made, the Unused Fee; and (b) to the Lessor, for the pro rata benefit of the Holders based on the Holder Commitment of each such Holder during the period for which payment is made, the Holder Unused Fee. Such payments of fees provided for in this Section 9.3 shall be due in arrears on each Unused Fee Payment Date. Notwithstanding the foregoing, so long as any Lender or Holder fails (in violation of the Operative Agreements) to make available any portion of its Commitment or Holder Commitment when requested, such Person shall not be entitled to receive payment of its pro rata share of its Unused Fee or Holder Unused Fee (as the case may be) until such Person shall make available such portion. Each such fee shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. If all or a portion of any Unused Fee or Holder Unused Fee shall not be paid when due, such overdue amount shall bear interest, payable by the Lessee on demand, at a rate per annum equal to the Base Rate plus 2%, from the date of such non-payment until such amount is paid in full (as well after as before judgment). SECTION 10. OTHER COVENANTS AND AGREEMENTS. 10.1. Cooperation with the Construction Agent or the Lessee. The Holders, the Owner Trustee (at the direction of the Holders) and the Agent shall, to the extent reasonably requested 37

42 by the Construction Agent or Lessee (but without assuming additional liabilities on account thereof), at the Construction Agent's or the Lessee's expense, cooperate with the Construction Agent or the Lessee in connection with its covenants contained herein including, without limitation, at any time and from time to time, upon the request of the Construction Agent or the Lessee, promptly and duly executing and delivering any and all such further instruments, documents and financing statements (and continuation statements related thereto) as the Construction Agent or the Lessee may reasonably request in order to perform such covenants. 10.2. Covenants of the Owner Trustee and the Holders. Each of the Owner Trustee and the Holders hereby agree that so long as this Agreement is in effect: (a) None of the Holders and the Owner Trustee (both in its trust capacity and in its individual capacity) will create or permit to exist at any time, and each of the Holders and the Owner Trustee will, at its own cost and expense, promptly take such action (and notify Lessee of such action) as may be necessary duly to discharge, or to cause to be discharged, all Lessor Liens attributable to it on the Properties; provided, however, that the Holders and the Owner Trustee shall not be required to discharge any such Lessor Lien while the same is being contested in good faith by appropriate proceedings diligently prosecuted so long as (a) such proceedings shall not involve any material danger of impairment of the Liens of the Security Documents or of the sale, forfeiture or loss of, any Property or title thereto or any interest therein or the payment of Rent, and (b) such proceedings shall not materially interfere with the disposition of any Property or title thereto or interest therein or the payment of Rent; (b) Without prejudice to any right of the Owner Trustee under the Trust Agreement to resign (subject to requirement set forth in the Trust Agreement that such resignation shall not be effective until a successor shall have agreed to accept such appointment), or the Holders' rights under the Trust Agreement to remove the institution acting as Owner Trustee (after consent to such removal by the Agent as provided in the Trust Agreement), each of the Holders and the Owner Trustee hereby agrees with the Lessee and the Agent (i) not to terminate or revoke the trust created by the Trust Agreement except as permitted by Article VIII of the Trust Agreement, (ii) not to amend, supplement, terminate or revoke or otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the rights of the Lessee or the Agent without the prior written consent of such party and (iii) to comply with all of the terms of the Trust Agreement, the nonperformance of which would adversely affect any such party; 38

43 (c) The Owner Trustee or any successor may resign or be removed by the Holders as Owner Trustee, a successor Owner Trustee may be appointed and a corporation may become the Owner Trustee under the Trust Agreement, only in accordance with the provisions of Article IX of the Trust Agreement and, with respect to such appointment, with the consent of the Lessee, which consent shall not be unreasonably withheld, conditioned or delayed; (d) The Owner Trustee, in its capacity as Owner Trustee under the Trust Agreement, and not in its individual capacity, shall not contract for, create, incur or assume any indebtedness (other than the indebtedness under the Bridge Debt), or enter into any business or other activity, other than pursuant to or under the Operative Agreements, except that the Owner Trustee may own the Ancillary Properties; (e) The Holders will not instruct the Owner Trustee to take any action in violation of the terms of any Operative Agreement; (f) Neither any Holder nor the Owner Trustee shall (i) commence any case, proceeding or other action with respect to the Owner Trustee under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, arrangement, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian or other similar official with respect to the Owner Trustee or for all or any substantial benefit of the creditors of the Owner Trustee; and neither any Holder nor the Owner Trustee shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in this paragraph; (g) The Owner Trustee shall give prompt notice to the Lessee and the Agent if the Owner Trustee's chief place of business or chief executive office, or the office where the records concerning the accounts or contract rights relating to a Property are kept, shall cease to be located at 79 South Main Street, Salt Lake City, Utah 84111, or if it shall change its name; (h) Provided that no Lease Event of Default has occurred and is continuing, neither the Owner Trustee nor any Holder shall, without the prior written consent of the Lessee, consent to or permit any amendment, supplement or other modification of the terms and provisions of the Credit Agreement or the Notes or (to the extent such amendment, supplement or modification would have an adverse effect on the rights or obligations of the Lessee under the Lease) any other Operative Agreement; 39

44 (i) Neither the Owner Trustee nor any Holder shall consent to or permit any amendment, supplement or other modification of the terms and provisions of any Operative Agreement, in each case without the prior written consent of the Agent except as described in Section 10.5 of this Agreement; (j) The Owner Trustee (i) shall take such actions and shall refrain from taking such actions with respect to the Operative Agreements or the Properties and shall grant such approvals and otherwise act or refrain from acting with respect to the Operative Agreements or the Properties in each case as directed in writing by the Agent or, in connection with Section 10.5 hereof, the Lessee, notwithstanding any contrary instruction or absence of instruction by any Holder or Holders; and (ii) shall not take any action, grant any approvals or otherwise act under or with respect to the Operative Agreements or any matters relating to the Properties without first obtaining the prior written consent of the Agent (and without regard to any contrary instruction or absence of instruction by any Holder); provided, however, that notwithstanding the foregoing provisions of this subparagraph (j) the Owner Trustee, the Agent and the Holders each acknowledge, covenant and agree that, with respect to all matters under the Operative Agreements that require the consent or concurrence of all of the Lenders pursuant to the terms of Section 9.1 of the Credit Agreement (the "Unanimous Vote Matters"), neither the Owner Trustee nor the Agent shall act or refrain from acting with respect to any Unanimous Vote Matter until such party has received the approval of each Lender and each Holder with respect thereto; (k) Except as otherwise contemplated by the Operative Agreements, neither the Owner Trustee nor any Holder shall use the proceeds of any Loan or Holder Funding for any purpose other than the payment of Transaction Expenses and the fees, expenses and other disbursements referenced in Sections 9.1(a) and (b) of this Agreement, the purchase or lease of Properties, the acquisition of Equipment, the construction of Improvements and the payment of interest regarding the Loans and the payment of the Holder Yield regarding the Holder Fundings, in each case accrued under the Credit Agreement or Trust Agreement, as the case may be, during the period prior to the Term Commencement Date with respect to a particular Property; and (l) Upon request of the Lessee, the Lessor shall provide the Lessee with a copy of its fiduciary tax returns solely for the purpose of enabling the Lessee to perform its obligations hereunder. 40

45 10.3. Lessee Covenants, Consent and Acknowledgment; Construction Agent Covenants. (a) Lessee acknowledges and agrees that the Owner Trustee, pursuant to the terms and conditions of the Security Agreement and the Mortgage Instruments, shall create Liens respecting the various personal property, fixtures and real property described therein in favor of the Agent. Lessee hereby irrevocably consents to the creation, perfection and maintenance of such Liens. (b) Lessor hereby instructs Lessee, and Lessee hereby acknowledges and agrees, that until such time as the Loans are paid in full and the Liens evidenced by the Security Agreement and the Mortgage Instruments have been released, (i) any and all Rent and any and all other amounts of any kind or type under any of the Operative Agreements due and owing or payable to the Lessor or the Owner Trustee shall instead be paid directly to the Agent or as the Agent may direct from time to time and (ii) Lessee shall cause all notices, certificates, financial statements, communications and other information which is delivered, or is required to be delivered, to the Lessor, the Owner Trustee or any Holder also to be delivered at the same time to the Agent. (c) Lessee shall not consent to or permit any amendment, supplement or other modification of the terms or provisions of any Operative Agreement without, in each case, obtaining the prior written consent of the Agent and, to the extent required by the proviso at the end of Section 10.2(j) hereof, each of the Holders. (d) Except as otherwise contemplated by the Operative Agreements, the Construction Agent shall not use the proceeds of any Holder Funding or Loan for any purpose other than the payment of Transaction Expenses and the fees, expenses and other disbursements referenced in Section 9.1(a) and (b) of this Agreement, the purchase or lease of Properties, the acquisition of Equipment, the construction of Improvements, the payment of interest regarding the Loans and the payment of the Holder Yield regarding the Holder Fundings, in each case accrued under the Credit Agreement or Trust Agreement, as the case may be, during the period prior to the Term Commencement Date with respect to a particular Property. (e) The Construction Agent and the Lessee shall restrict the amount of Equipment located in or on each Property, so that at all times the Property Cost of the Equipment located in or on a given Property shall be less than or equal to 10% of the total Property Cost of such Property, provided, however, that this percentage limitation shall not apply to any such Equipment consisting of Fixtures or other goods incorporated into or customarily considered to be part of a building or structure erected on real 41

46 property (such as heating, ventilating, air-conditioning, electrical and mechanical equipment or systems, escalators, elevators, wall and floor coverings, plumbing, pumps, tanks, conduits, wiring, lighting, security systems, sprinklers and other fire prevention and extinguishing apparatus). This 10% limitation shall apply to removable Equipment that (i) is not incorporated into a building or structure or (ii) is customarily considered to be trade fixtures or operating equipment for the corrections business of the Lessee. (f) Neither the Lessee nor the Construction Agent shall create or permit to exist at any time (and each of the Lessee and the Construction Agent shall, at its own expense, take such action as may be necessary to duly discharge, or cause to be discharged) any Lien against any Property other than Permitted Liens. (g) The Lessee shall pay (or cause to be paid) to the Agent the administrative fee (described in the Fee Letter) when and as due from time to time. (h) The Lessee and the Construction Agent agree that at all times, with respect to any Property, the appraised value of such Property (as shown in the most recent Appraisal of such Property received by the Agent pursuant to Section 5.3 or otherwise) shall be not less than 85% of the aggregate Property Cost of such Property; and any Appraisal obtained to comply with this provision shall be at the Lessee's and Construction Agent's sole cost and expense. 10.4. Sharing of Certain Payments. The parties hereto acknowledge and agree that all payments due and owing by the Lessee to the Lessor under the Lease or any of the other Operative Agreements shall be made by the Lessee directly to the Agent as more particularly provided in Section 10.3 hereof. The Holders and the Agent, on behalf of the Lenders, acknowledge the terms of Section 8 of the Credit Agreement regarding the allocation of payments and other amounts made or received from time to time under the Operative Agreements and agree all such payments and amounts are to be allocated as provided in Section 8 of the Credit Agreement. In connection therewith the Holders hereby (a) appoint the Agent to act as collateral agent for the Holders in connection with the Lien granted by the Mortgage Instruments to secure the Holder Amount and (b) acknowledge and agree and direct that the rights and remedies of the beneficiaries of the Lien of the Mortgage Instruments shall be exercised by the Agent on behalf of the Lenders and the Holders as directed from time to time by the Lenders without notice to or consent from the Holders. 10.5. Grant of Easements, Voting at Meetings, etc. The Agent and the Holders hereby agree that, so long as no Event of Default shall have occurred and be continuing, and until such time as the Agent gives instructions to the contrary to the Owner Trustee, the Owner Trustee shall, from time to time at the 42

47 request of the Lessee, in connection with the transactions contemplated by the Agency Agreement, the Lease or the other Operative Agreements, (i) grant easements and other rights in the nature of easements with respect to any Property, (ii) release existing easements or other rights in the nature of easements which are for the benefit of any Property, (iii) execute and deliver to any Person any instrument appropriate to confirm or effect such grants or releases, and (iv) execute and deliver to any Person such other documents or materials in connection with the acquisition, development or operation of any Property, including, without limitation, reciprocal easement agreements, operating agreements, development agreements, plats, replats or subdivision documents; provided, that each of the agreements and documents referred to in this Section 10.5 shall be of the type normally executed by the Lessee in the ordinary course of the Lessee's business and shall be on commercially reasonable terms so as not to diminish the value of any Property in any material respect. SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT. 11.1. Construction Agent's and Lessee's Credit Agreement Rights. Notwithstanding anything to the contrary contained in the Credit Agreement, the Agent, the Construction Agent, the Lessee and the Owner Trustee hereby agree that, prior to the occurrence and continuation of any Lease Default or Lease Event of Default, the Construction Agent and the Lessee (as designated below) shall have the following rights: (a) the Construction Agent shall have the right and obligation (as more specifically provided in Section 5.7 hereof) to designate the portion of the Loans on which interest is due and payable for purposes of the definition of "Allocated Interest"; (b) the Construction Agent shall have the right to give the notice referred to in Section 2.3 of the Credit Agreement, to designate the account to which a borrowing under the Credit Agreement is to be credited pursuant to Section 2.3 of the Credit Agreement and to provide the Allocation Notice; (c) the Lessee shall have the right to terminate or reduce the Commitments pursuant to Section 2.5(a) of the Credit Agreement and to make an Extension Request pursuant to Section 2.5(c) of the Credit Agreement; (d) the Lessee shall have the right to exercise the conversion and continuation options pursuant to Section 2.7 of the Credit Agreement; (e) the Lessee shall have the right to approve any successor agent pursuant to Section 7.9 of the Credit Agreement; 43

48 (f) the Lessee shall have the right to consent to any assignment by a Lender to which the Lessor has the right to consent pursuant to Section 9.8 of the Credit Agreement; and (g) without limiting the foregoing clauses (a) through (f), and in addition thereto, the Lessee shall have the right to exercise any other right of the Owner Trustee under the Credit Agreement upon not less than five (5) Business Days' prior written notice from the Lessee to the Owner Trustee and the Agent. 11.2. Construction Agent's and Lessee's Trust Agreement Rights. Notwithstanding anything to the contrary contained in the Trust Agreement, the Construction Agent, the Lessee, the Owner Trustee and the Holders hereby agree that, prior to the occurrence and continuation of any Lease Default or Lease Event of Default, the Construction Agent and the Lessee (as designated below) shall have the following rights: (a) the Construction Agent shall have the right and the obligation (as more specifically provided in Section 5.7 hereof) to designate the portion of the Holder Fundings on which Holder Yield is due and payable for purposes of the definition of Allocated Return in this Agreement; (b) the Lessee shall have the right to exercise the conversion and continuation options pursuant to Section 3.8 of the Trust Agreement; (c) no removal of the Owner Trustee or appointment of a successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement shall be made without the prior written consent (not to be unreasonably withheld or delayed) of the Lessee; and (d) the Holders and the Owner Trustee shall not amend, supplement or otherwise modify any provision of the Trust Agreement in such a manner as to adversely affect the rights of the Lessee without the prior written consent (not to be unreasonably withheld or delayed) of the Lessee. SECTION 12. TRANSFER OF INTEREST. 12.1. Restrictions on Transfer. The Holders may, directly or indirectly, assign, convey or otherwise transfer any of their right, title or interest in or to the Trust Estate or the Trust Agreement with the prior written consent of the Agent, and (provided no Default or Event of Default has occurred and is continuing) the Lessee, and (only if such proposed assignee is not a Lender) the Majority Lenders (which consent in each case shall not be unreasonably withheld or delayed), provided that such consents shall not be required for an assignment to an affiliate of the assigning Lender. The Owner Trustee may, subject to the Lien of the applicable Security Documents, but only with the prior written consent of the Agent, the Holders 44

49 (which consent may be withheld by the Agent or the Holders in their sole discretion) and (provided no Default or Event of Default has occurred and is continuing) the Lessee, directly or indirectly, assign, convey, appoint an agent with respect to enforcement of, or otherwise transfer any of the Owner Trustee's right, title or interest in or to any Property, the Lease, the Trust Agreement, this Agreement (including, without limitation, any right to indemnification thereunder), or any other document relating to a Property or any interest in a Property as provided in the Trust Agreement and the Lease. The provisions of the immediately preceding sentence shall not apply to the obligations of the Owner Trustee to transfer Property to the Lessee or a third party purchaser pursuant to Article XXII of the Lease upon payment for such Property in accordance with each of the terms and conditions of the Lease. 12.2. Effect of Transfer. From and after any transfer effected in accordance with this Section 12, the transferor shall be released, to the extent of such transfer, from its liability hereunder and under the other documents to which it is a party in respect of obligations to be performed on or after the date of such transfer; provided, however, that any transferor Holder shall remain liable under Article XI of the Trust Agreement to the extent that the transferee Holder shall not have assumed the obligations of the transferor Holder thereunder. Upon any transfer by the Owner Trustee or a Holder as above provided, any such transferee shall assume the obligations of the Owner Trustee and Lessor or the obligations of a Holder, as the case may be, and shall be deemed an "Owner Trustee", "Lessor" or "Holder", as the case may be, for all purposes of such documents and each reference herein to the transferor shall thereafter be deemed a reference to such transferee for all purposes, except as provided in the preceding sentence. Notwithstanding any transfer of all or a portion of the transferor's interest as provided in this Section 12, the transferor shall be entitled to all benefits accrued and all rights vested prior to such transfer including, without limitation, rights to indemnification under any such document. SECTION 13. INDEMNIFICATION. 13.1. General Indemnity. Whether or not any of the transactions contemplated hereby shall be consummated, the Indemnity Provider hereby assumes liability for and agrees to defend, indemnify and hold harmless each Indemnified Person on an After Tax Basis from and against any Claims which may be imposed on, incurred by or asserted against an Indemnified Person by any other Person (but not to the extent such Claims arise from the gross negligence, willful misconduct or willful breach of such Indemnified Person) in any way relating to or arising, or alleged (by any Person asserting such a Claim against an Indemnified Person) to arise, out of the execution, delivery, performance or enforcement of this Agreement, the Lease, any other Operative Agreement or the Bridge Loan Documents or on or with respect to any Ancillary Property or Property or any part thereof, 45

50 including, without limitation, Claims in any way relating to or arising or alleged to arise out of (a) the financing, refinancing, purchase, acceptance, rejection, ownership, design, construction, refurbishment, development, delivery, acceptance, nondelivery, leasing, subleasing, possession, use, operation, repair, modification, transportation, condition, sale, return, repossession (whether by summary proceedings or otherwise), or any other disposition of an Ancillary Property, a Property, or any part thereof, including the acquisition, holding or disposition of any interest in any Ancillary Property, Property, lease or agreement comprising a portion of any thereof; (b) any latent or other defect in any property whether or not discoverable by an Indemnified Person or the Indemnity Provider; (c) any Environmental Claim, any violation of Environmental Laws, or any other loss of or damage to any property or the environment relating to any Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the Operative Agreements, or any transaction contemplated thereby, or the Bridge Loan Documents or any transaction contemplated thereby; (e) any breach by the Construction Agent or the Lessee of any of its representations or warranties under the Operative Agreements to which it is a party or failure by the Construction Agent or the Lessee to perform or observe any covenant or agreement to be performed by it under any of the Operative Agreements; (f) the transactions contemplated hereby or by any other Operative Agreement, in respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA; (g) any personal injury, death or property damage, including without limitation Claims based on strict or absolute liability in tort; (h) any easement, right, agreement or document referred to in Section 10.5 of this Agreement; or (i) any Lien on any Ancillary Property or any Property (other than Liens created by the Operative Agreements or Lessor Liens). If a written Claim is made against any Indemnified Person or if any proceeding shall be commenced against such Indemnified Person (including a written notice of such proceeding) for any Claim, such Indemnified Person shall promptly notify the Indemnity Provider in writing and shall not take action with respect to such Claim without the consent of the Indemnity Provider for thirty (30) days after the receipt of such notice by the Indemnity Provider; provided, however, that, in the case of any such Claim, if action shall be required by law or regulation to be taken prior to the end of such 30-day period, such Indemnified Person shall endeavor, in such notice to the Indemnity Provider, to inform the Indemnity Provider of such shorter period, and no action shall be taken with respect to such Claim without the consent of the Indemnity Provider before seven (7) days before the end of such shorter period; provided, further, that the failure of such Indemnified Person to give the notices referred to in this sentence shall not diminish the Indemnity Provider's obligation hereunder except to the extent such failure materially precludes the Indemnity Provider from contesting such Claim. 46

51 If, within thirty (30) days of receipt of such notice from the Indemnified Person (or such shorter period as the Indemnified Person has notified the Indemnity Provider is required by law or regulation for the Indemnified Person to respond to such Claim), the Indemnity Provider shall request in writing that such Indemnified Person respond to such Claim, the Indemnified Person shall, at the expense of the Indemnity Provider, in good faith conduct and control such action (including, without limitation by pursuit of appeals) (provided, however, that (A) if such Claim can be pursued by the Indemnity Provider on behalf of or in the name of such Indemnified Person, the Indemnified Person, at the Indemnity Provider's request, shall allow the Indemnity Provider to conduct and control the response to such Claim and (B) in the case of any Claim, the Indemnified Person may request the Indemnity Provider to conduct and control the response to such Claim (with counsel to be selected by the Indemnity Provider and consented to by such Indemnified Person, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that any Indemnified Person may retain separate counsel at the expense of the Indemnity Provider in the event of a conflict)) by, in the sole discretion of the Person conducting and controlling the response to such Claim, (1) resisting payment thereof, (2) not paying the same except under protest, if protest is necessary and proper, (3) if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, or (4) taking such other action as is reasonably requested by the Indemnity Provider from time to time. The party controlling the response to any Claim shall consult in good faith with the non-controlling party and shall keep the non-controlling party reasonably informed as to the conduct of the response to such Claim; provided, that all decisions ultimately shall be made in the discretion of the controlling party, except that the Indemnity Provider may not agree to any dismissal or settlement of, or other agreement in connection with, any claim without the prior written consent of such Indemnified Person, if such dismissal, settlement or agreement would require any admission or acknowledgment of any culpability or wrongdoing by such Indemnified Person or provide for any nonmonetary relief to be performed by such Indemnified Person. The parties agree that an Indemnified Person may at any time decline to take further action with respect to the response to such Claim and may settle such Claim if such Indemnified Person shall waive its rights to any indemnity from the Indemnity Provider that otherwise would be payable in respect of such Claim (and any future Claim, the pursuit of which is precluded by reason of such resolution of such Claim) and shall pay to the Indemnity Provider any amount previously paid or advanced by the Indemnity Provider pursuant to this Section 13.1 by way of indemnification or advance for the payment of any amount regarding such Claim other than expenses of the action relating to such Claim. 47

52 Notwithstanding the foregoing provisions of this Section 13.1, an Indemnified Person shall not be required to take any action and no Indemnity Provider shall be permitted to respond to any Claim in its own name or that of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to pay and shall pay to such Indemnified Person on demand and on an After Tax Basis all reasonable costs, losses and expenses that such Indemnified Person actually incurs in connection with such Claim, including, without limitation, all reasonable legal, accounting and investigatory fees and disbursements, (B) the Indemnified Person shall have reasonably determined that the action to be taken will not result in any material danger of sale, forfeiture or loss of any Property, or any part thereof or interest therein, will not interfere with the payment of Rent, and will not result in risk of criminal liability, (C) if such Claim shall involve the payment of any amount prior to the resolution of such Claim, the Indemnity Provider shall provide to the Indemnified Person an interest-free advance in an amount equal to the amount that the Indemnified Person is required to pay (with no additional net after-tax cost to such Indemnified Person), (D) in the case of a Claim that must be pursued in the name of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have provided to such Indemnified Person an opinion of independent counsel selected by the Indemnified Person and reasonably satisfactory to the Indemnity Provider stating that a reasonable basis exists to contest such Claim, (E) such claim is covered by insurance and (F) no Event of Default shall have occurred and be continuing. In addition, an Indemnified Person shall not be required to contest any Claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this Section 13.1, unless there shall have been a change in law (or interpretation thereof) and the Indemnified Person shall have received, at the Indemnity Provider's expense, an opinion of independent counsel selected by the Indemnified Person and reasonably acceptable to the Indemnity Provider stating that as a result of such change in law (or interpretation thereof), it is more likely than not that the Indemnified Person will prevail in such contest. 13.2. General Tax Indemnity. (a) The Indemnity Provider shall pay and assume liability for, and does hereby agree to indemnify, protect and defend each Property and each Ancillary Property and all Indemnified Persons, and hold them harmless against, all Impositions on an After Tax Basis. (b) (i) Subject to the terms of Section 13.2(f), the Indemnity Provider shall pay or cause to be paid all Impositions directly to the taxing authorities where feasible and otherwise to the Indemnified Person, as appropriate, and the Indemnity Provider shall at its own expense, upon such Indemnified Person's reasonable 48

53 request, furnish to such Indemnified Person copies of official receipts or other satisfactory proof evidencing such payment. (ii) In the case of Impositions for which no contest is conducted pursuant to Section 13.2(f) and which the Indemnity Provider pays directly to the taxing authorities, the Indemnity Provider shall pay such Impositions prior to the latest time permitted by the relevant taxing authority for timely payment. In the case of Impositions for which the Indemnity Provider reimburses an Indemnified Person, the Indemnity Provider shall do so within thirty (30) days after receipt by the Indemnity Provider of demand by such Indemnified Person describing in reasonable detail the nature of the Imposition and the basis for the demand (including the computation of the amount payable). In the case of Impositions for which a contest is conducted pursuant to Section 13.2(f), the Indemnity Provider shall pay such Impositions or reimburse such Indemnified Person for such Impositions, to the extent not previously paid or reimbursed pursuant to subsection (a), prior to the latest time permitted by the relevant taxing authority for timely payment after conclusion of all contests under Section 13.2(f). (iii) Impositions imposed with respect to a Property for a billing period during which the Lease expires or terminates with respect to such Property (unless the Lessee has exercised the Purchase Option with respect to such Property or the Lessee has otherwise purchased such Property) shall be adjusted and prorated on a daily basis between the Indemnity Provider and the Lessor, whether or not such Imposition is imposed before or after such expiration or termination and each party shall pay its pro rata share thereof. (iv) At the Indemnity Provider's request, the amount of any indemnification payment by the Indemnity Provider pursuant to subsection (a) shall be verified and certified by an independent public accounting firm mutually acceptable to the Indemnity Provider and the Indemnified Person. The fees and expenses of such independent public accounting firm shall be paid by the Indemnity Provider unless such verification shall result in an adjustment in the Indemnity Provider's favor of 15% or more of the payment as computed by the Indemnified Person, in which case such fee shall be paid by the Indemnified Person. (v) The Indemnified Persons shall use good faith efforts to take lawful deductions in their respective tax returns so as to reduce the Impositions required to 49

54 be reimbursed by the Indemnity Provider hereunder; provided, however, that the failure of any Indemnified Person to take any deduction shall not impair in any way such Person's right to indemnification from the Indemnity Provider for any Impositions. (c) (i)The Indemnity Provider shall be responsible for preparing and filing any real and personal property or ad valorem tax returns with respect to each Property or Ancillary Property. In case any other report or tax return shall be required to be made with respect to any obligations of the Indemnity Provider under or arising out of subsection (a) and of which the Indemnity Provider has knowledge or should have knowledge, the Indemnity Provider, at its sole cost and expense, shall notify the relevant Indemnified Person of such requirement and (except if such Indemnified Person notifies the Indemnity Provider that such Indemnified Person intends to file such report or return) (A) to the extent required or permitted by and consistent with Legal Requirements, make and file in Indemnity Provider's name such return, statement or report; and (B) in the case of any other such return, statement or report required to be made in the name of such Indemnified Person, advise such Indemnified Person of such fact and prepare such return, statement or report for filing by such Indemnified Person or, where such return, statement or report shall be required to reflect items in addition to any obligations of the Indemnity Provider under or arising out of subsection (a), provide such Indemnified Person at the Indemnity Provider's expense with information sufficient to permit such return, statement or report to be properly made with respect to any obligations of the Indemnity Provider under or arising out of subsection (a). Such Indemnified Person shall, upon the Indemnity Provider's request and at the Indemnity Provider's expense, provide any data maintained by such Indemnified Person (and not otherwise available to or within the control of the Indemnity Provider) with respect to any Property which the Indemnity Provider may reasonably require to prepare any required tax returns or reports. (d) If as a result of the payment or reimbursement by the Indemnity Provider of any Imposition or other reasonable expenses of the Lessor or the payment of any Transaction Expenses incurred in connection with the transactions contemplated by the Operative Agreements, the Lessor, the Holders or partners of any Holder shall suffer a net increase in any federal, state or local income tax liability, the Indemnity Provider shall indemnify such Persons (without duplication of any indemnification required by subsection (a)) on an After Tax Basis for the amount of such increase. The calculation of any such net increase shall take into account any current or future tax savings (including tax deductions, net operating loss carry-forward or tax credits) realized or reasonably expected to be realized by such Person in respect thereof, as well as any 50

