Judicial Council of CaliforniaAdministrative Office of the Courts

Office of Court Construction and Management455 Golden Gate Avenue, San Francisco, CA 94102-3688

Location of Premises: 220 West “C” Street, San Diego, CaliforniaAOC Building # 37-A-3

LEASE AGREEMENT

LEASE SUMMARY

The basic terms of this Lease are:

Lessor: Judicial Council of California, Administrative Office of the Courts

Address for notice:

Administrative Office of the CourtsOffice of Court Construction and ManagementAttn: Portfolio Administration Analyst455 Golden Gate Avenue, 8th floorSan Francisco, CA 94102-3688Telephone: 415-865-4053Fax: 415-865-8885

with a copy to:

Administrative Office of the CourtsOffice of Court Construction and ManagementAtm: Manager, Real Estate455 Golden Gate Avenue, gth floorSan Francisco, CA 94102-3660Telephone: 415-865-4048Fax: 415-865-8885

In addition, all notices relating to termination of the Lease or an allegedbreach or default by Lessor must also be sent to:

Administrative Office of the Courts455 Golden Gate AvenueSan Francisco, CA 94 102-3688Attention: Senior Manager, Business ServicesTelephone: 415-865-4090Fax: 415-865-4326

All notices and correspondence to Lessor must reference the address of thePremises and the name of the entity occupying the Premises.

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2. Lessee: The CEO Group, Inc., a Florida corporation, doing business as“GEO California, Inc.”

Addresses for notice:

The Geo Group, Inc.One Park Place, Suite 700621 Northwest 53rd StreetBoca Raton, FL 33487Attn: Patricia McNair Persante

3. Premises: Premises means theCourthouse Space as more hilly described in theI,” “A.—2,” “.A.—5,” and

The Geo Group, Inc.One Park Place, Suite 700621 Northwest 53”’ StreetBoca Raton, FL 33487Attn: John Bulfin

Detention Facility Building and theexhibits attached hereto as Exhibit “A

4. Lessor’s and Lessee’s Lease Administrators: This Lease shall beadministered on behalf of Lessor by the Portfolio Administration Analyst for theSouthern Region, Office of Court Construction and Management, Administrative Officeof the Courts, or by such person’s duly-authorized designee (referred to collectively inthis Lease as “Lessor’s Lease Administrator”), and on behalf of Lessee by JamesBlack, Western Region Vice President, or by such other person as may be designated inwriting by Lessee (referred to hereinafter as “Lessee’s Lease Administrator”).

5. Lease Term:

(a) Commencement Date: The commencement date of this Lease willbe 12:00 midnight on July 2, 2014 (“Commencement Date”).

(b) Term: The term of this Lease shall be for the period commencing onthe Commencement Date and running until 11:59(“Termination Date”). (See Article 3, “Term of Lease.”)

6. Rent:

P.M. on January 6, 2016

Lessee.(a) Base Rent Due Date: Upon execution and delivery of Lease by

(b) Base Rent: The BaseHundred Thousand Dollars ($4,800,000),

Rent for the Premises is Four Million Eight

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(c) Additional Rent: Any and all sums of money or charges required tobe paid by Lessee to Lessor pursuant to the provisions of this Lease shall be paid as“Additional Rent.” (See Section 4.2, “Additional Rent.”)

(d) Late charge: 5% of overdue payment. (See, Section 4.4, “Failureto Pay Additional Rent; Late Charge.”)

(e) Interest on delinquent rent: 10% per year. (See, Section 4.4,“Failure to Pay Base Additional Rent; Late Charge.”)

7. General Description of Lessee’s Use of Premises: Lessee is authorized touse the Premises to operate the Detention Facility in the manner, and for the purposes, setforth in this Lease.

8. Liability. Property, and Worker’ Compensation Insurance: See Exhibit“D” attached hereto.

9. Exhibits To Lease: The following drawings and special provisions areattached as exhibits to this Lease:

EXHIBIT “A-i” - Description of the Premises

EXHIBIT “A-2” - Site Plan

EXHIBIT “A-3” - Legal Description and Plat of Detention Facility Land

EXHIBIT “A-4” - Legal Description and Plat of Courthouse Land

EXHIBIT “A-5” - Floor Plan of Detention Facility Building

EXHIBIT “A-6” - Courthouse Space

EXHIBIT “B” - Prisoner Transit Easement

EXHIBIT “C” - Letter Agreement

EXHIBIT “D” - Insurance Requirements

10. Construction of Lease Provisions: This Lease Summary (“Summary”)summarizes for convenience only certain key terms of this Lease delineated more ifilly inthe Articles and Sections referenced therein. In the event of a conflict between theprovisions of this Summary and this Lease, this Lease shall control.

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LEASE AGREEMENT

THIS LEASE AGREEMENT (“Lease”) is entered into as of July 22, 2011,between the Judicial Council of California, Administrative Office of the Courts(“Lessor”) and the GEO Group, Inc., a Florida corporation, doing business as “GEOCalifornia, Inc.” (“Lessee”), with reference to the following facts:

RECITALS

A. On December 23, 2009, Lessor and the County of San Diego (the“County”) consummated a transaction that included, among other things, the followingelements occurring simultaneously: (1) Lessor acquired from the County fee interest inand to the Detention Facility Property and the Courthouse Property; and (2) Countyassigned the County Lease to Lessor, the Master Lease came into full force and effect,and Lessor assigned the County Lease back to County, but subject to the Master Lease.

B. Lessee is a private developer and operator of detention facilities whowishes to continue to use the Premises as a facility to house detainees pursuant to acontract between Lessee and the U.S. federal government for the period immediatelyfollowing termination of the Master Lease until termination of Lessee’s current contractwith the U.S. federal government.

C. Lessor is willing to lease the Premises to Lessee and to allow Lessee tocontinue to occupy and use the Premises as a detention facility in accordance with theterms of this Lease and shall be returned to Lessor control and operation at the timespecified in this Lease.

NOW, THEREFORE, in consideration of the foregoing premises, and inconsideration of the rents and covenants hereinafter set forth, the parties agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Lease, the following terms shall have the meanings indicated:

“Additional Rent” has the meaning set forth in section 4.2 of this Lease.

“AdditionaL Required Work” has the meaning set forth in section 10.2.1 of thisLease.

“Affiliate” has the meaning set forth in section 15.4.4 of this Lease.

“Alterations” has the meaning set forth in section 10A of this Lease.

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“Beneficiary” has the meaning set forth in section 15.3 of this Lease.

“Casualty” has the meaning set forth in section 20.1 of this Lease.

“CC § 1942” has the meaning set forth in section 12.5 of this Lease.

“Change of Control” has the meaning set forth in section 15.1 of this Lease.

“Claims” has the meaning set forth in section 13.3.2 of this Lease.

“Commencement Date” has the meaning set forth in section 5(a) of theSummary.

“Common Area” has the meaning set forth in Exhibit “A-i” attached hereto.

“Control” has the meaning set forth in section 15.4.4 of this Lease.

“County” has the meaning set forth in section A of the Recitals.

“County Lease” means that certain “Standard Form Lease Agreement” enteredinto by and between the County and Lessor as of May 4, 1999 wherein Lessee’spredecessor-in-interest leased from the County the Premises for a term of 15 years.

“Court” means the Superior Court of California, County of San Diego.

“Courthouse” means the existing building currently used as a court facility by theCourt located on the Courthouse Land immediately adjacent to and connected with theDetention Facility.

“Courthouse Land” means that certain parcel of real property and allimprovements located thereon including the Courthouse in the State of California,County of San Diego, City of San Diego with a street address of 220 West Broadway asmore filly described in the legal description and plat map attached hereto as Exhibit “A-4.”

“Courthouse Property” means collectively the Courthouse and CourthouseLand.

“Courthouse Space” means certain space in the basement, first, and second floorsof the Courthouse depicted in the drawing attached hereto as Exhibit “A-6” which is partof the Premises.

“CRAL” has the meaning set forth in section 30.1(a) of this Lease.

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“Detainee” means any prisoner, inmate or detainee temporarily or permanentlyhoused at a facility operated by Lessee pursuant to its contract with the U.S. federalgovernment.

“Detention Facility” means the facility located on the Premises currently used byLessee to house Detainees.

“Detention Facility Land” means that certain parcel of real property and allimprovements located thereon including an existing 8-story tower with full basementused as part of the Detention Facility (the “Detention Facility Building”) in the State ofCalifornia, County of San Diego, City of San Diego with a street address of 220 West“C” Street as more fully described in the legal description and plat map attached hereto asExhibit “A-3.”

“Detention Facility Property” means, collectively, the Detention FacilityBuilding and the Detention Facility Land.

“Disability Accessibility Laws” has the meaning set forth in section 6.3(b) of thisLease.

“Event of Default” has the meaning set forth in section 16.1 of this Lease.

“Exempt Transfer” has the meaning set forth in section 15.5.5.4 of this Lease.

“Fixtures” has the meaning set forth in section 2.4.2 of this Lease.

“Force Majeure” has the meaning set forth in section 32,9 of this Lease.

“Foreclosure Period” has the meaning set forth in section 15.3.1.1(d) of thisLease.

“FURAA” has the meaning set forth in section 30.1(a) of this Lease.

“Hazardous Materials” has the meaning set forth in section 14.2 of this Lease.

“Hazardous Materials Laws” has the meaning set forth in section 14.1 of thisLease.

“Improvements” means, collectively, all improvements currently located on thePremises, plus any other improvements or Alterations constructed by Lessee on thePremises.

“Laws or Orders” has the meaning set forth in section 6.3(a) of this Lease.

“Lease” has the meaning set forth in the paragraph first written above.

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“Lessee” has the meaning set forth in the paragraph first written above.

“Lessee Parties” has the meaning set forth in section 13.1 of this Lease.

“Lessee Rent” has the meaning set forth in section 15.4.2 of this Lease.

“Lessee’s Agents” means Lessee, Lessee’s Contractor, and all subcontractors,

laborers, matedalmen and suppliers, or anyone directly or indirectly employed by any of

them to work on any Improvements.

“Lessee’s Lease Administrator” has the meaning set forth in section 4 of the

Summary.

“Lessor” has the meaning set forth in the paragraph first written above.

“Lessor Parties” has the meaning set forth in section 13.1 of this Lease.

“Lessor’s Lease Administrator” has the meaning set forth in section 4 of the

Summary.

“Letter Agreement” has the meaning set forth in section 7.2 of this Lease.

“Master Lease” means that certain “Master Lease” entered into by and between

the County and Lessor as of December 23, 2009, wherein the County leased from the

Lessor the Premises for a term ending at 11:59 P.M. on July 1,2014.

“Mortgage” has the meaning set forth in section 15.3 of this Lease.

“Net Income” has the meaning set forth in section 17 of this Lease.

“Permitted Use” means those uses to which Lessee is authorized to put the

Premises, as specified in Article 6, “Possession and Use.”

“Personal Property” has the meaning set forth in section 2.4.1 of this Lease.

“Premises” means the Detention Facility Building and the Courthouse Space

as further described on the exhibits attached hereto as Exhibits “A-i,” “A-2,” “A

and

“Prisoner Transit Easement” has the meaning set forth in section 2.2.1,

“Reservation of Easement for Prisoner Transit” as thrther described in the exhibit

attached hereto as Exhibit “B.”

“Relocation Benefits” has the meaning set forth in section 30.1(a) of this Lease.

“Relocation Statutes” has the meaning set forth in section 30.1(a) of this Lease.

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“Rent Due Date” has the meaning set forth in section 4.1 of this Lease.

“Sale” has the meaning set forth in section 22.1 of this Lease.

“State” means the State of California.

“Subject Space” has the meaning set forth in section 15.4.2 of this Lease.

“Summary” means the “Lease Summary” attached to this Lease.

“Taking” means the taking or damaging of all or a portion of the Premises byeminent domain or inverse condemnation or for any public or quasi-public use under anystatute, whether by final order in condemnation or by voluntary transfer or conveyance tothe condemning entity under threat of condemnation.

“Term” has the meaning set forth in section 3.1 of the Lease.

“Termination Date” has the meaning set forth in section 5(b) of the Summary.

“Transfer” has the meaning set forth in section 15.1 of this Lease.

“Transfer Fee” has the meaning set forth in section 15.4 of this Lease.

“Transfer Instrument” has the meaning set forth in section 15.2.1 of this Lease.

“Transfer Premium” has the meaning set forth in section 15.4.2 of this Lease.

“Transferee” has the meaning set forth in section 15.2 of this Lease.

“Transferee Rent” has the meaning set forth in section 15.4.2 of this Lease.

ARTICLE 2

PREMISES

2.1. Lease of Premises. Lessor hereby leases to Lessee and Lessee herebyleases from Lessor, for the rent and upon the covenants and conditions hereinafter setforth, the Premises, Except as expressly provided to the contrary in this Lease, referencesto the ‘Premises” include the Detention Facility and any other Improvements now orhereafter located on the Premises, without regard to whether ownership of suchImprovements vests in the Lessor or in Lessee during the Term.

2.1.1. Acceptance of Premises. Lessee acknowledges that Lessee hasoccupied and used the Premises and the Detention Facility prior to the CommencementDate, and that it accepts the Premises and the Detention Facility as of theCommencement Date in their condition at that time. Lessee further acknowledges that

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Lessor has made no oral or written representations or warranties to Lessee regarding thecondition of the Premises or the Detention Facility, and that Lessee is relying solely on itsinspection of the Premises and the Detention Facility with respect thereto.

2.1.2. Common Area and Parking.

(a) Common Area. In addition to Lessee’s rights to use andoccupy the Premises, Lessee shall have non-exclusive rights to. the Common Area, asdefined Exhibit “A-i.”

(b) Parking. In addition to the eight parking spaces included aspart of the Premises, Lessee shall also have the right to ten (10) reserved parking spacesplus a small area for motorcycle parking at the north end of the covered parking lot underthe Courthouse as shown on the drawing attached hereto as Exhibit “A-2.” Access tothis parking lot is via B Street and south along the driveway between the Courthouse andthe Detention Facility Building.

2.2. Reservations to Lessor/Easement Reservations. Lessee accepts thePremises subject to any and all existing easements and encumbrances. Lessor reservesthe right to establish, to grant or to use easements or rights-of-way over, under, along andacross the Premises for access, underground sewers, utilities, thoroughfares or such otherfacilities as it deems necessary for public health, convenience and welfare, whether or notsuch facilities directly or indirectly benefit the Premises, and to enter the Premises forany such purpose; provided, however, that any such grant of rights shall require that thePremises be restored to their preexisting condition. The parties specifically acknowledgethat the Lessor may construct and use, during the Term, a prisoner access tunnel belowthe basement of the Premises for the purpose of transporting prisoners from the CentralJail to the site of a new courthouse to be constructed on Union Street between “B” and“C” Streets.

2.2.1. Prisoner Transit Easement. On December 23, 2009, Lessorrecorded that the certain Temporary Prisoner Transit Easement Agreement with the SanDiego County Recorder’s Office as Document 2009-0708513 (copy attached hereto asExhibit “B”; hereafter, the “Prisoner Transit Easement”) wherein Lessor granted tothe County certain rights to use certain portions of the Premises and the Courthouse forthe purpose of transporting County prisoners and detainees to and from the Courthouse tothe County’s Central Jail, located at 1173 Front Street. Lessee acknowledges and agreesthat (a) the Prisoner Transit Easement follows approximately the same route and servesthe same purpose as the “Transit Easement” reserved by the County pursuant to section2.3.1 of the County Lease, and (b) the rights granted under this Lease are at all timessubordinate to the interest created by the Prisoner Transit Easement.

2.3. Lessee’s Right to Grant Easements or Rights of Way. Lessor grants toLessee the right to grant public entities or public service corporations, for the purpose of

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sewing the Premises and the Detention Facility for their permitted uses, rights of way oreasements on or over the Premises for poles or conduits or both for telephone, electricity,water, sanitary or storm sewers or both, and for other utilities and municipal or specialdisthct services. Lessor must approve all such easements, in writing; such approval notto be mireasonably withheld. Grants made under the authority of this section shall belimited to the Term.

2.4. Ownership of Personal Property and Improvements. The rights andobligations of the parties regarding the ownership of personal property, andImprovements on the Premises, shall be as follows:

2.4.1. Ownership of Personal Property. Subject to the provisions of thefollowing Section 2.4.2, “Ownership of Improvements and Fixtures,” all of Lessee’sfurniture, furnishings, signs and other personal property not permanently affixed to thePremises or to any Improvements (collectively referred to as “Personal in thisLease) shall remain the property of Lessee. Lessee shall, at its expense, immediatelyrepair any damage occasioned to the Premises or any Improvements by reason of theremoval of any Personal Property which Lessor does not request to remain on thePremises. Lessee may use any personal property remaining in the building as of theCommencement Date.

2.4.2. Ownership of Improvements and Fixtures. All Improvements onthe Premises, including Improvements installed by Lessee and any fixtures installed byLessee and permanently attached to the Premises, the Detention Facility or to anyexisting Improvements located thereon (collectively referred to in this Lease as“Fixtures”), shall remain the property of the Lessor. During the Term, Lessee shall notremove any Fixtures or Improvements from the Premises nor waste, destroy, or modifyany Improvements or Fixtures on the Premises, except as permitted by this Lease or withthe written authorization of Lessor.

ARTICLE 3

TERM OF LEASE

3.1. Term. The Term of this Lease will commence on the Commencement Dateand conthue until the Termination Date unless sooner terminated as hereinafter providedin this Lease.

3.2. Change of Law Allowing Early Termination by Lessee. In the event thatany State or federal statute or ordinance should become effective during the Term whichso restricts Lessee’s use of the Premises that Lessee is unable to continue its use andoccupancy of the Premises in substantially the manner initiaUy contemplated by thisLease, Lessee may apply in writing to Lessor for a mutual termination of this Lease.Lessor’s tonsent to such mutual termination shall not be unreasonably withheld. Upon

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such mutual termination, Lessee shall be entitled to no payment from Lessor for anyImprovements on the Premises, any remaining value of its leasehold interest, or anyreftmd of rent, including any Additional Rent payments Lessee has made under thisLease.

3.3. Surrender of the Premises Ouitelaim of Lessee’s Interest UponTemilnation.

(a) Lessee shall surrender possession of the Premises, or applicableportion thereof, to Lessor upon expiration of the Term or earlier termination of thisLease. Upon expiration of the Term, Lessee shall execute, acknowledge and deliver toLessor, within thirty (30) days following receipt of written demand therefor, a good andsufficient deed whereby Lessee quitclaims all right, title and interest in the Premises toLessor. Should Lessee fail or refuse to deliver such quitclaim deed to Lessor, Lessor mayprepare and record a notice reciting the failure of Lessee to do so, and such notice shallbe conclusive evidence of the termination of this Lease and of all rights of Lessee orthose claiming under Lessee to the Premises.

(b) Upon expiration of the Term, should the manner or methodemployed by Lessor to re-enter or take possession of the Premises, or portion thereof;pursuant to the provisions of this Lease give Lessee a cause of action for damages or inforcible entry and detainer, the total amount of damages to which Lessee shall be entitledin any such action shall be one dollar ($1.00). This provision may be filed in any actionbrought by Lessee against Lessor, and when so filed shall constitute a stipuiation byLessee fixing the total damages to which Lessee is entitled in such an action.

ARTICLE 4

RENT

4.1. Base Rent. Lessee shall pay as rent for the use and occupancy of thePremisçs during the entire Term of this Lease the amount of Four Million Eight HundredThousand Dollars ($4,800,000). Lessee shall pay said rent in advance, on the date theLease is executed and delivered by Lessee to Lessor (“Rent Due Date”).

4.2. Additional Rent. Lessee shall pay, as Additional Rent, all sums of moneyrequired to be paid pursuant to the terms of this Lease (collectively referred to herein as“Additional Rent”) which are not payable as Base Rent. All amounts of AdditionalRent payable in a given month shall be deemed to comprise a single rent obligation ofLessee to Lessor.

4.3. Delivery of Rent Payments. All Base Rent and Additional Rent due underthis Lease shall be made payable to, and shall be considered paid when delivered to:

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Administrative Office of the CourtsAttention: Finance Division, Accounting — General Ledger455 Golden Gate Avenue, 7th FloorSan Francisco, CA 94102-3688

Each check shall be made payable to “The State of California, Administrative Office ofthe Courts” identified as follows: “AOC Facility #37-A-3”. Lessor may, at any time, bywritten notice to Lessee, designate a different address to which Lessee shall deliver thepayments of Base Rent and Additional Rent.

4.4. Failure to Pay Additional Rent Late Charge.

(a) If Lessee fails to pay any Additional Rent due hereunder within 10days following the time it is due and payable, such unpaid amounts shall bear interest atthe rate often percent (10%) per year from the date due to the date of payment, computedon the basis of monthly compounding with actual days elapsed compared to a 360-dayyear. In addition to such interest, the late payment by Lessee of any Additional Rent duehereunder will cause Lessor to incur certain costs and expenses not contemplated underthis Lease, the exact amount of which costs being extremely difficult or impracticable tofix. Such costs and expenses will include, without limitation, administrative andcollection costs, and processing and accounting expenses. Therefore, if any suchAdditional Rent is not postmarked or received by Lessor from Lessee within 10 daysfollowing the due date, or on the first business day thereafter, Lessee shall immediatelypay to Lessor a late charge equal to five percent (5%) of each such overdue amount. Thislate charge represents a reasonable estimate of such costs and expenses and is faircompensation to Lessor for its loss caused by Lessee’s nonpayment. Should Lessee paysaid late charge but fail to pay contemporaneously therewith all unpaid amounts ofAdditional Rent due hereunder, Lessor’s acceptance of this late charge shall notconstitute a waiver of Lessee’s default with respect to such nonpayment by Lessee norprevent Lessor from exercising all other rights and remedies available to Lessor underthis Lease or under law.

(b) In the event of a dispute between the parties as to the correct amountof Additional Rent owed by Lessee, Lessor may accept any sum tendered by Lessee inpayment thereof, without prejudice to Lessor’s claim as to the proper amount ofAdditional Rent owing. If it is later determined that Lessee has not paid the lull amountof Additional Rent owing, the late charge specified herein shall apply only to that portionof the Additional Rent still due and payable from Lessee. Notwithstanding any provisionof this section to the contrary, however, Lessor’s Lease Administrator may waive anydelinquency payment or late charge upon written application of Lessee.

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ARTICLE 5

IRESERVEDI

ARTICLE 6

POSSESSION AND USE

6.1. Permitted Uses. Lessee shall use the Premises solely to occupy and operatethe Detention Facility on the Premises to house prisoners and/or detainees in accordancewith (a) the regulations and requirements of those governmental agencies supplying suchprisoners andlor detainees; (b) Lessee’s contractual obligations with such governmentalagencies; and (c) applicable City of San Diego land use ordinances and regulations(collectively, “Permitted Use”). No one other than Lessee, its agents and employees, orany sublessee of Lessee approved by Lessor as provided in Article 15, “Assignment,Subletting and Encumbrances”, below, is permitted to use the Premises for the purposesdescribed herein, and Lessee shall be filly responsible for the activities of its agents,employees and sublessees, if any, on the Premises.

6.2. Duties and Prohibited Conduct. Where Lessee is reasonably in doubt as tothe propriety of any particular use, Lessee may request the written determination ofLessor’s Lease Administrator that such use is or is not permitted, and Lessee will not bein breach or default under this Lease if Lessee abides by such determination.Notwithstanding the foregoing, however, Lessee shall not use nor permit the use of thePremises in any manner that will tend to create waste or a nuisance. Lessee will not use,or permit any person or persons to use, the Premises for the sale or display of any goodsand/or services which, in the sole discretion of Lessor, are inconsistent with the pemilneduses of the Premises pursuant to this Lease. Lessee shall keep the Premises, and everypart thereof, in a decent, safe and sanitary condition, free from any objectionable noisesor odors, except as may be typically present for the permitted uses specified above.

6.3. Compliance with Laws.

(a) Lessee, at Lessee’s sole expense, will procure, maintain and holdavailable for Lessor’s inspection any governmental license or permit required for theproper and lawftil conduct of Lessee’s business. Lessee shall not use the Premises forany use or purpose in violation of the laws, regulations, rules, orders or requirements ofthe United States of America, or the laws, ordinances, regulations, orders or requirementsof the State of California, the County of San Diego or the City of San Diego where thePremises are situated, or of other lawfUl authorities. Lessee shall, at Lessee’s expense,comply promptly with all applicable federal, state or local statutes, laws, ordinances,rules, regulations, orders, covenants and restrictions of record, and requirements in effectduring the Term (collectively, “Laws or Orders”), regulating the use by Lessee of the

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Premises. In connection herewith, the Parties specifically intend that Lessee shallbe solely responsible for performing and paying the costs of all repairs orrenovations of the Premises or any improvements thereon which may berequired by any Laws or Orders during the Term, regardless of their cost ornature. The fmal judgment of any court of competent jurisdiction, or the admission ofLessee or any sublessee or permittee in any action or proceeding against them or any ofthem, whether or not the Lessor is a party to such action or proceeding, that Lessee, orany such sublessee or permittee, has violated any such ordinance, law, statute, regulation,covenant, restriction or requirement pertaining to the use of the Premises, shall beconclusive as to that fact as between Lessor and Lessee.

(b) Notwithstanding any other provision of this Lease to the contrary,Lessee shall be solely responsible for payment of all costs of complying with allDisability Accessibility Laws. “Disability Accessibility Laws” shall include, but not belimited to, Tides 11 and III of the Americans with Disabilities Act, 42 U.S.C. sections12131 et seq., the Americans with Disabilities Act Architecturai Guidelines, 28 C.F.R. Pt.36, app. A, those provisions of the California Government code relating to Access toPublic Buildings by Physically Handicapped Persons, including California GovernmentCode sections 4450—4461 et. seq., the accessibility provisions of then-applicable editionsof the California Building Code, currently codified at California Code Regs., Title 24,sections 1 lOlB.1 et seq., the Unruh Civil Rights Act, California Civil Code section 51 etseq., and the Disabled Persons Act, California Civil Code section 54 et seq.

6.4. Substance Abuse. Lessee and its employees and agents shall not use &knowingly allow the use of the Premises for the purpose of unlawffilly selling, serving,using, storing, transporting keeping, manufactwing or giving away alcoholic beveragesor any “controlled substance,” precursor or analog specified in Division 10 of theCalifornia Health and Safety Code, and violation of this prohibition shall be grounds forinmiediate termination of this Lease, in accordance with the provisions of Article 16,“Defaults by Lessee; Lessor’s Remedies” below.

6.5. Control of Premises. Failure of Lessee to exercise control of the use ofPremises to conform to the provisions of this Article shall constitute a material breacliofthis Lease and grounds for termination, in accordance with the provisions of Article 16,“Defaults by Lessee; Lessor’s Remedies” below.

ARTICLE 7

UTILITIES

7.1. Separate Utility Services. Lessee shall be responsible for securing andmaintaining its separate utility services to the Premises, and shall provide and pay for allinitial utility deposits and fees needed to service the Premises, and for all utilities orservices necessary for its use and occupancy of the Premises during the Term, including

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but not limited to gas, water, electricity, sewer/septic tank charges and telephone. Lesseeshall pay directly to the applicable utility company such charges as are so separatelymetered, and Lessor shall have no obligation to pay for such utility services. Lessor shallnot be liable for any reason for any loss, damage or abatement of rent resulting from aninterruption of any of these services, Lessor shall have the right, at no charge fromLessee, to connect to any water, sewer, electrical, gas and communications lines as arenow or may hereafter be installed on the Premises, and shall have all necessary rights ofaccess to construct and service such connections; provided, however, that Lessee shallhave no obligation to pay any additional service fees or charges assessed by anygovernmental agency, or public or private utility company, for Lessor’s use of suchconnections.

7.2. Trash Compacter and Trash Removal Services. Since Lessee’scommencement of operation of the Detention Facility, Lessee has used the trashcompacter located in the County Courthouse and shared used of trash removal servicesprovided to the Courthouse. Pursuant to that certain letter agreement by and betweenLessor and Lessee, Lessor, in its capacity as manager of the Courthouse, agreed tocontinue this arrangement, and Lessee agreed to pay Lessor the sum of $1,500 per monthas compensation for its share of the cost of the use of the trash compacter and trashremoval services (the “Letter Agreement”; a copy is attached hereto as Exhibit “C”).As of the Commencement Date, the Letter Agreement will be deemed superseded by thisLease, but Lessee will continue to pay as Additional Rent the sum of $1,500 per monthon the Rent Due Date and on the first day of each month of the Term thereafter ascompensation for its share of the cost of the use of the trash compacter and trash removalservices. In the event of an increase in Lessor’s cost to provide use of the trashcompacter or trash removal services, Lessor may increase this monthly charge to Lesseeto reasonably reflect that increase provided that Lessor provides Lessee with not less than60 days prior written notice of any such proposed increased and reasonable supportingdocumentation supporting of the Lessor’s increase in costs.

ARTICLE 8

MECHANICS’ LIENS; STOP NOTICES

8.1. Mechanics’ Liens, Stop Notices. Lessee shall pay, or cause to be paid, thetotal cost and expense of all “works of improvement,” as that phrase is defined in theMechanic’s Lien Law in effect at the place of construction, done by it, or caused to bedone by it, on the Premises, and for all materials furnished for or in connection with anysuch work. If any lien or stop notice is filed against the Premises, Lessee shall cause thelien or stop notice to be discharged of record within thirty (30) days after it is filed.Lessee shall indemnify, defend and hold Lessor harmless from any and all liability, loss,damage, costs, attorneys’ fees and all other expenses on account of claims of lien of

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laborers or matetialmen or others for work performed or materials or supplies ifimishedfor Lessee or persons claiming under Lessee.

8.2. Contest of Lien or Stop Notice. If Lessee shall desire to contest any lien orstop notice filed against the Premises, it shall furnish Lessor, within the thirty-day periodfollowing filing of the lien or stop notice, security reasonably satisfactory to Lessor of atleast one hundred fifty percent (150%) of the amount of the lien or stop notice, plusestimated costs and interest, or a bond of a responsible corporate surety in such amount,conditioned on the discharge of the lien or stop notice. If a final judgment establishingthe validity or existence of a lien or stop notice for any amount is entered, Lessee shallimmediately pay and satisfS’ the same.