55 interest, penalties and additions to tax payable by such Lessor, or such Holder, or such Affiliate, in respect thereof. (e) As between the Indemnity Provider on one hand, and the Lessor or the Agent, any Lender or any Holder on the other hand, the Indemnity Provider shall be responsible for, and the Indemnity Provider shall indemnify and hold harmless the Lessor, the Agent, the Lenders and each Holder (without duplication of any indemnification required by subsection (a)) on an After Tax Basis against, any obligation for United States or foreign withholding taxes imposed in respect of payments on the Notes or Certificates or with respect to Rent payments under the Lease (and, if the Lessor, the Agent, any Lender or any Holder receives a demand for such payment from any taxing authority, the Indemnity Provider shall discharge such demand on behalf of the Lessor, the Agent, such Lender or such Holder); provided, however, that the right of any Lender to make a claim for indemnification under this Section 13.2(e) is subject to the compliance by such Lender with the requirements of Section 2.13 of the Credit Agreement. (f) (i) If a written Claim is made against any Indemnified Person, or if any proceeding shall be commenced against such Indemnified Person (including a written notice of such proceeding), for any Impositions, such Indemnified Person shall promptly notify the Indemnity Provider in writing and shall not take action with respect to such Claim or proceeding without the consent of the Indemnity Provider for thirty (30) days after the receipt of such notice by the Indemnity Provider; provided, however, that, in the case of any such Claim or proceeding, if action shall be required by law or regulation to be taken prior to the end of such 30- day period, such Indemnified Person shall, in such notice to the Indemnity Provider, inform the Indemnity Provider of such shorter period, and no action shall be taken with respect to such Claim or proceeding without the consent of the Indemnity Provider before seven (7) days before the end of such shorter period; provided, further, that the failure of such Indemnified Person to give the notices referred to this sentence shall not diminish the Indemnity Provider's obligation hereunder except to the extent such failure materially precludes the Indemnity Provider from contesting such Claim. (ii) If, within thirty (30) days of receipt of such notice from the Indemnified Person (or such shorter period as the Indemnified Person has notified the Indemnity Provider is required by law or regulation for the Indemnified Person to commence such contest), the Indemnity Provider shall request in writing that such Indemnified Person contest such Imposition, the 51

56 Indemnified Person shall, at the expense of the Indemnity Provider, in good faith conduct and control such contest (including, without limitation, by pursuit of appeals) relating to the validity, applicability or amount of such Imposition (provided, however, that (A) if such contest can be pursued independently from any other proceeding involving a tax liability of such Indemnified Person, the Indemnified Person, at the Indemnity Provider's request, shall allow the Indemnity Provider to conduct and control such contest and (B) in the case of any contest, the Indemnified Person may request the Indemnity Provider to conduct and control such contest (with counsel to be selected by the Indemnity Provider and consented to by such Indemnified Person, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that any Indemnified Person may retain separate counsel at the expense of the Indemnity Provider in the event of a conflict)) by, in the sole discretion of the Person conducting and controlling such contest, (1) resisting payment thereof, (2) not paying the same except under protest, if protest is necessary and proper, (3) if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, or (4) taking such other action as is reasonably requested by the Indemnity Provider from time to time. (iii) The party controlling any contest shall consult in good faith with the non-controlling party and shall keep the non-controlling party reasonably informed as to the conduct of such contest; provided, that all decisions ultimately shall be made in the sole discretion of the controlling party, except that the Indemnity Provider may not agree to any dismissal or settlement of, or other agreement in connection with, any claim without the prior written consent of such Indemnified Person, if such dismissal, settlement or agreement would require any admission or acknowledgment of any culpability or wrongdoing by such Indemnified Person or provide for any nonmonetary relief to be performed by such Indemnified Person. The parties agree that an Indemnified Person may at any time decline to take further action with respect to the contest of any Imposition and may settle such contest if such Indemnified Person shall waive its rights to any indemnity from the Indemnity Provider that otherwise would be payable in respect of such Imposition (and any future Claim by any taxing authority, the contest of which is precluded by reason of such resolution of such contest) and shall pay to the Indemnity Provider any amount previously paid or advanced by the Indemnity Provider pursuant to this Section 13.2 by way of indemnification or advance for 52

57 the payment of any amount regarding such Imposition other than expenses of such contest. (iv) Notwithstanding the foregoing provisions of this Section 13.2, an Indemnified Person shall not be required to take any action and no Indemnity Provider shall be permitted to contest any Imposition in its own name or that of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to pay and shall pay to such Indemnified Person on demand and on an After Tax Basis all reasonable costs, losses and expenses that such Indemnified Person actually incurs in connection with contesting such Imposition, including, without limitation, all reasonable legal, accounting and investigatory fees and disbursements, (B) the Indemnified Person shall have reasonably determined that the action to be taken will not result in any material danger of sale, forfeiture or loss of any Property, or any part thereof or interest therein, will not interfere with the payment of Rent, and will not result in risk of criminal liability, (C) if such contest shall involve the payment of the Imposition prior to the contest, the Indemnity Provider shall provide to the Indemnified Person an interest-free advance in an amount equal to the Imposition that the Indemnified Person is required to pay (with no additional net after-tax cost to such Indemnified Person), (D) in the case of a Claim that must be pursued in the name of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have provided to such Indemnified Person an opinion of independent tax counsel selected by the Indemnified Person and reasonably satisfactory to the Indemnity Provider stating that a reasonable basis exists to contest such Claim, and (E) no Event of Default shall have occurred and be continuing. In addition, an Indemnified Person shall not be required to contest any claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this Section 13.2, unless there shall have been a change in law (or interpretation thereof) and the Indemnified Person shall have received, at the Indemnity Provider's expense, an opinion of independent tax counsel selected by the Indemnified Person and reasonably acceptable to the Indemnity Provider stating that as a result of such change in law (or interpretation thereof), it is more likely than not that the Indemnified Person will prevail in such contest. 13.3. Environmental Indemnity. Without the limiting the generality of the foregoing, whether or not the transactions contemplated hereby shall be consummated, the Indemnity Provider 53

58 hereby assumes liability for and agrees to defend, indemnify and hold harmless each Indemnified Person on an after Tax Basis from and against any Claims which may be imposed on, incurred by or asserted against an Indemnified Person by any other Person (but not to the extent such Claims arise from the gross negligence, willful misconduct or willful breach of such Indemnified Person) in any way relating to or arising, or alleged (by any Person asserting such a Claim against an Indemnified Person) to arise, out of any Environmental Claim, any violation of Environmental Laws, or any other loss of or damage to any Property or Ancillary Property or the environment, in each case relating to any Property, Ancillary Property, the Lease, the Agency Agreement or the Indemnity Provider. SECTION 14. MISCELLANEOUS. 14.1. Survival of Agreements. The representations, warranties, covenants, indemnities and agreements of the parties provided for in the Operative Agreements, and the parties' obligations under any and all thereof, shall survive the execution and delivery of this Agreement, the transfer of any Property to the Owner Trustee, the acquisition of any Equipment, the construction of any Improvements, any disposition of any interest of the Owner Trustee in any Property or any interest of the Holders in the Owner Trust, the payment of the Notes and any disposition thereof, and shall be and continue in effect notwithstanding any investigation made by any party and the fact that any party may waive compliance with any of the other terms, provisions or conditions of any of the Operative Agreements. Except as otherwise expressly set forth herein or in other Operative Agreements, the indemnities of the parties provided for in the Operative Agreements shall survive the expiration or termination of any thereof. 14.2. No Broker, etc. Each of the parties hereto represents to the others that it has not retained or employed any broker, finder or financial adviser to act on its behalf in connection with this Agreement, nor has it authorized any broker, finder or financial adviser retained or employed by any other Person so to act. Any party who is in breach of this representation shall indemnify and hold the other parties harmless from and against any liability arising out of such breach of this representation. 14.3. Notices. Unless otherwise specifically provided herein, all notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof to be given to any Person shall be given in writing by United States certified or registered mail (postage prepaid), by nationally recognized courier service, by hand or by telecopy with confirming notice and any such notice shall become effective upon receipt and shall be directed to the address of such Person as indicated: 54

59 If to the Construction Agent, to it at the following address: Wackenhut Corrections Corporation 4200 Wackenhut Drive, #100 Palm Beach Gardens, Florida 33410-4243 Attention: Mr. David Watson, Controller and Chief Accounting Officer Telephone No.: (800) 666-5640 Ext. 6646 Telecopy No.: (561) 691-6473 If to the Lessee, to it at the following address: Wackenhut Corrections Corporation 4200 Wackenhut Drive, #100 Palm Beach Gardens, Florida 33410-4243 Attention: Mr. David Watson, Controller and Chief Accounting Officer Telephone No.: (800) 666-5640 Ext. 6646 Telecopy No.: (561) 691-6473 If to the Owner Trustee, to it at the following address: First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Val T. Orton Telephone No.: (801) 246-5630 Telecopy No.: (801) 246-5053 If to NationsBank, National Association, as a Holder or a Lender, to it at the following address: NationsBank, National Association 100 Southeast 2nd Street FL7-950-14-02 Miami, Florida 33131 Attn: Maria Conroy Telephone No.: (305) 533-2428 Telecopy No.: (305) 533-2437 with all notices of requests for Holder Fundings, or conversion, continuation or prepayment of any Holder Funding, to be sent to: NationsBank Agency Services Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Jamie McCotter Telephone No.: (704) 388-2374 Telecopy No.: (704) 386-9923 55

60 If to the Agent, to it at the following address: NationsBank, National Association 100 Southeast 2nd Street FL7-950-14-02 Miami, Florida 33131 Attn: Maria Conroy Telephone No.: (305) 533-2428 Telecopy No.: (305) 533-2437 with all notices of borrowing, conversion, continuation or prepayment of any Loan to be delivered to the address set forth in Section 9.2 of the Credit Agreement. If to any other Lender or Holder, to it at the address specified in the signature pages to the Credit Agreement or Trust Agreement (as applicable), any applicable amendment thereto, or any applicable Assignment and Assumption. From time to time any party may designate a new address for purposes of notice hereunder by notice to each of the other parties hereto. 14.4. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 14.5. Amendments and Termination. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified except by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification shall be sought. This Agreement may be terminated by an agreement signed in writing by the Owner Trustee, the Holders, the Lessee and the Agent. 14.6. Headings, etc. The Table of Contents and headings of the various Articles and Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. 14.7. Parties in Interest. Except as expressly provided herein, none of the provisions of this Agreement are intended for the benefit of any Person except the parties hereto; provided, that the Lenders are intended to be third-party beneficiaries of this Agreement. 56

61 14.8. GOVERNING LAW; WAIVERS OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. (b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 14.9. Submission to Jurisdiction; Waivers. Each of the parties hereto irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Operative Agreements to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of Florida and the courts of the United States of America, in each case sitting in Broward County, Florida, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail) postage prepaid, to the respective party at its address set forth in Section 14.3 hereof or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 14.9 any special, exemplary, punitive or consequential damages. 14.10. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the 57

62 remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render such provision unenforceable in any other jurisdiction. 14.11. Liability Limited. (a) The Agent, the Lessee and the Holders each acknowledge and agree that the Owner Trustee is (except as otherwise expressly provided herein or therein) entering into this Agreement and the other Operative Agreements to which it is a party (other than the Trust Agreement and other than as set forth in Section 7.2 of this Agreement), solely in its capacity as trustee under the Trust Agreement and not in its individual capacity and that Trust Company shall not be liable or accountable under any circumstances whatsoever in its individual capacity for or on account of any statements, representations, warranties, covenants or obligations stated to be those of the Owner Trustee, except for its own gross negligence or willful misconduct and except as otherwise expressly provided herein or in the other Operative Agreements. (b) Anything to the contrary contained in this Agreement, the Credit Agreement, the Notes or in any other Operative Agreement notwithstanding, neither the Lessor nor any Holder (in its capacity as a Holder) nor any officer, director, shareholder, or partner thereof, nor any of the successors or assigns of the foregoing (all such Persons being hereinafter referred to collectively as the "Exculpated Persons"), shall be personally liable in any respect for any liability or obligation hereunder or under any other Operative Agreement including the payment of the principal of, or interest on, the Notes, or for monetary damages for the breach of performance of any of the covenants contained in the Credit Agreement, the Notes, this Agreement, the Security Agreement or any of the other Operative Agreements. The Agent (for itself and on behalf of the Lenders) agrees that, in the event the Agent or any Lender pursues any remedies available to them under the Credit Agreement, the Notes, this Agreement, the Security Agreement, the Mortgage Instruments or under any other Operative Agreement, neither the Lenders nor the Agent shall have any recourse against any Exculpated Person, for any deficiency, loss or Claim for monetary damages or otherwise resulting therefrom, and recourse shall be had solely and exclusively against the Trust Estate and the Lessee (with respect to the Lessee's obligations under the Lease, the Participation Agreement and the Agency Agreement); but nothing contained herein shall be taken to prevent recourse against or the enforcement of remedies against the Trust Estate in respect of any and all liabilities, obligations and undertakings contained herein, in the Credit Agreement, in the Notes, in the Security Agreement, the Mortgage 58

63 Instruments or in any other Operative Agreement. Notwithstanding the provisions of this Section, nothing in this Agreement, the Credit Agreement, the Notes, the Security Agreement, the Mortgage Instruments or any other Operative Agreement shall: (i) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or arising under this Agreement, the Security Agreement, the Mortgage Instruments or the Credit Agreement or secured by the Security Agreement, the Mortgage Instruments or any other Operative Agreement, but the same shall continue until paid or discharged; (ii) relieve the Lessor or any Exculpated Person from liability and responsibility for (but only to the extent of the damages arising by reason of): (a) active waste knowingly committed by such Lessor or such Exculpated Person with respect to the Properties or (b) any fraud, gross negligence, willful misconduct or willful breach on the part of such Lessor or such Exculpated Person; (iii) relieve such Lessor or such Exculpated Person from liability and responsibility for (but only to the extent of the moneys misappropriated, misapplied or not turned over) (a) misappropriation or misapplication by such Lessor (i.e., application in a manner contrary to any Operative Agreement) of any insurance proceeds or condemnation award paid or delivered to such Lessor by any Person other than the Agent, (b) any deposits or any escrows or amounts owed by the Lessee under the Agency Agreement held by such Lessor or (c) any rents or other income received by such Lessor from the Lessee that are not turned over to the Agent; or (iv) affect or in any way limit the Agent's rights and remedies under any Operative Agreement with respect to the Rents and its rights thereunder or its right to obtain a judgment against the Lessor's interest in the Properties. 14.12. Rights of Lessee. Notwithstanding any provision of the Operative Agreements, if at any time all obligations (i) of the Owner Trustee under the Credit Agreement, the Security Documents, the Trust Agreement and the other Operative Agreements and (ii) of the Lessee under the Operative Agreements have in each case been satisfied or discharged in full, then the Lessee shall be entitled to (a) terminate the Lease and (b) receive all amounts then held under the Operative Agreements and all proceeds with respect to any of the Properties. Upon the termination of the Lease pursuant to the foregoing clause (a), the Lessor shall transfer to the Lessee all of its right, title and interest free and clear of the Lien of the Lease and all Lessor Liens in and to any Properties then subject to the Lease and any amounts or proceeds referred to in the foregoing clause (b) shall be paid over to the Lessee. 14.13. Further Assurances. The parties hereto shall promptly cause to be taken, executed, acknowledged or delivered, at the sole expense of the Lessee, all such further acts, 59

64 conveyances, documents and assurances as the other parties may from time to time reasonably request in order to carry out and effectuate the intent and purposes of this Participation Agreement, the other Operative Agreements and the transactions contemplated hereby and thereby (including, without limitation, the preparation, execution and filing of any and all Uniform Commercial Code financing statements and other filings or registrations which the parties hereto may from time to time request to be filed or effected). The Lessee, at its own expense and without need of any prior request from any other party, shall take such action as may be necessary (including any action specified in the preceding sentence), or (if Owner Trustee shall so request) as so requested, in order to maintain and protect all security interests provided for hereunder or under any other Operative Agreement. 14.14. Calculations under Operative Agreements. The parties hereto agree that all calculations and numerical determinations to be made under the Operative Agreements by the Owner Trustee shall be made by the Agent and that such calculations and determinations shall be conclusive and binding on the parties hereto in the absence of manifest error. 14.15. Confidentiality. Each of the Owner Trustee, the Holders, the Agent and the Lenders severally agrees to use reasonable efforts to keep confidential all non-public information pertaining to the Lessee or its Subsidiaries which is provided to it by the Lessee or its Subsidiaries, and shall not intentionally disclose such information to any Person except: (a) to the extent such information is public when received by such Person or becomes public thereafter due to the act or omission of any party other than such Person; (b) to the extent such information is independently obtained from a source other than the Lessee or any of its Subsidiaries and such information from such source is not, to such Person's knowledge, subject to an obligation of confidentiality or, if such information is subject to an obligation of confidentiality, that disclosure of such information is permitted; (c) to any Affiliate of any such Person or to counsel, auditors or accountants retained by any such Person or any such Affiliate, provided they agree to keep such information confidential as if such Person or Affiliate were party to this Agreement and to financial institution regulators, including examiners of any Lender, the Agent or the Owner Trustee, any Holder or any Affiliate in the course of examinations of such Persons; (d) in connection with any litigation or the enforcement or preservation of the rights of the Agent, the 60

65 Owner Trustee, the Lessor, any Lender or any Holder under the Operative Agreements; (e) to the extent required by any applicable statute, rule or regulation or court order (including, without limitation, by way of subpoena) or pursuant to the request of any regulatory or Governmental Authority having jurisdiction over any such Person; provided, however, that such Person shall endeavor (if not otherwise prohibited by Law) to notify the Lessee prior to any disclosure made pursuant to this clause (e), except that no such Person shall be subject to any liability whatsoever for any failure to so notify the Lessee; (f) the Agent, any Lender or any Holder may disclose such information to the Agent, any Lender or any Holder; or (g) to the extent disclosure to any other financial institution or other Person is appropriate in connection with any proposed or actual (i) assignment or grant of a participation by any of the Lenders of interests in the Credit Agreement or any Note to such other financial institution (who will in turn be required by the Agent to agree in writing to maintain confidentiality as if it were a Lender originally party to the Credit Agreement) or (ii) assignment by any Holder of interests in the Trust Agreement to another Person (who will in turn be required by the transferring Holder to agree in writing to maintain confidentiality as if it were a Holder originally party to this Participation Agreement). 14.16. Calculation of Rent, Interest, Holder Yield and Fees. Except as otherwise expressly set forth in the Operative Agreements, all calculation of Rent, interest, Holder Yield, Overdue Rate, Holder Overdue Rate, Facility Fees, or Holder Facility Fees payable hereunder shall be computed based on the actual number of days elapsed over a year of 360 days. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 61

66 IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. WACKENHUT CORRECTIONS CORPORATION, as Construction Agent By: ----------------------------------------- Name: George C. Zoley Title:Chief Executive Officer WACKENHUT CORRECTIONS CORPORATION, as Lessee By: ----------------------------------------- Name: George C. Zoley Title:Chief Executive Officer FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 By: ----------------------------------------- Name: Val T. Orton Title:Vice President SIGNATURE PAGE 1

67 NATIONSBANK, NATIONAL ASSOCIATION, as Administrative Agent By: ----------------------------------------- Name: Maria Conroy Title:Senior Vice President NATIONSBANK, NATIONAL ASSOCIATION, as a Holder By: ----------------------------------------- Name: Maria Conroy Title:Senior Vice President NATIONSBANK, NATIONAL ASSOCIATION, as a Lender By: ----------------------------------------- Name: Maria Conroy Title:Senior Vice President SIGNATURE PAGE 2

68 SCOTIABANC INC., as a Holder By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SCOTIABANC INC., as a Lender By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SIGNATURE PAGE 3

69 BARNETT BANK, N.A., as a Holder By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- BARNETT BANK, N.A., as a Lender By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SIGNATURE PAGE 4

70 BANQUE PARIBAS, as a Lender By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SIGNATURE PAGE 5

71 THE SAKURA BANK, LIMITED ATLANTA AGENCY, as a Lender By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SIGNATURE PAGE 6

72 SUMMIT BANK, as a Lender By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- SIGNATURE PAGE 7

73 Schedule 1 Initial Holders Holder Name Commitment - ---- ---------- NationsBank, National $ 645,545.22 Association Barnett Bank, N.A. $ 545,454.48 ScotiaBanc, Inc. $ 1,200,000.00 Schedule-1

74 EXHIBIT A REQUISITION FORM (Pursuant to Sections 4.2 and 5.2 of the Participation Agreement) Wackenhut Corrections Corporation, a Florida corporation (the "Company") hereby certifies as true and correct and delivers the following Requisition to First Security Bank, National Association, not individually, except as expressly stated in the Participation Agreement (hereinafter defined), but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 ("Lessor"), the Holders (as defined in the Participation Agreement), and NationsBank, National Association, as Administrative Agent for the Lenders pursuant to the Credit Agreement (the "Agent"): Reference is made herein to that certain Participation Agreement dated as of June 19, 1997 (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement") among the Company, in its capacity as Construction Agent, the Company, as Lessee, the Lessor, the Holders party thereto, the Lenders party thereto, and the Agent. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth therefor in the Participation Agreement. Check one: ____ INITIAL CLOSING DATE: _______________ (one Business Day prior notice required for Base Rate Funding) (three Business Days prior notice required for Eurodollar Funding) ____ PROPERTY CLOSING DATE: _______________ (one Business Day prior notice required for Base Rate Funding) (three Business Days prior notice required for Eurodollar Funding) ____ CONSTRUCTION FUNDING DATE: _______________ (one Business Day prior notice required for Base Rate Funding) (three Business Days prior notice required for Eurodollar Funding) 1. Transaction Expenses and other fees, expenses and disbursements under Section 9.1(a) or (b) of the Participation Agreement and any and all other amounts contemplated to be financed under the Participation Agreement including without limitation any Work, broker's fees, taxes, recording fees and the like (with supporting invoices or closing statement attached): A-1

75 Party to Whom Amount is Owed Amount Owed (in U.S. Dollars) ------------- ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- ------------- ----------------- 2. Legal Description of Land: See attached Schedule 1 [Note: Include legal description only with initial requisition form for any particular piece of Land and any subsequent changes] 3. Description of Improvements: See attached Schedule 2 4. Description of Equipment: See attached Schedule 3 5. Description of Work: See attached Schedule 4 6. Total Property Cost requested to date with respect to this Property (excluding the amount requested herein): $________ 7. Total additional amount requested herein: $_____________ In connection with this Requisition, the Company hereby requests that the Lenders make Loans to the Lessor in the amount of $__________ ($__________ constituting Series A Loans and $__________ constituting Series B Loans) and that the Holder[s] make [a] Holder Fundings[s] to the Lessor in the amount of $__________. The Company hereby certifies (i) that the foregoing amounts requested do not exceed the total aggregate of the Available Commitments plus the Available Holder Commitment and (ii) each of the provisions of the Participation Agreement applicable to the Loans and Holder Fundings requested hereunder have been complied with as of the date of this Requisition. The Company hereby certifies that the Land, Improvements, Equipment and Work described herein are necessary and appropriate for its business operations. The Company has caused this Requisition to the executed by its duly authorized officer as of this _____ day of June, 1997. WACKENHUT CORRECTIONS CORPORATION By: -------------------------------- Name: George C. Zoley Title: Chief Executive Officer A-2

76 Schedule 1 Legal Description of Land To be included only with initial requisition form and to show any changes to legal description. A-3

77 Schedule 2 Description of Improvements A-4

78 Schedule 3 Description of Equipment ================================================================================ General Description Make Model Serial Number ------------------- ---- ----- ------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ A-5

79 Schedule 4 Work (a) Work Performed for which the Funding is requested: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ (b) Property to which such Work relates: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ A-6

80 EXHIBIT B WACKENHUT CORRECTIONS CORPORATION OFFICER'S CERTIFICATE (Pursuant to Section 5.6 of the Participation Agreement) WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company") DOES HEREBY CERTIFY as follows: 1. The address for the subject Property is _______________________________ ________________________________________________________. 2. The Completion Date for the construction of Improvements at the Property occurred on __________________. 3. The aggregate Property Cost for the Property was $________________. [If any of the Property consists of Tangible Personal Property, the portion of the Property Cost attributable to such Tangible Personal Property was $_____________.] 4. Attached hereto as Schedule 1 is the detailed, itemized documentation supporting the asserted expenditure amounts referenced above in Section 3 of this Officer's Certificate. 5. All Improvements have been made in accordance with all applicable Legal Requirements, in a good and workmanlike manner and otherwise in full compliance with the standards and practices of the Company with respect to Company-owned properties and improvements. 6. No consent or approval of any Person is required for any of the Improvements except for consents and approvals which have already been obtained. Capitalized terms used in this Officer's Certificate and not otherwise defined have the respective meanings ascribed thereto in the Participation Agreement dated as of June 19, 1997 among the Company, as Lessee and as Construction Agent, First Security Bank, National Association, as Owner Trustee under the Wackenhut Corrections Trust 1997-1, the Holders party thereto, the Lenders party thereto, and NationsBank, National Association, as the Administrative Agent for the Lenders (as such agreement may be amended, modified, supplemented or restated from time to time). B-1

81 IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly executed and delivered as of this ___ day of _______________, 199_. WACKENHUT CORRECTIONS CORPORATION By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- B-2

82 Schedule 1 [itemized expenditures] B-3

83 EXHIBIT C FORM OF OPINION OF COUNSEL TO WACKENHUT CORRECTIONS CORPORATION AND WCC RE HOLDINGS, INC. C-1

84 EXHIBIT D WACKENHUT CORRECTIONS CORPORATION OFFICER'S CERTIFICATE (Pursuant to Section 6.1(e) of the Participation Agreement) WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company"), DOES HEREBY CERTIFY as follows: 1. Each and every representation and warranty of the Company contained in the Operative Agreements to which it is a party is true and correct in all material respects on and as of the date hereof. 2. No Default or Event of Default has occurred and is continuing under any Operative Agreement. 3. Each Operative Agreement to which the Company is a party is in full force and effect with respect to it. 4. The Company has performed and complied with all covenants, agreements and conditions contained in the Participation Agreement (hereinafter defined) or in any Operative Agreement required to be performed or complied with by it on or prior to the date hereof. Capitalized terms used in this Officer's Certificate and not otherwise defined herein have the respective meanings ascribed thereto in the Participation Agreement dated as of June 19, 1997 among the Company, as Construction Agent and as Lessee, First Security Bank, National Association, as the Owner Trustee, the Holders party thereto, the Lenders party thereto, and NationsBank, National Association, as the Administrative Agent. IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly executed and delivered as of this 19th day of June, 1997. WACKENHUT CORRECTIONS CORPORATION By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- D-1

85 EXHIBIT E WACKENHUT CORRECTIONS CORPORATION SECRETARY'S CERTIFICATE (Pursuant to Section 6.1(f) of the Participation Agreement) WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company"), DOES HEREBY CERTIFY as follows: 1. Attached hereto as Exhibit A is a true, correct and complete copy of the Resolutions of the Board of Directors of the Company effective as of ______________, 1997. Such resolutions have not been amended, modified or rescinded since their date of adoption and remain in full force and effect as of the date hereof. 2. Attached hereto as Exhibit B is a true, correct and complete copy of the Certificate of Incorporation of the Company on file in the Office of the Secretary of State of Florida. Such Certificate of Incorporation, as amended, remains in full force and effect as of the date hereof. 3. Attached hereto as Exhibit C is a true, correct and complete copy of the Bylaws of the Company. Such Bylaws, as amended, remain in full force and effect as of the date hereof. 4. The persons named below now hold the offices set forth opposite their names, and the signatures opposite their names and title are their true and correct signatures. Name Office Signature ---- ------ --------- ------------------ ----------------------- -------------------- ------------------ ----------------------- -------------------- IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be duly executed and delivered as of this 19th day of June, 1997. WACKENHUT CORRECTIONS CORPORATION By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- E-1

86 EXHIBIT F FIRST SECURITY BANK, NATIONAL ASSOCIATION OFFICER'S CERTIFICATE (Pursuant to Section 6.2(d) of the Participation Agreement) FIRST SECURITY BANK, NATIONAL ASSOCIATION not individually (except with respect to paragraph (a) below, to the extent any such representations and warranties are made in its individual capacity) but solely as owner trustee under the Wackenhut Corrections Trust 1997-1 (the "Owner Trustee"), DOES HEREBY CERTIFY as follows: (a) Each and every representation and warranty of the Owner Trustee contained in the Operative Agreements to which it is a party is true and correct on and as of the date hereof. (b) Each Operative Agreement to which the Owner Trustee is a party is in full force and effect with respect to it. (c) The Owner Trustee has duly performed and complied with all covenants, agreements and conditions contained in the Participation Agreement (hereinafter defined) or in any Operative Agreement required to be performed or complied with by it on or prior to the date hereof. Capitalized terms used in this Officer's Certificate and not otherwise defined herein have the respective meanings ascribed thereto in the Participation Agreement dated as of June 19, 1997 among Wackenhut Corrections Corporation, as Construction Agent and as Lessee, First Security Bank, National Association, as Owner Trustee, the Holders party thereto, the Lenders party thereto, and NationsBank, National Association, as the Administrative Agent. IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to be duly executed and delivered as of this 19th day of June, 1997. FIRST SECURITY BANK, NATIONAL ASSOCIATION not individually, except as expressly stated herein, but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- F-1