8.3. Right to Cure. if Lessee shall be in default in paying any charge for whicha mechanics’ lien or stop notice claim and suit to foreclose the lien or stop notice havebeen filed, and shall not have given Lessor security to protect the property and Lessorfrom liability for such claim of lien or stop notice, Lessor may (but shall not be requiredto) pay said claim and any costs, and the amount so paid, together with reasonableattorneys’ fees incurred in connection therewith, shall be immediately due and owingfrom Lessee to Lessor as additional rent, and Lessee shall pay the same to Lessor withinterest at the rate specified in section 16.9, “rnterest”, from the date(s) of Lessor’spayments.

8.4. Notice of Lien or Stop Notice. Should any claim of lien or stop notice befiled against the Premises or any action be filed against the Premises or any actionaffecting the title to such property be commenced, the party receiving notice of such lienor stop notice or action shall immediately give the other party written notice thereof.

8.5. Notice of Nonresponsibility. Lessor or its representatives shall have theright to go upon and inspect the Premises at all reasonable times and shall have the rightto post and keep posted thereon notices of nonresponsibility or such other notices whichLessor may deem to be proper for the protection of Lessor’s interest in the Premises.Lessee shall, before the commencement of any work which might result in any such lienor stop notice, give to Lessor written notice of its intention to do so in sufficient time toenable posting of such notices.

ARTICLE 9

SECURITY

9.1. Lessee Responsible for Security. Lessee shall be responsible for and shallprovide for all security of the Premises, and Lessor shall have no responsibilitywhatsoever with respect to security.

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9.2. Operation Plan. Lessee is required to deliver to Lessor an operationsmanual with respect to Detention Facility. This manual should explain normal andemergency operating procedures. Emergency contingency plans may be part of theoperations plan or they may be separate plans.

9.3. Emergency Agreements. Lessee is required to have signed cooperativeagreements with all affected local agencies (i.e. City of San Diego Police, City of SanDiego Fire, etc.) affected by emergency incidents inside or outside the Detention Facility.

ARTICLE 10

ALTERATIONS AND ADDITIONS

10.1. Lessor’s Consent to Alterations. Lessee may, at Lessee’s sole cost andexpense, make such permanent and nonsuiictural alterations, replacements, additions, orchanges to the completed Improvements, or may construct additional Improvementswithin the Detention Facility (collectively, “Alterations”), as Lessee may find necessaryor convenient for its purposes. In no event, however, shall Lessee make or cause to bemade any Alterations without obtaining the prior written approval therefor of Lessor, andof the appropriate building/inspection depathnent having jurisdiction over the Premises.

10.1.1. Consent Procedure. Conditions. Lessee shall request Lessor’sconsent to Alterations by written notice to Lessor, which must be accompanied byschematic plans showing the general scope of the work. As a condition of its consent toAlterations, Lessor may impose any requirements that Lessor considers desirable,including a requirement that Lessee provide Lessor with a surety bond, a letter of credit,or other financial assurance that the cost of the Alterations will be paid when due.

10.1.2. Lessor Consent. Lessee shall obtain Lessor’s LeaseAdministrator’s consent to any Alterations; Lessor’s consent shall not be unreasonablywithheld.

10.1.3. Costs of Review. Lessee shall reimburse Lessor for all reasonableout-of-pocket costs and expenses (including, without limitation, any architect and/orengineer fees) incurred by Lessor in approving or disapproving Lessee’s plans for anyAlterations.

10.2. Compliance of Alterations With Laws and Insurance Requirements. Lesseeshall cause all Alterations to comply with the following;

(a) Applicable Laws or Orders;

(b) Applicable requirements of a fire-rating bureau; and

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(c) Applicable requirements of Lessee’s hazard insurance carrier.

Before beginning construction of any Alteration, Lessee shall obtain a validbuilding permit and any other permits required by any government entity havingjurisdiction over the Premises. Lessee shall provide copies of those permits to Lessorbefore the work begins. Lessee acknowledges that because the Detention FacilityBuilding and the Courthouse are now owned by the State of California acting by andthrough the Judicial Council of California, Administrative Office of the Courts, thegovernmental entities having jurisdiction over the Premises now include the JudicialCouncil of California, Administrative Office of the Courts for general plan review, theState of California’s Division of State Architect for plan review under applicableDisability Access Laws, and the State Fire Marshal.

10.2.1. Additional Required Work In the event that any Alteration resultsin Lessor’s being required under Laws and Orders to perform any work that Lessor couldotherwise avoid or defer (“Additional Required Work”) Lessee shall, at Lessee’s soleexpense, perform such Additional Required Work in the Premises, which shall be subjectto the same requirements as any Alteration. If any Additional Required Work must beperformed outside the Premises, Lessor may elect to perform that work at Lessee’sexpense. No consent by Lessor to any proposed work shall constitute a waiver ofLessee’s obligations under this section.

10.3. Manner of Construction. Lessee shall build Alterations entirely within thePremises. Any Alterations shall be done in a good and workmanlike manner, using newmaterials equivalent in quality to those used in the construction of the completedImprovements, and performed under the supervision of a competent architect or structuralengineer licensed to perform work in California. Any Alterations which exceed the valueof Twenty-Five Thousand Dollars ($25,000) shall also be made in conformity with allrequirements, procedures and/or criteria specified promulgated by Lessor, and withschematic plans approved in writing by Lessor. All work shall be diligently prosecutedto completion. Lessee shall take all measures necessary to ensure that labor peace ismaintained at all times.

10.4. Lessor’s Right of Entry. Lessor, its agents and employees, shall have theright, at any time upon prior reasonable notice to Lessee, to enter the Premises to inspectthe progress of any Alteration. In connection therewith, Lessor’s consultants mayperform such testing and inspection services on the Premises and in any Alterations as theLessor, in its sole reasonable discretion, deems necessary to insure that any Alterationbeing consthrnted on the Premises conforms to applicable laws, building codes andLessor’s technical standards for the particular Alteration. No such inspection or approvalby Lessor or its agents, however, shall relieve Lessee from its obligation to construct anyAlterations on the Premises in conformance with applicable laws and building codes.

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10.5. Final Completion. Upon completion of construction of any Alterations,Lessee shall:

(a) Cause a timely notice of completion to be recorded in the office ofthe San Diego County Recorder, in accordance with Civil Code section 3093 or anysuccessor statute, and Lessee shall deliver to Lessor, within ten (10) days aftercompletion of said work, a copy Of the Notice of Occupancy and the building permit withrespect thereto;

(b) Deliver to Lessor evidence of Ml payment and unconditional finalwaivers of all liens for labor, services, or materials; and

(c) Pay to Lessor two pncent (2%) of the cost of constructing theAlteration to compensate ‘Lessor for all overhead, costs, and expenses arising fromLessor’s involvement with that work.

Lessee hereby appoints Lessor as Lessee’s attorney-in-fact to file the Notice ofCompletion on Lessee’s failure to do so after any Alteration has been substantiallycompleted. Within twenty (20) days after completion of any Alterations, Lessee shalldeliver to Lessor a reproducible copy of the drawings of Alterations as built.

10.6. Payment for Alterations. Lessee shall promptly pay all charges and costsincurred in connection with any Alteration, as and when required by the terms of anyagreements with contractors, designers, or suppliers. At least seven (7) days beforebeginning construction of any Alteration, Lessee shall give Lessor written notice of theexpected commencement date of that construction to pennit Lessor to post and record anotice of nonresponsibility.

10.7. Construction Insurance. Before construction begins on any Alterations,Lessee shall deliver to Lessor reasonable evidence that damage to, or destruction of, theAlterations during construction will be covered by the policies that Lessee is required tocarry under Article 13, “Exculpation, Indemnification and Insurance,” below, and by apolicy of builder’s all-risk insurance in an amount approved by Lessor. Lessee shallprovide a copy of such builder’s risk policy, any endorsements, and an original certificateof insurance that complies with subsection G of Exhibit “B” attached hereto. Lesseeshall cause any contractor and each subcontractor engaged in any Alteration to maintainall workers’ compensation insurance required by law and liability insurance (includingproperty damage) in amounts reasonably required by Lessor. Lessee shall provideevidence of that insurance to Lessor before construction begins.

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ARTICLE 11

TAXES, ASSESSMENTS AND FEES

11.1. Responsibility for Payment of Taxes and Assessments. Lessor shall not beobligated to pay any taxes or assessments accruing against Lessee on the Premises or anyinterest of Lessee therein before, during or after the Term, or any extension thereof; allsuch payments shall be the sole responsibility of Lessee. In addition, Lessee shall besolely responsible for payment of any taxes or assessments levied upon anyImprovements, Fixtures or Personal Property located on the Premises, to the extent thatsuch taxes or assessments result from the business or other activities of Lessee upon, or inconnection with, the Premises.

11.2. Definition of “Taxes.” As used herein, the term “taxes” means all taxes,governmental bonds, special assessments, Mello-Roos assessments, charges, rent incomeor transfer taxes, license and transaction fees, including, but not limited to: (a) any state,local, federal, personal or corporate income tax, or any real or personal property tax; (b)any estate inheritance taxes; (c) any franchise, succession or transfer taxes; (d) interest ontaxes or penalties resulting from Lessee’s failure to pay taxes; (e) any increases in taxesattributable to the sale of Lessee’s leasehold interest in the Premises; or (I) any taxeswhich are essentially payments to a governmental agency for the right to makeimprovements to the Premises.

11.3. Creation of Possesson’ Interest. Pursuant to the provisions of Revenue andTaxation Code section 107.6, Lessee is hereby advised that the terms of this Lease mayresult in the creation of a possessory interest. If such a possessoiy interest is vested inLessee, Lessee may be subjected to the payment of real property taxes levied on suchinterest. Lessee shall be solely responsible for the payment of any such real propertytaxes. Lessee shall pay all such taxes when due, and shall not allow any such taxes,assessments or fees to become a lien against the Premises or any improvement thereon;provided, however, that nothing herein shall be deemed to prevent or prohibit Lesseefrom contesting the validity of any such tax, assessment or fee in a manner authorized bylaw.

ARTICLE 12

REPAIRS; MAINTENANCE

12.1. Lessee’s Repair and Maintenance Obligations. Lessee shall at all timesfrom and after the Commencement Date, at its own cost and expense, repair, maintain ingood and tenantable condition, ordinary wear and tear excepted, and replace, asnecessary, the Premises and Improvements and every part thereof, including, withoutlimitation, the following as applicable: the roof; the heating, ventilation and air

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conditioning system; mechanical and electrical systems; all meters, pipes, conduits,equipment, components and facilities (whether or not within the Improvements) thatsupply the Improvements exclusively with utilities; all Fixtures and other equipmentinstalled on the Premises or in the Improvements; and all such items of repair,maintenance, alteration, improvement or reconstruction as may be required at any time orfrom time to time by any governmental agency having jurisdiction over the Premises orImprovements, or by any insurance company insuring all or any part of the Premises orImprovements, or both. Lessee’s obligations hereunder shall apply regardless of whetherthe repairs, restorations and replacements are ordinary or extraordinary, foreseeable orunforeseeable, capital or noncapital, or the fault or not the fault of Lessee, its agents,employees, invitees, visitors, sublessees or contractors. All replacements made by Lesseein accordance with this section shall be of like size, kind and quality to the items replacedand shall be subject to Lessor’s approval. Upon surrender of the Premises andImprovements, Lessee shaH deliver the Premises and Improvements to Lessor in goodorder, condition and state of repair, but shall not be responsible for damages resultingfrom ordinary wear and tear. In connection herewith, the Parties specifically intendthat Lessee shall be solely responsible for performing and paying the costs of allrepairs or renovations to the Premises or any Improvements thereon which maybe required by Laws or Orders during the Term, regardless of their cost ornature.

12.2. No Limitation of Rights Pertaining to Damage or Destruction orCondemnation. Nothing in this Article defining Lessee’s duty of maintenance shall beconstrued as limiting any right given to Lessee in Article 10, “Alterations andAdditions,” to alter, modify, demolish, remove, or replace any Improvement.

12.3. Lessor’s Right to Enter; Lessor Not Obligated to Repair or Maintain.Lessee shall permit Lessor, or its authorized representatives, to enter the Premises at alltimes during usual business hours to inspect the same, and to perform any work therein(a) that may be necessary to comply with any Laws or Orders; (b) that Lessor may deemnecessary to prevent waste or deterioration in connection with the Premises if Lesseedoes not make, or cause to be made, such repairs or perform, or cause to be performed,such work promptly after receipt of written demand from Lessor; or (c) that Lessor maydeem necessary in connection with the expansion, reduction, remodeling, protection orrenovation of any Lessor-constructed or owned facilities on or off of the Premises.Nothing contained in this section, however, shall imply any duty on the part of Lessor todo any such work which, under any provision of this Lease, Lessee may be required todo, nor shall Lessor’s perfonnance of any repairs on behalf of Lessee constitute a waiverof Lessee’s default in failing to do the same.

12.4. Lessor’s Election to Make Repairs. If Lessee refuses or neglects to repair,replace, or maintain the Premises or Improvements, or any part thereof, as required bythis Article, Lessor, upon ten (10) days’ prior written notification to Lessee, may elect to

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make or to cause any such repairs to be made or performed. Lessee shall indemnify,defend and hold Lessor harmless against any damage or liability arising therefrom, andshall pay all of Lessor’s costs in effecting such repairs, as Additional Rent, promptlyupon receipt from Lessor of an invoice therefor.

12.5. Lessee’s Waiver of Rent Abatement. California Civil Code Section 1942.Notwithstanding any provision of this Lease to the contrary, no deprivation, impairment,or limitation of use resulting from any event or work contemplated by this Article, norexercise by Lessor of any of its tights pursuant to this Article, shall entitle Lessee to anyoffset, abatement, or reduction in rent nor to any termination or extension of the Term. Tothe extent that any remedies specified in this Lease conflict or are inconsistent with anyprovisions of California Civil Code section 1942, or any successor statute thereto (“CC §1942”), the provisions of this Lease shall control. Lessee specifically waives any right itmay have pursuant to CC § 1942 to effect maintenance or repairs to the Premises and toabate the costs thereof from rent due to the Lessor under this Lease.

ARTICLE 13

EXCULPATION, INDEMNIFICATION AND INSURANCE

13,1. Definition of “Lessee Parties” and “Lessor Parties.” For purposes of thisArticle 13, the term “Lessee Parties” refers singularly and collectively to Lessee andLessee’s officers, members, partners, agents, employees, and independent contractors aswell as to all persons and entities claiming through any of these persons or entities. Theterm “Lessor Parties” refers singularly and collectively to Lessor, the Superior Court ofCalifornia, County of San Diego (the “Court”) and their respective judicial officers,officers, directors, affiliated entities, personal representatives, assigns, licensees, invitees,agents, servants, employees, and independent contractors of these persons or entities.

13.2. Exculpation.

13.2.1. Exculpation. To the flullest extent permitted by law, Lessee, on itsbehalf and on behalf of all Lessee Parties, waives all claims (in law, equity, or otherwise)against Lessor Parties arising out of, knowingly and voluntarily assumes the risk of; andagrees that Lessor Parties shall not be liable to Lessee Parties for any of the following:

(a) Injury to or death of any person; or

(b) Loss of, injury or damage to, or destruction of any tangible orintangible property, including the resulting loss of use, economic losses, andconsequential or resulting damage of any kind from any cause.

Lessor Parties shall not be liable under this clause regardless of whether theliability results from any active or passive act, error, omission, or negligence of anyof the

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Lessor Parties; or is based on claims in which liability without fault or strict liability isimposed or sought to be imposed on any of the Lessor Parties.

13.2.2. Survival of Exculpation. The clauses of this section 13.2 shallsurvive the expiration or earlier termination of this Lease until all claims within the scopeof this section 13.2 are ifilly, finally, and absolutely barred by the applicable statutes oflimitations.