87 EXHIBIT G FIRST SECURITY BANK, NATIONAL ASSOCIATION CERTIFICATE OF ASSISTANT SECRETARY (Pursuant to Section 6.2(e) of the Participation Agreement) I, _____________________________, Senior Vice President and a duly elected and qualified Assistant Secretary of the Board of Directors of First Security Bank, National Association (the "Association"), hereby certify as follows: 1. The Association is a National Banking Association duly organized, validly existing and in good standing under the laws of the United States. With respect thereto the following is noted: A. Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., the Comptroller of the Currency charters and exercises regulatory and supervisory authority over all National Banking Associations; B. On December 9, 1881, the First National Bank of Ogden, Utah was chartered as a National Banking Association under the laws of the United States and under Charter No. 2597; C. On October 2, 1922, in connection with a consolidation of The First National Bank of Ogden, Ogden, Utah, and The Utah National Bank of Ogden, Ogden, Utah, the title was changed to "The First & Utah National Bank of Ogden"; on January 18, 1923, The First & Utah National Bank of Ogden changed its title to "First Utah National Bank of Ogden"; on January 19, 1926, the title was changed to "First National Bank of Ogden"; on February 24, 1934, the title was changed to "First Security Bank of Utah, National Association"; and D. First Security Bank of Utah, National Association, Ogden, Utah, continues to hold a valid certificate to do business as a National Banking Association. 2. The Association's Articles of Association, as amended, are in full force and effect, and a true, correct and complete copy is attached hereto as Exhibit A and incorporated herein by reference. Said Articles were last amended October 20, 1975, as required by law on notice at a duly called special meeting of the shareholders of the Association. 3. The Association's By-Laws, as amended, are in full force and effect; and a true, correct and complete copy is G-1

88 attached hereto as Exhibit B and incorporated herein by reference. Said By-Laws, still in full force and effect, were adopted September 17, 1942, by resolution, after proper notice of consideration and adoption of By-Laws was given to each and every shareholder, at a regularly called meeting of the Board of Directors with a quorum present. 4. Pursuant to the authority vested in it by an Act of Congress approved December 23, 1913 and known as the Federal Reserve Act, as amended, the Federal Reserve Board (now the Board of Governors of the Federal Reserve System) has granted to the Association now known as "First Security Bank of Utah, National Association" of Ogden, Utah, the right to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any of the fiduciary capacity in which State banks, trust companies or other corporations which come into competition with National Banks are permitted to act under the laws of the State of Utah; and under the provisions of applicable law, the authority so granted remains in full force and effect. 5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a and 12 U.S.C. 481, as amended) the Comptroller of the Currency has issued Regulation 9, as amended, dealing, in part, with the Fiduciary Powers of National Banks, said regulation providing in sub-paragraph 9.7(a)(1-2): (1) The board of directors is responsible for the proper exercise of fiduciary powers by the Bank. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the Bank in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the Bank's fiduciary powers as it may consider proper to assign to such director(s), officer(s), employee(s) or committee(s) as it may designate. (2) No fiduciary account shall be accepted without the prior approval of the board, or of the director(s), officer(s), or committee(s) to whom the board may have designated the performance of that responsibility . . . . 6. A Resolution relating to Exercise of Fiduciary Powers was adopted by the Board of Directors at a meeting held July 26, 1994 at which time there was a quorum present; said G-2

89 resolution is still in full force and effect and has not been rescinded. Said resolution is attached hereto as Exhibit C and incorporated herein by reference. 7. A Resolution relating to the Designation of Officers and Employees to Exercise Fiduciary Powers was adopted by the Trust Policy Committee at a meeting held August 2, 1995 at which time a quorum was present; said resolution is still in full force and effect and has not been rescinded. Said resolution is attached hereto as Exhibit D and is incorporated herein by reference. 8. Attached hereto as Exhibit E and incorporated herein by reference, is a listing of facsimile signatures of persons authorized (herein "Authorized Signatory or Signatories") on behalf of the Association and its Trust Group to act in exercise of its fiduciary powers subject to the resolutions in Paragraphs 6 and 7, above. 9. The principal office of the First Security, National Association, Trust Group and of its departments, except for the St. George, Utah, Ogden, Utah, and Provo, Utah, branch offices, is located at 79 South Main Street, Salt Lake City, Utah 84111 and all records relating to fiduciary accounts are located at such principal office of the Trust Group or in storage facilities within Salt Lake County, Utah, except for those of the Ogden, Utah, St. George, Utah, and Provo, Utah, branch offices, which are located at said office. 10. Each Authorized Signatory (i) is a duly elected or appointed, duly qualified officer or employee of the Association; (ii) holds the office or job title set forth below his or her name on the date hereof; (iii) and the facsimile signature appearing opposite the name of each such officer or employee is a true replica of his or her signature. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Association this 19th day of June, 1997. (SEAL) ----------------------------------- Senior Vice President Assistant Secretary G-3

90 EXHIBIT H FORM OF OPINION OF COUNSEL TO FIRST SECURITY BANK, NATIONAL ASSOCIATION H-1

91 Appendix A Rules of Usage and Definitions I. Rules of Usage The following rules of usage shall apply to this Participation Agreement and the Operative Agreements (and each appendix, schedule, exhibit and annex to the foregoing) unless otherwise required by the context or unless otherwise defined therein: (a) Except as otherwise expressly provided, any definitions set forth herein or in any other document shall be equally applicable to the singular and plural forms of the terms defined. (b) Except as otherwise expressly provided, references in any document to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits are references to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in or to such document. (c) The headings, subheadings and table of contents used in any document are solely for convenience of reference and shall not constitute a part of any such document nor shall they affect the meaning, construction or effect of any provision thereof. (d) References to any Person shall include such Person, its successors and permitted assigns and transferees. (e) Except as otherwise expressly provided, reference to any agreement means such agreement as amended, modified, extended, supplemented, restated or replaced from time to time in accordance with the applicable provisions thereof. (f) Except as otherwise expressly provided, references to any law includes any amendment or modification to such law and any rules or regulations issued thereunder or any law enacted in substitution or replacement therefor. (g) When used in any document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof. Appendix A-1

92 (h) References to "including" means including without limiting the generality of any description preceding such term and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. (i) Unless the context indicates otherwise, the disjunctive "or" shall include the conjunctive "and." (j) Each of the parties to the Operative Agreements and their counsel have reviewed and revised, or requested revisions to, the Operative Agreements, and the usual rule of construction that any ambiguities are to be resolved against the drafting party shall be inapplicable in the construing and interpretation of the Operative Agreements and any amendments or exhibits thereto. II. Definitions "Acceleration" shall have the meaning given to such term in Section 6 of the Credit Agreement. "acquire" or "purchase" shall mean, with respect to any Property, unless the context indicates, the acquisition or purchase of such Property by the Owner Trustee from any Person. "Acquisition Funding" shall mean an advance of funds (consisting of Loans by the Lenders and Holder Fundings by the Holders) to the Lessor on a specified date to pay Property Acquisition Costs and other expenses pursuant to Section 5.3(b) of the Participation Agreement. "Acquisition Loan" shall mean any Loan made in connection with and as part of an Acquisition Funding. "Administrative Agent" or "Agent" shall mean, collectively, (a) NationsBank, together with its Affiliates, as the administrative agent for the Lenders under this Agreement and the other Operative Agreements and any successor Administrative Agent who may be appointed pursuant to Section 7.9 of the Credit Agreement, and (b) NationsBank, together with its affiliates, as agent and collateral agent for itself, the Lenders and the Holders under the Security Documents. "Affiliate" shall mean, with respect to any Person, any Person or group acting in concert in respect of the Person in question that, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purposes of this definition, "control (including, with correlative meanings, the terms "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies Appendix A-2

93 of a Person, whether through the ownership of voting securities or by contract or otherwise. "After Tax Basis" shall mean, with respect to any payment to be received, the amount of such payment increased so that, after deduction of the amount of all taxes required to be paid by the recipient calculated at the rate believed by such recipient to be the highest marginal rate then applicable to the recipient (less any tax savings realized as a result of the payment of the indemnified amount) with respect to the receipt by the recipient of such amounts, such increased payment (as so reduced) is equal to the payment otherwise required to be made. "Agency Agreement" shall mean the Agency Agreement, dated as of the Initial Closing Date, between the Construction Agent and the Lessor, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. "Agency Agreement Event of Default" shall mean an "Event of Default" as defined in Section 5.1 of the Agency Agreement. "Allocated Interest" with respect to any Construction Period Property shall mean as of any Scheduled Interest Payment Date, the amount of interest due and payable on such date with respect to a portion of the Loans (which portion shall be designated by the Borrower by written notice (an "Allocation Notice") to the Administrative Agent) having an aggregate principal amount equal to the Loan Property Cost of such Property as of such date. "Allocated Return" with respect to any Construction Period Property shall mean, as of any Scheduled Interest Payment Date, the amount of Holder Yield due and payable on such date with respect to a portion of the Holder Fundings (which portion shall be designated by the Owner Trustee by written notice to the Holders) having an aggregate stated amount equal to the Holder Property Cost of such Property as of such date. "Allocation Notice" shall have the meaning given to such term in the definition of "Allocated Interest." "Ancillary Property" shall mean the Louisiana Property or the Broward Property. "Applicable Margin" shall mean, for each Eurodollar Loan, that percent per annum set forth below, which shall be based upon the Consolidated Fixed Charge Coverage Ratio for the Four-Quarter Period most recently ended as specified below: Appendix A-3

94 - -------------------------------------------------------------------------------- Tier Consolidated Fixed Charge Coverage Ratio Applicable Margin - -------------------------------------------------------------------------------- I Equal to or greater than 4.00 to 1.00 0.525% - -------------------------------------------------------------------------------- Tier Consolidated Fixed Charge Coverage Ratio Applicable Margin - -------------------------------------------------------------------------------- II Equal to or greater than 3.25 to 1.00 0.605% and less than 4.00 to 1.00 - -------------------------------------------------------------------------------- III Equal to or greater than 2.75 to 1.00 0.775% and less than 3.25 to 1.00 - -------------------------------------------------------------------------------- IV Equal to or greater than 2.00 to 1.00 1.025% and less than 2.75 to 1.00 - -------------------------------------------------------------------------------- The Applicable Margin shall be established at the end of each Fiscal Quarter of Wackenhut Corrections (each, a "Determination Date"). Any change in the Applicable Margin following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Agent pursuant to Section 7.1(a)(ii) and Section 7.1(b)(ii) of the Existing Wackenhut Corrections Credit Agreement (as incorporated by reference into Section 28.1 of the Lease), subject to review and approval of such computations by the Agent, and shall be effective commencing on the date following the date such certificate is received (or, if earlier, the date such certificate was required to be delivered) until the date following the date on which a new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if Wackenhut Corrections shall fail to deliver any such certificate within five (5) days after the time period required by such Section 7.1, then the Applicable Margin shall be Tier IV from the date such certificate was required to be delivered until the appropriate certificate is so delivered. The foregoing notwithstanding, from the Initial Closing Date to the date following the date on which the compliance certificate required by such Section 7.1(b)(ii) is delivered for the third (3rd) quarter of Fiscal Year 1997, the Applicable Margin shall be Tier II. "Applicable Unused Fee Rate" shall mean that percent per annum set forth below, which shall be based upon the Consolidated Fixed Charge Coverage Ratio for the Four-Quarter Period most recently ended as specified below: Appendix A-4

95 - -------------------------------------------------------------------------------- Tier Consolidated Fixed Charge Coverage Ratio Applicable Unused Fee Rate - -------------------------------------------------------------------------------- I Equal to or greater than 4.00 to 1.00 0.175% - -------------------------------------------------------------------------------- II Equal to or greater than 3.25 to 1.00 0.200% and less than 4.00 to 1.00 - -------------------------------------------------------------------------------- III Equal to or greater than 2.75 to 1.00 0.250% and less than 3.25 to 1.00 - -------------------------------------------------------------------------------- IV Equal to or greater than 2.00 to 1.00 0.300% and less than 2.75 to 1.00 - -------------------------------------------------------------------------------- The Applicable Unused Fee Rate shall be established at the end of each Fiscal Quarter of Wackenhut Corrections (the "Determination Date"). Any change in the Applicable Unused Fee Rate following each Determination Date shall be determined based upon the computations set forth in the certificate furnished to the Agent pursuant to Section 7.1(a)(ii) and Section 7.1(b)(ii) of the Existing Wackenhut Corrections Credit Agreement (as incorporated by reference into Section 28.1 of the Lease), subject to review and approval of such computations by the Agent, and shall be effective commencing on the date following the date such certificate is received (or, if earlier, the date such certificate was required to be delivered) until the date following the date on which a new certificate is delivered or is required to be delivered, whichever shall first occur; provided however, if Wackenhut Corrections shall fail to deliver any such certificate within five (5) days after the time period required by such Section 7.1, then the Applicable Unused Fee Rate shall be Tier IV from the date such certificate was required to be delivered until the appropriate certificate is so delivered. The foregoing notwithstanding, from the Initial Closing Date, the date following the date on which the compliance certificate required by such Section 7.1(b)(ii) is delivered for the third (3rd) quarter of Fiscal Year 1997, the Applicable Unused Fee Rate shall be Tier II. "Appraisal" shall mean, with respect to any Property an appraisal to be delivered in connection with Section 5.3 of the Participation Agreement or in accordance with the terms of Section 10.1(e) of the Lease, in each case prepared by a reputable appraiser reasonably acceptable to the Agent, which in the judgment of counsel to the Agent, complies with all of the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto, and all other applicable Legal Requirements. Appendix A-5

96 "Appraisal Procedure" shall have the meaning given such term in Section 22.4 of the Lease. "Approved State" shall mean any state in the United States. "Appurtenant Rights" shall mean (i) all agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments and other rights and benefits at any time belonging or pertaining to the Land underlying any Improvements, or the Improvements, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the Land and (ii) all permits, licenses and rights, whether or not of record, appurtenant to such Land. "Assignment and Acceptance" shall mean the Assignment and Acceptance in the form attached as Exhibit C to the Credit Agreement. "Assignment of Project Rights" shall mean the Assignment of Project Rights and Contract Documents dated as of the Initial Closing Date, between the Owner Trustee and the Agent, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. "Available Commitment" shall mean, as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Commitment over (b) the aggregate principal amount of all Loans made by such Lender. "Available Holder Commitments" shall mean an amount equal to the excess, if any, of (i) the amount of the Holder Commitments over (ii) the aggregate amount of the Holder Fundings made since the Initial Closing Date. "Bankruptcy Code" shall mean Title 11 of the U.S. Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto; "Base Rate" shall have the meaning given such term in the Existing Wackenhut Corrections Credit Agreement. "Base Rate Funding" shall mean a Funding that bears interest (with respect to the Loans included therein) and Holder Yield (with respect to the Holder Fundings included therein) based on the Base Rate. "Base Rate Holder Funding" shall mean a Holder Funding bearing a Holder Yield based on the Base Rate. "Base Rate Loans" shall mean Loans the rate of interest applicable to which is based upon the Base Rate. Appendix A-6

97 "Basic Rent" shall mean, the sum of (i) the Loan Basic Rent and (ii) the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is due. "Basic Term" shall mean with respect to any Property, the period beginning on the commencement of the Term and ending on June 19, 1999. "Basic Term Expiration Date" shall have the meaning specified in Section 2.2 of the Lease. "Bill of Sale" shall mean a Bill of Sale regarding Equipment in form and substance satisfactory to the Owner Trustee, the Holders and the Agent. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrowing Date" shall mean any Business Day specified in a notice delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the Borrower requests the Lenders to make Loans hereunder. "Bridge Debt" shall mean indebtedness in the outstanding principal amount of not more than $11,700,930.37 on the Initial Closing Date, and (after giving effect to a required payment on June 20, 1997) not more than $4,959,243.37 from and after June 20, 1997, owed by the Owner Trustee to NationsBank pursuant to the Bridge Loan Documents. "Bridge Loan Documents" shall mean, collectively, (a) the Promissory Note dated as of March 14, 1997 by the Owner Trustee in favor of NationsBank, in the original principal amount of $10,000,000, (b) the Guaranty Agreement dated as of March 14, 1997 by Wackenhut Corrections Corporation, (c) the Indemnification Agreement dated as of March 14, 1997 by and among Owner Trustee and NationsBank, National Association, and (d) the Trust Agreement, as each of the foregoing agreements or instruments may be amended, modified, supplemented or restated from time to time (including without limitation by the Consolidated Amendment No. 1 to Note and Other Agreements dated as of the Initial Closing Date, among the Owner Trustee, NationsBank and Wachenhut); and any other agreements, instruments and documents heretofore or hereafter executed or delivered in connection with any of the foregoing or the transactions contemplated thereby. "Bridge Loan Event of Default" shall mean an "Event of Default" as defined in the Bridge Loan Documents. "Broward Property" shall mean the property in Broward County, Florida, currently owned by the Owner Trustee, which was acquired using proceeds of loans under the Bridge Loan Documents. Appendix A-7

98 "Budgeted Total Loan Property Cost" shall mean, at any date of determination, with respect to any Construction Period Property, an amount equal to the aggregate amount which the Construction Agent in good faith expects to be expended in order to achieve Completion with respect to such Property (including amounts expected to be expended to pay Allocated Interest and Allocated Return with respect to such Property). "Business Day" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "Casualty" shall mean any damage or destruction of all or any portion of a Property as a result of a fire or other casualty. "Category" with respect to any Commitment or Loan shall mean a Commitment or Loan with respect to Series A Loans or Series B Loans, as the case may be. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986. "Certificate" shall mean a Certificate in favor of each Holder evidencing the Holder Fundings made by such Holder and issued pursuant to the Trust Agreement. "Change of Control" shall mean (a) in the case of the Incorporated Covenants, a "Change of Control" as defined in the Existing Wackenhut Corrections Credit Agreement (together with any modifications or amendments thereto, or covenants of a New Facility, in each case approved in accordance with Section 28.1(a) of the Lease); and (b) in the case of a Wackenhut Corrections Credit Agreement Event of Default, a "Change of Control" as defined in the Existing Wackenhut Corrections Credit Agreement (as amended, modified or restated heretofore or hereafter) or any New Facility. "Claims" shall mean any and all obligations, liabilities, losses, actions, suits, penalties, claims, demands, costs and expenses (including, without limitation, reasonable attorney's fees and expenses) of any nature whatsoever. "Closing Date" shall mean the Initial Closing Date and each Property Closing Date. Appendix A-8

99 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. "Collateral" shall mean all assets of the Lessor or the Lessee, now owned or hereafter acquired, upon which a lien is purported to be created by the Security Documents. "Commitment" shall mean, as to any Lender, the obligation of such Lender to make Series A Loans or Series B Loans, as the case may be, to the Borrower hereunder in an aggregate principal amount at any one time outstanding not to exceed the respective amounts for such Category set forth opposite such Lender's name on Schedule 1.2 of the Credit Agreement, as such amounts may be reduced or increased from time to time in accordance with the provisions of this Agreement, the Credit Agreement or the Lease. "Commitment Percentage" shall mean, as to any Lender at any time, the percentage which such Lender's Commitment with respect to a Category of Loans then constitutes of the aggregate Commitments of all Lenders with respect to the same Category (or, at any time after the Commitments of any such Category shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Loans of such Category then outstanding constitutes of the aggregate principal amount of all of the Loans of such Category then outstanding). "Commitment Period" shall mean the period from the Initial Closing Date to and including the Construction Period Termination Date, or such earlier date as the Commitments shall terminate as provided in the Credit Agreement. "Completed Property" shall mean a Property for which Completion has occurred or will occur on the date of determination or on the respective Property Closing Date. "Completion" shall mean, with respect to a Property, such time as final completion of the Improvements on such Property has been achieved in accordance with the Plans and Specifications (excluding punch list items), the Agency Agreement and the Lease, and in compliance with all material Legal Requirements and Insurance Requirements and a certificate of occupancy has been issued with respect to such Property by the appropriate Governmental Authority. If the Lessor purchases a Property that includes existing Improvements that are to be immediately occupied by the Lessee, the date of Completion for such Property shall be the Property Closing Date. "Completion Date" shall mean, with respect to a Property, the earlier of (i) the date on which Completion for such Property has occurred and (ii) the Construction Period Termination Date. The foregoing notwithstanding, for the purposes of Section 2.6(b), 3.2(a)(x), 3.3(b) or 5.1(b) of the Agency Agreement, Appendix A-9

100 "Completion Date" shall mean, with respect to a Property, the date on which Completion for such Property has occurred. "Condemnation" shall mean any taking or sale of the use, access, occupancy, easement rights or title to any Property or any part thereof, wholly or partially (temporarily or permanently), by or on account of: (a) any actual or threatened eminent domain proceeding or other taking of action by any Person having the power of eminent domain, including any action by a Governmental Authority to change the grade of, or widen the streets adjacent to, any Property or alter the pedestrian or vehicular traffic flow to any Property so as to result in a change in access to such Property, or (b) an eviction by paramount title or any transfer made in lieu of any such proceeding or action. "Consolidated Fixed Charge Coverage Rate" shall have the meaning assigned thereto in the Existing Wackenhut Corrections Credit Agreement. "Construction Agent" shall mean Wackenhut Corrections, as construction agent under the Agency Agreement. "Construction Budget" shall mean, with respect to any Property, the cost of constructing and developing any Improvements on such Property as determined by the Construction Agent in its reasonable, good faith judgment. "Construction Commencement Date" shall mean, with respect to Improvements, the date on which construction of such Improvements commences pursuant to the Agency Agreement. "Construction Funding" shall mean an advance of funds (consisting of Loans by the Lenders and Holder Fundings by the Holders) on a specified date to pay Property Costs pursuant to Section 5.4 or 5.5 of the Participation Agreement. "Construction Loan" shall mean any Loan made in connection with and as part of a Construction Funding . "Construction Loan Property Cost" shall mean, with respect to each Construction Period Property at any date of determina tion, an amount equal to (a) the aggregate principal amount of Construction Loans and Interest Payment Loans made on or prior to such date with respect to such Property minus (b) the aggregate principal amount of prepayments or repayments, as the case may be, of the Loans allocated to reduce the Construction Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit Agreement. "Construction Period" shall mean, with respect to a Property, the period commencing on the Construction Commencement Appendix A-10

101 Date for such Property and ending on the Completion Date for such Property. "Construction Period Property" shall mean, at any date of determination, any Property as to which the Term has not commenced on or prior to such date. "Construction Period Termination Date" shall mean the earlier of (i) the date that the Commitments have been terminated in their entirety in accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) June 19, 1999. "Contractual Obligation" shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Control" (including the correlative meanings of the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Controlled Affiliate" shall mean (a) any Subsidiary of Wackenhut Corrections or (b) any corporation in which Wackenhut Corrections or any Subsidiary of Wackenhut Corrections has the power to elect directors having more than 50% voting control of such corporation. "Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the Trust Agreement. "Credit Agreement" shall mean the Credit Agreement, dated as of the Initial Closing Date, among the Lessor, the Agent, and the Lenders, as specified therein, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. "Credit Agreement Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Credit Agreement Event of Default. "Credit Agreement Event of Default" shall mean any event or condition defined as an "Event of Default" in Section 6 of the Credit Agreement. "Credit Documents" shall mean the Credit Agreement, the Notes, and the Security Documents. "Deed" shall mean a warranty deed regarding Land or Improvements in form and substance satisfactory to the Owner Trustee, the Holders and the Agent. Appendix A-11

102 "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Dollars" and "$" shall mean dollars in lawful currency of the United States of America. "Election Notice" shall have the meaning given to such term in Section 20.1 of the Lease. "Environmental Claim" shall mean any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or private in nature) arising (a) pursuant to, or in connection with, any actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or other response action in connection with a Hazardous Material, Environmental Law, or other order of a Governmental Authority or (d) from any actual or alleged damage, injury, threat, or harm to health, safety, natural resources, or the environment. "Environmental Law" shall mean any Law, permit, consent, approval, license, award, or other authorization or requirement of any Governmental Authority relating to emissions, discharges, releases, threatened releases of any Hazardous Substance into ambient air, surface water, ground water, publicly owned treatment works, septic system, or land, or otherwise relating to the handling, storage, treatment, generation, use, emission or disposal of any Hazardous Substance or pollution or to the protection of health or the environment, including without limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., and state or local statutes analogous thereto. "Environmental Violation" shall mean any activity, occurrence or condition that violates or threatens to violate (if the threat requires remediation under any Environmental Law and is not remediated during any grace period allowed under such Environmental Law) or results in or threatens (if the threat requires remediation under any Environmental Law and is not remediated during any grace period allowed under such Environmental Law) to result in noncompliance with any Environmental Law. "Equipment" shall mean equipment, apparatus, furnishings, fittings and personal property of every kind and nature whatsoever purchased, leased or otherwise acquired using the proceeds of the Loans or the Holder Fundings by the Construction Agent, the Lessee or the Lessor as specified or described in either a Requisition or a Lease Supplement, whether or not now or subsequently attached to, contained in or used or usable in any Appendix A-12

103 way in connection with any operation of any Improvements or other improvements to real property, including without limitation, all equipment described in the Appraisal, all heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilation, air conditioning and air-cooling apparatus, refrigerating, and incinerating equipment, escalators, elevators, loading and unloading equipment and systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, fittings and fixtures of every kind and description. "Equipment Schedule" shall mean (a) each Equipment Schedule attached to the applicable Requisition and (b) each Equipment Schedule attached to the applicable Lease Supplement as Schedule I-A. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall mean each entity required to be aggregated with the Lessee pursuant to the requirements of Section 414(b) or (c) of the Code. "Eurodollar Reserve Percentage" shall have the meaning specified in the Existing Wackenhut Corrections Credit Agreement. "Eurodollar Funding" shall mean a Funding that bears interest (with respect to the Loans included therein) and Holder Yield (with respect to the Holder Fundings included therein) based on the Eurodollar Rate. "Eurodollar Holder Funding" shall mean a Holder Funding bearing a Holder Yield based on the Eurodollar Rate. "Eurodollar Loans" shall mean Loans the rate of interest applicable to which is based upon the Eurodollar Reserve Rate. "Eurodollar Rate" or "Eurodollar Reserve Rate" shall mean for the Interest Period for any Eurodollar Loan or Eurodollar Holder Funding comprising part of the same borrowing or advance (including conversions, extensions and renewals), a per annum rate calculated according to the following formula: Interbank Offered Rate ---------------------------------- 1-Eurodollar Reserve Percentage. "Event of Default" shall mean a Lease Event of Default, a Guaranty Event of Default, an Agency Agreement Event of Default or a Credit Agreement Event of Default. "Excepted Payments" shall mean: Appendix A-13

104 (a) all indemnity payments (including indemnity payments made pursuant to Section 13 of the Participation Agreement), whether made by adjustment to Basic Rent or otherwise, to which the Owner Trustee, any Holder or any of their respective Affiliates, agents, officers, directors or employees is entitled; (b) any amounts (other than Basic Rent, Termination Value, or Purchase Option Price) payable under any Operative Agreement to reimburse the Owner Trustee, any Holder or any of their respective Affiliates for performing or complying with any of the obligations of the Lessee under and as permitted by any Operative Agreement (including without limitation any reimbursement of the reasonable expenses of the Owner Trustee, the Trust Company and the Holders incurred in connection with any such payment); (c) any amount payable to a Holder by any transferee of such interest of a Holder as the purchase price of such Holder's interest in the Trust Estate (or portion thereof); (d) any insurance proceeds (or payments with respect to risks self-insured or policy deductibles) under liability policies other than such proceeds or payments payable to the Agent or any Lender; (e) any insurance proceeds under policies maintained by the Owner Trustee or any Holder other than such proceeds payable to the Agent or any Lender; (f) Transaction Expenses or other amounts or expenses paid or payable to or for the benefit of the Owner Trustee or any Holder; (g) all right, title and interest of any Holder or the Owner Trustee to any Property or any portion thereof or any other property to the extent any of the foregoing has been released from the Liens of the Security Documents and the Lease pursuant to the terms thereof; (h) upon termination of the Credit Agreement pursuant to the terms thereof, all remaining property covered by the Lease or Security Documents; (i) all payments in respect of the Holder Yield; (j) any payments in respect of interest to the extent attributable to payments referred to in clauses (a) through (i) above; and (k) any rights of either the Owner Trustee or Trust Company to demand, collect, sue for or otherwise receive and enforce payment of any of the foregoing amounts, provided that such rights shall not include the right to terminate the Lease. Appendix A-14

105 "Excepted Rights" shall mean the rights retained by the Owner Trustee pursuant to Section 8.2(a) of the Credit Agreement. "Excess Proceeds" shall mean the excess, if any, of the aggregate of all awards, compensation or insurance proceeds payable in connection with a Casualty or Condemnation over the Termination Value paid by the Lessee pursuant to the Lease with respect to such Casualty or Condemnation. "Existing Credit Agent" shall mean the "Agent" as defined in the Existing Wackenhut Corrections Credit Agreement. "Existing Wackenhut Corrections Credit Agreement" shall have the meaning specified in Section 28.1 of the Lease. "Expected Maximum Property Cost" at any time shall mean the sum of (a) the then outstanding aggregate Property Cost of all Properties (whether or not subject to the Lease), plus (b) the maximum total additional Property Cost expected to be advanced or incurred, on such date or at any time thereafter, with respect to any Properties (including without limitation any expected Acquisition Funding, Contribution Funding or other expected Property Costs, and including without limitation any expected Property Cost referred to in a Construction Budget). "Expiration Date" shall mean the Basic Term Expiration Date or the last day of any Extended Term, if applicable. "Expiration Date Purchase Option" shall mean the Lessee's option to purchase all (but not less than all) of the Properties on the Expiration Date. "Extended Term" shall mean the extension of the Basic Term (or a previous Extended Term) for a period of one year following the end of the Basic Term (or such previous Extended Term) with respect to which Lessee has exercised its Renewal Option pursuant to Section 21.1 of the Lease. "Facility" shall mean a facility used for the treatment, storage or disposal of Hazardous Substances. "Fair Market Sales Value" shall mean, with respect to any Property, the amount, which in any event, shall not be less than zero, that would be paid in cash in an arms-length transaction between an informed and willing purchaser and an informed and willing seller, neither of whom is under any compulsion to purchase or sell, respectively, such Property. Fair Market Sales Value of any Property shall be determined based on the assumption that, except for purposes of Section 17 of the Lease, such Property is in the condition and state of repair required under Section 10.1 of the Lease and the Lessee is in compliance with the other requirements of the Operative Agreements. Appendix A-15