13.2.3. Lessee’s Acknowledgment of Fairness. Lessee acknowledges thatthis section 13.2 was negotiated with Lessor, that the consideration for it is fair andadequate, and that Lessee had a fair opportunity to negotiate, accept, reject, modify, oralter it.

13.2.4. No Exculpation for Nondelegable Duties. This exculpation clausemay not be interpreted or construed as an attempt by Lessor to be relieved of liabilityarising out of a nondelegable duty on the part of Lessor.

13.2.5. Waiver of Civil Code section 1542. With respect to theexculpation provided in this Article, Lessee waives the benefits of Civil Code section1542, which provides:

“A general release does not extend to claims which the creditor doesnot know or suspect to exist in Ms favor at the time of executing therelease, which if known by him must have materially affected hissettlement with the debtor.”

13.3. Indemnification.

13.3.1. Lessee’s Indenmification of Lessor Parties. To the fullest extentpermitted by law, Lessee shall, at Lessee’s sole expense and with counsel reasonablyacceptable to Lessor, indemnify, protect, defend, and hold harmless Lessor Parties fromand against all Claims, as defined in section 13.3.2, from any cause, arising out of orrelating (directly or indirectly) to this Lease, the tenancy created under this Lease, or thePremises, including, without limitation:

(a) The use or occupancy, or manner of use or occupancy, of thePremises by Lessee Parties;

(b) Any act, error, omission, or negligence of Lessee Parties or ofany invitee, guest, or licensee of Lessee Parties, including, without limitation, Detainees,in, on, or about the Detention Facility Property or Courthouse Property;

(c) Lessee’s conducting of its business;

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(d) Any alterations, activities, work, or things done, omitted,permitted, allowed, or suffered by Lessee Parties in, at, or about the Premises, includingconstruction of Improvements, and also including the violation of or failure to complywith any Laws or Orders in existence on the Commencement Date or enacted,promulgated, or issued after the Commencement Date; and

(e) Any breach or default in performance of any obligation onLessee’s part to be performed under this Lease, whether before or during the Term orafter its expiration or earlier termination.

13.3.2. Definition of Claims. For purposes of this Lease, “Claims” meansany and all claims, losses, costs, damage, expenses, liabilities, liens, actions, causes ofaction (whether in tort or contract, law or equity, or otherwise), charges, assessments,fines, and penalties of any kind (including consultant and expert expenses, court costs,and attorneys’ fees actually incurred).

13.3.3. Type of Injury or Loss. This indemnification extends to andincludes Claims for:

(a) Injury to any persons (including death at any time resultingfrom that injury);

(b) Loss of, injury or damage to, or destruction of property(including all loss of use resulting from that loss, injury, damage, or destruction); and

(c) All economic losses and consequential or resulting damage ofany kind.

13.3.4. Active or Passive Negligence; Strict Liability. Except as providedin this section 13.3.4, the indemnification in section 13.3.1 shall apply, withoutlimitation, to Claims caused by the concurrent negligent act or omission, whether activeor passive, of Lessor Parties, and regardless of whether liability without fault or strictliability is imposed or sought to be imposed on Lessor Parties. The indemnification insection 13.3.1 shall not apply to the extent that a final judgment of a court of competentjurisdiction establishes that a Claim against one Lessor Party was caused solely by thenegligence or wiliflil misconduct of that Lessor Party. In that event, however, thisindemnification shall remain valid for all other Lessor Parties.

13.3.5. Indenmification Independent of Insurance Obligations. Theindemnification provided in this Article 13 may not be construed or interpreted as in anyway restricting, limiting, or modifying Lessee’s insurance or other obligations under thisLease and is independent of Lessee’s insurance and other obligations. Lessee’scompliance with the insurance requirements and other obligations under this Lease shall

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not in any way restrict, limit, or modify Lessee’s indemnification obligations under thisLease.

13.3.6. Survival of Indemnification. The clauses of this section 13.3 shallsurvive the expiration or earlier termination of this Lease until all claims against LessorParties involving any of the indemnified matters are ffilly, finally, and absolutely barredby the applicable statutes of limitations.

13.3.7. Duty To Defend. Lessee’s duty to defend Lessor Parties is separateand independent of Lessee’s duty to indemnify Lessor Parties. The duty to defendincludes claims for which Lessor Parties may be liable without fault or strictly liable.The duty to defend applies regardless of whether the issues of negligence, liability, fault,default, or other obligation on the part of Lessee Parties have been determined. The dutyto defend applies immediately, regardless of whether Lessor Parties have paid any sumsor incurred any detriment arising out of or relating (directly or indirectly) to any Claims.It is the express intention of the parties that Lessor Parties be entitled to obtain summaryadjudication or summary judgment regarding Lessee’s duty to defend Lessor Parties atany stage of any claim or suit within the scope of this section 13.3.

114. Insurance. Lessee shall provide and maintain, during the Term and for suchother period as may be required herein, at its sole expense, insurance in the amounts andform specified in this Section and in Exhibit “D,” attached hereto.

13.4.1. Compliance with Insurer Requirements. Lessee shall, at Lessee’ssole expense, comply with all requirements, guidelines, rules, orders, and similarmandates and directives pertaining to the use of the Premises, whether imposed byLessee’s insurers, Lessor’s insurers, or both. If Lessee’s business operations, conduct, oruse of the Premises cause any increase in the premium for any insurance policies carriedby Lessor, Lessee shall, within ten (10) business days after receipt of written notice fromLessor, reimbusse Lessor for the increase. Lessee shall, at Lessee’s sole expense, complywith all rules, orders, regulations, or requirements of the American Insurance Association(formerly the National Board of Fire Underwriters) and of any similar body.

13.4.2. Survival of Insurance Requirements. Lessee shall, at Lessee’s soleexpense, maintain in fill force and effect the liabiLity insurance coverage required underthis Lease and shall maintain Lessor Parties as additional insured, for a period of no lessthan six (6) months after expiration or earlier termination of this Lease.

13.4.3. Insurance Independent of Exculpation and Indemnification. Theinsurance requirements set forth in this Section are independent of Lessee’s exculpation,indemnification, and other obligations under this Lease and shall not be construed orinterpreted in any way to restrict, limit, or modify Lessee’s exculpation, indemnification,and other obligations or to limit Lessee’s liability under this Lease.

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ARTICLE 14

HAZARDOUS MATERIALS

14.1. Hazardous Materials Laws-Definition. As used in this section, the term“Hazardous Materials’ Laws” means any and all federal, state or local laws orordinances, rules, decrees, orders, regulations or court decisions (including the so-called“common law”), including without limitation the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601 etseq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. § 1801 etseq.), and the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C.§ 6901 et seq.), relating to hazardous substances, hazardous materials, hazardous waste,toxic substances, environmental conditions on, under or about the Premises, soil andground water conditions or other similar substances or conditions.

14.2. Hazardous Materials - Definition. As used in this section the term“Hazardous Materials” means any chemical, compound, material, substance or othermatter that;

(a) is a flammable, explosive, asbestos, radioactive nuclear medicine,vaccine, bacteria, virus, hazardous waste, toxic, overtly injurious or potentially injuriousmaterial, whether injurious or potentially injurious by itself or in combination with othermaterials;

(b) is controlled, referred to, designated in or governed by anyHazardous Materials Laws;

(c) gives rise to any reporting, notice or publication requirements underany Hazardous Materials Laws, or

(d) is any other material or substance giving rise to any liability,responsibility or duty upon the Lessor or Lessee with respect to any third person underany Hazardous Materials Law.

14.3. Existing Conditions. Lessor neither represents nor wanants that (a) prior tothe commencement of the Term the Premises was free of Hazardous Materials, or (b) thePremises is presumed to contain asbestos containing materials, materials contaminated bylead, and possibly other Hazardous Materials not known to the Lessor. Lessor will makeavailable to Lessee what information is in the possession of the Lessor concerning thenature and/or location of any Hazardous Materials upon request of the Lessee.

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14.4. Lessee’s Representations and Warranties.

14.4.1. Lessee represents and warrant that during its pre-CommencementDate occupancy and use of the Premises neither Lessee, nor its agents, employees,sublessees, assigns, contractors or invitees caused or permitted any Hazardous Materialsto be brought, kept or used in or about the Premises except as required by Lessee’spermitted use of the Premises, as described in Article 6, “Possession and Use.”

14.4.2. Lessee represents and warrants that, during the Term or anyextension thereof, or for such longer period as may be specified herein, Lessee shallcomply with the following provisions of this section unless otherwise specificallyapproved in writing by Lessor’s Lease Administrator:

(a) Lessee shall not cause or permit any Hazardous Materials to bebrought, kept or used in or about the Premises by Lessee, its agents, employees,sublessees, assigns, contractors or invitees, except as required by Lessee’s permitted useof the Premises, as described in Article 6, “Possession; Use.”

(b) Any handling, transportation, storage, treatment or usage by Lesseeof Hazardous Materials that is to occur on the Premises following the CommencementDate shall be in compliance with all applicable Hazardous Materials Laws;

(c) Any leaks, spiiis, release, discharge, emission or disposal ofHazardous Materials which may occur on the Premises following the CommencementDate shall be promptly and thoroughly cleaned and removed from the Premises by Lesseeat its sole expense, and any such discharge shall be promptly reported in writing toLessor, and to any other appropriate governmental regnlatory authorities;

(d) Excepting any asbestos which may be present on the Premises as ofthe Commencement Date, no friable asbestos shall be constructed, placed on, deposited,stored, disposed of, or located by Lessee in the Premises;

(e) No underground improvements, including but not limited totreatment or storage tanks, or water, gas or oil wells shall be located by Lessee on thePremises without Lessor’s prior written consent;

(f) Lessee shall conduct and complete all investigations, studies,sampling, and testing procedures and all remedial, removal, and other actionsnecessitated by construction of the Leasehold Improvements and any Alterations;

(g) Lessee shall promptly supply Lessor with copies of all notices,reports, correspondence, and submissions made by Lessee to the United StatesEnvironmental Protection Agency, the United States Occupational Safety and HealthAdministration, the California Occupational Safety and Health Administration and anyother local, state or federal authority which requires submission of any information

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concerning environmental mailers or hazardous wastes or substances pursuant toapplicable Hazardous Materials’ Laws;

(Ii) Lessee shall promptly notify Lessor of any liens threatened orattached against the Premises pursuant to any Hazardous Materials’ Law. If such a lien isfiled against the Premises, then, within the earlier of (i) twenty (20) days following suchfiling, or (ii) before any governmental authority commences proceedings to sell thePremises pursuant to the lien, Lessee shall either: (a) pay the claim and remove the lienfrom the Premises, or (b) furnish either (1) a bond or cash deposit reasonably satisfactoryto Lessor in an amount not less than the claim from which the lien arises, or (2) othersecurity satisfactory to Lessor in an amount not less than that which is sufficient todischarge the claim from which the lien arises. At the end of this lease, Lessee shallsurrender the Premises to Lessor free of any and all Hazardous Materials and incompliance with all Hazardous Materials’ Laws affecting the Premises.

14.5. Indemnification by Lessee. Lessee (and, if applicable, each of its generalpartners) and its successors, assigns, and guarantors, if any, jointly and severally agree toprotect, indemnify, defend (with counsel selected by Lessor) reimburse and hold LessorParties hanniess from any claims, judgments, damages, penalties, fines, costs or expenses(known or unknown, contingent or otherwise), liabilities (including sums paid insefflement of claims), personal injury (incLuding wrongful death), property damage (realor personal) or loss, including attorneys’ fees, consultants’ fees, and expprts’ fees(consultants and experts to be selected by Lessor) which arise during or after the Termfrom or in connection with the presence or suspected presence of Hazardous Materialsdeposited by Lessee, its employees or agents during the Term anywhere in the Premises,including the soil or ground water on or under the Premises, unless the HazardousMaterials are present solely as a result of the gross negligence or willful misconduct ofLessor Parties. Without limiting the generality of the foregoing, the indenmificafionprovided by this section shall specifically cover costs incurred in connection withinvestigation of site conditions or any cleanup, remedial, removal or restoration workrequired by any Hazardous Materials Laws because of the release or discharge ofHazardous Materials by Lessee during the course of Lessee’s alteration or improvementof the Premises, unless Hazardous Materials are present solely as a result of the grossnegligence or willful misconduct of Lessor Parties.

14.6. Remedies Cumulative: Survival. The provisions of this Article shall be inaddition to any and all obligations and liabilities Lessee may have to Lessor at commonlaw, and any remedies and the environmental indemnities provided for herein shallsurvive the expiration or termination of this Lease and/or any transfer of all or anyportion of the Premises, or of any interest in this Lease, and shall be governed by the lawsof the State of California.

14.7. Inspection. Lessor and Lessor’s agents, servants, and employees including,without limitation, legal counsel and environmental consultants and engineers retained by

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Lessor, may (but without the obligation or duty so to do), at any time and from time totime, on not less than ten (10) business days’ notice to Lessee (except in the event of anemergency in which case no notice shall be required), inspect the Premises to determinewhether Lessee is complying with Lessee’s obligations set forth in this Article, and toperform environmental inspections and sampling, during regular business hours (exceptin the event of an emergency) or during such other hours as Lessor and Lessee mayagree. If Lessee is not in compliance, Lessor shall have the right, in addition to Lessor’sother remedies available at law and in equity, to enter upon the Premises immediately andtake such action as Lessor in its sole judgment deems appropriate to remediate any actualor threatened contamination caused by Lessee’s failure to comply. Lessor will usereasonable efforts to minimize interference with Lessee’s use of Premises but will not beliable for any interference caused by Lessor’s entry and remediation efforts. Uponcompletion of any sampling or testing Lessor will (at Lessee’s expense if Lessor’s actionsare a result of Lessee’s default under this section) restore the affected area of thePremises from any damage caused by Lessor’s sampling and testing.

ARTICLE 15

ASSIGNMENT, SUBLETTING AND ENCUMBRANCES

15.1. Lessor’s Consent to Assignment Required. Lessee shall not voluntarily orinvoluntarily assign, sublease, mortgage, encumber, or otherwise transfer (collectively, a“Transfer”) all or any portion of the Premises or its interest in this Lease withoutLessor’s prior written consent. Lessor may withhold its consent until Lessee hascomplied with the provisions of the following Sections of this Article. Any attemptedTransfer without Lessor’s consent shall be void and shall constitute a material breach ofthis Lease. As used herein, the term “Transfer” shall include an arrangement (includingwithout limitation management agreements, concessions, and licenses) that allows the useand occupancy of all or part of the Premises by anyone other than Lessee, and the changeof control of Lessee as a corporation, partnership or other business entity. “Change ofControl” is defined to mean the happening of any of the following:

(a) any person or entity, including a “group” as defined in Section13(d)(3) of the Securities Exchange Act of 1934, other than Lessee or a wholly-ownedsubsidiary thereof or any employee benefit plan of Lessee or any of its subsidiaries,becomes the beneficial owner of Lessee’s securities having 50% or more of the combinedvoting power of the then-outstanding securities of Lessee that may be cast for the electionof directors of Lessee; or

(b) less than a majority of the combined voting power of the then-outstanding securities of Lessee or any successor corporation or entity entitled to votegenerally in the election of the directors of Lessee or such other corporation or entityafter such transactions are held in the aggregate by the holders of Lessee’s securities

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entitled to vote generally in the election of directors of Lessee immediately prior to suchtransaction.