106 "Federal Funds Effective Rate" shall have the meaning given to such term in the Existing Wackenhut Corrections Credit Agreement. "Fee Letter" shall mean that certain letter agreement dated June 17, 1997, among Wackenhut Corrections and NationsBank. "Fiscal Quarter" means any quarter of a Fiscal Year. "Fiscal Year" means any period of approximately twelve consecutive calendar months ending on the Sunday nearest to December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the "1996 Fiscal Year") refer to the Fiscal Year ending on the Sunday nearest to December 31 of such calendar year (which Sunday may occur in such calendar year or the following calendar year.) "Fixtures" shall mean all fixtures relating to the Improvements, including all components thereof, located in or on the Improvements, together with all replacements, modifications, alterations and additions thereto. "Force Majeure Event" shall mean any event beyond the control of the Construction Agent, other than a Casualty or Condemnation, including, but not limited to, strikes, lockouts, adverse soil conditions, acts of God, adverse weather conditions, inability to obtain labor or materials, governmental activities, civil commotion and enemy action; but excluding any event, cause or condition that results from the Construction Agent's financial condition. "Four-Quarter Period" shall have the meaning given to such term in the Existing Wackenhut Corrections Credit Agreement. "Funding" shall mean a Construction Funding or an Acquisition Funding. "GAAP" shall mean "Generally Accepted Accounting Principles" as defined in the Existing Wackenhut Corrections Credit Agreement. "Governmental Action" shall mean all permits, authorizations, registrations, consents, approvals, waivers, exceptions, variances, orders, judgments, written interpretations, decrees, licenses, exemptions, publications, filings, notices to and declarations of or with, or required by, any Governmental Authority, or required by any Legal Requirement, and shall include, without limitation, all environmental and operating permits and licenses that are required for the full use, occupancy, zoning and operation of any Property. "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof and Appendix A-16

107 any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including without limitation any court or governmental body, agency, department, commission, board, bureau or instrumentality of a governmental body. "Ground Lease" shall mean (a) a ground lease (in form and substance satisfactory to the Agent and the Lessor) with respect to any Property owned by the Lessee and leased to the Lessor where such lease has a ninety-nine year term and payments set at $1.00 per year, or (b) a ground lease or ground sub-lease of any Property by any Person to the Lessor, where such lease or sublease (as well as any other lease or sub-lease with respect to such Property) is in form and substance, and contains such terms and conditions, as are satisfactory in all respects to the Agent and the Lessor. "Guarantor" shall mean Wackenhut Corrections. "Guaranty Agreement" or "Guaranty" shall mean, collectively, (a) the Guaranty Agreement (Series A Obligations) dated as of the Initial Closing Date between the Guarantor and the Agent, and (b) the Guaranty Agreement dated as of the Initial Closing Date by Wackenhut Corrections to the Lessor, as each such agreement may be amended, supplemented, restated or modified from time to time in accordance with the terms thereof. "Guaranty Event of Default" shall mean any default by the Guarantor of any of its covenants, agreements or obligations contained under the Guaranty Agreement. "Hazardous Substance" shall mean any of the following: (i) any petroleum or petroleum product, explosives, radioactive material, asbestos, formaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any substance, material, product, derivative, compound or mixture, mineral, chemical, waste, gas, medical waste, or pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous to the environment or human health or safety as determined in accordance with any Environmental Law; or (iii) any substance, material, product, derivative, compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant that would support the assertion of any claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. "Hedging Obligations" shall mean, with respect to any Person, all liabilities of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. Appendix A-17

108 "Holder Amount" shall mean as of any date, the aggregate amount of Holder Fundings made by each Holder to the Trust Estate pursuant to Section 2 of the Participation Agreement or Section 3.1 of the Trust Agreement less any payments of any Holder Fundings received by the Holders pursuant to Section 3.4 of the Trust Agreement. "Holder Applicable Margin" shall mean a rate per annum equal to the Applicable Margin plus one percent (1.00%). "Holder Commitment" shall mean, as to any Holder, the obligation of such Holder to make Holder Fundings to the Lessor in an aggregate principal amount at any time outstanding not to exceed the respective amount set forth opposite such Holder's name on Schedule 1, as such amounts may be increased or reduced from time to time in accordance with the provisions of this Agreement, the Trust Agreement or the Lease. "Holder Commitments" shall mean the aggregate of all Holder Commitments. "Holder Construction Property Cost" shall mean, with respect to any Construction Period Property at any date of determination, an amount equal to (a) the outstanding Holder Fundings made on or prior to such date in connection with and as part of any Construction Funding for such Property, plus (b) the outstanding Holder Fundings made on or prior to such date to fund the payment of Allocated Holder Return with respect to such Property, minus (c) the aggregate principal amount of prepayments or repayments, as the case may be, of Holder Fundings described in clause (a) or clause (b). "Holder Funding" shall mean any Funding made by any Holder to the Owner Trustee pursuant to the terms of the Trust Agreement or the Participation Agreement. "Holder Overdue Rate" shall mean the rate specified in Section 3.13 of the Trust Agreement. "Holder Property Cost" shall mean with respect to a Property an amount equal to the outstanding Holder Fundings with respect thereto (including Holder Fundings with respect to Allocated Return allocated to such Property). "Holder Unused Fee" shall mean, at any time, the product of (a) the Applicable Unused Fee Rate multiplied by (b) the average daily amount by which (i) the aggregate Holder Commitments of the Holders (under the Operative Agreements) exceeds (ii) the aggregate outstanding principal amount of Holder Fundings. "Holder Yield" shall mean with respect to Holder Fundings from time to time either the Eurodollar Reserve Rate plus the Holder Applicable Margin, or the Base Rate plus one percent Appendix A-18

109 (1.00%) per annum, as elected by the Owner Trustee from time to time with respect to such Holder Fundings in accordance with the terms of the Trust Agreement; provided, however, that (i) upon delivery of the notice described in Section 3.7(c) of the Trust Agreement, the outstanding Holder Fundings of each Holder shall bear a yield at the Base Rate plus one percent (1.00%) applicable from time to time from and after the dates and during the periods specified in Section 3.7(c) of the Trust Agreement, and (ii) upon the delivery by a Holder of the notice described in Section 3.9(d) of the Trust Agreement or as otherwise set forth in Section 3.8 of the Trust Agreement, the Holder Fundings of such Holder shall bear a yield at the Base Rate plus one percent (1.00%) applicable from time to time after the dates and during the periods specified in Section 3.9(d) or 3.8 (as the case may be) of the Trust Agreement. "Holders" shall mean the several banks and other financial institutions which are from time to time holders of Certificates in connection with the Wackenhut Corrections Trust 1997-1. "Impositions" shall mean, except to the extent described in the following sentence, any and all liabilities, losses, expenses, costs, charges and Liens of any kind whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or withholdings ("Taxes") including without limitation (i) any real and personal property taxes, including personal property taxes on any property covered by the Lease that is classified by Governmental Authorities as personal property, frontage taxes and real estate or ad valorem taxes in the nature of property taxes; (ii) any sales taxes, use taxes and other similar taxes (including rent taxes and intangibles taxes); (iii) any excise taxes; (iv) any real estate transfer taxes, conveyance taxes, mortgage taxes, stamp taxes and documentary recording taxes and fees; (v) any taxes that are or are in the nature of franchise, income, value added, privilege and doing business taxes, license and registration fees; (vi) any assessments on any Property, including all assessments for public Improvements or benefits, whether or not such improvements are commenced or completed within the Term; and (vii) any tax, Lien, assessment or charge asserted, imposed or assessed by the PBGC or any governmental authority succeeding to or performing functions similar to, the PBGC; and in each case all interest, additions to tax and penalties thereon, which at any time prior to, during or with respect to the Term or in respect of any period for which the Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or imposed by any Governmental Authority upon or with respect to (a) any Property or any part thereof or interest therein; (b) the leasing, financing, refinancing, demolition, construction, substitution, subleasing, assignment, control, condition, occupancy, servicing, maintenance, repair, ownership, possession, activity conducted on, delivery, insuring, use, operation, improvement, transfer of title, return or other disposition of any Property or any part thereof or interest Appendix A-19

110 therein; (c) the Certificates or the Notes or other indebtedness with respect to any Property or any part thereof or interest therein; (d) the rentals, receipts or earnings arising from any Property or any part thereof or interest therein; (e) the Operative Agreements, the performance thereof, or any payment made or accrued pursuant thereto; (f) the income or other proceeds received with respect to any Property or any part thereof or interest therein upon the sale or disposition thereof; (g) any contract (including the Agency Agreement) relating to the construction, acquisition or delivery of the Improvements or any part thereof or interest therein; (h) the issuance of the Certificates or the Notes; or (i) otherwise in connection with the transactions contemplated by the Operative Agreements. The term "Imposition" shall not mean or include: (i) Taxes and impositions (other than Taxes that are, or are in the nature of, withholding, sales, use, rental, value added, transfer or property taxes) that are imposed on an Indemnified Person (other than Lessor) by the United States federal government or (in the case of a Person organized under the laws of a foreign country) by a Governmental Authority of such country, and that are in each case based on or measured by the net income (including taxes based on capital gains and minimum taxes or franchise taxes) of such Person; provided that this clause (i) shall not apply to (and shall not exclude) any Tax or imposition imposed with respect to a payment (including any Rent payment) except for (A) the portion of such payment constituting interest on a Loan or Holder Yield or (B) any such Tax or imposition to the extent it arises because an Indemnified Person has previously written off as uncollectible (and reduced the tax basis for) an Obligation which it has subsequently collected, and provided, further that this clause (i) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made; (ii) Taxes and impositions (other than Taxes that are, or are in the nature of, sales, use, rental, value added, transfer or property taxes) that are imposed on any Indemnified Person (other than Lessor) by any state or local jurisdiction or taxing authority within any state or local jurisdiction and that are based upon or measured by the net income or net receipts; provided that this clause (ii) shall not apply to (and shall not exclude) (A) any Tax or imposition imposed with respect to a payment (including any Rent payment) except for (I) the portion of such payment constituting interest on a Loan or Holder Yield or (II) any such Tax or imposition to the extent it arises because an Indemnified Person has previously written off (and reduced the tax basis for) an Obligation which it has subsequently collected, or (B) any Tax or imposition imposed on an Appendix A-20

111 Indemnified Person by any state or local jurisdiction if such Tax or imposition would not arise as to such Person but for the location, possession or use of any Property in such jurisdiction; and provided, further, that this clause (ii) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made; (iii) any Tax or imposition to the extent, but only to such extent, it relates to any act, event or omission that occurs after the termination of the Lease and redelivery or sale of the property in accordance with the terms of the Lease (but not any Tax or imposition that relates to such termination, redelivery or sale or to any period prior to such termination, redelivery or sale); or (iv) any Taxes which are imposed on an Indemnified Person as a result of the gross negligence or willful misconduct of such Indemnified Person itself (as opposed to any gross negligence or willful misconduct imputed to such Indemnified Person), but not Taxes imposed as a result of the ordinary negligence of such Person. Any Tax or imposition excluded from the defined term "Imposition" by any one of the foregoing clauses (i) through (iv) shall not be construed as constituting an Imposition by any provision of any other of the aforementioned clauses. "Improvements" shall mean, with respect to the construction, renovation or Modification of a Property, all buildings, structures, Fixtures, and other improvements of every kind existing at any time and from time to time on or under the Land purchased, leased or otherwise acquired using the proceeds of the Loans or the Holder Fundings, together with any and all appurtenances to such buildings, structures or improvements, including sidewalks, utility pipes, conduits and lines, parking areas and roadways, and including all Modifications and other additions to or changes in the Improvements at any time, including without limitation (a) any Improvements existing as of the Property Closing Date as such Improvements may be referenced on the applicable Requisition and (b) any Improvements made subsequent to such Property Closing Date. "Incorporated Covenants" shall have the meaning specified in Section 28.1 of the Lease. "Indebtedness" shall have the meaning assigned thereto in the Existing Wackenhut Corrections Credit Agreement. "Indemnified Person" shall mean each of the Lessor, the Owner Trustee, in its individual and its trust capacity, the Agent, NCMI, the Holders, the Lenders and their respective Appendix A-21

112 successors, assigns, directors, shareholders, partners, officers, employees, agents and Affiliates. "Indemnity Provider" shall mean, respecting each Property, the Construction Agent from the date of the Participation Agreement to and including the Term Commencement Date for such Property and the Lessee for the duration of the Term for such Property. "Initial Closing Date" shall mean the date of the Participation Agreement. "Initial Construction Funding" shall mean any initial Funding to pay for: (i) Property Costs for construction of any Improvements; and (ii) the Property Costs of restoring or repairing any Property which is required to be restored or repaired in accordance with Section 15.1(e) of the Lease. "Insurance Requirements" shall mean (a) all terms and conditions of any insurance policy either required by the Lease to be maintained by the Lessee or required by the Agency Agreement to be maintained by the Construction Agent, and (b) all requirements of the issuer of any such policy. "Interbank Offered Rate" shall mean for the Interest Period for any Eurodollar Loan or Eurodollar Holder Funding comprising part of the same borrowing or advance (including conversions, extensions and renewals), a per annum rate equal to the "Interbank Offered Rate" (as defined in the Existing Wackenhut Corrections Credit Agreement) having an identical Interest Period. "Interest Payment Loan" shall mean any Loan made to fund the payment of Allocated Interest with respect to a Construction Period Property. "Interest Period" shall mean (a) during the Commitment Period the period beginning on the date of the first Eurodollar Loan (and related Eurodollar Holder Funding) extended pursuant to the terms of the Operative Agreements and ending one month later, and, thereafter, the period commencing on the last day of the preceding Interest Period and ending one month later, and (b) during the period from and the Commitment Period, (i) initially, the period commencing on the conversion or continuation date, as the case may be, with respect to such Eurodollar Loan or Eurodollar Holder Funding and ending, in the case of any Eurodollar Loan or Eurodollar Holder Funding, one, two, three, six or nine months thereafter, as selected by the Borrower (in the case of a Eurodollar Loan) or the Owner Trustee (in the case of a Eurodollar Holder Funding) in its notice of borrowing, Funding, continuation or conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable Appendix A-22

113 to such Eurodollar Loan or Eurodollar Holder Funding and ending one, two, three, six or nine months thereafter, as selected by the Borrower by irrevocable notice to Administrative Agent (in the case of a Eurodollar Loan) or by the Owner Trustee by irrevocable notice to the Holders (in the case of a Eurodollar Holder Funding) in each case not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided, however, that all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (B) no Interest Period shall extend beyond the Maturity Date, (C) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month, (D) during the Commitment Period, then shall not be (on any day) more than one (1) Interest Period in effect for all Eurodollar Loans and Eurodollar Holder Fundings, and (E) from and after all the Commitment Period, on any day the sum of the (1) Interest Periods in effect under the Operative Agreements for all Eurodollar Loans and Eurodollar Holder Funding plus (2) all "Interest Periods" (as defined in the Existing Wackenhut Corrections Credit Agreement, as amended from time to time), shall not exceed eight (8) in the aggregate. "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, together with the rules and regulations promulgated thereunder. "IRS" shall mean the United States Internal Revenue Service, or any successor or analogous organization. "Land" shall mean (a) a parcel or parcels of real property that is described on (i) the Requisition issued by the Construction Agent on the Property Closing Date relating to such parcel or (ii) Schedule I-C to each applicable Lease Supplement executed and delivered in accordance with the requirements of Section 2.4 of the Lease and, to the extent set forth in any such Requisition or Schedule, may include without limitation a leasehold interest (pursuant to a Ground Lease) in such Land, and (b) all Appurtenant Rights with respect to such Land. "Law" shall mean any statute, law, ordinance, code, regulation, rule, directive, order, writ, injunction or decree of any Governmental Authority. "Lease" or "Lease Agreement" shall mean the Lease Agreement dated as of the Initial Closing Date, between the Lessor and the Lessee, together with any Lease Supplements thereto, as such Appendix A-23

114 Lease Agreement may from time to time be supplemented, amended, restated or modified in accordance with the terms thereof. "Lease Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Lease Event of Default. "Lease Event of Default" shall have the meaning specified in Section 17.1 of the Lease. "Lease Supplement" shall mean each Lease Supplement substantially in the form of Exhibit A to the Lease, together with all attachments and schedules thereto, as such Lease Supplement may be supplemented, amended, restated or modified from time to time. "Legal Requirements" shall mean all foreign, Federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Owner Trustee, the Holders, the Agent, any Lender or any Improvements or the taxation, demolition, construction, use or alteration of such Improvements, whether now or hereafter enacted and in force, including without limitation any that require repairs, modifications or alterations in or to any Property or in any way limit the use and enjoyment thereof (including all building, zoning and fire codes and the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et seq., and any other similar Federal, state or local laws or ordinances and the regulations promulgated thereunder) and any that may relate to environmental requirements (including all Environmental Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments which are either of record or known to the Lessee affecting any Property or the Appurtenant Rights. "Lender Financing Statements" shall mean UCC financing statements and fixture filings appropriately completed and executed for filing in the applicable jurisdiction in order to evidence or perfect the Agent's security interest (for itself and on behalf of the Lenders) in any Equipment or in any Improvements. "Lenders" shall mean the several banks and other financial institutions from time to time party to the Credit Agreement. "Lessee" shall have the meaning set forth in the Lease. "Lessor" shall mean the Owner Trustee, not in its individual capacity, but as Lessor under the Lease. "Lessor Basic Rent" shall mean the scheduled Holder Yield due on the Holder Fundings on any Scheduled Interest Payment Date Appendix A-24

115 pursuant to the Trust Agreement (but not including interest on (i) any such scheduled Holder Yield due on the Holder Fundings prior to the Term Commencement Date with respect to the Property to which such Holder Fundings relate or (ii) overdue amounts under the Trust Agreement or otherwise). "Lessor Financing Statements" shall mean UCC financing statements and fixture filings appropriately completed and executed for filing in the applicable jurisdictions in order to evidence or perfect the Lessor's interest under the Lease to the extent the Lease is a security agreement or a mortgage. "Lessor Lien" shall mean any Lien, true lease or sublease or disposition of title arising as a result of (a) any claim against the Lessor or Trust Company, in its individual capacity, not resulting from the transactions contemplated by the Operative Agreements, (b) any act or omission of the Lessor or Trust Company, in its individual capacity, which is not required by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (c) any claim against the Lessor or Trust Company, in its individual capacity, with respect to Taxes or Transaction Expenses against which the Lessee is not required to indemnify Lessor or Trust Company, in its individual capacity, pursuant to Section 13 of the Participation Agreement or (d) any claim against the Lessor or Trust Company, in its individual capacity, arising out of any transfer by the Lessor of all or any portion of the interest of the Lessor in the Properties, the Trust Estate or the Operative Agreements other than the transfer of title to or possession of any Properties by the Lessor pursuant to and in accordance with the Lease, the Credit Agreement, the Security Agreement or the Participation Agreement or pursuant to the exercise of the remedies set forth in Article XVII of the Lease. "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien, option or charge of any kind. "Limited Recourse Amount" shall mean, with respect to the Properties on an aggregate basis as of a specified date, an amount equal to the sum of the Termination Values with respect to all of the Properties on such date, less the Maximum Residual Guarantee Amount as of such date with respect to the Properties. "Loan Basic Rent" shall mean the interest due on the Loans on any Scheduled Interest Payment Date pursuant to the Credit Agreement (but not including interest on (i) any such Loan prior to the Term Commencement Date with respect to the Property to which such Loan relates or (ii) any overdue amounts under Section 2.8(c) of the Credit Agreement or otherwise). "Loan Property Cost" shall mean, with respect to each Property at any date of determination, an amount equal to (a) the aggregate principal amount of Acquisition Loans, Construction Appendix A-25

116 Loans and Interest Payment Loans made on or prior to such date with respect to such Property minus (b) the aggregate amount of prepayments or repayments as the case may be of the Loans allocated to reduce the Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit Agreement. "Loans" shall mean, collectively, the Series A Loans and the Series B Loans. "Louisiana Property" shall mean the property in Jena, Louisiana, currently owned by the Owner Trustee, which was acquired using proceeds of loans under the Bridge Loan Documents. "Majority Lenders" shall mean at any time, Lenders whose Commitment Percentages represent at least 51% of the aggregate Commitments. "Marketing Period" shall mean, if the Lessee has given an Election Notice in accordance with Section 20.1 of the Lease, the period commencing on the date such Sale Notice is given and ending on the applicable Expiration Date or Payment Date. "Material Adverse Effect" shall mean a material adverse effect on (a) the business, condition (financial or otherwise) assets, liabilities or operations of Wackenhut Corrections or any of its Subsidiaries, (b) the ability of the Lessee or any Subsidiary to perform its respective obligations under any Operative Agreement to which it is a party, (c) the validity or enforceability of any Operative Agreement or the rights and remedies of the Agent, the Lenders, the Holders, or the Lessor thereunder, (d) the validity, priority or enforceability of any Lien on any Property created by any of the Operative Agreements, or (e) the value, utility or useful life of any Property or the use, or ability of the applicable Lessee to use, any Property for the purpose for which it was intended. "Maturity Date" shall mean June 19, 2002, or such earlier date as the Lease may terminate. "Maximum Property Cost" shall mean the aggregate amount of the Property Costs for all Properties subject to the Lease as of the applicable determination date. "Maximum Residual Guarantee Amount" shall mean an amount equal to eighty-eight percent (88%) of the aggregate Property Cost for all of the Properties. "Modifications" shall have the meaning specified in Section 11.1(a) of the Lease. "Mortgage Instrument" shall mean any mortgage, deed of trust or any other instrument executed by the Owner Trustee in favor of Appendix A-26

117 the Agent and evidencing a Lien on a Property, in form and substance reasonably acceptable to the Agent. "Multi-employer Plan" shall mean any plan described in Section 4001(a)(3) of ERISA to which contributions are or have been made or are required to be made by Wackenhut Corrections or any of its Subsidiaries or ERISA Affiliates. "NationsBank" shall mean NationsBank, National Association, a national banking association. "NCMI" means NationsBanc Capital Markets, Inc. "Net Proceeds" shall mean all amounts paid in connection with any Casualty or Condemnation, and all interest earned thereon, less the expense of claiming and collecting such amounts, including all costs and expenses in connection therewith for which the Agent or Lessor is entitled to be reimbursed pursuant to the Lease. "Net Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a sale described in Section 22.1 of the Lease (net of all expenses of sale) are less than the Limited Recourse Amount with respect to the Properties if it has been determined that the Fair Market Sales Value of the Properties at the expiration of the term of the Lease has been impaired by greater than expected wear and tear during the Term of the Lease. "New Facility" shall have the meaning specified in Section 28.1 of the Lease. "Non-Excluded Taxes" shall have the meaning given to such term in Section 2.13 of the Credit Agreement. "Notes" shall mean, collectively, the Series A Notes and the Series B Notes. "Occupational Safety and Health Law" shall mean the Occupational Safety and Health Act of 1970 and any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating or relating to, or imposing liability or standards of conduct concerning, employee health or safety, as now or at any time hereafter in effect. "Officer's Certificate" shall mean a certificate signed by any individual holding the office of vice president or higher, which certificate shall certify as true and correct the subject matter being certified to in such certificate. "Operative Agreements" shall mean, collectively, the Participation Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the Credit Agreement, the Notes, the Lease (and a memorandum thereof in a form reasonably acceptable Appendix A-27

118 to the Agent), each Lease Supplement (and a memorandum thereof in a form reasonably acceptable to the Agent), the Side Agreement, the Guaranty Agreement, the Security Agreement, the Assignment of Project Rights, and each Mortgage Instrument. "Overdue Interest" shall mean any interest payable pursuant to Section 2.8(c) of the Credit Agreement. "Overdue Rate" shall mean (i) with respect to Loan Basic Rent, and any other amount owed under or with respect to the Credit Agreement or the Security Documents, the rate specified in Section 2.8(c) of the Credit Agreement, (ii) with respect to Lessor Basic Rent, the Holder Yield and any other amount owed under or with respect to the Trust Agreement, the Holder Overdue Rate and (iii) with respect to any other amount, the Base Rate plus 2%. "Owner Trustee" shall mean First Security Bank, National Association, not individually, except as expressly stated in the various Operative Agreements, but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1, and any successor or replacement Owner Trustee expressly permitted under the Operative Agreements. "Participant" shall have the meaning given to such term in Section 9.7 of the Credit Agreement. "Participation Agreement" shall mean the Participation Agreement dated as of the date hereof among the Construction Agent, the Lessee, the Owner Trustee, the Holders party thereto, the Lenders party thereto, and the Administrative Agent, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof. "Payment Date" shall mean any Scheduled Interest Payment Date and any date on which interest or Holder Yield in connection with a prepayment of principal on the Loans or of the Holder Fundings is due under the Credit Agreement or the Trust Agreement. "PBGC" shall mean the Pension Benefit Guaranty Corporation created by Section 4002(a) of ERISA or any successor thereto. "Permitted Exceptions" shall mean: (i) Liens of the types described in clauses (i), (ii) and (v) of the definition of Permitted Liens; (ii) Liens for Taxes not yet due; and (iii) all encumbrances, exceptions, restrictions, easements, rights of way, servitudes, encroachments and irregularities in title, other than Liens which, in the Appendix A-28

119 reasonable assessment of the Agent, materially impair the use of any Property for its intended purpose. "Permitted Liens" shall mean: (i) the respective rights and interests of the parties to the Operative Agreements as provided in the Operative Agreements; (ii) the rights of any sublessee or assignee under a sublease or an assignment expressly permitted by the terms of the Lease; (iii) Liens for Taxes that either are not yet due or are being contested in accordance with the provisions of Section 13.1 of the Lease; (iv) Liens arising by operation of law, materialmen's, mechanics', workmen's, repairmen's, employees', carriers', warehousemen's and other like Liens relating to the construction of the Improvements or in connection with any Modifications or arising in the ordinary course of business for amounts that either are not more than 30 days past due or are being diligently contested in good faith by appropriate proceedings, so long as such proceedings satisfy the conditions for the continuation of proceedings to contest Taxes set forth in Section 13.1 of the Lease; (v) Liens of any of the types referred to in clause (iv) above that have been bonded for not less than the full amount in dispute (or as to which other security arrangements satisfactory to the Lessor and the Agent have been made), which bonding (or arrangements) shall comply with applicable Legal Requirements, and shall have effectively stayed any execution or enforcement of such Liens; (vi) Liens arising out of judgments or awards with respect to which appeals or other proceedings for review are being prosecuted in good faith and for the payment of which adequate reserves have been provided as required by GAAP or other appropriate provisions have been made, so long as such proceedings have the effect of staying the execution of such judgments or awards and satisfy the conditions for the continuation of proceedings to contest Taxes set forth in Section 13.1 of the Lease; (vii) Liens in favor of municipalities to the extent agreed to by the Lessor and the Agent; and (viii) Permitted Exceptions. Appendix A-29

120 "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, limited liability partnership, governmental authority or any other entity. "Plans and Specifications" shall mean, with respect to Improvements, the plans and specifications for such Improvements to be constructed or already existing, as such Plans and Specifications may be amended, modified or supplemented from time to time in accordance with the terms of the Participation Agreement. "Primary Property Percentage" shall mean 9%. "Prime Rate" shall have the meaning given to such term in the Existing Wackenhut Corrections Credit Agreement. "Property" shall mean, with respect to each real property site that is acquired, constructed or renovated pursuant to the terms of the Operative Agreements, the Land and each item of Equipment and the various Improvements, in each case located on such Land. Each Property shall be suitable for, and used by Lessee (or a permitted sublessee) only for, correctional facilities. There shall not be more than 8 properties in the aggregate that are (or have at any time been) Properties (including without limitation any properties that were previously Properties subject to the Operative Agreements but have subsequently been repurchased by the Lessee, transferred to any other Person, or retained by the Lessor). "Property Acquisition Cost" shall mean the cost to Lessor to purchase a Property on a Property Closing Date. "Property Closing Date" shall mean each date on which the Lessor purchases a Property. "Property Cost" shall mean with respect to a Property the aggregate amount of the Loan Property Cost plus the Holder Property Cost for such Property (as such amounts shall be increased equally among all Properties respecting the Holder Fundings and the Loans extended from time to time to pay for the Transaction Expenses, fees, expenses and other disbursements referenced in Sections 9.1(a) and (b) of the Participation Agreement). "Purchase Option" shall have the meaning given to such term in Section 20.1 of the Lease. "Purchase Option Price" shall have the meaning specified in Section 20.1 of the Lease. Appendix A-30