15.2. Lessor’s Election. Lessee’s request for consent to any Transfer shall beaccompanied by a written statement setting forth the details of the proposed Transfer,including (a) the name, address, business, business history and financial condition of theproposed assignee or sublessee (collectively, “Transferee”) sufficient to enable Lessorto determine the financial responsibility and character of the Transferee; (b) a copy of theproposed assignment or sublease and the financial details of the proposed Transfer(including the duration, the rent and any security deposit payable under an assignment orsublease); (c) the Transferee’s proposed use of the Premises; and (d) any other relatedinformation which Lessor may reasonably require. Lessor shall have the right: (x) towithhold consent to the Transfer in its sole and absolute discretion; (y) to grant consent;or (z) to consent provided that Lessor is paid, as additional rent hereunder, all sums orother consideration to be paid to Lessee under the terms of the Transfer in excess of thetotal rent due hereunder.

15.2.1. Consent to Assignment or Sublease. Lessor’s consent to anassignment or sublease will not be effective until (a) a thIly executed copy of theinstrument accomplishing a Transfer (“Transfer Instrument”) has been delivered toLessor, including, without limitation, a copy of any trust deed encumbering Lessee’sleasehold and the note secured thereby; (b) in the case of a sublease, Lessor has receivedfrom Lessee an original of the executed sublease and; and (c) in the case of anassignment, Lessor has received a written instrmnent in which the assignee has assumedand agreed to perform all of Lessee’s obligations under this Lease. Any rights acquiredby a Transferee pursuant to any Transfer Instrument shall be subject to each and everycovenant, condition and restriction set forth in this Lease and to all of the rights andinterest of Lessor hereunder except as may be otherwise herein specifically provided.Lessor may require any permitted sublessee to make rent payments directly to Lessor, inthe amount of Base Rent or Additional Renf due hereunder. In the event of any conflictbetween the provisions of this Lease and the provisions of any Transfer Instrument, theprovisions of this Lease shall control.

15.3, Transfer Fee, If Lessor is requested to consent to a Transfer hereunder,Lessee shall pay all Lessor’s attorneys’ fees, plus a nonrelbndable fee of $5,000(“Transfer Fee”) to reimburse Lessor or Lessor’s agent for costs and expenses incurredin connection with such request. The Transfer Fee shall be delivered to Lessorconcurrently with Lessee’s request for consent.

15.4. Transfer Premium,

15.4.1. Transfer Premium Payment. As a reasonable condition to Lessor’sconsent to any Transfer, Lessee shall pay to Lessor five percent (5%) of any TransferPremium, as defined in Section 15.4.2, below.

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15.4.2. Definition of “Transfer Premium.” “Transfer Premium” meansall base rent, additional rent, and other consideration payable by Transferee to Lessee(including key money and bonus money and any payment in excess of fair market valuefor services rendered by Lessee to Transferee or assets, fixtures, inventory, equipment, orfi.irnimre transferred by Lessee to Transferee in connection with the Transfer(“Transferee Rent”), after deducting all periodic rent payable by Lessee under thisLease (excluding the Transfer Premium) (“Lessee Rent”) for that portion of the Premisestransferred (“Subject Space”). If pan of the Transfer Premium is payable by Transfereeother than in cash, Lessor’s share of that noncash consideration shall be in a formreasonably satisfactory to Lessor.

15.4.3. Monthly Payment of Transfer Premium. Lessee shall pay theTransfer Premium in advance, on the date the Transfer Instrument is delivered to Lessor,together with its payment of Additional Rent under Section 4.2, “Additional Rent,”above.

15.4.4. Exemption From Recapture. This Section 15.4 does not apply toany “Exempt Transfer.” An Exempt Transfer consists of any of the following:

(a) Any Transfer for which Lessor’s consent is not required; or

(b) Any Transfer to an Affiliate of Lessee, as defined below; or

As used herein, the term “Affiliate” means any entity that controls, is controlledby, or is under common control with Lessee. “Control” means the direct or indirectownership of fifty-one percent (51%) of the voting securities of an entity or possession ofthe right to vote fifty-one percent (51%) of the voting interest in the ordinary direction ofthe entity’s affairs.

15.5. No Release of Lessee. No permitted Transfer shall release or changeLessee’s primary liability to pay the rent and to perform all other obligations of Lesseeunder this Lease, except to the extent this Lease is terminated as described above. Lesseemay not amend the assignment or sublease in such a way as to reduce or delay paymentof amounts that are provided in the assignment or sublease approved by Lessor. Lessor’sacceptance of rent from any other person is not a waiver of any provision of this Articleor a consent to Transfer. Lessor’s consent to one Transfer shall not be deemed to implyLessor’s consent to any subsequent Transfer. If Lessee’s Transferee defaults under thisLease, Lessor may proceed directly against Lessee without pursuing remedies against theTransferee, Lessor may consent to subsequent assignments or modifications of this Leaseby Lessee’s Transferee, without notifying Lessee or obtaining its consent, and such actionshall not relieve Lessee’s liability under this Lease.

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15.6. No Merger. No merger shall result from a Transfer pursuant to this Article,Lessee’s surrender of this Lease, or a mutual cancellation of this Lease in any othermanner.

15.7. Approval of Temporary or Limited Activities. Notwithstanding anyprovision of this Article to the contrary, the Lessor’s Lease Administrator may, at his orher sole discretion, and without charging a Transfer Fee, give written authorization forthe following activities on the Premises: (a) activities of a temporary nature, not toexceed one hundred twenty (120) calendar days, and (b) activities of a limited naturewhich do not exceed ten (10) hours per week. Lessee shall maintain, on an approvedLessor form, a listing of all such activities approved by the Lessor, stating the nature,duration and other relevant matters regarding such activities, and shall make such formavailable to Lessor for inspection upon request. Nothing herein shall relieve Lessee fromits responsibilities under this Lease, and Lessee shall be responsible for insuring that anysuch activity approved by the Lessor complies with all of the provisions of this Lease.Any such temporary or limited activity shall be subject to immediate termination upondelivery of written notification thereof from the Lessor.

ARTICLE 16

DEFAULTS BY LESSEE; LESSOR’S REMEDIES

16.1. Events of Default. The occunehee of any of the following shall constitute amaterial default by Lessee and a breach of this Lease:

(a) Failing or refusing to pay any amount of Base Rent or AdditionalRent when due in accordance with the provisions of this Lease, and the failure or refusalcontinues for five (5) calendar days after notice from Lessor; provided, however, thatLessee will not be entitled to more than one (1) notice for default in payment of rentduring any twelve-month period, and if within twelve (12) months after any such notice,any rent is not paid when due, an event of default will have occurred without furthernotice;

(b) Failing or refusing to construct, occupy or operate the Premises orImprovements in accordance with the provisions of this Lease, or any abandonment ofthe Premises;

(c) Failing or refusing to perform fully and promptly any covenant,condition or other obligation of this Lease, other than those specified in subparagraphs (a)and (b) above, the breach of which Lessee is capable of curing after reasonable noticefrom Lessor;

(d) Maintaining, committing or permitting on the Premises orImprovements waste, a nuisance, or use of the Premises or Improvements for an unlawful

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purpose, or assigning or subletting this Lease in a manner contrary to the provisions ofArticle 15, “Assignment, Subletting and Encumbrances,” above;

(e) The occurrence of any of the events described in Article 19,“Bankruptcy,” below; or

U) The occurrence of any of the events set forth in Section 16.4,“Lessor’s Rights and Remedies,” below.

16.2. Notices. Following the occurrence of any of the defaults specified in thepreceding section, Lessor shall give Lessee a written notice specifying the nature of thedefault and the provisions of this Lease breached and demanding that Lessee either thulycure each such default within the time period specified in the subparagraphs below or quitthe Premises and surrender the same to Lessor:

(a) For nonpayment of Base Rent or Additional Rent, five (5) calendardays;

(b) For a curable default, a reasonable period not to exceed thirty (30)calendar days, provided, however, that if such default cannot be cured within said timeperiod, Lessee shall be deemed to have cured such default if Lessee so notifies Lessor inwriting, commences cure of the default within said time period, and thereafter diligentlyand in good faith continues with and actually completes said cure; and

(c) For a noncurable default, Lessor shall give Lessee a written noticespecifying the nature of the default and the provisions of this Lease breached and Lessorshall have the right to demand in said notice that Lessee, and any subtenant, quit thePremises within thirty (30) calendar days.

16.3. Replacement of Statutory Notice Requirements. When this Lease requiresservice of a notice, that notice shall replace rather than supplement any equivalent orsimilar statutory notice, including any notices required by Code of Civil Proceduresection 1161 or any similar or successor statute. When a statute requires service of anotice in a particular manner, service of that notice (or a similar notice required by thisLease) in the manner required by Article 27, “Notices,” shall replace and satisfy thestatutory service-of-notice procedures, including those required by Code of CivilProcedure section 1162 or any similar or successor statute.

16.4. Lessor’s Rights and Remedies. Should Lessee fail to cure any suchdefaults within the time periods specified in the immediately preceding section, or fail toquit the Premises as required thereby, Lessor may exercise any of the following rightswithout ffirther notice or demand of any kind to Lessee or any other person, except asmay otherwise be required by applicable California law:

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(a) The right of Lessor to terminate this Lease and Lessee’s right topossession of the Premises and to reenter the Premises, take possession thereof andremove all persons therefrom, following which Lessee shall have no thither claim on thePremises under this Lease;

(b) The right of Lessor without terminating this Lease and Lessee’s rightto possession of the Premises, to reenter the Premises and occupy the whole or any paftthereof for and on account of Lessee and to collect any unpaid rents and other charges,which have become payable, or which may thereafter become payable pursuant to CivilCode section 1951.4; or

(c) The right of Lessor, even though it may have reentered the Premisesin accordance with the immediately preceding subparagraph (b) of this section, to electthereafter to terminate this Lease and Lessee’s right to possession of the Premises.

Should Lessor have reentered the Premises under the provisions of subparagraph(b) of this section, Lessor shall not be deemed to have terminated this Lease, the liabilityof Lessee to pay rent or other charges thereafter accruing, or Lessee’s liability fordamages under any of the provisions hereof, by any such reentry or by any action, inunlawfUl detainer or otherwise, to obtain possession of the Premises, unless Lessor shallhave notified Lessee in writing that it has so elected to terminate this Lease and Lessee’sright to possession. Lessee thither covenants that the service by Lessor of any noticepursuant to the unlawfUl detainer statutes of the State of California and the surrender ofpossession pursuant to such notice shall not (unless Lessor elects to the contrary at thetline of, or at any time subsequent to, the serving of such notice and such election isevidenced by a written notice to Lessee) be deemed to be a termination of this Lease. Inthe event of any reentry or taking possession of the Premises as aforesaid, Lessor shallhave the right, but not the obligation, at Lessee’s expense, to remove therefrom all or anypart of the buildings or structures placed on the Premises by Lessee or its agents, and anyor all merchandise, Fixtures or Personal Property located therein and to place the same instorage at a public warehouse at the expense and risk of Lessee. The rights and remediesgiven to Lessor in this section shall be additional and supplemental to all other rights orremedies which Lessor may have under laws in force when the default occurs.

16.4.1. rRESERVED.1

16.5. Lessor’s Damages. Should Lessor terminate this Lease and Lessee’s rightto possession of the Premises pursuant to the provisions of subparagraph (a) or (c) of theimmediately preceding Section, Lessor may recover from Lessee as damages any or all ofthe following:

(a) The worth at the time of award of any unpaid rent that had beenearned at the time of such termination;

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(b) The worth at the time of award of the amount by which the unpaidrent that would have been earned after termination until the time of award exceeds theamount of such rent loss Lessee proves could have been reasonably avoided;

(c) The worth at the time of award of the amount by which the unpaidrent for the balance of the Term after the time of award exceeds the amount of such rentloss that Lessee proves could be reasonably avoided;

(d) Any other amount necessary to compensate Lessor for all thedetriment proximately caused by Lessee’s failure to perform its obligations under thisLease or which in the ordinary course of things would be likely to result therefrom,including, without limitation, any costs or expense incurred by Lessor in (i) retakingpossession of the Premises, including reasonable attorneys’ fees therefor; (ii) maintainingor preserving the Premises after such default; (iii) preparing the Premises for releffing to anew tenant, including repairs or alterations to the Premises for such reletting; (iv) leasingcommissions; and (v) any other costs necessary or appropriate to relet the Premises; and

(e) At Lessor’s election, such other amounts in addition to or in lieu ofthe foregoing as may be permitted from time to time by the laws of the State ofCalifornia.

As used in subparagraphs (a) and (b) of this section, the “worth at the time ofaward” is computed by allowing interest at the maximum rate allowed by California law.As used in subparagraph (c) of this section, the “worth at the time of award” is computedby discounting such amount at the discount rate of the Federal Reserve Bank of SanFrancisco at the time of award, plus one percent (1%).

Ml rent, other than Base Rent shall, for the purposes of calculating any amountdue under the provisions of subparagraph (c) of this section, be computed on the basis ofthe average monthly amount thereof accruing during the immediately preceding six (6)month period, except that if it becomes necessary to compute such rent before such a six(6) month period has occurred, then such rent shall be computed on the basis of theaverage monthly amount hereof accruing during such shorter period.

16.6. Fixtures and Personal Property. In the event of Lessee’s default, all ofLessee’s merchandise, Fixtures and Personal Property shall remain on the Premises and,continuing during the length of said default, Lessor shall have the right to take theexclusive possession of same and to use the same free of rent or charge until all defaultshave been cured or, at its option, to require Lessee to remove same forthwith.

16.7. Lessor’s Security Interest. To secure Lessee’s performance of any and allof Lessee’s obligations under this Lease, Lessee hereby grants Lessor an express first andprior contractual lien and security interest in Improvements and Fixtures located on thePremises, and also upon all proceeds of any insurance that may accrue to Lessee by

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reason of the destruction or damage of such property. Lessee waives the benefit of allexemption laws in favor of this lien and security interest. This lien and security interestis given in addition to Lessor’s statutory lien and is cumulative with it. Upon theoccurrence of an event of default, these liens may be foreclosed with or without courtproceedings by public or private sale, so long as Lessor gives Lessee at least fifteen (15)days’ notice of the time and place of the sale. Lessor shall have the right to become thepurchaser if it is the highest bidder at the sale. To perfect said security interest, Lesseeshall execute and deliver to Lessor such financing statements required by the applicableUniform Commercial Code as Lessor may request.

16.8. Lessee’s Waiver. Notwithstanding anything to the contrary contained inthis Article, Lessee waives (to the fullest extent permitted under law) any written notice(other than such notice as this Aiticle specifically requires) which any statute or law nowor hereafter in force prescribes be given Lessee. Lessee thither waives any and all rightsof redemption under any existing or future law in the event its eviction from, ordispossession of, the Premises for any reason, or in the event Lessor reenters and takespossession of the Premises in a lawful manner.

16.9. Interest. Any amounts, other than rent, due from Lessee under theprovisions of this Lease which are not paid when due shall bear interest at the rate of fourpercent (4%) over the discount rate charged from time to time by the Federal ReserveBank (San Francisco office), but not to exceed the maximum rate which Lessor ispermitted by law to charge.

ARTICLE 17

DEFAULTS BY LESSOR; REMEDIES

If Lessor shall neglect or fail to perform or observe any of the terms, covenants, orconditions contained in this Lease on its part to be performed or observed within thirty(30) days after written notice of default or, when more than thirty (30) days shall berequired because of the nature of the default, if Lessor shall fail to proceed diligently tocure such default after written notice thereof, then Lessor shall be liable to Lessee for anyand all damages sustained by Lessee as a result of Lessor’s breach; provided, however,that (a) any money judgment resulting from any default or other claim arising under thisLease shall be satisfied only out of the current rents, issues, profits and other incomeLessor receives from its operation of Premise, net of all current operating expenses,liabilities, reserves and debt service associated with said operation (“Net Income” forpurposes of this Article only), (b) no other real, personal or mixed property of Lessor,wherever located, shall be subject to levy on any such judgment obtained against Lessor,(c) if such Net Income is insufficient to safis& such judgment, Lessee will not instituteany further action, suit, claim or demand, in law or in equity, against Lessor for or on theaccount of such deficiency, and (d) such neglect or failure shall not constitute consent by

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Lessor for Lessee to perform or observe such terms, covenants or conditions at Lessor’s

expense. Lessee hereby waives, to the extent permitted under law, any right to satisfy

said money judgment against Lessor except from Net tncome, and also waives the

protections of Civil Code sections 1932 and 1933,

ARTICLE 18

IRESERVEDI

ARTICLE 19

BANKRUPTCY

19.1. Right of Termination. The occurrence of any of the following events shall

be deemed a material default under this Lease, and Lessor may terminate this Lease and

any interest of Lessee therein in the manner set forth in Article 16, “Defaults By Lessee;

Lessor’s Remedies,” above:

(a) Proceedings are instituted whereby all, or substantially all, of

Lessee’s assets are placed in the hands of a receiver, trustee or assignee for the benefit of

Lessee’s creditors, and such proceedings continue for at least thirty (30) days;

(b) Any creditor of Lessee institutes judicial or administrative process to

execute on, attach or otherwise seize any of Lessee’s merchandise, Fixtures or Personal

Property, located on the Premises and Lessee fails to discharge, set aside, exonerate by

posting a bond, or otherwise obtain a release of such property within thirty (30) days;

(c) A petition is filed for an order of relief under the Federal Bankruptcy

Code or for an order or decree of insolvency or reorganization or rearrangement under

any state or federal law, and is not dismissed within thirty (30) days;

(d) Lessee makes a bulk sale of all, or substantially all, of Lessee’s

merchandise, Fixtures or Personal Property located on the Premises, except in accordancewith the provisions of Article 10, “Additions and Alterations,” or except in connection

with a permitted assignment or subletting under this Lease, and fails to replace the same

with similar items of equal or greater value and utility within three (3) days.

If a court of competent jurisdiction determines that any of the foregoing events isnot a default under this Lease, and a trustee is appointed to take possession (or if Lesseeremains a debtor in possession), and such trustee or Lessee transfers Lessee’s interest

hereunder, then Lessor shall receive, as Additional Rent, the difference, if any, between

the rent (or other consideration) paid in connection with such transfer, minus the rentpayable by Lessee hereunder. Any assignee pursuant to the provisions of any bankruptcy

law shall be deemed without further act to have assumed all of the obligations of Lessee

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hereunder arising on or after the date of such assignment. Any such assignee shall upondemand execute and deliver to Lessor an instrument confirming such assumption.

19.2. Request for Information. Within ten (10) days after Lessor’s requesttherefor, Lessee shall provide Lessor and any mortgagee or proposed mortgagee ofLessor, as Lessor shall specify, such financial, legal and business information concerningany of the events described in this Article as Lessor shall request.

ARTICLE 20

DAMAGE OR DESTRUCTION

20.1. Lessee’s Duty to Repair Casualty. Should the Premises, or Lessee’sFixtures, Improvements or Personal Property, be damaged by fire, earthquake, or anyother identifiable event of a sudden, unexpected, or unusual nature (“Casualty”), Lessee,at Lessee’s sole cost and expense, shall, as expeditiously as reasonably possible, repairany damages to the Premises, and repair, restore and replace any such damaged ordestroyed Fixtures, Improvements or Personal Property.

20.2. Construction Provisions. In the event of any reconstruction of thePremises, Fixtures or Improvements required of Lessee pursuant to this Article, Lesseeshall repair the Premises, and repair or rebuild such Fixtures and Improvements, tosubstantially the same condition they were in immediately preceding such Casualty.Lessee shall also repair or replace its Personal Property situated upon the Premises whichmay have been damaged or destroyed by such Casualty as may in the opinion of Lessorbe necessary for the resumption by Lessee of its business upon the Premises.

20.3. No Abatement of Rent. In the event of reconstruction, replacement orrepair by Lessee pursuant to this Article, Lessee shall continue its operations on thePremises during any such period to the extent reasonably practicable from the standpointof prudent business management, and in continuing compliance with applicable laws andregulations. During such time, the obligation of Lessee to pay Base Rent and AdditionalRent shall remain in thU force and effect Lessee shall not be entitled to anycompensation or damages from Lessor for loss of use of the whole or any part of thePremises, Lessee’s Personal Property, or any inconvenience or annoyance occasioned bysuch damage, reconstruction or replacement. Lessee hereby waives any statutory rightsof termination which may arise by reason of any partial or total destruction of thePremises.

20.4. Lessor’s Election to Repair. If, in Lessor’s judgement, Lessee fails to makereasonable progress to repair any Casualty, Lessor, upon ten (10) days’ prior writtennotice to Lessee, and with or without terminating this Lease, may elect to (a) repair thePremises, and (b) repair, restore, or replace the damaged or destroyed Improvements,Fixtures or Personal Property, as applicable. Lessor’s election to perform any obligation

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of Lessee under this Section on Lessee’s failure or refusal to do so shall not constimte a 4waiver of any right or remedy for Lessee’s default. Lessee shall indemnify, defend and

hold Lessor harmless against any damage or liability arising therefrom, and shall pay, as

Additional Rent, all of Lessor’s costs in effecting such repairs, promptly upon receipt

from Lessor of an invoice therefor. Upon Lessor’s election to perform any obligation ofLessee under this Section, all proceeds from Lessee’s insurance shall be disbursed and

paid to Lessor.

20.5. Damage or Destruction During the Final Six Months of the Term. Lessee is

relieved of the obligation to, but may, repair, restore, or reconstruct Improvements

damaged or destroyed during the final six (6) months of the Term if Improvements on thePremises are damaged or destroyed to the extent of more than fifty percent (50%) of thereplacement cost for all Improvements on the Premises, or the damage is such that thePremises cannot be repaired and restored within ninety (90) days after the Casualty; the

damage or destruction is uninsured and is not required to be insured under any provision

of this Lease; and Lessee complies with all the following conditions:

(a) Gives Lessor notice of the Casualty promptly but not later than five

(5) days after the event, detailing facts that qualif’ the casualty under this provision;

(b) Is not in default under any provision or condition of this Lease;

(c) Continues to make all payments when due as required by theprovisions of this Lease; provided, however, that Lessor may, by notice given at any timeafter receipt of Lessee’s notice of the Casualty, elect to terminate this Lease at a datestated in Lessor’s notice and to forgive all rent for the period following that date;

(d) Pays in Mi, or has paid in flail, any outstanding indebtednessincurred by Lessee and secured by an encumbrance or encumbrances on the leasehold;

(e) (If Lessor terminates the Lease) Delivers possession of the Premisesto Lessor and quitclaims all right, title, and interest in the Premises and Improvements;

(0 Causes to be discharged all liens and encumbrances resulting fromany act or omission of Lessee;

(g) Removes, or deposits the cost of removing, all Fixtures and

Improvements as specified in Section 10.5, “Fixtures,” relating to Lessee’s duty toremove Improvements on any termination or expiration of the Tenn;

(1-i) Effectively relinquishes and transfers to Lessor all insurance

proceeds resulting from the Casualty.

20.6. Malor Destruction. Notwithstanding any of the foregoing provisions of this

Article to the contrary, in the event that, at any time after the Commencement Date, (a)

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the Improvements are damaged or destroyed to the extent of more than fifty percent(50%) of their replacement cost, or (b) the damage is such that the Improvements cannotbe repaired and restored within ninety (90) days after the Casualty, then Lessor andLessee shall each have the right to terminate this Lease upon thirty (30) days’ priorwritten notice to Lessee. If the parties to this Lease cannot agree upon the extent andamount of such damage or destruction, Lessor shall promptly designate a certifiedarchitect, registered engineer, or licensed building contractor who shall determine suchmatters, and the determination of such architect, engineer, or contractor shall be final andbinding upon the parties to this Lease. Monthly rent shalL be apportioned and paid to thetime of termination.

20.7. Lessee’s Waiver of Statutory Provisions. The provisions of this Lease,including those in this Article, constitute an express agreement between Lessor andLessee that applies in the event of any Casualty to the Premises or Improvements.Lessee, therefore, fully waives the provisions of any statute or regulation, includingCalifornia Civil Code sections 1932(2) and 1933(4), for any rights or obligationsconcerning a Casualty.

ARTICLE 21

EMINENT DOMAIN

21.1. Condemnation. If all of the Premises is taken under eminent domainproceedings by a party other than Lessor, or, if less than all of the Premises is taken undersuch proceeding and in the opinion of Lessor’s Lease Administrator the part takensubstantially impairs the ability of Lessee to use the remainder of the Premises for thepurposes permitted by this Lease, then either Lessor or Lessee may terminate this Leaseas of the date that the condemning authority takes possession by delivery of writtennotice of such election within twenty (20) days after such party has been notified of thetaking or, in the absence thereof, within twenty (20) days after the condemning authorityshall have taken possession.

21.2. Continuation of Lease After Condemnation. If this Lease is not terminatedby Lessor or Lessee, it shall remain in full force and effect as to any portion of thePremises remaining, and:

(a) This Lease will end as of the date possession of the part is taken bythe public entity as to the part of the Premises that is taken;

(b) Prepaid rent will be allocated in proportion to the relationship thatthe compensation paid to Lessee and Lessor by the public entity for the portion of thePremises condenmed, including any amount paid to Lessee for damages to the remainderof the Premises, bears to the value of the whole of the Premises as of the date possessionof the part is taken by the public entity;

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(c) Rent shall be reduced in proportion to the relationship that the

compensation paid to Lessee and Lessor by the public entity for the portion of the

Premises condemned including any amount paid to Lessee for damages to the remainder

of the Premises, bears to the value of the whole of the Premises as of the date possession

of the part is taken by the public entity; and

(d) At its cost, Lessee shall restore so much of the remaining portion of

the Premises as is required to create a reasonably sound architectural (or economically

feasible) unit substantially suitable for the purposes for which they were used

immediately before the taking, using good workmanship and new first class materials, all

in accordance with the requirements of Article 10, “Additions and Alterations,” above.

21.3. Lessee’s Award. In connection with any taking, Lessee may prosecute its

own claim by separate proceedings against the condemning authority for damages legally

due to it (such as the loss of Improvements or Fixtures that Lessee was entitled to remove

and moving expenses) only so long as Lessee’s award does not diminish or otherwise

adversely affect Lessor’s award.

21.4. Allocation of Condemnation Award for a Total Taking of the Premises. All

awards for the total taking of the Premises or proceeds from the sale made under the

threat of the exercise of the power of eminent domain shall be the property of Lessor,

whether made as compensation for diminution of value of the leasehold estate, for the

taking of the fee, or as severance damage; provided, however, that Lessee shall be

entitled to any award for (i) the value of Lessee-constructed Improvements minus

depreciation by that percentage per year which is derived by dividing 100 years by the

length of the Term, and (II) loss of or damage to Lessee’s trade fixtures, and removable

personal property, Notwithstanding the foregoing, any amount of condemnation

compensation due to Lessee pursuant hereto shall go first, to Lessor to satisfy (1) Lessor’s

attorneys’ fees, appraisal fees, and other costs incurred in prosecuting the claim for the

award, (ii) Lessor’s lost rent and the value of the reversion as of the ending date, and (iii)

any financial obligations of Lessee to Lessor pursuant to the provisions of this Lease, and

second, to any creditors of Lessee to satisfy the unpaid principal balance due to such

creditor from any Lessor-approved loan encumbering the Premises.

ARTICLE 22

SALE OR MORTGAGE BY LESSOR

22.1. Sale or Mortgage. Subject to Lessee’s leasehold interest under this Lease,

Lessor may, at any time and without the consent of Lessee, sell, purchase, exchange,

transfer, assign, lease, encumber or convey Lessor’s interest in whole or in part, in this

Lease, the Premises, and the realty underlying the Premises (collectively referred to in

this Article as a “Sale”).

41

22.2. Release on Sale. From and after a Sale of Lessor’s entire interest in thePremises, Lessor shall be released from all liability toward Lessee and Lessee’ssuccessors and assigns arising from this Lease because of any act, occurrence or omissionof Lessor occurring after such Sale.

ARTICLE 23

SUBORDINATION; AflORNMENT

23.1. Subordination. Without the necessity of any other document beingexecuted and delivered by Lessee, this Lease is and shall be junior, subject andsubordinate to any existing or fliffire permits or approvals issued by the United States ofAmerica or any local, State or federal agency affecting the control or operation of thePremises; Lessee shall be bound by the terms and provisions of such permits orapprovals. In addition, this Lease is and shall also be subject, subordinate and junior toall ground leases, mortgages, deeds of trust and other security instruments of any kindwhich may cover the Premises, or any portion thereof.

23.2. Attornment. In the event any proceedings are brought for foreclosure, or inthe event of the exercise of the power of sale under any mortgage or deed of trust madeby Lessor covering the Premises, Lessee shall attorn to the purchaser upon any suchforeclosure or sale and recognize such purchaser as landlord under this Lease.

ARTICLE 24

LESSOR’S RIGHT OF ACCESS

24.1. Right of Entry. Lessor, its agents, employees, and contractors may enterthe Premises at any time in response to an emergency, and, at reasonable hours, uponprior reasonable notice to Lessee, to (a) inspect the Premises and Improvements; (b)exhibit the Premises and Improvements to prospective purchasers or Lessees; (c)determine whether Lessee is complying with its obligations in this Lease (including itsobligations with respect to compliance with Hazardous Materials Laws); (d) post noticesof nonresponsibility or similar notices; (e) inspect the progress of construction of anyImprovement; or (0 make repairs that this Lease requires or allows Lessor to make, ormake repairs to any adjoining space or utility services, or make repairs, alterations, orimprovements to any other portion of the Premises; provided, however, that all work willbe done as promptly as reasonably possible and so as to cause as little interference toLessee as reasonably possible.

24.2. Lessee’s Waiver. Lessee waives any claim of injury or inconvenience toLessee’s business, interference with Lessee’s business, loss of occupancy or quietenjoyment of the Premises, or any other loss occasioned by such entry. If necessary,

42

Lessee shall provide Lessor with keys to unlock all of the doors in the Premises

(excluding Lessee’s vaults, safes, and similar areas designated in writing by Lessee in

advance). Lessor will have the right to use any means that Lessor may deem proper to

open doors in the Premises and to the Premises in an emergency. No entry to thePremises by Lessor by any means will be a forcible or unlawffil entry into the Premises or

a detainer of the Premises or an eviction, actual or constructive, of Lessee from the

Premises, or any part of the Premises, nor will the entry entitle Lessee to damages or an

abatement of rent or other charges that this Lease requires Lessee to pay.