121 "Purchasing Lender" shall have the meaning given to such term in Section 9.8(a) of the Credit Agreement. "Register" shall have the meaning given to such term in Section 9.9(a) of the Credit Agreement. "Release" shall mean any release, pumping, pouring, emptying, injecting, escaping, leaching, dumping, seepage, spill, leek, flow, discharge, disposal or emission of a Hazardous Substance. "Renewal Option" shall have the meaning specified in Section 21.1 of the Lease. "Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent, in each case payable under the Lease. "Reportable Event" shall have the meaning specified in ERISA. "Requested Funds" shall mean any funds requested by the Lessee or the Construction Agent, as applicable, in accordance with Section 5 of the Participation Agreement. "Requirement of Law" shall mean, as to any Person, the Certificate of Incorporation and By-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Requisition" shall have the meaning specified in Section 4.2 of the Participation Agreement. "Responsible Officer" shall mean the Chief Executive Officer, the President, any Senior Vice President or Controller or with respect to financial matters, the Chief Financial Officer or Controller, except that when used with respect to the Trust Company or the Owner Trustee, "Responsible Officer" shall also include the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, the Controller and any Assistant Controller or any other officer of the Trust Company or the Owner Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. "Sale Date" shall have the meaning given to such term in Section 22.1(a) of the Lease. Appendix A-31

122 "Sale Notice" shall mean a notice given to Lessor in connection with the election by Lessee of its Sale Option. "Sale Option" shall have the meaning given to such term in Section 20.1 of the Lease. "Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan (or Eurodollar Holder Funding), the last day of the Interest Period applicable to such Eurodollar Loan (or Holder Funding), and if such Interest Period is for more than three months, at intervals of three months after the first day of such Interest Period and (b) as to any Base Rate Loan (or Base Rate Holder Funding), the first day of each month, and the date of conversion of such Loan to a Eurodollar Loan (or conversion of such Holder Funding to a Eurodollar Holder Funding), and (c) as to any Loan (or Holder Funding), the Maturity Date. "Securities Act" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder. "Security Agreement" shall mean the Security Agreement, dated as of the Initial Closing Date between the Owner Trustee and NationsBank, National Association, as agent, as such agreement may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof. "Security Documents" shall mean the collective reference to the Lease, the Lease Supplements, the Security Agreement, the Mortgage Instruments, and all other security documents hereafter delivered to the Administrative Agent granting a lien on any asset or assets of any Person to secure the obligations and liabilities of the Borrower hereunder or under any of the other Credit Documents or to secure any guarantee of any such obligations and liabilities. "Series A Loans" shall mean the loans described as such in Section 2.1 of the Credit Agreement. "Series A Notes" shall mean the promissory notes issued to the Lenders pursuant to Section 2.2 of the Credit Agreement evidencing the Series A Loans. "Series B Loans" shall mean the loans described as such in Section 2.1 of the Credit Agreement. "Series B Notes" shall mean the promissory notes issued to the Lenders pursuant to Section 2.2 of the Credit Agreement evidencing the Series B Loans. "Side Agreement" shall mean the Side Agreement dated as of the Initial Closing Date among the Lessee, the Construction Appendix A-32

123 Agent, the Owner Trustee, the Lenders party thereto, the Holders party thereto and the Administrative Agent. "Subsidiary" shall mean, as to any Person, any corporation in which more than 50% of its outstanding voting stock is owned directly or indirectly by such Person and/or by one or more of such Persons's Subsidiaries. "Supplemental Rent" shall mean all amounts, liabilities and obligations (other than Basic Rent) which the Lessee assumes or agrees to pay to Lessor, the Holders, the Agent, the Lenders or any other Person under the Lease or under any of the other Operative Agreements including, without limitation, payments of the Purchase Option Price, the Termination Value and the Maximum Residual Guarantee Amount and all indemnification amounts, liabilities and obligations. "Tangible Personal Property" shall mean that portion of the Equipment which is not and will not become a Fixture or Improvement. "Taxes" shall have the meaning specified in the definition of Impositions. "Term" shall mean the Basic Term and each Extended Term, if any. "Term Commencement Date" shall have the meaning specified in Section 2.2 of the Lease. "Termination Date" shall have the meaning specified in Section 16.2(a) of the Lease. "Termination Notice" shall have the meaning specified in Section 16.1 of the Lease. "Termination Value" shall mean (a) with respect to all Properties, an amount equal to the sum of (i) the aggregate outstanding principal of the Notes, plus (ii) the aggregate accrued interest on the Loans, plus (iii) the aggregate Holder Property Cost, plus (iv) the aggregate accrued Holder Yield, plus any (v) other Rent and other amounts due and owing under the Lease or any other Operative Agreement, and (b) with respect to a particular Property, an amount equal to the product of the Termination Value of all the Properties times a fraction, the numerator of which is the Property Cost allocable to the particular Property in question and the denominator of which is the aggregate Property Cost for all the Properties. "Total Condemnation" shall mean a Condemnation that involves a taking of Lessor's entire title to a Property. Appendix A-33

124 "Transaction Expenses" shall mean all costs and expenses incurred in connection with the preparation, execution and delivery of the Operative Agreements and the transactions contemplated by the Operative Agreements including without limitation: (a) the reasonable fees, out-of-pocket expenses and disbursements of counsel in negotiating the terms of the Operative Agreements and the other transaction documents, preparing for the closings under, and rendering opinions in connection with, such transactions and in rendering other services customary for counsel representing parties to transactions of the types involved in the transactions contemplated by the Operative Agreements; (b) any and all reasonable fees, charges or other amounts payable to the Lenders, Agent, the Holders, the Owner Trustee or any broker which arise under any of the Operative Agreements; (c) any other reasonable fee, out-of-pocket expenses, disbursement or cost of any party to the Operative Agreements or any of the other transaction documents; (d) any and all Taxes and fees incurred in recording or filing any Operative Agreement or any other transaction document, any deed, declaration, mortgage, security agreement, notice or financing statement with any public office, registry or governmental agency in connection with the transactions contemplated by the Operative Agreement; and (e) real estate taxes on a Property paid during the Construction Period. "Trust Agreement" shall mean the Second Amended and Restated Trust Agreement dated as of the Initial Closing Date between the Holders and the Owner Trustee, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. "Trust Company" shall mean First Security Bank, National Association in its individual capacity, and any successor owner trustee under the Trust Agreement, in each case in its individual capacity. "Trust Estate" shall have the meaning specified in Section 2.2 of the Trust Agreement. "Tuhnekcaw, Inc." shall mean Tuhnekcaw, Inc., a Delaware corporation. Appendix A-34

125 "Type" shall mean, as to any Loan, whether it is a Base Rate Loan or a Eurodollar Loan. "UCC Financing Statements" shall mean collectively the Lender Financing Statements and the Lessor Financing Statements. "Unfunded Amount" shall have the meaning specified in Section 3.2 of the Agency Agreement. "Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code as in effect in any applicable jurisdiction. "United States Bankruptcy Code" shall mean Title 11 of the United States Code. "Unused Fee" shall mean, at any time, the product of (a) the Applicable Unused Fee Rate, multiplied by (b) the average daily amount by which (i) the aggregate Commitments of the Lenders for all Categories of Loans (under the Operative Agreements) exceeds (ii) the outstanding principal amount of all Categories of Loans. "Unused Fee Payment Date" shall mean last Business Day of each March, June, September and December and the last day of the Commitment Period, or such earlier date as the Commitments shall terminate as provided in the Credit Agreement. "U.S." shall mean the United States of America, its territories, its possessions and all other areas subject to its jurisdiction. "Voting Stock" shall mean, with respect to any Person, capital stock issued by a corporation or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to vote may have been suspended by the happening of such a contingency. "Wackenhut Control Group Member" shall mean any of the following: (a) Wackenhut Corrections, (b) Wackenhut Corporation, (c) Tuhnekcaw, Inc., (d) George R. Wackenhut, (e) Ruth J. Wackenhut, (f) Richard R. Wackenhut, (g) any trust over which George R. Wackenhut or Ruth J. Wackenhut has dispositive or voting power, or (h) any heir or successor of any of the foregoing. "Wackenhut Corporation" shall mean Wackenhut Corporation, a Florida corporation. "Wackenhut Corrections" means Wackenhut Corrections Corporation, a Florida corporation. Appendix A-35

126 "Wackenhut Corrections Credit Agreement Event of Default" shall mean an "Event of Default" as defined in the Existing Wackenhut Corrections Credit Agreement (as amended, modified or restated heretofore or hereafter) or any New Facility. "Wackenhut Corrections Trust 1997-1" shall mean the grantor trust created pursuant to the terms and conditions of the Trust Agreement. "Work" shall mean the furnishing of labor, materials, components, furniture, furnishings, fixtures, appliances, machinery, equipment, tools, power, water, fuel, lubricants, supplies, goods or services with respect to any Property. Appendix A-36

1 EXHIBIT 4.3 CREDIT AGREEMENT Dated as of June 19, 1997 among First Security Bank, National Association, not individually, except as expressly stated herein, but solely as Owner Trustee for Wackenhut Corrections Trust 1997-1 as Borrower, The Several Lenders from Time to Time Parties Hereto, and NationsBank, National Association as Administrative Agent

2 TABLE OF CONTENTS Page SECTION 1. DEFINITIONS........................................................1 1.1. Definitional Provisions..................................1 1.2. Defined Terms............................................1 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS....................................2 2.1. Commitments..............................................2 2.2. Notes....................................................2 2.3. Procedure for Borrowing; Amounts of Borrowings...........3 2.4. Unused Fees..............................................4 2.5. Termination, Reduction or Extension of Commitments..............................................4 2.6. Prepayments and Payments.................................5 2.7. Conversion and Continuation Options......................6 2.8. Interest Rates and Payment Dates.........................7 2.9. Computation of Interest..................................8 2.10. Pro Rata Treatment and Payments..........................8 2.11. Increased Costs, Illegality, etc.........................9 2.12. Funding Indemnity.......................................11 2.13. Taxes...................................................11 2.14. Notice of Amounts Payable; Mandatory Assignment.........13 SECTION 3. REPRESENTATIONS AND WARRANTIES....................................14 3.1. Due Organization, etc...................................14 3.2. Authorization; No Conflict..............................15 3.3. Enforceability, etc.....................................15 3.4. Litigation..............................................15 3.5. Lessor Liens............................................16 3.6. Assignment..............................................16 3.7. Defaults................................................16 3.8. Documentation...........................................16 3.9. Use of Proceeds.........................................16 3.10. Securities Act..........................................16 3.11. Chief Place of Business.................................16 3.12. Federal Reserve Regulations.............................16 3.13. Investment Company Act..................................17 SECTION 4. CONDITIONS PRECEDENT..............................................17 4.1. Conditions to Effectiveness.............................17 4.2. Conditions to Each Loan.................................17 SECTION 5. COVENANTS.........................................................18 5.1. Other Activities........................................18 5.2. Ownership of Properties; Indebtedness...................18 5.3. Disposition of Assets...................................18 5.4. Compliance with Operative Agreements....................18 5.5. Further Assurances......................................18 5.6. Notices.................................................19 5.7. Discharge of Liens......................................19 5.8. Trust Agreement.........................................19 SECTION 6. EVENTS OF DEFAULT.................................................19 i

3 PAGE SECTION 7. THE ADMINISTRATIVE AGENT..........................................22 7.1. Appointment.............................................22 7.2. Delegation of Duties....................................23 7.3. Exculpatory Provisions..................................23 7.4. Reliance by Administrative Agent........................24 7.5. Notice of Default.......................................24 7.6. Non-Reliance on Administrative Agent and Other Lenders.................................................24 7.7. Indemnification.........................................25 7.8. Administrative Agent in Its Individual Capacity.........26 7.9. Successor Administrative Agent..........................26 SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL........................27 8.1. Collection of Payments and Other Amounts................27 8.2. Certain Remedial Matters................................29 8.3. Release of Properties, etc..............................29 8.4. Excepted Payments.......................................30 SECTION 9. MISCELLANEOUS.....................................................30 9.1. Amendments and Waivers..................................30 9.2. Notices.................................................31 9.3. No Waiver; Cumulative Remedies..........................32 9.4. Survival of Representations and Warranties..............32 9.5. Payment of Expenses and Taxes...........................32 9.6. Successors and Assigns; Participations and Assignments.............................................33 9.7. Participations..........................................33 9.8. Assignments; Additional Commitment......................33 9.9. The Register; Disclosure................................36 9.10. Adjustments; Set-off....................................37 9.11. Counterparts............................................38 9.12. Severability............................................38 9.13. Integration.............................................38 9.14. GOVERNING LAW...........................................38 9.15. Submission To Jurisdiction; Waivers.....................38 9.16. Acknowledgments.........................................39 9.17. WAIVERS OF JURY TRIAL...................................39 9.18. Nonrecourse.............................................39 9.19. Usury Savings Clause....................................40 Schedule 1.2 Exhibit A SERIES A NOTE Exhibit B SERIES B NOTE Exhibit C ASSIGNMENT AND ACCEPTANCE SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE RELATING TO (A) THE CREDIT AGREEMENT ii

4 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of June 19, 1997, is among FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, except as expressly stated herein, but solely as Owner Trustee for Wackenhut Corrections Trust 1997-1 (the "Owner Trustee" or the "Borrower"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, as Lender and as Administrative Agent. The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1. DEFINITIONAL PROVISIONS. (a) Unless otherwise defined therein, all terms defined in this Agreement shall have such defined meanings when used in the other Credit Documents or any certificate or other document made or delivered pursuant hereto or thereto. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) All accounting terms used herein shall have the respective meanings given to them in accordance with GAAP, unless otherwise provided herein. All computations and determinations for purposes of determining compliance with the financial requirements of this Agreement shall be made in accordance with GAAP, unless otherwise provided herein. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms or such terms. 1.2. DEFINED TERMS. Each capitalized term used in this Agreement and not otherwise defined herein shall have the meaning ascribed thereto in Appendix A to the Participation Agreement (defined below). (a) "AGREEMENT" shall mean this Credit Agreement, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof. (b) "PARTICIPATION AGREEMENT" means the Participation Agreement dated as of the date hereof among Wackenhut Corrections Corporation, as Construction Agent and as Lessee, the Owner Trustee, the Holders party thereto from time to time, the Lenders party thereto from time to time,

5 and NationsBank, National Association, as Administrative Agent, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1. COMMITMENTS. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make Series A Loans and Series B Loans to the Borrower from time to time during the Commitment Period for the purpose of enabling the Borrower to purchase the Properties and to pay Property Acquisition Costs, Property Costs and Transaction Expenses, in an aggregate principal amount as to each Category of Loans at any one time outstanding not to exceed such Lender's Commitment applicable to such Category of Loans; provided that all borrowings under this SECTION 2.1(a), when aggregated with corresponding Holder Fundings, shall be allocated between Series A Loans and Series B Loans as follows: Series A Loans--88%; Series B Loans--9%; and Holder Fundings--3%. (b) The Loans may be Base Rate Loans or Eurodollar Loans having an Interest Period of one, two, three, six or nine months, as specified in the definition of "Interest Period," subject only to the limitations specified in such definition and to the provisions of SECTIONS 2.7, 2.9(c) and 2.11. Any Loan other than a Eurodollar Loan shall constitute a Base Rate Loan. 2.2. NOTES. The Loans made by each Lender shall be evidenced by (i) in the case of Series A Loans, a promissory note of the Borrower, substantially in the form of EXHIBIT A (the "Series A Note"), and (ii) in the case of Series B Loans, a promissory note of the Borrower, substantially in the form of EXHIBIT B (the "Series B Note"), in each case with appropriate insertions as to payee, date and principal amount, payable to the order of such Lender and in a principal amount equal to the applicable Commitment of such Lender. Each Lender is hereby authorized to record the date, Type and amount of each Loan made by such Lender, each continuation thereof, each conversion of all or a portion thereof to another Type, and the date and amount of each payment or prepayment of principal thereof on the schedule annexed to and constituting a part of any of its Notes, and any such recordation shall constitute PRIMA FACIE evidence of the accuracy of the information so recorded, PROVIDED that the failure to make any such recordation or any error in such recordation shall not affect the Borrower's obligations hereunder or under such Note. Each Note shall (i) be dated the Initial Closing Date (ii) be stated to mature on the Maturity Date, and (iii) provide for the payment of interest in accordance with SECTION 2.8. 2

6 2.3. PROCEDURE FOR BORROWING; AMOUNTS OF BORROWINGS. (a) The Borrower may borrow under the Commitments during the Commitment Period on any Business Day that a Funding may be requested pursuant to the terms of SECTION 5.2 of the Participation Agreement, PROVIDED that the Borrower shall give the Administrative Agent irrevocable notice (which must be received by the Administrative Agent (i) prior to 11:00 A.M., Charlotte, North Carolina time, three Business Days prior to the requested Borrowing Date if all or any part of the requested Loans are to be Eurodollar Loans, or (ii) prior to 11:00 A.M., Charlotte, North Carolina time one (1) Business Day prior to the requested Borrowing Date with respect to any Loans that are to be Base Rate Loans) specifying (A) the amount to be borrowed (which on any date shall not be in excess of the then Available Commitments), (B) the requested Borrowing Date, (C) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination thereof, and (D) if the borrowing is to be a combination of Eurodollar Loans and Base Rate Loans, the respective amounts of each Type of Loan; PROVIDED, HOWEVER, that during the Commitment Period (1) there shall be only one (1) Interest Period in effect at any specified time, which Interest Period shall apply to all amounts then outstanding hereunder bearing interest based on the Eurodollar Rate and which Interest Period shall be one month in length (subject to the adjustments set forth in the definition of "Interest Period"), (2) the first Interest Period shall commence on the date that the first Eurodollar Loan hereunder is extended, (3) each succeeding Interest Period shall begin on the last day of the preceding Interest Period, and (4) any amounts borrowed or converted hereunder which are to bear interest based on the Eurodollar Rate may only be borrowed or converted on the first day of a permitted Interest Period. Pursuant to the terms of the Participation Agreement, the Borrower shall be deemed to have delivered such notice upon the delivery of a notice by the Construction Agent or the Lessee containing such required information. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Subject to the terms and conditions hereof (including specifically without limitation SECTION 4.2 hereof), each Lender will make the amount of its pro rata share of each borrowing of each Category available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in SECTION 9.2 prior to 2:00 P.M., Charlotte, North Carolina time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting an account designated, subject to SECTION 11.1 of the Participation Agreement, by the Borrower on the books of such office with the aggregate 3

7 of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. To the extent the principal amount of any Loan is repaid by the Borrower (in connection with the purchase by the Lessee or Construction Agent, or transfer to a third party, of a Property pursuant to the Operative Agreements, but NOT the purchase or transfer of all the Properties pursuant to the Lease or the transfer of any Property pursuant to the Lessor's or Agent's foreclosure or similar exercise of remedies following an Event of Default), the amount repaid shall not reduce the Commitments and may be reborrowed hereunder (PRO RATA from the Lenders), subject to any conditions on borrowing (and the limit on the aggregate number of Properties) set forth herein and in the other Operative Agreements; and PROVIDED FURTHER that the available amount shall not be increased hereunder if the Commitments have been terminated pursuant to SECTION 6 of this Agreement. Except as set forth in the preceding sentence, no amount of any Loan which is repaid or prepaid may be reborrowed hereunder. (b) The Borrower shall deliver an Allocation Notice to the Administrative Agent at least five (5) Business Days before any Scheduled Interest Payment Date. On each date which is three (3) Business Days prior to any Scheduled Interest Payment Date that occurs during the Commitment Period, the Borrower shall be deemed to have requested a Eurodollar Loan pursuant to SECTION 2.3(a) in an amount equal to the aggregate amount of Allocated Interest due and payable on such date with respect to the Construction Period Properties. Upon receipt of any Allocation Notice from the Borrower with respect to such Allocated Interest, the Administrative Agent shall promptly notify each Lender thereof. The Borrowing Date with respect to any such borrowing shall be the relevant Scheduled Interest Payment Date (PROVIDED, that the making of the Loans pursuant to such borrowing shall be subject to satisfaction of the applicable conditions precedent set forth in SECTION 4.2) and the proceeds of such borrowing shall be applied to pay such Allocated Interest. On each such Borrowing Date, the Loan Property Cost and Construction Loan Property Cost shall be increased by an amount equal to the Allocated Interest paid on such date with respect to such Property with the proceeds of such borrowing. (c) The aggregate amount of any borrowing constituting a Eurodollar Loan and any conversion thereof shall be in an amount of at least $1,000,000. 2.4. UNUSED FEES. Promptly after receipt from the Lessee of payment of any Unused Fees payable pursuant to the Participation Agreement, the Administrative Agent shall distribute such payment to the Lenders pro rata according to their respective Commitment Percentages. 4

8 2.5. TERMINATION, REDUCTION OR EXTENSION OF COMMITMENTS. (a) The Borrower shall have the right, upon not less than five (5) Business Days' written notice to the Administrative Agent, to terminate the Commitments or, from time to time (but not more than twice), to reduce the amount of the Commitments, such reductions to be effected pro rata among Categories of Loans and in conjunction with simultaneous pro rata reductions of the Holder Commitments, PROVIDED, that (i) after giving effect to such reduction, the aggregate outstanding principal amount of the Loans of any Category shall not exceed the aggregate Commitments of such Category and the aggregate outstanding amount of Holder Fundings shall not exceed the aggregate Holder Commitments, (ii) such notice shall be accompanied by a certificate of the Construction Agent stating that the amount equal to 97% of aggregate Budgeted Total Loan Property Cost as of the date of such reduction does not exceed the aggregate amount of Available Commitments as of such date after giving effect to such reduction and (iii) unless a Lease Default or Lease Event of Default has occurred and is continuing, the Lessee or the Construction Agent shall have consented to such reduction or termination. Any such reduction of Commitments and Holder Commitments shall be in an aggregate amount equal to the lesser of (A) $1,000,000 or any integral multiple thereof or (B) the remaining Available Commitments of each Category and the remaining Available Holder Commitments, and shall reduce permanently the Commitments of each Category and the Holder Commitments then in effect. (b) On any date on which the Commitments of any Category shall automatically be reduced to zero pursuant to SECTION 6, the Borrower shall prepay all outstanding Loans, together with accrued unpaid interest thereon and all other amounts owing hereunder or under any other Credit Document. 2.6. PREPAYMENTS AND PAYMENTS. (a) The Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon at least two (2) Business Days' irrevocable notice to the Administrative Agent, specifying the date and amount of prepayment and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof, and, if a combination thereof, the amount allocable to each; provided that all prepayments of Loans shall be applied pro rata between Series A Loans (aggregated as a single amount) and Series B Loans (aggregated as a single amount). Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Except as set forth in the next-to-last sentence of SECTION 2.3(a), amounts prepaid may not be reborrowed. 5

9 (b) If on any date the Administrative Agent or the Lessor shall receive any payment in respect of (i) any Casualty or Condemnation pursuant to SECTION 15.1(a) or 15.1(g) of the Lease (excluding any payments in respect thereof which are payable to Lessee in accordance with the Lease), or (ii) the Termination Value of any Property in connection with the delivery of a Termination Notice pursuant to ARTICLE XVI of the Lease, or (iii) the Termination Value of any Property in connection with the exercise of the option to purchase any Property under SECTION 17.11, 17.12 OR 20.1 of the Lease, or (iv) the Termination Value of any Property in connection with the exercise of a Purchase Option under SECTION 20.2 of the Lease or the exercise of the option of the Lessee to transfer the Properties to a third party pursuant to SECTION 20.2 of the Lease, or (v) any payment required to be made or elected to be made by the Construction Agent to the Lessor pursuant to the terms of the Agency Agreement, then in each case, the Borrower shall be required to prepay the principal balance of the Loans on such date (such prepayment to be applied pro rata as between Series A Loans (aggregated as a single amount) and Series B Loans (aggregated as a single amount)) in an amount equal to ninety-seven percent (97%) of such payment and shall apply the remaining three percent (3%) of such payment pro rata to the principal amount of outstanding Holder Fundings. (c) Each prepayment of the Loans pursuant to SECTION 2.6(b) shall be allocated to reduce the Loan Property Cost of the affected Property. Each prepayment of the Loans pursuant to SECTION 2.6(a) shall be allocated to reduce the respective Loan Property Costs of all Properties pro rata according to the Loan Property Costs of such Properties immediately before giving effect to such prepayment. Any amounts applied to reduce the Loan Property Cost of any Construction Period Property pursuant to this paragraph (c) shall also be applied to reduce the Construction Loan Property Cost of such Property until such Construction Loan Property Cost has been reduced to zero. Each prepayment of the Loans pursuant to Section 2.6(a) or 2.6(b) shall be accompanied by a simultaneous prepayment of accrued interest on such Loan and the simultaneous payment of any amounts payable under SECTION 2.12 hereof in connection with the prepayment of such Loan. (d) The outstanding principal amount of the Loans shall be due and payable in full to the Agent for the benefit of each Lender on the Maturity Date, or earlier as specified herein or in any other Operative Agreement. 2.7. CONVERSION AND CONTINUATION OPTIONS. (a) Subject to the restrictions set forth in SECTIONS 2.3, 2.9(c) and 2.11 the Borrower may elect from time to 6

10 time to convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three (3) Business Days' prior irrevocable notice of such election. Upon receipt or any such notice the Administrative Agent shall promptly notify each Lender hereof. All or any part of outstanding Eurodollar Loans or Base Rate Loans may be converted as provided herein, PROVIDED that (i) no Base Rate Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing, (ii) no Base Rate Loan may be converted into a Eurodollar Loan which matures after the Maturity Date, (iii) during the Commitment Period such conversion may only occur on the first day of an Interest Period permitted pursuant to the terms of SECTION 2.3 hereof and (iv) such notice of conversion shall contain an election by the Borrower of an Interest Period for such Eurodollar Loan to be created by such conversion and such Interest Period shall be in accordance with the terms of the definition of the term "Interest Period" as set forth in Appendix A to the Participation Agreement. (b) Subject to the restrictions set forth in SECTIONS 2.3, 2.9(c) and 2.11 hereof, any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent in accordance with the applicable provisions of the term "Interest Period" set forth in Appendix A to the Participation Agreement, PROVIDED that no Eurodollar Loan may be continued as such (i) when any Event of Default has occurred and is continuing or (ii) if such Eurodollar Loan would mature after the Maturity Date and PROVIDED, FURTHER, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding provision such Loan shall be automatically converted to a Base Rate Loan on the last day of such then expiring Interest Period. 2.8. INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Reserve Rate determined for such day plus the Applicable Margin. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate. (c) If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable on any Loan or (iii) any other amount payable hereunder shall not be paid when due (subject to applicable grace periods) (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is the lesser of (x) the interest rate applicable to such Loan (or 7

11 in the case of clause (iii) above, the Base Rate) plus 2% and (y) the highest interest rate permitted by applicable law, in each case from the date of such non-payment until such amount is paid in full (whether after or before judgment). (d) Interest shall be payable in arrears on each Scheduled Interest Payment Date, PROVIDED that (i) interest accruing pursuant to paragraph (c) of this SECTION 2.8 shall be payable from time to time on demand and (ii) each prepayment of any Loan shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid. 2.9. COMPUTATION OF INTEREST. (a) Interest shall be calculated on the basis established in SECTION 14.16 of the Participation Agreement, with respect to length of a "year" and number of days for which interest is accrued. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate, Eurodollar Reserve Percentage, or otherwise, shall become effective as of the day on which such change would become effective under the Existing Wackenhut Corrections Credit Agreement. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. (c) If the Eurodollar Rate cannot be determined by the Administrative Agent in the manner specified in the definition of the term "Eurodollar Rate" referenced in Appendix A to the Participation Agreement, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. Until such time as the Eurodollar Rate can be determined by the Administrative Agent in the manner specified in such definition of such term, no further Eurodollar Loans shall be made or continued as such at the end of the then current Interest Period and all Loans shall continue as Base Rate Loans. 2.10. PRO RATA TREATMENT AND PAYMENTS. (a) Except as provided in SECTION 2.14(b)(ii), each borrowing by the Borrower from the Lenders hereunder and any reduction of the Commitments of any Category of the Lenders 8

12 shall be made pro rata according to the respective Commitment Percentages of such Category of the Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Series A Loans or the Series B Loans, as the case may be, shall be made pro rata according to the respective outstanding principal amounts on the Loans of each such Category then held by each Lender. All payments (including prepayments) to be made by the Borrower hereunder and under the Notes, whether on account of principal, interest or otherwise, shall be made without setoff, counterclaim or other defense and shall be made prior to 12:00 Noon, Charlotte, North Carolina time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent's office specified in SECTION 9.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day; PROVIDED, HOWEVER, if such payment includes an amount of interest calculated with reference to the Eurodollar Rate and the result of such extension would be to extend such payment into another calendar month, then such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this SECTION 2.10(b) shall be conclusive in the absence of manifest error. If such Lender's share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate as set forth above on demand from the Borrower. 9

13 2.11. INCREASED COSTS, ILLEGALITY, ETC. (a) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements that are expressly included in the calculation of the Eurodollar Reserve Rate) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request hereafter adopted, promulgated or made by any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Loans, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent but subject to the terms of SECTION 2.14), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law, but in each case promulgated or made after the date hereof) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type or upon the Loans, then, upon demand by such Lender (with a copy of such demand to the Administrative Agent but subject to the terms of SECTION 2.14), the Borrower shall immediately pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder or upon the Loans. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) Without affecting its rights under SECTION 2.11(a) or 2.11(b) or any other provision of this Agreement, each Lender agrees that if there is any increase in any cost to or reduction in any amount receivable by such Lender with respect to which the Borrower would be obligated to compensate such Lender pursuant to SECTIONS 2.11(a) or 2.11(b), such Lender shall use reasonable efforts to select an alternative lending office which would not result in any 10