ARTICLE 25

QUIET ENJOYMENT

If Lessee is not in breach under the covenants made in this Lease, Lessor

covenants that Lessee shall have peaceful and quiet enjoyment of the Premises without

hindrance on the part of Lessor. Lessor will defend Lessee in the peaceful and quiet

enjoyment of the Premises against claims of all persons claiming through or under the

Lessor.ARTICLE 26

HOLDING OVER

If Lessee remains in possession of the Premises, for any reason, after theexpiration of the term of this Lease without executing a new Lease, or after Lessor hasdeclared a forfeiture by reason of a default by Lessee, then such holding over shall beconstrued as a tenancy from month to month, subject to all the conditions, provisions andobligations of this Lease insofar as they are applicable to a month-to-month tenancy. TheBase Rent payable during any period of holding over shall be equal to one hundred fiftypercent (150%) of the Base Rent payable during the period immediately precedingLessee’s holding over.

ARTICLE 27

NOTICES

27.1. Notices. Whenever in this Lease it shall be required or permitted thatnotice or demand be given or served by either party to this Lease to or on the other, suchnotice or demand shall be in writing, mailed or delivered to the other party at theaddresses specified in Sections 1 and 2 of the Summary. Mailed notices shall be sent byUnited States Postal Service, certified or registered mail, postage prepaid and shall bedeemed to have been given, delivered and received three (3) business days after the datesuch notice or other communication is posted by the United States Postal Service. All

other such notices or other communications shall be deemed given, delivered and

43

received upon actual receipt. Either party may, by written notice delivered pursuant tothis provision, at any lime designate a different address to which notices shall be sent.

27.2. Default Notices. Notwithstanding anything to the contrary containedwithin this Article, any notices Lessor is required or authorized to deliver to Lessee inorder to advise Lessee of alleged violations of Lessee’s covenants under this Lease mustbe in writing but shall be deemed to have been duly given or served upon Lessee byLessor attempting to deliver at the Premises during normal business hours a copy of suchnotice to Lessee or its managing employee and by Lessor mailing a copy of such notice toLessee in the manner specified hi the preceding Section.

ARTICLE 28

NONDISCRIMINATION

Lessee hereby covenants by and for itself, its successors, assigns and all personsclaiming under or through it, that this Lease is made and accepted upon and subject to thecondition that there shaU be no discrimination against, or segregation of, any person orgroup of persons on account of race, color, creed, religion, sex, marital status, nationalorigin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure orenjoyment of the Premises, nor shall Lessee itself, or any person claiming under orthrough it, establish or permit any such practice or practices of discrimination orsegregation with reference to the selection, location, number, use or occupancy oftenants, lessees, sublessees, subtenants or vendees in the Premises.

ARTICLE 29

DISABLED VETERANS

To the extent required by law, Lessee shall comply with all Disabled VeteranBusiness Enterprise (DVBE) requirements including any participation goals or good faithefforts, as the case may be, as required by Military and Veterans Code section 999 et seq.with respect to any services, materials or supplies provided under this Lease. If requiredby law, efforts to include DVBEs as part of the services, materials or supplies under thisLease shall continue throughout the Lease term and any extensions or renewals thereof.Lessor agrees to provide Lessee or its designees with any requested relevant supportingdocuments and to maintain such documents for a period of three (3) years after fmalpayment under thi Lease. DVBE resources can be found at:http:Hwww.pd.dgs.ca.gov/dvbe/default.hthi, or by calling the Office of Small Businessand DVBE Services at (916) 375-4940.

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ARTICLE 30

WAIVER OF RELOCATION ASSJSTANCE BENEFITS

30.1. Relocation Assistance Benefits. Lessee is hereby informed and

acknowledges the following:

(a) By entering into this Lease and becoming a tenant of Lessor, Lessee

may become entitled to receipt of “relocation assistance benefits” (“Relocation

Benefits”) pursuant to the Federal Uniform Relocation Assistance Act (42 U.S.C. §4601 et seq.; hereafter, “FURAA”) and/or the California Relocation Assistance Law

(Cal. Gov. Code, § 7270 et seq.; hereafter, “CRAL”) (collectively, the “Relocation

Statutes”), should Lessor at some time make use of the Premises in such a way so as to

“displace” Lessee from the Premises.

(b) Lessee may be entitled to receive Relocation Benefits pursuant to

CRAL to the extent that Lessor, at any time prior to the expiration or lawful termination

of this Lease and any extensions or renewals thereof, makes use of the Premises in such a

way as to cause Lessee to become a “displaced person.” For purposes of CRAL, a

“displaced person” is defined as any person who moves from real property, or who

moves his, her or its personal property from real property, either as a direct result of: (i) a

written notice of intent to acquire, or the acquisition of, the real property, in whole or in

part, for a program or project undertaken by a public entity or by any person having an

agreement with, or acting on behalf of, a public entity; or (ii) the rehabilitation,

demolition, or other displacing activity, as the public entity may prescribe under a

program or project undertaken by a public entity, of real property on which the person is

a residential tenant or conducts a business or farm operation, if the public entity

determines that the displacement is pennanent (Cal. Gov. Code §7260). Lessee may also

be entitled to receive Relocation Benefits pursuant to the FURAA to the extent that

federal funds are used in connection with any Lessor use of the Premises that causes

Lessee to become a “displaced person.”

(c) Pursuant to the Relocation Statutes, Lessor may become obligated to

make such payments to Lessee even where such displacement of Lessee does not

otherwise constitute a breach or default by Lessor of its obligations pursuant to this

Lease.

(d) Lessee hereby acknowledges that Lessor acquired the Detention

Facility Property and the Courthouse Property from the County of San Diego on

December 23, 2009, and that upon such transfer, Lessee may be entitled to receive

Relocation Benefits to the extent that Lessor, at any time prior to the expiration or lawflul

termination of the Lease and any extensions or renewals thereof, makes use of the

Premises in such a way as to cause Lessee to become a “displaced person.”

45

(e) Under the Relocation Statutes in effect as of the CommencementDate of this Lease, Relocation Benefits may include payment to a “displaced person” of(i) the actual and reasonable expense of moving himself or herself and a family, business,or farm operation, including personal property; plus (ii) the actual direct loss of tangiblepersonal property as a result of moving or discontinuing a business; plus (ill) the actualand reasonable expense in searching for a replacement business, not to exceed OneThousand Dollars ($1,000); plus (iv) the actual and reasonable expense of reestablishinga business, not to exceed Ten Thousand Dollars ($10,000); or (v) payment in lieu ofmoving expenses of not less than One Thousand Dollars ($1000) or more than TwentyThousand Dollars ($20,000).

30.2. Lessee’s Waiver and Release of Relocation Benefits. With knowledge ofthe foregoing, Lessee hereby (a) waives in favor of Lessor, the Lessor Parties, and theState of California any and all rights it had, may now have, or may hereafter obtain, toRelocation Benefits under CRAL or the FURAA from either Lessor, the Lessor Parties,or the State of California in connection with or arising out of any displacement of Lessee,and (b) releases Lessor, the Lessor Parties, and the State of California from any liabilityfor payment of such Relocation Benefits, provided, however, that Lessee does not waiveits rights to Relocation Benefits to the extent that Lessee’s entitlement thereto may ariseout of any condemnation actions taken by the State of California or any other publicagency with respect to the Premises. Lessee ibrther agrees to execute any additionaldocumentation in frrtherance and consistent with the foregoing release and waiver asLessor or the Lessor Parties may reasonable require in the future, including, withoutlimitation, at such point in time when Lessee is actually displaced from the Premises.

30.3. Lessor Reliance. Notwithstanding anything contained in this Lease to thecontrary, Lessee hereby agrees and acknowledges that Lessor, the Lessor Parties, and theState of California are relying on the terms, provisions, acknowledgment, waiver andrelease contain in this Article 30. Lessee and Lessor hereby agree and acknowledge thatLessor, the Lessor Parties, and the State of California are entitled to rely on, and areintended third party beneficiaries of, the terms, provisions, acknowledgement, waiver andrelease contained in this Article 30.

ARTICLE 31

RECORDS, ACCOUNTS AND AUDITS

31.1. Lessee’s Duty to Keen Records. Lessee shall, at all times during the Term,and for a period of five (5) years following expiration or earlier termination of this Lease,keep or cause to be kept, mae and complete books, records and accounts of all (a)construction undertaken pursuant to the rights conferred on Lessee under this Lease, and(b) financial transactions in the operation of all business activities, of whatever nature,conducted pursuant to the rights granted by this Lease. Such records shall also include

46

the source and disposition of all trash and other waste collected and disposed of by

Lessee in the operation of its business. Said records must be supported by source

documents such as sales slips, cash register tapes, purchase invoices or other pertinent

documents.

31.2. Lessor’s Right to Audit. Lessor shall have the right at any reasonable time

to examine and perform audits of Lessee’s records pertaining to (a) construction

undertaken pursuant to the rights conferred on Lessee under this Lease, and (b) it

operations on the Premises, including, without limitation, any records pertaining to

Lessee’s use of utilities on the Premises. Notwithstanding the foregoing, the Lessor will

only have the right to audit those fmancial operations of Lessee which may affect the

amount of rent or other charges the Lessor is entitled to receive under this Lease. All

Lessee’s books or accounts and records shall be made available to Lessor at one location

within the limits of the City of San Diego, or another mutually agreeable single location

within the state of California. The cost of said audits shall be borne by Lessor; however,

Lessee shall provide to Lessor at Lessee’s expense, necessary data to enable Lessor to

fully comply with each and every requirement of the State of California or by the United

States of America for information or reports relating to this Lease and to Lessee’s use of

the Premises.

ARTICLE 32

GENERAL PROVISIONS

32.1. Authority. Lessee represents and warrants that it has full power and

authority to execute and fully perform its obligations under this Lease pursuant to its

governing instruments, without the need for any further action, and that the person(s)

executing this Lease on behalf of Lessee are the duly designated agents of Lessee and are

authorized to do so.

32.2. Brokers. Lessee warrants that it has had no dealings with any real estate

broker or agent in connection with the negotiation and/or execution of this Lease. In the

event any broker other than the brokers acknowledged in writing by Lessor make claim

for monies owed, Lessee shall indemnify, defend and hold Lessor harmless therefrom.

32.3. Captions. The captions, headings and index appearing in this Lease are

inserted for convenience only and in no way define, limit, construe, or describe the scope

or intent of the provisions of this Lease.

32.4. Lessor Approval. Except where stated herein to the contrary, the phrases

“Lessor’s approval,” and “Lessor’s written approval” or such similar phrases shall mean

approval of Lessor’s Lease Administrator or said Administrator’s representative as

authorized by said administrator in writing.

47

32.5. Cumulative Remedies. In the event of a default under this Lease, eachparty’s remedies shall be limited to those remedies set forth in this Lease; any suchremedies are cumulative and not exclusive of any other remedies under this Lease towhich the non-defaulting party may be entitled.

32.6. Entire Agreement. This Lease, together with all addenda, exhibits andriders attached hereto, constitutes the entire agreement between the parties with respect tothe subject matter hereof, and all prior or contemporaneous agreements, understandingsand representations, oral or written, are superseded.

32.7. Estoppel Certificate. Lessee shall at any time during the term of this Lease,within five (5) business days of written notice from Lessor, execute and deliver to Lessora statement in writing certifying that this Lease is unmodified and in flail force and effector, if modified, stating the nature of such modification. Lessee’s statement shall includeother details requested by Lessor, such as the date to which rent and other charges arepaid, the current ownership and name of Lessee, Lessee’s knowledge concerning anyoutstanding defaults with respect to Lessor’s obligations under this Lease and the natureof such defaults if they are claims. Any such statement may be relied upon conclusivelyby any prospective purchaser or encumbrancer of the Premises. Lessee’s failure todeliver such statements within such time shall be conclusive upon Lessee that this Leaseis in flaIl force and effect, except to the extent any modification has been represented byLessor, and that there are no uncured defaults in the Lessor’s performance, that the entireBase Rent has been paid in advance, and that not more than one month’s Additional Renthas been paid in advance.

32.8. Exhibits. All exhibits referred to herein are attached hereto andincorporated by reference.

32.9. Force Majeure. In the event either party is prevented or delayed fromperforming any act or discharging any obligation hereunder, except for the payment ofrent by Lessee, because of any and all causes beyond either party’s reasonable control,including unusual delays in deliveries, abnormal adverse weather conditions, unavoidablecasualties, strikes, labor disputes, inability to obtain labor, materials or equipment, acts ofCod, governmental restrictions, regulations or controls, any hostile government actions,civil commotion (except for disturbances caused by Detainees under the control ofLessee) and fire or other casualty, legal actions attacking the validity of this Lease or theLessor’s or Lessee’s occupancy of the Premises, or any other casualties beyond thereasonable control of either party except casualties resulting from Lessee’s negligentoperation or maintenance of the Premises or the Improvements (“Force Majeure”),performance of such act shall be excused for the period of such delay, and the period forperformance of such act shall be extended for a period equivalent to the period of suchdelay. Force Majeure shall not include any bankruptcy, insolvency, or other fmancialinability on the part of either party hereto.

48

32.10. Governing Law. This Lease shall be governed, construed and enforced inaccordance with the laws of the State of California without regard to its conflicts of lawrules. This provision applies to all claims and causes of action that Lessee has or mayacquire against Lessor, whether based on contract, tort, statute, or anything else. Lesseeagrees that any claims that it has or may acquire against Lessor shall be commenced inthe Superior Court of the State of California and Lessee agrees to submit to the personaland exclusive jurisdiction of that Court. Lessee waives all defenses and arguments thatthe Superior Court of the State of California constitutes an inconvenient forum basedupon the residence or domicile of Lessee, the location of witnesses, the location ofdocuments, or anything else.

32.11. Independent Contractor. Lessee acknowledges that it is an independentcontractor; that it alone retains control of the manner of conducting its activities infurtherance of this Lease; that it as well as any persons or agents as it may employ are notemployees of the Lessor.

32.12. Interpretation. The parties have each agreed to the use of the particularlanguage of the provisions of this Lease, and any question of doubtful interpretation shallnot be resolved by any rule of interpretation providing for interpretation against theparties who cause an uncertainty to exist or against the draftsperson.

32.13. Joint and Several Liability. If more than one person or entity executes thisLease as Lessee, each of them is jointly and severally liable for all of the obligations ofLessee hereunder.

32.14. Lessee’s Lease Administration. Lessee confinns that Lessee’s LeaseAdministrator has been given fill operational responsibility for compliance with theterms of this Lease. Lessee shall provide Lessor with a written schedule of its normalhours of business operation on the Premises, and Lessee’s Lease Administrator or arepresentative designated thereby shall be (a) available to Lessor on a twenty-four (24)hour a day, seven (7) days a week, basis, and (b) present on the Premises during Lessee’snormal business hours, to resolve problems or answer question pertaining to this Leaseand Lessee’s operations on the Premises.

32.15. Modification. The provisions of this Lease may not be modified, except bya written instrument signed by both parties.

32.16. Partial Invalidity. If any provision of this Lease is determined by a court ofcompetent jurisdiction to be invalid or unenforceable, the remainder of this Lease shallnot be affected thereby. Each provision shall be valid and enforceable to the fullestextent permitted by law.

.49

32.17. Payments. Except as may otherwise be expressly stated, each paymentrequired to be made by Lessee shall be in addition to and not in substitution for otherpayments to be made by Lessee.

32.18. Successors & Assigns. This Lease shall be binding on and inure to thebenefit of the parties and their successors and assigns, except as may otherwise beprovided herein.