14 such increase in any cost to or reduction in any amount receivable by such Lender; PROVIDED, HOWEVER, that no Lender shall be obligated to select an alternative lending office if such Lender determines, in its sole discretion, that (i) as a result of such selection such Lender would be in violation of any applicable law, regulation, treaty, or guideline, or would incur additional costs or expenses or (ii) such selection would be inadvisable for regulatory reasons or would impose an unreasonable burden or additional costs on such Lender. (d) Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of or any change in any law or regulation, or in the interpretation of any law or regulation, makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for any Lender to perform its obligations hereunder to make or maintain Eurodollar Loans, then (i) each Eurodollar Loan will automatically, at the end of the Interest Period for such Eurodollar Loan, convert into a Base Rate Loan and (iii) the obligation of the Lenders to make, convert or continue Eurodollar Loans shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist. 2.12. FUNDING INDEMNITY. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or reasonable expense which such Lender may sustain or incur as a consequence of (a) any failure of the Borrower to make a borrowing of any Loan hereunder after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement (other than by reason of the failure of a Lender or Lenders to make funds available without cause), (b) any failure of the Borrower to make any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a voluntary or involuntary prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnification shall be in an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein over (ii) the amount of interest (as determined by such Lender) which would have accrued to such Lender on such amount by reemploying such funds in loans of the same type and amount during the period from the date of prepayment or failure to borrow to the last day of the then applicable Interest Period (or, in the case of a failure to 11

15 borrow, the Interest Period that would have commenced on the date of such failure). This covenant shall survive the termination of this Agreement and the payment of all other amounts payable hereunder. 2.13. TAXES. (a) All payments made by the Borrower under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, documentary stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement, any Note or any other Operative Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder or under the Notes, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes, PROVIDED, HOWEVER, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the U.S. or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this SECTION 2.13. Whenever any Non-Excluded Taxes are payable by the Borrower, then as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest, costs or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this SECTION 2.13(a) shall 12

16 survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Lender that is not incorporated under the laws of the U.S. or a state thereof shall: (i) deliver to the Borrower and the Administrative Agent (A) the duly completed copies of IRS Form 1001 or 4224, or successor applicable form, as the case may be, and (B) an IRS Form W-8 or W-9, or successor applicable form, as the case may be; (ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent; unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement without deduction or withholding of any U.S. federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from U.S. backup withholding tax. Each Person that shall become a Participant pursuant to SECTION 9.7 or a Lender pursuant to SECTION 9.8 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this SECTION 2.13(b), PROVIDED that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased. 2.14. NOTICE OF AMOUNTS PAYABLE; MANDATORY ASSIGNMENT. (a) NOTICE. In the event that any Lender becomes aware that any amounts are or will be owed to it pursuant to SECTION 2.11, 2.12 or 2.13 or that it is unable to make Eurodollar Loans, then it shall promptly notify the Borrower and the Administrative Agent thereof and, as soon as 13

17 possible thereafter, such Lender shall submit to the Borrower (with a copy to the Administrative Agent) a certificate indicating the amount owing to it and the calculation thereof. The amounts set forth in such certificate shall be conclusive evidence of the obligations of the Borrower hereunder absent manifest error. (b) MANDATORY ASSIGNMENT. In the event that any Lender delivers to the Borrower a certificate pursuant to SECTION 2.14(a) in connection with amounts payable pursuant to SECTION 2.11 or SECTION 2.12, or such Lender is required to make Loans as Base Rate Loans in accordance with SECTION 2.11(d) then, subject to SECTION 11.1 of the Participation Agreement, the Borrower may, at its own expense and in its sole discretion, (i) require such Lender to transfer or assign, in whole or in part, without recourse (in accordance with SECTION 9.8), all or part of its interests, rights (except for rights to be indemnified for actions taken while a party hereunder) and obligations under this Agreement to a replacement bank or institution if the Borrower (subject to SECTION 11.1 of the Participation Agreement), with the full cooperation of such Lender, can identify a Person who is ready, willing and able to be such replacement bank or institution with respect thereto and such replacement bank or institution (which may be another Lender) shall assume such assigned obligations, or (ii) during such time as no Default or Event of Default has occurred and is continuing, terminate the Commitment of such Lender and prepay all outstanding Loans of such Lender; PROVIDED, HOWEVER, that (x) the Borrower or such replacement bank or institution, as the case may be, shall have paid to such Lender in immediately available funds the principal of and interest accrued to the date of such payment on the Loans made by it hereunder and all other amounts owed to it hereunder (and, if such Lender is also a Holder, all Holder Fundings and Holder Yield accrued and unpaid thereon), (y) any termination of Commitments shall be subject to the terms of SECTION 2.5(a) and (z) such assignment or termination of the Commitment of such Lender and prepayment of Loans does not conflict with any law, rule or regulation or order of any court or other Governmental Authority. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, each of the Trust Company and the Owner Trustee hereby represents and warrants to the Administrative Agent and each Lender as follows (PROVIDED that the representations in SECTIONS 3.8, 3.9, 3.10, 3.12 and 3.13 are made solely by the Owner Trustee in its capacity as such): 3.1. DUE ORGANIZATION, ETC. It is a national banking association duly organized, validly existing and in good standing 14

18 under the laws of the United States and has the power and authority to enter into and perform its obligations under the Trust Agreement and (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) has the trust power and authority to act as the Owner Trustee and to enter into and perform the obligations under each of the other Operative Agreements to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party and each other agreement, instrument and document to be executed and delivered by it on or before the date this representation is made or deemed made in connection with or as contemplated by each such Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party. 3.2. AUTHORIZATION; NO CONFLICT. The execution, delivery and performance of each Operative Agreement to which it is or will be a party, either in its individual capacity or (assuming due authorization, execution and delivery of the Trust Agreement by the Holders) as the Owner Trustee, as the case may be, has been duly authorized by all necessary action on its part and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by it with any of the terms and provisions thereof (a) requires or will require any approval of its stockholders or any approval or consent of any trustee or holders of any of its indebtedness or obligations, (b) violates or will violate any current law, governmental rule or regulation relating to its banking or trust powers, (c) violates or will violate or result in any breach of or constitute any default under, or result in the creation of any Lien upon any of its property under, (i) its charter or by-laws, or (ii) any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement or other agreement or instrument to which it is a party or by which it or its properties may be bound or affected, which violation, breach, default or Lien under clause (ii) would materially and adversely affect its ability, in its individual capacity or as Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or (d) requires or will require any Governmental Action by any Governmental Authority regulating its banking or trust powers. 3.3. ENFORCEABILITY, ETC. The Trust Agreement and, assuming the Trust Agreement is the legal, valid and binding obligation of the Holders, each other Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is or will be a party have been, or will be, duly executed and delivered by the Trust Company or the Owner Trustee, as the case may be, and the Trust Agreement and each such other Operative Agreement to which the Trust Company or the Owner Trustee, as the case may be, is a party constitutes, or upon execution and delivery will constitute, a legal, valid and binding obligation enforceable against the Trust Company or the Owner Trustee, as the case may be, in accordance with the terms thereof. 15

19 3.4. LITIGATION. There is no action or proceeding pending or, to its knowledge, threatened to which it is or will be a party, either in its individual capacity or as the Owner Trustee, before any Governmental Authority that concerns any Property being purchased or leased or Construction Funding being funded on the date this representation is made or deemed made or that, if adversely determined, would materially and adversely affect its ability, in its individual capacity or as Owner Trustee, to perform its obligations under the Operative Agreements to which it is a party or would question the validity or enforceability of any of the Operative Agreements to which it is or will become a party. 3.5. LESSOR LIENS. Each Property is free and clear of all Lessor Liens attributable to it in its individual capacity. 3.6. ASSIGNMENT. It has not assigned or transferred any of its right, title or interest in or under the Lease, the Agency Agreement or its interest in any Property, except in accordance with the Operative Agreements. 3.7. DEFAULTS. No Default or Event of Default hereunder or under any other Operative Agreement attributable to it has occurred and is continuing. 3.8. DOCUMENTATION. The Owner Trustee, in its trust capacity, is a party to no documents, instruments or agreements other than the Operative Agreements (and any other documents delivered in connection with the Operative Agreements). 3.9. USE OF PROCEEDS. The Owner Trustee shall use the proceeds of the Loans solely in accordance with the terms of the Operative Agreements. 3.10. SECURITIES ACT. Neither the Owner Trustee nor any Person authorized by the Owner Trustee to act on its behalf has offered or sold any interest in the Trust Estate or the Notes, or in any similar security relating to a Property, or in any security the offering of which for the purposes of the Securities Act of 1933, as amended, would be deemed to be part of the same offering as the offering of the aforementioned securities to, or solicited any offer to acquire any of the same from, any Person other than in the case of the Notes, the Lenders, and neither the Owner Trustee nor any Person authorized by the Owner Trustee to act on its behalf will take any action which would subject, as a direct result of such action alone, the issuance or sale of any interest in the Trust Estate or the Notes to the provisions of Section 5 of the Securities Act of 1933, as amended, or require the qualification of any Operative Agreement under the Trust Indenture Act of 1939, as amended. 3.11. CHIEF PLACE OF BUSINESS. The Owner Trustee's chief place of business, chief executive office and office where the documents, accounts and records relating to the transactions 16

20 contemplated by this Agreement and each other Operative Agreement are kept are each located at 79 South Main Street, Salt Lake City, Utah 84111. 3.12. FEDERAL RESERVE REGULATIONS. The Owner Trustee is not engaged principally in, and does not have as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Board), and no part of the proceeds of the Loans will be used by it to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulations G, T, U or X of the Board. 3.13. INVESTMENT COMPANY ACT. The Owner Trustee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4. CONDITIONS PRECEDENT 4.1. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement is subject to the satisfaction of all conditions precedent set forth in SECTION 6 of the Participation Agreement required by said Section to be satisfied on or prior to the Initial Closing Date and to the receipt by each Lender of its Notes, duly executed by the Borrower. 4.2. CONDITIONS TO EACH LOAN. The agreement of each Lender to make any Loan requested to be made by it on any date is subject to the satisfaction of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by the Borrower in or pursuant to the Operative Agreements shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date. (b) NO DEFAULT. Neither any Event of Default nor (except as otherwise permitted under SECTION 8.4 of the Participation Agreement) any Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made on such date. (c) PARTICIPATION AGREEMENT CONDITIONS. With respect to each Acquisition Funding and each Construction Funding, the applicable conditions precedent to the Funding associated therewith specified in SECTION 5 of the Participation Agreement shall have been satisfied. 17

21 (d) HOLDER CONTRIBUTION. With respect to each Acquisition Funding and each Construction Funding, the Administrative Agent shall be satisfied that the Lessor shall receive from the Holders on the relevant Borrowing Date an amount equal to the Holder Funding associated with such Loan. (e) ALLOCATION NOTICE. With respect to each Interest Payment Loan, the Administrative Agent shall have received an Allocation Notice no later than five (5) Business Days prior to the Borrowing Date in respect thereof. Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such Loan that the conditions contained in this SECTION 4.2 have been satisfied. SECTION 5. COVENANTS So long as any Loan or Note remains outstanding and unpaid or any other amount is owing to any Lender or the Administrative Agent hereunder or under any other Credit Document and so long as the Commitments have not been terminated: 5.1. OTHER ACTIVITIES. The Borrower shall not conduct, transact or otherwise engage in, or commit to transact, conduct or otherwise engage in, any business or operations other than the entry into, and exercise of rights and performance of obligations in respect of, the Operative Agreements and other activities incidental or related to the foregoing. 5.2. OWNERSHIP OF PROPERTIES; INDEBTEDNESS. The Borrower shall not own, lease, manage or otherwise operate any properties or assets other than the Ancillary Properties or in connection with the activities described in SECTION 5.1, or incur, create, assume or suffer to exist any Indebtedness or other consensual liabilities or financial obligations other than the Bridge Debt or as may be incurred, created or assumed or as may exist in connection with the activities described in SECTION 5.1 (including, without limitation, the Loans and other obligations incurred by the Borrower hereunder). 5.3. DISPOSITION OF ASSETS. The Borrower shall not convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets, whether now owned or hereafter acquired, except to the extent expressly contemplated by the Operative Agreements. 5.4. COMPLIANCE WITH OPERATIVE AGREEMENTS. The Borrower shall at all times (a) observe and perform all of the covenants, conditions and obligations required to be performed by it (whether in its capacity as Lessor, Owner Trustee or otherwise) under each Operative Agreement to which it is a party and (b) observe and perform, or cause to be observed and performed, 18

22 all of the covenants, conditions and obligations of the Lessor under the Lease, even in the event that the Lease is terminated at stated expiration following a Lease Event of Default or otherwise. 5.5. FURTHER ASSURANCES. At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of the Borrower, the Borrower will promptly and duly execute and deliver such further instruments and documents and take such further action as the Administrative Agent or the Majority Lenders may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and the other Operative Agreements and of the rights and powers herein or therein granted. 5.6. NOTICES. If on any date, a Responsible Officer of the Borrower shall obtain actual knowledge of the occurrence of a Default or Event of Default, the Borrower will give written notice thereof to the Administrative Agent within five (5) Business Days after such date. 5.7. DISCHARGE OF LIENS. Neither the Borrower nor the Trust Company will create or permit to exist at any time (and each of the Borrower and the Trust Company will, at its own expense, promptly take such action as may be necessary duly to discharge, or cause to be discharged), any Lessor Liens attributable to it on the Properties, PROVIDED that the Borrower and the Trust Company shall not be required to discharge any Lessor Lien while the same is being contested in good faith by appropriate proceedings diligently prosecuted so long as (a) such proceedings shall not involve any material danger of impairment of any of the Liens contemplated by the Security Documents or of the sale, forfeiture or loss of any Property or title thereto or any interest therein or the payment of Rent, and (b) such proceedings shall not materially interfere with the disposition of any Property or title thereto or interest therein or the payment of Rent. 5.8. TRUST AGREEMENT. Without prejudice to any right of the Owner Trustee under the Trust Agreement to resign, the Owner Trustee (a) agrees not to terminate or revoke the trust created by the Trust Agreement except as permitted by ARTICLE VIII of the Trust Agreement, (b) agrees not to amend, supplement, terminate, revoke or otherwise modify any provision of the Trust Agreement in any manner which could reasonably be expected to have an adverse effect on the rights or interests of the Administrative Agent or the Lenders hereunder or under the other Operative Agreements and (c) agrees to comply with all of the terms of the Trust Agreement. SECTION 6. EVENTS OF DEFAULT Upon the occurrence of any of the following specified events (each an "Event of Default"): 19

23 (a) The Borrower shall, except as provided in paragraph (c), default, and such default shall continue for five (5) or more days, in the payment when due of any principal or interest on any Loan; or (b) Except as provided in paragraphs (a) and (c), the Borrower shall default, and such default shall continue for ten (10) or more days, in the payment of any amount owing under any of the Credit Documents; or (c) The Borrower shall default in the payment of any amount due on the Maturity Date owing under any Credit Document; or (d) The Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in any Credit Document to which it is a party (other than those referred to in paragraphs (a), (b) and (c) above), PROVIDED that in the case of any such default under SECTION 5.4, 5.5 or 5.8(c), such default shall continue for a period of at least thirty (30) days after notice to the Borrower and the Lessee by the Administrative Agent or the Majority Lenders; or (e) Any representation, warranty or statement made or deemed made by the Borrower herein or in any other Credit Document, or by the Borrower, or the Lessee or the Construction Agent in the Participation Agreement, the Lease or the Agency Agreement or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto, shall prove to be untrue in any material respect on the date as of which made or deemed made; or (f) (i) Any Lease Event of Default shall have occurred and be continuing; or (ii) The Owner Trustee shall default in the due performance or observance by it of any term, covenant or agreement contained in the Participation Agreement or in the Trust Agreement to or for the benefit of the Administrative Agent or a Lender, PROVIDED that in the case of this clause (ii), such default shall continue unremedied for a period of at least thirty (30) days after notice to the Owner Trustee and the Lessee by the Administrative Agent or the Majority Lenders; or (iii) Any Wackenhut Corrections Credit Agreement Event of Default shall have occurred and be continuing; or (iv) Any Bridge Loan Event of Default shall have occurred and be continuing; or (g) The Borrower shall be unable to pay its debts generally as they become due; file a petition to take 20

24 advantage of any insolvency statute; make an assignment for the benefit of its creditors; commence a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or any substantial part of its property; file a petition or answer seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute; or (h) Any court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of the Borrower or of the whole or any substantial part of its properties and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days, or approve a petition filed against the Borrower seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, which petition is not dismissed within sixty (60) days; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of the Borrower or of the whole or any substantial part of its properties, which control is not relinquished within sixty (60) days; or if there is commenced against the Borrower any proceeding or petition seeking reorganization, arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state which proceeding or petition remains undismissed for a period of sixty (60) days; or if the Borrower takes any action to indicate its consent to or approval of any such proceeding or petition; or (h) Any Security Document shall cease to be in full force and effect, or shall cease to give the Administrative Agent the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a first priority perfected security interest in, and Lien on, all of the Properties), in favor of the Administrative Agent on behalf of itself and the Lenders, superior to and prior to the rights of all third Persons and subject to no other Liens (except Permitted Liens); or (i) The Lease, the Guaranty or any other Operative Agreement shall cease to be enforceable against the Lessee, the Construction Agent or the Guarantor; or (j) One or more judgments or decrees shall be entered against the Borrower involving a liability of $50,000 or more for any one such judgment or decree, or $100,000 or more in the aggregate for all such judgments and decrees, and any such judgments or decrees shall not have been 21

25 vacated, discharged or stayed or bonded pending appeal within thirty (30) days from the entry thereof; or (k) Any default by any party shall have occurred and be continuing under any lease or sublease (other than the Lease or any sublease by Lessee permitted under SECTION 25.2(b) of the Lease) of any portion of any Property; then, and in any such event, (A) if such event is an Event of Default specified in paragraph (g) above with respect to the Borrower, the Commitments shall automatically and immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement, the Notes and any other Credit Documents, shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Majority Lenders, the Administrative Agent may, or upon the request of the Majority Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Majority Lenders, the Administrative Agent may, or upon the request of the Majority Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement, the Notes and any other Credit Documents, to be due and payable forthwith, whereupon the same shall immediately become due and payable (any of the foregoing occurrences or actions referred to in clause (A) or (B) above, being referred to as an "Acceleration"). Except as expressly provided above in this SECTION 6, presentment, demand, protest and all other notices of any kind are hereby expressly waived. Upon the occurrence of any Event of Default and at any time thereafter so long as any Event of Default shall be continuing, the Administrative Agent may, and upon the written instructions of the Majority Lenders shall, exercise any or all of the rights and powers and pursue any or all of the remedies available to it hereunder and under the other Credit Documents and the Lease and shall have any and all rights and remedies available under the Uniform Commercial Code or any other provision of law (all such remedies being cumulative and in addition to any other remedies that may be available). Upon the occurrence of any Event of Default and at any time thereafter so long as any Event of Default shall be continuing, the Administrative Agent may, and upon request of the Majority Lenders shall, proceed to protect and enforce this Agreement, the Notes, the Lease, and the other Operative Agreements by one or more suits or proceedings in equity, at law or in bankruptcy, whether for the specific performance of any covenant or agreement contained therein or in execution or aid of any power granted therein, or for foreclosure hereunder, or for the appointment of a receiver for any Property, or for the recovery of judgment for 22

26 any indebtedness secured thereby, or for the enforcement of any other remedy available under applicable laws. The Borrower shall be liable for any and all accrued and unpaid amounts due hereunder before, during or after the exercise of any of the foregoing remedies, including without limitation all reasonable legal fees and other reasonable costs and expenses incurred by the Administrative Agent or any Lender by reason of the occurrence of any Event of Default or the exercise of remedies with respect thereto. SECTION 7. THE ADMINISTRATIVE AGENT 7.1. APPOINTMENT. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Operative Agreements, and each Lender irrevocably authorizes the Administrative Agent, in such capacity, to execute the Operative Agreements as agent for and on behalf of such Lender, to take such action on behalf of such Lender under the provisions of this Agreement and the other Operative Agreements and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Operative Agreements, together with such other powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, each of the Lenders hereby specifically acknowledges the terms and provisions of the Participation Agreement and directs the Administrative Agent to exercise such powers, make such decisions and otherwise perform such duties as are delegated to the Administrative Agent thereunder without being required to obtain any specific consent with respect thereto from any Lender. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Operative Agreement or otherwise exist against the Administrative Agent. 7.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement and the other Operative Agreements through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 7.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Operative Agreement (except for its or such Person's own gross negligence 23

27 or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or the Lessee or any officer thereof contained in this Agreement or any other Operative Agreement or in any certificate, report, statement or other document provided in connection with, this Agreement or any other Operative Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Operative Agreement or for any failure of the Borrower or the Lessee to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Operative Agreement, or to inspect the properties, books or records of the Borrower or the Lessee. 7.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower or the Lessee), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Operative Agreement unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Operative Agreements in accordance with a request of the Majority Lenders, and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. 7.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with 24

28 respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; PROVIDED that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Lenders. 7.6. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or the Lessee, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and the Lessee and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Operative Agreements, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and the Lessee. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower or the Lessee which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 7.7. INDEMNIFICATION. The Lenders agree to indemnify the Administrative Agent, in its capacity as such (to the extent not reimbursed by the Borrower or the Lessee and without limiting the obligation of the Borrower or the Lessee to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this SECTION 7.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any 25

29 and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes) be imposed on, incurred by or asserted against any of them in any way relating to or arising out of, the Commitments, this Agreement, any of the other Operative Agreements or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any of them under or in connection with any of the foregoing; PROVIDED that the Administrative Agent shall not be indemnified hereunder against any liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from the gross negligence or willful misconduct of the Administrative Agent. The agreements in this SECTION 7.7 shall survive the payment of the Notes and all other amounts payable hereunder or under any other Credit Document. 7.8. ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower or the Lessee as though the Administrative Agent were not the Administrative Agent hereunder and under the other Operative Agreements. With respect to any Loans made or renewed by it and any Note issued to it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Operative Agreements as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. 7.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as Administrative Agent upon thirty (30) days' notice to the Lenders, the Borrower and, so long as no Lease Event of Default shall have occurred and be continuing, the Lessee. If the Administrative Agent shall resign as Administrative Agent under this Agreement, the Majority Lenders shall appoint from among the Lenders a successor Administrative Agent which successor Administrative Agent shall be subject to the approval of the Borrower and, so long as no Lease Event of Default shall have occurred and be continuing, the Lessee, such approval not to be unreasonably withheld, conditioned or delayed. If no successor Administrative Agent is appointed prior to the effective date of the resignation of the resigning Administrative Agent, the Administrative Agent may appoint a successor Administrative Agent from among the Lenders, after consulting with the Lenders and subject to the approval of the Borrower and, so long as no Lease Event of Default shall have occurred and be continuing, the Lessee, such approval not to be unreasonably withheld, conditioned or delayed. If no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is thirty days following a retiring Administrative Agent's notice of resignation, the retiring agent's notice of 26

30 resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Administrative Agent until such time, if any, as the Majority Lenders appoint a successor Administrative Agent, as provided for above. Upon the effective date of such resignation, the successor Administrative Agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent, the term "Administrative Agent" shall mean such successor Agent, and the retiring Administrative Agent's rights, powers and duties in such capacity shall be terminated. After any retiring Administrative Agent resigns hereunder, the provisions of this ARTICLE VII and SECTION 9.5 shall inure to the benefit of such retiring Agent as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. SECTION 8. MATTERS RELATING TO PAYMENT AND COLLATERAL 8.1. COLLECTION OF PAYMENTS AND OTHER AMOUNTS. (a) The Lessee has agreed pursuant to the terms of the Participation Agreement to pay directly to the Administrative Agent any and all Rent and any other amounts of any kind or type owing by the Lessee to the Lessor or the Owner Trustee under the Lease or any other Operative Agreement. The Administrative Agent shall, promptly after receipt, apply in accordance with the terms of this SECTION 8 any such amounts received from the Lessee and all other payments, receipts and other consideration received by the Administrative Agent pursuant to the Security Agreement or otherwise received by the Administrative Agent or any of the Lenders in connection with the Collateral, the Security Documents or any of the other Operative Agreements. (b) Payments and other amounts received by the Administrative Agent from time to time in accordance with the terms of subparagraph (a) shall be applied as follows: (i) Any such payment identified as Basic Rent shall be applied by the Administrative Agent FIRST, ratably to the Lenders for application to the payment of interest on the Loans which is due and payable on such date (other than, except in the case of an Acceleration, Allocated Interest); and SECOND, to the Borrower for application ratably to the payment of accrued Holder Yield with respect to Holder Property Cost (other than, except in the case of an Acceleration, Allocated Return); and THIRD, if no Default or Event of Default has occurred and is continuing, any excess shall be paid to such Person or Persons as the Lessee may designate; PROVIDED that if a Default or Event of Default is in effect, such excess (if any) shall instead be held by the Administrative Agent until the earlier of (I) the first date thereafter on which no Default or Event of Default 27

31 shall be continuing (in which case such payments shall then be made to such other Person or Persons designated by the Lessee) and (II) the Maturity Date (or, if earlier, the date of any Acceleration) in which case such amounts shall be applied in the manner contemplated by SECTION 8.1(b)(iv). (ii) Any such payment or amount described in SECTION 2.6(b) shall be applied in accordance with the terms of SECTION 2.6(b). (iii) Any such payment identified as proceeds of the sale of any Property, whether pursuant to ARTICLE XXII of the Lease or pursuant to the exercise of remedies under the Security Documents or otherwise, and any payment in respect of excess wear and tear pursuant to SECTION 22.3 of the Lease, shall be applied by the Administrative Agent FIRST, ratably to the payment of the principal and interest of the Series B Loans then outstanding, SECOND, to the payment to the Borrower of an amount not to exceed the outstanding principal balance of all Holder Fundings plus all outstanding Holder Yield with respect to such outstanding Holder Fundings, THIRD, to the extent such payment exceeds the maximum amount payable pursuant to the foregoing provisions of this paragraph (iii), ratably to the payment of the principal and interest of the Series A Loans plus any and all other amounts owing to the Administrative Agent and the Lenders hereunder or under any of the other Operative Agreements and FOURTH, to the extent moneys remain after application pursuant to clauses FIRST through THIRD above, to the Borrower for application to any and all other amounts owing to the Holders or the Borrower and as the Borrower and the Holders shall determine. (iv) Any such payment identified as a payment pursuant to SECTION 22.1(b) of the Lease (or otherwise) of the Maximum Residual Guarantee Amount (or any such lesser amount as may be required by SECTION 22.1(b) of the Lease) in respect of the Properties shall be applied by the Administrative Agent FIRST, ratably to the payment of the principal and interest balance of the Series A Loans then outstanding, SECOND, to the payment of any other amounts owing to the Administrative Agent or the Lenders hereunder or under any of the other Operative Agreement, and THIRD, to the extent moneys remain after application pursuant to clauses FIRST and SECOND above, to the Borrower for application to Holder Fundings and Holder Yield and any other amounts owing to the Holders or the Borrower as the Borrower and the Holders shall determine. 28

32 (v) Any such payment identified as Supplemental Rent shall be applied by the Administrative Agent to the payment of any amounts then owing to the Administrative Agent, the Lenders, the Holders and the other parties to the Operative Agreements (or any of them) (other than any such amounts payable pursuant to the preceding provisions of this SECTION 8.1(b)) as shall be determined by the Administrative Agent in its reasonable discretion. (vi) The Administrative Agent in its reasonable judgment shall identify the nature of each payment or amount received by the Administrative Agent and apply each such amount in the manner specified above. (c) Upon the termination of the Commitments and the payment in full of the Loans and all other amounts owing by the Borrower hereunder or under any other Credit Document, any such moneys remaining with the Administrative Agent shall be paid to the Borrower or such other Person or Persons as the Borrower may designate. In the event of an Acceleration it is agreed that, prior to the application of amounts received by the Administrative Agent in the order described in SECTION 8.1(b) above, any such amounts shall first be applied to the payment of (i) any and all sums advanced by the Administrative Agent in order to preserve the Collateral or preserve its security interest therein, (ii) the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing or realizing on the Collateral, or of any exercise by the Administrative Agent of its rights under the Security Documents, together with reasonable attorneys' fees and court costs and (iii) any other amounts owed to the Administrative Agent under or in connection with the transactions contemplated by the Operative Agreements (including without limitation any accrued and unpaid administration fees). 8.2. CERTAIN REMEDIAL MATTERS. Notwithstanding any other provision of this Agreement or any other Credit Document: (a) the Borrower shall at all times retain all rights to Excepted Payments payable to or for the account of the Owner Trustee or any of the Holders and to demand, collect or commence an action at law to obtain such payments and to enforce any judgment with respect thereto (but not to terminate the Lease as a result thereof); and (b) the Borrower shall at all times retain the right, but not to the exclusion of the Administrative Agent, (A) to receive from the Lessee all notices, certificates and other documents and all information that the Lessee is permitted or required to give or furnish to the Borrower or the Lessor pursuant to the Lease, the Participation Agreement or any 29

33 other Operative Agreement, (B) to retain all rights with respect to insurance that ARTICLE XIV of the Lease specifically confers upon the "Lessor", (C) to provide such insurance as the Lessee shall have failed to maintain or as the Borrower may desire, and (D) to enforce compliance by the Lessee with the provisions of ARTICLES VIII, IX, X, XI, XIV AND XVII of the Lease. 8.3. RELEASE OF PROPERTIES, ETC. If the Lessee shall at any time purchase any Property pursuant to the terms of the Lease, or the Construction Agent shall purchase any Property pursuant to the Agency Agreement, or if any Property shall be sold in accordance with ARTICLE XXII of the Lease, then, upon satisfaction by the Borrower of its obligation to prepay the Loans and to pay accrued interest on the Loans so prepaid pursuant to SECTION 2.6, the Administrative Agent is hereby authorized to release such Property from the Liens created by the Security Documents. In addition, upon the termination of the Commitments and the payment in full of the Loans and all other amounts owing by the Borrower, the Lessee and the Construction Agent hereunder or under any other Operative Agreement the Administrative Agent is hereby authorized to release all of the Properties from the Liens created by the Security Documents; provided that such payment shall be sufficient to pay in full the Loans and all other amounts owing by the Borrower, the Lessee or the Construction Agent hereunder or under the other Operative Agreements. Upon request of the Borrower or the Lessee following any such release, the Administrative Agent shall, at the sole cost and expense of the Borrower or the Lessee, execute and deliver to the Borrower or the Lessee such documents as the Borrower or the Lessee shall reasonably request to evidence such release. 8.4. EXCEPTED PAYMENTS. Notwithstanding any other provision of this Agreement or the Security Documents, any Excepted Payment received at any time by the Administrative Agent shall be distributed promptly to the Person entitled to receive such Excepted Payment. SECTION 9. MISCELLANEOUS 9.1. AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Credit Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this SECTION 9.1. The Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent may, from time to time, (a) enter into written agreements with the Borrower, amending, modifying or supplementing the Credit Documents for the purpose of adding any provisions to the Credit Documents or changing in any manner the rights of the Administrative Agent, the Lenders or the Borrower thereunder or (b) waive, on such terms and conditions as the Majority Lenders may specify in such instrument, any of the requirements of the Credit Documents or any Default or Event of 30

34 Default and its consequences. In addition, the Administrative Agent may from time to time consent in writing to amendments, supplements, modifications or waivers with respect to any Operative Agreement (other than the Credit Documents but including the Guaranty Agreement), subject to receipt of the prior written consent of the Majority Lenders; PROVIDED, HOWEVER, that so long as the Administrative Agent has no actual knowledge of the existence of an Event of Default the Administrative Agent may grant waivers or consents with respect to the terms and requirements of the Participation Agreement without the prior consent of the Lenders (as such authority of the Administrative Agent is more specifically described in SECTION 7.1 hereof). Notwithstanding the foregoing, no such amendment, supplement, modification or waiver shall (i) reduce the amount or extend the scheduled date of maturity of any Note, or reduce the stated rate of any interest payable hereunder (other than as a result of waiving the applicability of any post default increase in interest rates) or any Unused Fees payable under the Participation Agreement, or extend the scheduled date of any payment of such interest or Unused Fees, or increase the amount or extend the expiration date of any Lender's Commitment, in each case without the consent of each Lender directly affected thereby, or (ii) amend, modify or waive any provision of this SECTION 9.1 or reduce the percentage specified in the definition of Majority Lenders, or consent to the assignment or transfer by the Borrower of or release the Borrower from any of its rights and obligations under the Credit Documents, or release a material portion of the Collateral (except in accordance with SECTION 8.3), or release the Lessee from its obligations under the Lease, or release the Guarantor from its obligations under the Guaranty, or otherwise alter any payment obligations of the Lessee to the Lessor or the Lessor to the Administrative Agent or the Lenders under the Operative Agreements, in each case without the written consent of all the Lenders, or (iii) amend, modify or waive any provision of SECTION 7 without the written consent of the then Administrative Agent. Any such waiver, amendment, supplement or modification shall be binding upon the Borrower, the Lessee, the Lenders and the Administrative Agent and all future holders of the Notes. In the case of any waiver, the Borrower, the Lessee, the Lenders and the Administrative Agent shall be restored to their former position and rights under the Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extent to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 9.2. NOTICES. All notices, requests and demands to or upon the respective parties hereto shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in SCHEDULE 1.2 in the case of the other parties hereto, or to such 31

35 other address as may be hereafter notified by any party hereto or any future holder of the Notes: The Borrower: First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Val T. Orton Telephone No.: (801) 246-5630 Telecopy No.: (801) 246-5053 NationsBank, as Administrative Agent: NationsBank, National Association 100 Southeast 2nd Street FL7-950-14-02 Miami, Florida 33131 Attention: Maria Conroy Telephone No.: (305) 533-2428 Telecopy No.: (305) 533-2437 with all notices of borrowing, conversion, continuation or prepayment to be sent to: NationsBank, N.A. Agency Services Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Jamie McCotter Telephone No.: (704) 388-2374 Telecopy No.: (704) 386-9923 PROVIDED that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to SECTION 2.3, 2.5, 2.6 or 2.7 shall not be effective until received. 9.3. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 9.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall, except 32

36 as otherwise specifically limited therein, survive the execution and delivery of this Agreement and the Notes and the making of the Loans hereunder. 9.5. PAYMENT OF EXPENSES AND TAXES. The Borrower agrees to: (a) pay all reasonable out-of-pocket costs and expenses of (i) the Administrative Agent, whether or not the transactions herein contemplated are consummated, in connection with the negotiation, preparation, execution and delivery of the Operative Agreements and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees and disbursements of counsel for the Agent) and (ii) the Administrative Agent and each of the Lenders in connection with the enforcement of the Operative Agreements and the documents and instruments referred to therein (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent and for each of the Lenders) and (b) pay and hold each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes. 9.6. SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. 9.7. PARTICIPATIONS. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks, financial institutions or other entities (each, a "Participant") participating interests in any Loan owing to such Lender, the Notes held by such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Operative Agreements; PROVIDED that any such sale of a participating interest shall be in a principal amount of at least $5,000,000. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement and the Notes, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the Notes. In no event shall any Participant have any right to approve any amendment or waiver of any provision of this Agreement or any other Operative Agreement, or any consent to any departure by the Borrower or any other Person therefrom, except to the extent that such amendment, 33

37 waiver or consent would (a) reduce the principal of, or interest on, any Loan or Note, or postpone the date of the final maturity of any Loan or Note, or reduce the amount of any Unused Fee, in each case to the extent subject to such participation or (b) release all or substantially all of the Collateral. 9.8. ASSIGNMENTS; ADDITIONAL COMMITMENT. (a) Any Lender may, in accordance with applicable law, at any time and from time to time assign to any Lender or any affiliate of any Lender or, with the consent (subject to SECTION 11.1 of the Participation Agreement) of the Borrower and the Administrative Agent (which in each case shall not be unreasonably withheld, conditioned or delayed), to an additional bank, financial institution or other entity that (i) is either organized under the laws of the United States or any state thereof or is a foreign bank that operates a branch office in the United States and (ii) in either case, is not the Lessee or any affiliate of the Lessee, (each such permitted assignee being referred to as a "Purchasing Lender"), all or any part of its rights and obligations under this Agreement and the other Operative Agreements pursuant to an Assignment and Acceptance, substantially in the form of EXHIBIT C, executed by such Purchasing Lender, such assigning Lender (and, in the case of a Purchasing Lender that is not a Lender or an affiliate thereof, subject to SECTION 11.1 of the Participation Agreement, by the Borrower and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register; PROVIDED that no such assignment to a Purchasing Lender (other than any Lender or any affiliate thereof) of the Commitments hereunder shall be in an aggregate principal amount less than $5,000,000 (other than in the case of an assignment of all of a Lender's interests under this Agreement and the Notes), and PROVIDED FURTHER that the assigning Lender shall simultaneously assign to the same Purchasing Lender the same percentage of the assigning Lender's rights and obligations under each of the Operative Agreements (with respect to each of the Series A Loans and the Series B Loans), and PROVIDED FURTHER that the Borrower (or, subject to SECTION 11.1 of the Participation Agreement, the Lessee) may withhold its approval of such an assignment if as a result of such assignment the Borrower incurs increased cost under SECTION 2.13. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and 34

38 Acceptance covering all of the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). Notwithstanding anything to the contrary in this Agreement, the consent of the Borrower shall not be required, and, unless requested by the relevant Purchasing Lender or assigning Lender, new Notes shall not be required to be executed and delivered by the Borrower, for any assignment which occurs at any time when any of the events described in SECTION 6(g) shall have occurred and be continuing. (b) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and a Purchasing Lender (and, in the case of a Purchasing Lender that is not a Lender or an affiliate thereof, by the Borrower and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $2,500 (which shall not be payable by the Borrower, except in connection with an assignment requested in accordance with SECTION 2.14(b)), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) promptly after the effective date determined pursuant thereto, record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower on or prior to such effective date, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent new Notes (in exchange for the Notes of the assigning Lender), each in an amount equal to the Commitment assumed or Loans purchased by the relevant Purchasing Lender pursuant to such Assignment and Acceptance, and, if the assigning Lender has retained a Commitment or any Loan hereunder, new Notes to the order of the assigning Lender, each in an amount equal to the Commitment or Loans retained by it hereunder. Such new Notes shall be dated the Effective Date and shall otherwise be in the form of the Notes replaced thereby. (c) Each Purchasing Lender (other than any Lender organized and existing under the laws of the U.S. or any state thereof, or any political subdivision of the U.S. or of any such state), by executing and delivering an Assignment and Acceptance, (i) agrees to execute and deliver to the Administrative Agent, as promptly as practicable, four signed copies (two for the Administrative Agent and two for delivery by the Administrative Agent to the Borrower) of IRS Form 1001, Form 4224 or Form W-8 (or any successor form or comparable form) claiming complete exemption from withholding and deduction for or on account of U.S. Federal taxes on or in respect of payments of principal and interest under or in respect of this Agreement (it being understood that if 35

39 the applicable form is not so delivered, payments under or in respect of this Agreement may be subject to withholding and deduction); (ii) represents and warrants to the Borrower and the Administrative Agent that the form so delivered is true and accurate and that, as of the effective date of the applicable Assignment and Acceptance, each of such Purchasing Lender's Lending Offices is entitled to receive payments of principal and interest under or in respect of this Agreement without withholding or deduction for or on account of any taxes imposed by the U.S. Federal government; (iii) agrees to deliver annually hereafter to each of the Borrower and the Administrative Agent not later than December 31 of the year preceding the year to which it will apply, two further properly completed signed copies of IRS Form 1001, Form 4224 or Form W-8 (or any successor form or comparable form), as appropriate, unless an event has occurred which renders the relevant form inapplicable (it being understood that if the applicable form is not so delivered, payments under or in respect of this Agreement may be subject to withholding and deduction); (iv) agrees to promptly notify the Borrower and the Administrative Agent in writing if it ceases to be entitled to receive payments of principal and interest under or in respect of this Agreement without withholding or deduction for or on account of any taxes imposed by the U.S. or any political subdivision in or of the U.S. (it being understood that payments under or in respect of this Agreement may be subject to withholding and deduction in such event); (v) acknowledges that in the event it ceases to be exempt from withholding or deduction of such taxes, the Administrative Agent may withhold or deduct the applicable amount from any payments to which such assignee Lender would otherwise be entitled, without any liability to such assignee Lender therefor; and (vi) agrees to indemnify the Borrower and the Administrative Agent from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs or expenses that result from such assignee Lender's breach of any such representation, warranty or agreement. (d) Any Lender party to this Agreement may, from time to time and without the consent of the Borrower or any other Person, pledge or assign for security purposes any portion 36

40 of its Loans or any other interests in this Agreement and the other Credit Documents to any Federal Reserve Bank. 9.9. THE REGISTER; DISCLOSURE. The Administrative Agent shall maintain at its address referred to in SECTION 9.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders, the Commitments of the Lenders, and the principal amount of the Loans by Series owing to each Lender from time to time. The entries in the Register shall be conclusive, in the absence of clearly demonstrable error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable notice. 9.10. ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED LENDER") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in SECTION 6(g), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders as to each Category of Loans; PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefit is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that any Lender so purchasing a participation from a Lender pursuant to this SECTION 9.10 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Person were the direct creditor of the Borrower in the amount of such participation. (b) In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each of the Administrative Agent and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice 37

41 of any kind to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by the Administrative Agent or such Lender (including, without limitation, by branches and agencies of the Administrative Agent or such Lender wherever located) to or for the credit or the account of the Borrower against and on account of the obligations and liabilities of the Borrower to the Administrative Agent or such Lender under this Agreement or under any of the other Operative Agreements, including, without limitation, all interests in obligations of the Borrower purchased by any such Lender pursuant to SECTION 9.10(a), and all other claims of any nature or description arising out of or connected with this Agreement or any other Operative Agreement, irrespective or whether or not the Administrative Agent or such Lender shall have made any demand and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured. 9.11. COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 9.12. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.13. INTEGRATION. This Agreement and the other Operative Documents represent the agreement of the Borrower, the Administrative Agent, and the Lenders with respect to the subject mater hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Operative Documents. 9.14. GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAW. 9.15. SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby irrevocably and unconditionally: 38

42 (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of Florida and the courts of the United States of America, in each case sitting in Broward County, Florida, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail) postage prepaid, to the Borrower at its address set forth in SECTION 9.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this SECTION 9.15 any special, exemplary, punitive or consequential damages. 9.16. ACKNOWLEDGMENTS. Borrower hereby acknowledges that: (a) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Administrative Agent and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (b) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 9.17. WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 39

43 9.18. NONRECOURSE. Anything to the contrary contained in this Agreement or in any other Operative Agreement notwithstanding, neither the Borrower nor any Holder nor any officer, director or shareholder thereof, nor any of the Borrower's successors or assigns (all such Persons being hereinafter referred to collectively as the "Exculpated Persons"), shall be liable in its individual capacity in any respect for any liability or obligation hereunder or under any other Operative Agreement including the payment of the principal of, or interest on, the Notes, or for monetary damages for the breach of performance of any of the covenants contained in this Agreement, the Notes or any of the other Operative Agreements. The Administrative Agent and the Lenders agree that, in the event any of them pursues any remedies available to them under this Agreement, the Notes or any other Operative Agreement, neither the Administrative Agent nor the Lenders shall have any recourse against the Borrower, in its individual capacity, nor any other Exculpated Person, for any deficiency, loss or claim for monetary damages or otherwise resulting therefrom and recourse shall be had solely and exclusively against the Trust Estate and the Lessee; but nothing contained herein shall be taken to prevent recourse against or the enforcement of remedies against the Trust Estate in respect of any and all liabilities, obligations and undertakings contained in this Agreement, the Notes or any other Operative Agreement. Notwithstanding the provisions of this Section, nothing in this Agreement, the Participation Agreement, the Notes, the Security Agreement, the Mortgage Instruments or any other Operative Agreement shall: (a) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or arising under this Agreement, the Security Agreement, the Mortgage Instruments or the Participation Agreement or secured by the Security Agreement, the Mortgage Instruments or any other Operative Agreement, but the same shall continue until paid or discharged; (b) relieve the Lessor or any Exculpated Person from liability and responsibility for (but only to the extent of the damages arising by reason of): (i) active waste knowingly committed by the Lessor or any Exculpated Person with respect to the Properties or (ii) any fraud, gross negligence, willful misconduct or willful breach on the part of the Lessor or any such Exculpated Person; (c) relieve the Lessor or any Exculpated Person from liability and responsibility for (but only to the extent of the moneys misappropriated, misapplied or not turned over) (i) misappropriation or misapplication by the Lessor (i.e., application in a manner contrary to any Operative Agreement) of any insurance proceeds or condemnation award paid or delivered to the Lessor by any Person other than the Agent, (ii) any deposits or any escrows or amounts owed by the Lessee under the Agency Agreement held by the Lessor or (iii) any rents or other income received by the Lessor from the Lessee that are not turned over to the Agent; or (d) affect or in any way limit the Agent's rights and remedies under any Operative Agreement with respect to the Rents and its rights and powers thereunder or to obtain a judgment against the Lessor's interest in the Properties. 40

44 9.19. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein, the aggregate interest rate charged under any of the Notes, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate (as such term is defined below). If the rate of interest (determined without regard to the preceding sentence) under this Agreement or any other Operative Agreement at any time exceeds the Highest Lawful Rate (as defined below), the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement and the other Operative Agreements had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder and under the other Operative Agreements (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder and thereunder if the stated rates of interest set forth in this Agreement and in such Operative Agreements had at all times been in effect, then to the extent permitted by law, the Borrower shall pay to the Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of the Lenders and the Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to the Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. 41

45 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORROWER: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually except as expressly stated herein, but solely as Owner Trustee for Wackenhut Corrections Trust 1997-1 By: ------------------------------- Name: Val T. Orton Title: Vice President SIGNATURE PAGE 1

46 LENDERS: NATIONSBANK, NATIONAL ASSOCIATION, as Administrative Agent, and as a Lender By: -------------------------------- Name: Maria Conroy Title: Senior Vice President SIGNATURE PAGE 2

47 SCOTIABANC INC., as a Lender By: ------------------------- Name: Title: Address for Notices: 600 Peachtree Street, N.E. Suite 2700 Atlanta, Georgia 30308 Telephone No.: (404) 877-1535 Telecopy No.: (404) 888-8998 Wire Transfer Instructions: The Bank of Nova Scotia 1 Liberty Plaza New York, New York 10006 ABA No.: 026002532 Account No.: 0735639 Attention: D. Legista Re: Wackenhut SIGNATURE PAGE 3

48 BARNETT BANK, N.A., as a Lender By: ---------------------------- Name: Title: Address for Notices: 9000 Southside Boulevard Building 600 Jacksonville, Florida 32256 Telephone No.: (904) 464-6502 Telecopy No.: (904) 464-5549 Wire Transfer Instructions: Barnett Technologies 9000 Southside Boulevard Building 600 Jacksonville, Florida 32256 ABA No.: 063000047 Account No.: 0800053949 Attention: Commercial Loan Operations SIGNATURE PAGE 4

49 BANQUE PARIBAS, as a Lender By: ------------------------ Name: Title: By: ------------------------ Name: Title: Address for Notices: 787 Seventh Avenue New York, New York 10019 Telephone No.: (212) 841-2509 Telecopy No.: (212) 841-2217 Wire Transfer Instructions: Bankers Trust NY ABA No.: 021-001-033 Account Name: Banque Paribas NY Account No.: 04-202-195 Attention: Loan Servicing Re: Wackenhut Corrections Corporation SIGNATURE PAGE 5

50 THE SAKURA BANK, LIMITED ATLANTA AGENCY, as a Lender By: ------------------------ Name: Title: Address for Notices: 245 Peachtree Center Avenue, NE Suite 2703 Atlanta, Georgia 30303 Telephone No.: (404) 521-3111 Telecopy No.: (404) 521-1131 Wire Transfer Instructions: Morgan Guaranty Trust Co. of New York New York, New York ABA No.: 021 000 238 Account Name: The Sakura Bank, Ltd., New York Account No.: 631-22-624 In Favor of: MTKB, Atlanta A/C 8000100-1 SIGNATURE PAGE 6

51 SUMMIT BANK, as a Lender By: --------------------- Name: Title: Address for Notices: 250 Moore Street, 2nd Floor Hackensack, New Jersey 07602 Telephone No.: (201) 646-5441 Telecopy No.: (201) 488-6185 Wire Transfer Instructions: Summit Bank 55 Challenger Boulevard Ridgefield Park, NJ 07660 ABA No.: 021202162 Account No.: 47902 Attention: CL02 SIGNATURE PAGE 7

52 SCHEDULE 1.2 SERIES A SERIES B NAME OF LENDER COMMITMENT COMMITMENT - -------------- ---------- ---------- NationsBank, National Association $ 15,928,624.51 $ 1,629,063.85 ScotiaBanc, Inc. $ 12,300,371.78 $ 1,257,992.53 Barnett Bank, N.A. $ 16,000,000.00 $ 1,636,363.70 Banque Paribas $ 6,542,750.93 $ 669,144.98 The Sakura Bank, Limited, Atlanta Agency $ 9,814,126.39 $ 1,003,717.47 Summit Bank $ 9,814,126.39 $ 1,003,717.47

53 EXHIBIT A SERIES A NOTE $ ____________________ ----------------------------------- __________, 199_ FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee for the Wackenhut Corrections Trust 1997-1 (the "BORROWER"), hereby unconditionally promises to pay to the order of _________________ __________________ (the "LENDER") at the office of NationsBank, National Association, as Administrative Agent, located at Independence Center, 15th Floor, Charlotte, North Carolina 28255 in lawful money of the United States of America and in immediately available funds, on the Maturity Date, the principal amount of (a) ________________ DOLLARS ($___________, or, if less, (b) the aggregate unpaid principal amount of all Series A Loans made by the Lender to the Borrower pursuant to SECTION 2.1 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in SECTION 2.8 of such Credit Agreement. The Borrower further agrees to pay all other amounts owing to the Lender pursuant to the Credit Agreement or any other Credit Document (as defined in the Credit Agreement). The holder of this Series A Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of each Series A Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof and each conversion of all or a portion thereof to another Type. Each such endorsement shall constitute PRIMA FACIE evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in such endorsement shall not affect the obligations of the Borrower in respect of such Loan. This Series A Note (a) is one of the Series A Notes referred to in the Credit Agreement dated as of June 19, 1997 (as amended, supplemented, restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, and NationsBank, National Association, as Administrative Agent, (b) is subject to the provisions of the Credit Agreement (including, without limitation, SECTION 9.18 thereof) and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. Capitalized terms not otherwise defined herein shall have the respective meanings assigned in the Credit Agreement. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature

54 and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Series A Note in respect thereof. Upon the occurrence of any Event of Default, all amounts then remaining unpaid on this Series A Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as Owner Trustee for the Wackenhut Corrections Trust 1997-1 By: ------------------------------- Name: Title:

55 EXHIBIT B SERIES B NOTE $ ____________________ ----------------------------------- __________, 199_ FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee for the Wackenhut Corrections Trust 1997-1 (the "BORROWER"), hereby unconditionally promises to pay to the order of ____________________________________ (the "LENDER") at the office of NationsBank, National Association, as Administrative Agent, located at Independence Center, 15th Floor, Charlotte, North Carolina 28255, in lawful money of the United States of America and in immediately available funds, on the Maturity Date, the principal amount of (a) _________________________ DOLLARS ($___________), or, if less, (b) the aggregate unpaid principal amount of all Series B Loans made by the Lender to the Borrower pursuant to SECTION 2.1 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in SECTION 2.8 of such Credit Agreement. The Borrower further agrees to pay all other amounts owing to the Lender pursuant to the Credit Agreement or any other Credit Document (as defined in the Credit Agreement). The holder of this Series B Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of each Series B Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof and each conversion of all or a portion thereof to another Type. Each such endorsement shall constitute PRIMA FACIE evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in such endorsement shall not affect the obligations of the Borrower in respect of such Loan. This Series B Note (a) is one of the Series B Notes referred to in the Credit Agreement dated as of June 19, 1997 (as amended, supplemented, restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, and NationsBank, National Association, as Administrative Agent, (b) is subject to the provisions of the Credit Agreement (including, without limitation, SECTION 9.18 thereof) and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. Capitalized terms not otherwise defined herein shall have the respective meanings assigned in the Credit Agreement. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature

56 and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Series B Note in respect thereof. Upon the occurrence of any Event of Default, all amounts then remaining unpaid on this Series B Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not individually, but solely as Owner Trustee for the Wackenhut Corrections Trust 1997-1 By: ------------------------------- Name: Title:

57 EXHIBIT C ASSIGNMENT AND ACCEPTANCE Reference is made to (a) the Credit Agreement, dated as of June 19, 1997 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), restated among First Security Bank, National Association, not in its individual capacity, but solely as Owner Trustee (the "OWNER TRUSTEE" or the "BORROWER"), the Lenders named therein, and NationsBank, National Association, as Administrative Agent [(b) the Amended and Restated Trust Agreement dated as of June 19, 1997 (as amended, supplemented, restated or otherwise modified from time to time, the "Trust Agreement"), among the Holders party thereto and the Owner Trustee] and (c) the Credit Agreement, dated as of June 19, 1997 (as amended, supplemented or otherwise modified from time to time, the "WACKENHUT CORRECTIONS CREDIT AGREEMENT") among Wackenhut Corrections Corporation, as borrower ("Wackenhut Corrections"), NationsBank, National Association, as Administrative Agent and the Lenders party thereto. Unless otherwise defined herein, terms defined in the Credit Agreement [(or if not defined therein, then the Trust Agreement)] and used herein shall have the meanings given to them in the Credit Agreement [(or the Trust Agreement, as the case may be)]. __________________ (the "ASSIGNOR") and __________________ (the "ASSIGNEE") agree as follows: 20. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below), an interest (the "ASSIGNED INTEREST") in and to (A) the Assignor's rights and obligations under the Credit Agreement with respect to the credit facilities contained in the Credit Agreement as are set forth on Schedule 1 hereto (collectively, the "ASSIGNED FACILITY"), in the respective principal amount for the Assigned Facility as set forth on Schedule 1; [(B) the Assignor's rights and obligations as a Holder under the Trust Agreement, in the respective Holder Advance and Holder Commitment Amounts set forth on Schedule 1] and (C) the Assignor's rights and obligations under the Wackenhut Corrections Credit Agreement with respect to certain credit facilities contained in the Wackenhut Corrections Credit Agreement as are set forth on Schedule 1 hereto (collectively, the "ASSIGNED WACKENHUT CORRECTIONS FACILITY"). 21. The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement, [the Trust Agreement,] any other Operative Agreement, the Wackenhut Corrections Credit Agreement, or any other Loan Documents (as defined in the Wackenhut Corrections Credit Agreement, and hereinafter referred to as the "WACKENHUT CORRECTIONS LOAN DOCUMENTS") or the execution, legality,

58 validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, [the Trust Agreement,] any other Operative Agreement, the Wackenhut Corrections Credit Agreement, or any other Wackenhut Corrections Loan Documents, or any other instrument or document furnished pursuant thereto, other than that it has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or Wackenhut Corrections, or any other obligor or the performance or observance by the Borrower or Wackenhut Corrections, or any other obligor of any of their respective obligations under the Credit Agreement, [the Trust Agreement], any other Operative Agreement, the Wackenhut Corrections Credit Agreement, any other Wackenhut Corrections Loan Document, or any other instrument or document furnished pursuant hereto or thereto; (c) attaches the Series A Note and the Series B Note held by it evidencing the Assigned Facility, [and the Certificate held by it,] and requests that the Administrative Agent exchange each such Note [and such Certificate] for a new Note of like Series payable to the Assignee, [and a new Certificate in the name of Assignee] and (if the Assignor has retained any interest in the Assigned Facility [and interest as a Holder]) a new Note of such Series payable to the Assignor in the respective amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date); and (d) attaches the Revolving Credit Note (as defined in the Wackenhut Corrections Credit Agreement, and hereinafter referred to as the "WACKENHUT CORRECTIONS REVOLVING CREDIT NOTE") held by it entering the Assigned Wackenhut Corrections Facility, and requests that the Administrative Agent exchanges such Wackenhut Corrections Revolving Credit Note for a new Wackenhut Corrections Revolving Credit Note payable to the Assignee, and (if the Assignor has retained any interest in the Assigned Wackenhut Corrections Facility) a new Wackenhut Corrections Revolving Credit Note payable to the Assignor in the respective amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date). 22. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance and that it is an "Eligible Assignee" (as such term is defined in the Wackenhut Corrections Credit Agreement); (b) confirms that it has received copies of the Operative Agreements, the Wackenhut Corrections Loan Documents, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it will, independently and without reliance upon the Assignor, the Administrative Agent or any other Lender [or Holder] and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, [the Trust Agreement,] other Operative Agreements, the

59 Wackenhut Corrections Credit Agreement, other Wackenhut Corrections Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent as defined in each of the Operative Agreements and the Wackenhut Corrections Loan Documents) to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Operative Agreements, the Wackenhut Corrections Credit Agreement, the other Wackenhut Corrections Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the respective Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Participation Agreement, the Wackenhut Corrections Credit Agreement, [and] the Credit Agreement [and the Trust Agreement] and will perform in accordance with their terms all the obligations which by the terms of the Participation Agreement, the Wackenhut Corrections Credit Agreement, [and] the Credit Agreement [and the Trust Agreement] are required to be performed by it as a Lender [or a Holder] including, if it is organized under the laws of a jurisdiction outside the U.S., its obligations pursuant to SECTION 2.13(b) of the Participation Agreement, SECTION 9.8 of the Credit Agreement and SECTION _____ of the Wackenhut Corrections Credit Agreement. 23. The effective date of this Assignment and Acceptance shall be __________, 19__ (the "EFFECTIVE DATE"). Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance and recording by it in the manner provided pursuant to SECTION 9.9 of the Credit Agreement and SECTION _____ of the Wackenhut Corrections Credit Agreement, effective as of the Effective Date. 24. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees, [Holder Fundings, Holder Yield] and other amounts) to the Assignee whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. 25. From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement, the Wackenhut Corrections Credit Agreement [and the Trust Agreement] and to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender [or a Holder] thereunder and under the other Operative Agreements and other Wackenhut Corrections Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement, the Wackenhut Corrections Credit Agreement,[the Trust Agreement] and

60 the other Operative Agreements and other Wackenhut Corrections Loan Documents. 26. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed as of the date first above written by their respective duly authorized officers on Schedule 1 hereto. ASSIGNOR: [NAME OF ASSIGNOR] By: --------------------------------- Name: Title: ASSIGNEE: [NAME OF ASSIGNEE] By: ---------------------------------- Name: Title: Consent to: WACKENHUT CORRECTIONS CORPORATION By: ------------------------------ Name: Title: NATIONSBANK, NATIONAL ASSOCIATION By: ------------------------------ Name: Title:

61 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE RELATING TO (A) THE CREDIT AGREEMENT, DATED AS OF JUNE 19, 1997, AMONG FIRST SECURITY BANK, NATIONAL ASSOCIATION NOT INDIVIDUALLY, BUT SOLELY AS OWNER TRUSTEE, THE LENDERS NAMED THEREIN, NATIONSBANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT FOR THE LENDERS, AND (B) THE CREDIT AGREEMENT DATED AS OF JUNE 19, 1997, AMONG WACKENHUT CORRECTIONS CORPORATION, AS BORROWER, NATIONSBANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, AND THE LENDERS PARTY THERETO. Name of Assignor: Name of Assignee: Effective Date of Assignment: I. TROL FACILITY LOAN COMMITMENT AMOUNTS ASSIGNED OUTSTANDING LOAN (INCLUDING LOAN COMMITMENT PRINCIPAL AMOUNTS OUTSTANDING LOAN PERCENTAGE ASSIGNED PRINCIPAL AMOUNTS) ASSIGNED ----------------- ----------------- --------------- Series A Series A $__________ $__________ Series B Series B $__________ $__________

62 Holder Commitment Amounts Assigned (Including Outstanding Holder Outstanding Holder Commitment Funding Amounts Holder Funding Percentage Assigned Amounts) Assigned -------- -------- -------- $ $ % ------------ ------------- ----- II. REVOLVING CREDIT FACILITY ---------------- Revolving Credit Commitment Assigned (including Outstanding Revolving Applicable Outstanding Revolving Credit Loans Commitment Credit Loans Participations and Percentage Assigned Assigned Participations) Assigned -------- -------- --------------- -------- $ $ $ % ------------ ------------- ------------- ----- [Name of Assignor] [Name of Assignee] By:_______________________________ By:______________________________ Name: Name: Title: Title: Address for Notices to Assignee: _________________________________ _________________________________ _________________________________ Telephone No.: __________________ Telecopy No.: ___________________

63 Wire Transfer Instructions for Assignee: ABA #:_____________________________ Account #:_________________________ Reference:_________________________ Attention:_________________________

64 Document Name : NB WACKENHUT TROL CREDIT AGREEMENT DOC NO: 119594.12 NANCY Attorney: Manley Roberts Time and Date: June 1, 1997 (10:58am)

1 EXHIBIT 4.4 AMENDED AND RESTATED TRUST AGREEMENT dated as of June 19, 1997 among NATIONSBANK, N.A. (SOUTH), and the other financial institutions parties thereto, as Holders, and FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Owner Trustee WACKENHUT CORRECTIONS TRUST 1997-1

2 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS; AMENDED AND RESTATED AGREEMENT.............................1 SECTION 1.1 Definitions.....................................1 SECTION 1.2 Interpretation..................................2 ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS; DECLARATION OF TRUST BY TRUST COMPANY........................2 SECTION 2.1 Authority To Execute and Perform Various Documents.......................................2 SECTION 2.2 Declaration of Trust by Trust Company...........2 ARTICLE III CONTRIBUTIONS AND PAYMENTS..............................................3 SECTION 3.1 Procedure for Holder Fundings; Certificates.....3 SECTION 3.2 Certificate Yield...............................4 SECTION 3.3 Scheduled Return of Holder Fundings.............5 SECTION 3.4 Early Return of Holder Fundings.................5 SECTION 3.5 Payments from Trust Estate Only.................5 SECTION 3.6 Method of Payment...............................5 SECTION 3.7 Computation of Yield............................6 SECTION 3.8 Conversion and Continuation Options.............6 SECTION 3.9 Increased Costs, Illegality, etc................7 SECTION 3.10 Contribution Indemnity..........................8 SECTION 3.11 Notice of Amounts Payable.......................9 SECTION 3.12 [INTENTIONALLY DELETED].........................9 ARTICLE IV COLLECTIONS AND DISTRIBUTIONS..........................................10 SECTION 4.1 Collections and Remittances by the Owner Trustee........................................10 SECTION 4.2 Priority of Distributions......................10 SECTION 4.3 Excepted Payments..............................10 SECTION 4.4 Distributions after Default....................10 ARTICLE V DUTIES OF THE OWNER TRUSTEE............................................11 SECTION 5.1 Notice of Certain Events.......................11 SECTION 5.2 Action Upon Instructions.......................11 SECTION 5.3 Indemnification................................11 SECTION 5.4 No Duties Except as Specified In Trust Agreement or Instructions......................12 SECTION 5.5 No Action Except Under Specified Documents or Instructions......................12 SECTION 5.6 Absence of Duties..............................13 ARTICLE VI THE OWNER TRUSTEE......................................................13 SECTION 6.1 Acceptance of Trust and Duties.................13 SECTION 6.2 Furnishing of Documents........................14 SECTION 6.3 No Representations or Warranties as to the Properties or Operative Agreements.........14 SECTION 6.4 No Segregation of Moneys; No Interest..........15 SECTION 6.5 Reliance; Advice of Counsel....................15 SECTION 6.6 Liability With Respect to Documents............15 i

3 SECTION 6.7 Not Acting In Individual Capacity..............15 SECTION 6.8 Books and Records; Tax Returns.................16 ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE..................................16 SECTION 7.1 Indemnification Generally......................16 SECTION 7.2 Compensation and Expenses......................17 ARTICLE VIII TERMINATION OF TRUST AGREEMENT........................................17 SECTION 8.1 Termination of Trust Agreement.................17 SECTION 8.2 Termination at Option of the Holders...........17 SECTION 8.3 Termination at Option of the Owner Trustee........................................18 SECTION 8.4 Actions by the Owner Trustee Upon Termination....................................18 ARTICLE IX SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE OWNER TRUSTEES...........................................18 SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor.......................18 SECTION 9.2 Co-Trustees and Separate Trustees..............20 SECTION 9.3 Notice.........................................23 ARTICLE X SUPPLEMENTS AND AMENDMENTS............................................23 SECTION 10.1 Supplements and Amendments.....................23 SECTION 10.2 Limitation on Amendments.......................24 ARTICLE XI MISCELLANEOUS.........................................................24 SECTION 11.1 No Legal Title to Trust Estate in the Holders........................................24 SECTION 11.2 Sale of Properties by the Owner Trustee is Binding.....................................24 SECTION 11.3 Limitations on Rights of Others................24 SECTION 11.4 Notices........................................25 SECTION 11.5 Severability...................................25 SECTION 11.6 Limitation on the Holders' Liability...........25 SECTION 11.7 Separate Counterparts..........................25 SECTION 11.8 Successors and Assigns.........................25 SECTION 11.9 Headings.......................................26 SECTION 11.10 Governing Law..................................26 SECTION 11.11 Performance by the Holders.....................26 SECTION 11.12 Conflict with Operative Agreements.............26 SECTION 11.13 No Implied Waiver..............................26 EXHIBIT A FORM OF HOLDER CERTIFICATE.............................................A-1 ii

4 AMENDED AND RESTATED TRUST AGREEMENT THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of June __, 1997, is among the Holders from time to time parties hereto (each a "Holder"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, in its individual capacity ("Trust Company"), and in its capacity as trustee hereunder, together with its successors and assigns (the "Owner Trustee"). WHEREAS, in order to provide a portion of the funds for the acquisition or leasing of the Properties and for carrying out the other transactions contemplated by the Operative Agreements, each Holder will make its respective Holder Fundings pursuant to this Trust Agreement and the Participation Agreement (as defined below); and WHEREAS, the Holders desire to provide for the Trust to exist for the purpose of purchasing the Properties and leasing such Properties to the Lessee, and carrying out certain transactions contemplated by the Operative Agreements; and WHEREAS, Trust Company is willing to act as trustee hereunder and to accept the trust created hereby (the "Trust"). NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: [INSERT ADDITIONAL LANGUAGE RE INDIVIDUAL TRUSTEE IN LOUISIANA] ARTICLE I DEFINITIONS; AMENDED AND RESTATED AGREEMENT SECTION 1.1 DEFINITIONS. For purposes of this Trust Agreement (including the "WHEREAS" clauses set forth above), capitalized terms used in this Trust Agreement and not otherwise defined herein shall have the meanings assigned to them in Appendix A to that certain Participation Agreement, dated as of the date hereof (the "Participation Agreement"), among Wackenhut Corrections Corporation , as Construction Agent and as Lessee, the Owner Trustee, the Holders party thereto from time to time, the Lenders party thereto from time to time, and NationsBank, N.A. (South), as Administrative Agent for the Lenders, as such agreement may be amended, modified, restated or supplemented from time to time in accordance with the terms thereof. Unless otherwise indicated, references in this Trust Agreement to articles, sections, paragraphs, clauses, appendices, schedules and exhibits are to the same contained in this Trust Agreement.

5 SECTION 1.2 INTERPRETATION. The rules of usage set forth in Appendix A to the Participation Agreement shall apply to this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS; DECLARATION OF TRUST BY TRUST COMPANY SECTION 2.1 AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS. Each Holder hereby authorizes and directs the Owner Trustee (i) to execute and deliver, as trustee for and on behalf of each such Holder, each Operative Agreement to which the Owner Trustee is a party and any other agreements, instruments, certificates or documents related to the transactions contemplated hereby or thereby to which the Owner Trustee is a party, (ii) to take whatever action shall be required to be taken by the Owner Trustee by the terms of, and exercise its rights and perform its duties under, each of the documents, agreements, instruments and certificates referred to in clause (i) above as set forth in such documents, agreements and certificates, and (iii) subject to the terms of this Trust Agreement, to take such other action in connection with the foregoing as the Holders may from time to time direct. SECTION 2.2 DECLARATION OF TRUST BY TRUST COMPANY. (a) Trust Company hereby declares that it will hold all estate, right, title and interest of the Owner Trustee in and to the Properties, each Holder Funding, the Operative Agreements and any other property contributed by any Holder, including, without limitation, all amounts of Rent, insurance proceeds and condemnation awards, indemnity or other payments of any kind (collectively, the "Trust Estate") as Owner Trustee upon the trusts set forth herein and for the use and benefit of each Holder, subject, however, to the provisions of the Credit Agreement and the Security Documents. The name of the Trust shall be Wackenhut Corrections Trust 1997-1. (b) The purpose of the Trust is to hold title to the Trust Estate for the benefit of the Holders and to engage in activities ancillary and incidental thereto as the Holders shall determine to be desirable. Except in connection with the foregoing, the Owner Trustee shall not (i) engage in any business activity, (ii) have any property, rights or interest, whether real or personal, tangible or intangible, (iii) incur any legal liability or obligation, whether fixed or contingent, matured or unmatured, other than in the normal course of the administration of the Trust or (iv) subject any of its property or assets for any mortgage, Lien, security interest or other claim or encumbrance, other 2

6 than in favor of the Lenders or the Holders pursuant to the provisions of the Operative Agreements and this Trust Agreement. THIS TRUST IS NOT A BUSINESS TRUST. THE SOLE PURPOSE OF THE TRUST IS TO ACQUIRE AND HOLD TITLE TO THE TRUST ESTATE, SUBJECT TO THE RIGHTS OF THE LENDERS, FOR THE BENEFIT OF THE HOLDERS. THE OWNER TRUSTEE MAY NOT TRANSACT BUSINESS OF ANY KIND WITH RESPECT TO THE PROPERTY COMPRISING THE TRUST ESTATE NOR SHALL THIS AGREEMENT BE DEEMED TO BE, OR CREATE OR EVIDENCE THE EXISTENCE OF A CORPORATION DE FACTO OR DE JURE, OR A MASSACHUSETTS TRUST, OR ANY OTHER TYPE OF BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE AMONG THE OWNER TRUSTEE, THE HOLDERS, THE ADMINISTRATIVE AGENT AND THE LENDERS. ARTICLE III CONTRIBUTIONS AND PAYMENTS SECTION 3.1 PROCEDURE FOR HOLDER FUNDINGS; CERTIFICATES. (a) Upon receipt from the Lessee by the Owner Trustee and the Administrative Agent of the Requisition specified in Section 5.2 of the Participation Agreement, and subject to the terms and conditions of the Participation Agreement, the Owner Trustee shall request from each Holder an advance and each Holder shall make an advance under the Holder Commitment of such Holder on each date Fundings are made pursuant to Section 5 of the Participation Agreement. The Owner Trustee may request an advance under the Holder Commitments during the Commitment Period on any date that an Advance may be requested pursuant to the terms of Section 5.2(a) of the Participation Agreement, provided that the Owner Trustee shall give each Holder irrevocable notice (which notice must be received by each Holder (i) prior to 12:00 Noon, Charlotte, North Carolina time, three Business Days prior to the requested date of advance if all or any part of the requested advance is to be a Eurodollar Holder Funding or (ii) prior to 12:00 Noon Charlotte, North Carolina time one Business Day prior to the requested date of advance with respect to any advance that is to be a Base Rate Holder Funding), specifying (A) the amount to be advanced, (B) the requested date of advance, (C) whether the advance is to be a Eurodollar Holder Funding or a Base Rate Holder Funding or a combination thereof, and (D) if the advance is to be a combination of Eurodollar Holder Fundings and Base Rate Holder Fundings, the respective amounts of each type of advance; provided, however, that (1) there shall be not more than ___ (__) Interest Periods in effect at any specified date, which Interest Periods shall apply to all Eurodollar Holder Fundings then outstanding, and (2) any amounts advanced or converted hereunder which are to bear Holder Yield based on the Eurodollar Rate may only be 3

7 advanced or converted on the first day of one of the ___ (__) permitted Interest Periods. Pursuant to the terms of Section 11.2 of the Participation Agreement, the Owner Trustee shall be deemed to have delivered such notice upon the delivery of a notice by the Lessee containing such required information. (b) Upon receipt of the Requisition and the notice delivered pursuant to Section 3.1(a), each Holder shall make the amount of its Holder Funding available to the Owner Trustee at the office of the Owner Trustee referred to in Section 11.4 prior to 12:00 Noon, Charlotte, North Carolina time on the date requested by the Lessee in funds immediately available to the Owner Trustee. (c) The Holder Funding shall at all times be Eurodollar Holder Fundings having an Interest Period of one, two, three or six months, as specified in the definition of "Interest Period," subject only to the limitations specified in such definition and to the provisions of Sections 3.1(a), 3.7(c), 3.8 and 3.9. Any Holder Funding other than a Eurodollar Holder Funding shall constitute a Base Rate Holder Funding. (d) On each date which is three Business Days prior to any Scheduled Interest Payment Date, the Owner Trustee shall be deemed to have requested a Eurodollar Holder Funding pursuant to Section 3.1(a) in an amount equal to the aggregate amount of Allocated Return due and payable on such date with respect to the Construction Period Properties. The date such Holder Funding shall be made with respect to any such request shall be the relevant Scheduled Interest Payment Date and the proceeds of such Holder Funding shall be applied to pay such Allocated Return. On each such date, the Holder Property Cost and Holder Construction Property Cost of each Construction Period Property shall be increased by an amount equal to the Allocated Return paid on such date with the proceeds of such Holder Funding. (e) The Holder Fundings made by each Holder to the Trust Estate shall be evidenced by a Certificate of the Owner Trustee, substantially in the form of Exhibit A hereto, issued in the name of the Holder and in an amount equal to the Holder Commitment of such Holder. Each Certificate shall (i) be dated as of the Initial Closing Date and (ii) bear a yield on the unpaid Holder Amount thereof from time to time outstanding at the Holder Yield. SECTION 3.2 CERTIFICATE YIELD. The Owner Trustee shall pay to each Holder, from the Trust Estate, its pro rata portion of Holder Yield on Holder Fundings made hereunder. Payment of Holder Yield on each Holder Funding shall be made in arrears on each Payment Date. If the date on which such payment of Holder 4

8 Yield shall be due shall not be a Business Day, such payment shall be made on the next succeeding Business Day. SECTION 3.3 SCHEDULED RETURN OF HOLDER FUNDINGS. Except in the case of early return of advances as set forth in Section 3.4 below or upon default, no return of the principal amount of the Holder Fundings shall be due prior to the Maturity Date. On the Maturity Date, subject to the terms of the Credit Agreement, the Owner Trustee shall pay to each Holder its aggregate unpaid Holder Amount together with all accrued but unpaid Holder Yield and all other amounts due the Holders from the Owner Trustee hereunder or under the Operative Agreements. SECTION 3.4 EARLY RETURN OF HOLDER FUNDINGS. As contemplated by and pursuant to the terms of the Lease, the Lessee shall be required or may elect under certain circumstances as described in the Lease to pay the Termination Value with respect to one or more Properties or purchase one or more Properties and upon such purchase or payment the amounts paid by the Lessee in connection therewith shall be distributed in accordance with the terms of Section 8 of the Credit Agreement. Any such amounts received by the Owner Trustee shall be paid over by the Owner Trustee to each Holder in an amount equal to such Holder's pro rata portion of the Holder Amount relating to the applicable Property or Properties. Notwithstanding the provisions set forth in this Section 3.4, any prepayment of the Certificates shall be in accordance with the provisions of Sections 2.6 and 8.1(b)(i) of the Credit Agreement so that so long as any amount of the Loans is outstanding the aggregate amount of the outstanding Holder Fundings as evidenced by the Certificates shall be equal to or greater than three percent (3%) of the Property Cost. No amount of any Holder Funding which is repaid to the Holders may be readvanced hereunder. SECTION 3.5 PAYMENTS FROM TRUST ESTATE ONLY. All payments to be made by the Owner Trustee under this Trust Agreement (including, without limitation, any payments pursuant to Section 3.10) shall be made only from the income and proceeds from the Trust Estate and only to the extent that the Owner Trustee shall have received income or proceeds from the Trust Estate to make such payments in accordance with the terms hereof, except as specifically provided in Section 6.1. Each Holder agrees that it will look solely to the income and proceeds from the Trust Estate to the extent available for payment as herein provided and that, except as specifically provided herein, Trust Company shall not be liable to any Holder for any amounts payable under this Trust Agreement and shall not be subject to any liability under this Trust Agreement. SECTION 3.6 METHOD OF PAYMENT. All amounts payable to a Holder pursuant to this Trust Agreement shall be paid or caused to be paid by the Owner Trustee to, or for the account of, such 5

9 Holder, or its nominee, by transferring such amount in immediately available funds to a bank institution or banking institutions with bank wire transfer facilities for the account of such Holder or as otherwise instructed in writing from time to time by such Holder. SECTION 3.7 COMPUTATION OF YIELD. (a) Holder Yield shall be calculated on the basis established in Section 14.16 of the Participation Agreement, with respect to length of a "year" and number of days for which interest is accrued. Any change in the Holder Yield resulting from a change in the Base Rate, Eurodollar Reserve Percentage, or otherwise, shall become effective as of the opening of business on the day on which such change would become effective under the Existing Wackenhut Corrections Credit Agreement. (b) Pursuant to Section 14.14 of the Participation Agreement, the calculation of Holder Yield under this Section 3.7 shall be made by the Administrative Agent. Each determination of an interest rate by the Administrative Agent shall be conclusive and binding on the Owner Trustee and the Holders in the absence of manifest error. (c) If the Eurodollar Rate cannot be determined by the Administrative Agent in the manner specified in the definition of the term "Eurodollar Rate", the Owner Trustee shall give telecopy or telephonic notice thereof to the Holders as soon as practicable after receipt of same from the Administrative Agent. Until such time as the Eurodollar Rate can be determined by the Administrative Agent in the manner specified in the definition of such term, no further Eurodollar Holder Fundings shall be made or continue as such at the end of the then current Interest Period and all Holder Fundings shall continue as Base Rate Holder Fundings. SECTION 3.8 CONVERSION AND CONTINUATION OPTIONS. (a) Subject to the restrictions set forth in Sections 3.1, 3.7(c) and 3.9, the Owner Trustee may elect from time to time to convert Base Rate Holder Fundings to Eurodollar Holder Fundings by giving each Holder at least three Business Days' prior irrevocable notice of such election. All or any part of outstanding Holder Fundings may be converted as provided herein, provided that (i) no Base Rate Holder Funding may be converted into a Eurodollar Holder Funding when any Event of Default has occurred and is continuing, (ii) no Base Rate Holder Funding may be converted into a Eurodollar Holder Funding which matures after the Maturity Date, and (iii) such notice of conversion shall contain an election by the Owner Trustee of an Interest Period for such Eurodollar Holder Funding to be 6

10 created by such conversion and such Interest Period shall satisfy the conditions of the definition of the term "Interest Period" as set forth in Appendix A to the Participation Agreement. (b) Subject to the restrictions set forth in Sections 3.1, 3.7(c) and 3.9 hereof, any Eurodollar Holder Funding may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Owner Trustee giving irrevocable notice to each Holder in accordance with the applicable provisions of the definition of the term "Interest Period" as set forth in Appendix A to the Participation Agreement; provided that no Eurodollar Holder Funding may be continued as such (i) when any Event of Default has occurred and is continuing or (ii) if such Eurodollar Holder Funding would mature after the Maturity Date and provided, further, that if the Owner Trustee shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding provision, such Holder Funding shall be automatically converted to a Base Rate Holder Funding on the last day of such then expiring Interest Period. SECTION 3.9 INCREASED COSTS, ILLEGALITY, ETC. (a) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements that are expressly included in the calculation of the Eurodollar Reserve Rate) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request hereafter adopted, promulgated or made, by any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Holder of agreeing to make or making, funding or maintaining Holder Fundings, then the Owner Trustee shall from time to time, upon demand by such Holder, pay to such Holder additional amounts sufficient to compensate such Holder for such increased cost. A certificate as to the amount of such increased cost, submitted to the Owner Trustee by such Holder, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Holder determines that compliance with any law or regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law, but in each case promulgated or made after the date hereof) affects or would affect the amount of capital required or expected to be maintained by such Holder or any corporation controlling such Holder and that the amount of such capital is increased by or based upon the existence of such Holder's commitment to make Holder Fundings hereunder and other commitments of this 7

11 type, then, upon demand by such Holder, the Owner Trustee shall immediately pay to such Holder, from time to time as specified by such Holder, additional amounts sufficient to compensate such Holder or such corporation in the light of such circumstances, to the extent that such Holder reasonably determines such increase in capital to be allocable to the existence of such Holder's commitment to make Holder Fundings hereunder. A certificate as to such amounts submitted to the Owner Trustee by such Holder shall be conclusive and binding for all purposes, absent manifest error. (c) Without affecting its rights under Section 3.9(a) or 3.9(b) or any other provision of this Trust Agreement, each Holder agrees that if there is any increase in any cost to or reduction in any amount receivable by such Holder with respect to which the Owner Trustee would be obligated to compensate such Holder pursuant to Section 3.9(a) or 3.9(b) or 2.10(b), such Holder shall use reasonable efforts to select an alternative office from which to fund Holder Fundings which would not result in any such increase in any cost to or reduction in any amount receivable by such Holder; provided, however, that no Holder shall be obligated to select such an alternate office if such Holder determines that (i) as a result of such selection such Holder would be in violation of any applicable law, regulation, treaty, or guideline, or would incur additional costs or expenses or (ii) such selection would be inadvisable for regulatory reasons or would impose an unreasonable burden or additional costs on such Holder. (d) Notwithstanding any other provision of this Trust Agreement, if any Holder shall notify the Owner Trustee that the introduction of or any change in any law or regulation, or in the interpretation of any law or regulation makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for any Holder to perform its obligations hereunder to make or maintain Eurodollar Holder Fundings then (i) each Eurodollar Holder Funding will automatically, at the end of the Interest Period for such Eurodollar Holder Funding, convert into a Base Rate Holder Funding and (ii) the obligation of the Holders to make, convert or continue Eurodollar Holder Fundings shall be suspended until such Holder shall notify the Owner Trustee that such Holder has determined that the circumstances causing such suspension no longer exist. SECTION 3.10 CONTRIBUTION INDEMNITY. Subject to the provisions of Section 3.11, the Owner Trustee agrees to indemnify each Holder and to hold each Holder harmless from any loss or reasonable expense which such Holder may sustain or incur as a consequence of (a) failure of the Owner Trustee to accept any Holder Funding hereunder after the Owner Trustee has given a 8

12 notice requesting the same in accordance with the provisions of this Trust Agreement, (b) failure of the Owner Trustee to make any prepayment of a Holder Funding after the Owner Trustee has given a notice thereof in accordance with the provisions of this Trust Agreement, or (c) the making of a voluntary or involuntary prepayment of a Eurodollar Holder Funding on a day which is not the last day of an Interest Period with respect thereto. Such indemnification shall be in an amount equal to the excess, if any, of (i) the amount of Holder Yield which would have accrued on the amount so prepaid, or not accepted, converted or continued for the period from the date of such prepayment or of such failure to accept, convert or continue to the last day of such Interest Period (or, in the case of a failure to accept, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable Holder Yield rate for such Holder Fundings provided for herein over (ii) the amount of yield (as determined by such Holder) which would have accrued to such Holder on such amount by placing such amount on deposit for a comparable period with leading banks in the relevant interest rate market. This covenant shall survive the termination of this Trust Agreement and the payment of all other amounts payable hereunder. SECTION 3.11 NOTICE OF AMOUNTS PAYABLE. In the event that any Holder becomes aware that any amounts are or will be owed to it pursuant to Section 3.9 or 3.10 or that it is unable to make Holder Fundings which bear a yield based on the Eurodollar Rate, then it shall promptly notify the Owner Trustee thereof and, as soon as possible thereafter, such Holder shall submit to the Owner Trustee a certificate indicating the amount owing to it and the calculation thereof. The amounts set forth in such certificate shall be prima facie evidence of the obligations of the Owner Trustee hereunder. SECTION 3.12 [INTENTIONALLY DELETED] SECTION 3.13 HOLDER OVERDUE RATE. If all or a portion of (i) the principal amount of any Holder Funding, (ii) any Holder Yield payable on any Holder Funding, or (iii) any other amount payable hereunder shall not be paid when due (subject to applicable grace periods) (whether at the stated maturity, by acceleration or otherwise), such amount shall bear interest at a rate per occurrence which is the lesser of (x) the Holder Yield applicable to such Holder Funding plus 2% (or in the case of clause (iii) above, the Base Rate plus 3%) and (y) the highest interest rate permitted by applicable law, in each case from the date of such non-payment until such amount is paid in full (whether after or before judgment). 9

13 ARTICLE IV COLLECTIONS AND DISTRIBUTIONS SECTION 4.1 COLLECTIONS AND REMITTANCES BY THE OWNER TRUSTEE. The Owner Trustee agrees that, subject to the provisions of this Trust Agreement, it will during the term of this Trust administer the Trust Estate and, at the direction of the Holders (or, so long as the Credit Agreement shall continue, subject to the provisions of the Credit Agreement and the Security Documents), take steps to collect all Rent and other sums payable to the Owner Trustee by the Lessee under the Lease. The Owner Trustee agrees to distribute all proceeds received from the Trust Estate in accordance with Article III and Sections 4.2 and 4.3. The Owner Trustee shall make such distribution promptly upon receipt of such proceeds (provided such proceeds are available for distribution) by the Owner Trustee, it being understood and agreed that the Owner Trustee shall not be obligated to make such distribution until the funds for such distribution have been received by the Owner Trustee in cash or its equivalent reasonably acceptable to the Owner Trustee. SECTION 4.2 PRIORITY OF DISTRIBUTIONS. Subject to the terms and requirements of the Operative Agreements, all payments and amounts received by Trust Company as Owner Trustee or on its behalf shall be distributed to the Administrative Agent for allocation by the Administrative Agent in accordance with the terms of Section 8 of the Credit Agreement or, if such payments or amounts are received by the Owner Trustee from the Administrative Agent, then they shall be distributed forthwith upon receipt in the following order of priority: first, in accordance with the Holder Yield protection provisions set forth in Article III; and, second, the balance, if any, of such payment or amount remaining thereafter shall be distributed to the Holders pro rata. SECTION 4.3 EXCEPTED PAYMENTS. Anything in this Article IV, or elsewhere in this Trust Agreement to the contrary notwithstanding, any Excepted Payment received at any time by the Owner Trustee shall be distributed promptly to the Person entitled to receive such Excepted Payment. SECTION 4.4 DISTRIBUTIONS AFTER DEFAULT. Subject to the terms of Section 5.1 hereof, the proceeds received by the Owner Trustee from the exercise of any remedy under the Lease shall be distributed pursuant to Section 4.2 above. This Trust shall cease and terminate in accordance with the terms set forth in Section 8.1 and upon the final disposition by the Owner Trustee of all of the Trust Estate pursuant to this Section 4.4. 10

14 ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.1 NOTICE OF CERTAIN EVENTS. In the event the Owner Trustee shall have knowledge of any Lease Default, Lease Event of Default, Credit Agreement Default, Credit Agreement Event of Default, Agency Agreement Default or Agency Agreement Event of Default, the Owner Trustee shall give written notice thereof within five (5) Business Days to each Holder, the Lessee and the Administrative Agent unless such Default or Event of Default no longer exists before the giving of such notice. Subject to the provisions of Section 5.3, the Owner Trustee shall take or refrain from taking such action as Administrative Agent shall direct so long as the Credit Agreement is in effect (and as more specifically provided in Section 10.2(j) of the Participation Agreement) and thereafter as the Holders shall jointly direct, in each case by written instructions to the Owner Trustee. If the Owner Trustee shall have given the Administrative Agent and the Holders notice of any event and shall not have received written instructions as above provided within 30 day