32.19. Time of Essence. Time is of the essence of each and every provision of thisLease.

32.20. Waiver. No provision of this Lease nor the breach thereof shall be deemedwaived, except by written consent of the party against whom the waiver is claimed. Thewaiver by Lessor of any breach of any term, covenant or condition contained in thisLease shall not be deemed to be a waiver of such term, covenant or condition of anysubsequent breach thereof, or of any other term, covenant or condition contained in thisLease. Lessor’s subsequent acceptance of partiai rent or performance by Lessee shall notbe deemed to be an accord and satisfaction or a waiver of any preceding breach by Lesseeof any term, covenant or condition of this Lease or of any right of Lessor to a forfeitureof this Lease by reason of such breach, regardless of Lessor’s knowledge of suchpreceding breach at the time of Lessor’s acceptance. The failure on the part of Lessor torequire exact or fill and complete compliance with any of the covenants, conditions ofagreements of this Lease shall not be construed as in any manner changing or waiving theterms of this Lease or as estopping Lessor from enforcing in thU the provisions hereof.No custom or practice which may arise or grow up between the parties hereto in thecourse of administering this Lease shall be construed to waive, estop or in any way lessenthe right of Lessor to insist upon the fill performance of, or compliance with, any term,covenant or condition hereof by Lessee, or construed to inhibit or prevent the rights ofLessor to exercise its rights with respect to any defauit, dereliction or breach of this Leaseby Lessee.

[SIGNATURE PAGE TO IMMEDIATELY FOLLOW)

50

IN WITNESS WHEREOF, the Lessor and Lessee have duly executed this Leaseas of the day and year flrst above written.

LESSOR: LESSOR:

JUDICIAL COUNCIL OF CALIFORNIA, tktGEO GROUP, INC., a FloridaADMINSTRATIVE OFFICE OF THE corporation. doing business as “GEOCOURTS California, Inc.”

72/277/2 1By: %fl( By:

___________

Name: Grant S. Walker Name: ,‘fl %‘,qy ,kfr5jy

Title: Senior Mana,ger. Business Services Title: nodib.Date:

__________________________

Date: 24-, jj/ /

APPROVED AS TO FORM:Administrative Office of the Courts,Office of the General Counsel

By: (? (UName:Thharles R. MartelTitle: AttorneyDate: •-3.ojj

-

.51

EXHIBIT AlPremises, Common Area and Paricjpg

A. The “Premises” is defined as:

1. Detention Facility Building. The Detention Facility was designed as a maximumsecurity prison, with steel reinforced concrete walls. It is generally described as an eight storytower with a full basement. Each floor of the tower incorporates 12,772 square feet, measuring53 feet along “B” Street and 240 feet along Front Street. The first and second floors includeadditional space at the south end of the tower. The first floor “footprint” measures 24,227square feet, while the second floor is 20,697 square feet, The total area being leased totals133,825 square feet, including the 5,071 square foot outside recreation area on the eighth floor.The following is a floor by floor area. These areas are “gross” building areas and weremeasured from the outside face of exterior walls or the exterior face of concrete basement wails.

Floor Areas ofFanner CDF

Basement 13,696 s.f.Floor I 24,227 s.fFloor 2 20,697 s.f.Floor 3 12,772 s.f.Floor 4 12,772 s.f.FloorS 12,772 s.f.Floor 6 12,772 s.f.Floor 7 12,680 s.fFloor S 6,366 s.f.Floor S (exercise yard) 5,071 s.f

TOTAL 133,825 s.f

The location of the Detention Facility Building on the Detention Facility Land, and the theCourthouse on the Courthouse Land ure shown on the site plan attached as Exhibit “AT’. Legaldescriptions and piat maps of the Detention Facility Land and the Courthouse Land are attachedas Exhibits “A-3” and “A-4” respectively. Floor pians of the Detention Facility Building areattached hereto as Exhibit “AS”.

The Detention Facility Building also includes (a) a basement corridor on the outside ofthe westerly wall of the tower measuring approximately seven feet wide and running the lengthof the tower, and (b) eight exterior parking spaces along the west side of the Detention FacilityBuilding as shown on the drawing attached as part of this Exhibit “A2”.

2. Courthouse Space. The Courthouse Space is depicted on the drawings attachedhereto as Exhibit “A6”.

AlA

B. The “Common Area” associated with the Premises is defined as:

The driveway and open lot between the Detention Facility Building and the Courthouse.

The parking and driveway area is roughly 38 feet wide and 94 feet deep. This area provides

access to Lessee’s eight exterior parking spaces described above as part of the Premises, and

access to the underground parking for the Courthouse and to the Detention Facility Building’s

freight elevator at the south end of the lot. This common use area is identified on the site plan

attached as Exhibit “A2’.’.

Lessee and the Lessor will both have access and rights to the freight elevator. A joint use

schedule will need to be negotiated prior to the detention facility being occupied.

C. Common Area Parking:

The Lessor will provide lessee with 10 designated parking spaces plus a small area for

motorcycle parking at the north end of the covered parking lot under the Lessor Courthouse.

Access to the parking lot is via B Street and south along the driveway between the Lessor

courthouse and the leased detention facility.

.

.A1-2

EXHIBIT A2Site Plan

A2-l

EXHIBIT A3isgal Description and Plat of Detention Facility Land

PARCEL NO. 2006-0063-A-2: (9-25-2009) (WAR:TGThpet)

A portion of Lots Fl through L, inc1usive of Block “K” of HORTON’S ADDITION

according to Map thereof made by L.L. Lockling, in the City of San Diego, County of San

Diego, State of California, according to Map thereof filed in the Office of the Clerk of

San Diego County, June 1871, more particularly described as follows:

COM21ENC1NG at the Southeast corner of Block ‘X’ also being an intersection of the80 foot wide sidelines of C Street and Front Street;THENCE alone the Easterly line of Block “K”,. North 0000134 East, 58.97 feet to an

intersection of the centerline of the East-West Seismic Expansion joint in the Courthouse

Building as shown on the As Built plans on file in the Office of the County Engineer of

said San Diego County and the Easterly line of said Block “K” also being the TRUE

POINT OF BEGINNING;THENCE along the centerline of said Seismic joint North $9°52’26” West, 56.07 feet to

an angle point in said Seismic joint;THENCE continuing along said Seismic joint and the exterior of the existing Easterly

wing of said Courthouse Building, North 00°07’34” East 204.48 feet;THENCE continuing to following the exterior of the existing Easterly wing of said

Courthouse Building, North 89°52’26” West, 19,92 feet;THENCE continuing to following the exterior of the existing Easterly wing of said

Courthouse Building and its Northerly projection, North 00°07’34” East, 37.38 feet, to a

point on the Northerly line of said Block “K”;1EBNCE along said Northerly line of Block “K”, South 89°34’39’ East, 75.99 feet to theNortheasterly corner of said Block ‘(K”;‘HENCE along the Easterly line of said Block “K”, South 89°34’39” West, 241.47 feetto the TRUE POINT OF BEGINNING.

TOGETHER WITH any County of San Diego fee interests in the adjoining stxeets.

A3-1

-Ev

EXHIBIT A4Legal Description and Plat of Courthouse Land

PARCEL NO. 2006-0063-A-i: (9-25-2009) (WAR:TGH:pet)

Lots 1 through 6, inclusive, in Block 2 as shown on Map of ZflDDLETOWN, in the City

of San Diego, County of San Diego, State of California, according to Partition Map

thereof made by order Df the reference in the Case of Baldwin, et al. vs. Couts, et al., in

the Disthct Court of the Eighteenth Judicial District of the State of California, by 3.E;

Jackson, filed in the Office of the Clerk of San Diego County, January 1874 and Lots Ci

through L, inclusive, of Block “K” of HORTON’S ADDITION aecording to Map thereof

made by L.L. Lockling, in the City of San Diego, County of San Diego, State of

California, according to Map thereof filed in the Office of the Clerk of San Diego

County, June 1871.

EXCEPTING THEREFROM that portion of said Block “K” more particularly described

as follàws:

COMMENCING at the Southeast corner of Block “K”, also being an intersection ofthe

80 foot wide sidelines of C Street and Front Street;THENCE along the. Easterly line of Block “KY’, North 00°07’34” East, 58.97 feet to an

intersection of the centerline of the East-West Seismic Expansion joint in the Courthouse

Building as shown on the As Built plans on file in the Office of the County Engineer of

said San Diego County and the Easterly line of said Block “K” also being the TRUE

POINT OF BEGINNING;TENCE along the centerline of said Seismic joint, North 89°52’26” West, 56,07 feet to

an angle point in said Seismic joint;THENCE continuing along, said Seismic joint and the exterior of the existing Easterly

wing of said Courthouse Building, North 0007’34” East 204.48 feet;THENCE continuing to following the exterior of the existing Easterly wing of said

Cowthouthe Building, North 89°52’26” Wesç19.92 feet;THENCE continuing to following the exterior of the existing Easterly wing of said

Courthouse Building and its Northerly projection, North 00°07’34” East, 37.38 feet, to apoint on the Northerly line of said Block “K”;THENCE along said Northerly line of Block “K”, South 8994’39” East, 75.99 feet to theNortheasterly corner of said Block “K”;THENCE along the Easterly line of said Block “K”, South 89°34’39” West, 241.47 feetto the TRUE POINT OF BEGINNING.

TOGETHER WITH any underlying fee interests the County of San Diego may have inthe adjoining streets.

A4•

PARCEL NO. 2006-0063-B: (2-21-2006) (WAR:TGH:pet)

All of Block “0” as shown on Map of MIDDLETOWN, in the City of San Diego, Countyof San Diego, State of California, according to Partition Map thereof made by order of thereference in the Case of Baldwin, et al. vs. Couts, et at, in the District Court of theEighteenth Judicial District of the State of California, by J.E. Jackson, filed in the Officeof the Clerk of San Diego County, January 1874.

TOGETHER WITH Lots G through L, inclusive, in Block “L” of HORTON’SADDITION, in the City of San Diego, County of San Diego, according to Map thereofmade by Li.,. Lockting, filed in the Office of the Clerk of San Diego County, June 1871.

TOGETHER WITH any underlying foe interests the County of San Diego may have inthe adjoining streets.

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EXHIBIT BPthoner Transit Easement

DOC 2009-0708513

_________________

I IL! ItUihi IIDIHI IhI ThIIII!IhlIII 11111111

_______

— DEC23 2009 tOO AMWHEN RECORDED MAIL TO, brnotntcno 6734

5N DIEGO mUNWBtQ3flDCRs OflTCE

4 Courny of San Diego rOL aUT.nITVRECOnOtR

9 fl DecntofGcnen)Services OC NAs Overland Annuc, Suite 2240 PACES: 13San Diego, CalifornIa 92123Aft.ntion Director

SPACE ASOVE THIS LINE FOR RECORDELS USE

‘)- d OFFICIALSTATE SUSINUS— EtEMn FROM ECORDINO PUS rUSSUANFTO GOVT. CODE SECTION 3V ANDDOCUMENLLRV TMANSFER TAX FURSUANrID REVENUEAND TAXATION CODE SECTION II21

TEMPORARY PRISONER TRANSrr %g Cauntrcounhnufl3r.M,110351) snd Old

APN: A portion of 533-517-01 and a portion of 533436-02, County of San Diego

DOCUMENmRVTRANSFffimx$ -t’This Temporary Prisoner Transit Easement Agreement (this “Areement’) is mauc -and

entered into as of DttA,..Ltr ci 3 2009 (“EffectIve Date”), by and between THE STATE OFCALIFORNIA, acting by and through THE JUDICIAL COUNCIL OF CALIFORNIA,ADMINISTRATIVE OFFICE OF THE COURTS (“Grantor”), end the COUNTY OF SANDIEGO, a politkai subdivision of the State of California (“Grantee”). Grantor and Grantee aresometimes hereinafter referred to individually as a “azk” and collectively as the “7artles”.

RECITAL5

A. Grantor is the owner of the real property In the City of San Diego, County of San

Diego. State of California, more particularly described on Exhibit “A” attached hereto andincorporated herein by this reference (“Grantor’s Land”), together with the improvementslocated thereon (collectively, with Grantor’s Land, “Crantor’ayronertv”), consisting of, amongother things (I) the building commonly known as the County Courthouse having the street addressof 22(1 West Broadway, San Diego, California 92101 (the “County Courthouse”), and (II) aneight-story detention facility tower having the struet address of 220 West “C” Street, San Diego,CalifornIa 92101 (the “Old Jail’). The Old Jail is Connected to the Coirniy Courthouse by aseismic jOlnL

B, Grantee is the owner of the real property In the City of San Diego, County of SanDiego, State of California, more particularly described on Exhibit “B” attached hereto andincorporated herein by this refenace (“Craalee’s tsnd, together with the improvementslocated thereon (collectively, with Grantee’s Land, “Granite’s Property”), consisting of, amongother things, a detention facility having a street address of 1173 Front Street, San Diego,California 92101 (the “Central Sail”). The Central Sail is connected to the Old Jail by apedestrian sky bridge thaI extends over and across Front Street (“rldge9.

LCOALfl2/31117310v5

q,oo74/2 XSYO•soripticnt San DiegocA Docua3t-Yoar.OocXO 2003,rQeSjJ peg., 1 oF 13Orderi 125 Cnanti

B-i

6735

C. Pursuant to this Agreement, Grantor desires to grant to Grantee, and Grantee desires

to accept from Grantos a temporary, ion-exclusive easement and right-of-way appurtenant to

Grantee’s Property iii, on, along, through, across, and over certain portions of Grantor’s Property

for the purpose of pedestrian ingress and egress in connection with transportation of prisoners and

detainees by die rantee and the San Diego County Sheriff, and each of their respective

employees and agents (collectively, the ucnntec Parties”), between the Can] Jail and the

Sheriff CSB Holding Area (as hereinafter defined) in the County Courthouse, all in accordance

with this Agreement.

I). Grantor and Grantee also intend by this Agreement to create certain rights and

obligations with respect to Grantor’s Property in accordance with section 1468 of the California

Clvii Code.

NOW. THEREFORE, for valuable consideration, receipt of which is hereby

acknowledged, the Parties hereby agree as follows:

I. Qrant of Easement.

(a) Grantot hereby grants to Grantee a temporary, non-exclusive easement and

right-of-way in, on, along, through, across, and over certain portions of Grantor’s Property, which

portions are depicted on Exhibit “C” attache4 hereto and incorporated herein by this reference

(“Easement Area”), for the purpose of pedestrian ingress and egress In connection with the

Grantee Parties’ transportation of Grantee’s prisoners and detainees between the Central Jail and

the Sheriff CSB Holding Area in the County Courthouse (collectively, the “Easement”). For

purposes of this Agreement, the phrase “Sheriff CSB Holding Area” shall mean that portion of

the Eascment Area chat is located in the County Courthouse, as depicted on Exhibit “C” attached

hereto.

(b) The Easement is appurtenant to and for the benefit of the Grantee’s Property

and nina with the Grantor’s Property and isa burden on the Grantor’s Property.

2. Scope of Easement.

The scope of the Easement shall Include the following:

(a) the right of pedestrian ingress of the Grantee Panics and Grantee’s prisoners

and detainees from the Central Jail (and the Bridge that connects the Centrai jail to the Old Jail),

in,. on, along, through, acros, and over the Easement Area for purposes ofaccessing and entering

into the Sheriff CSB Holding Area; and

(b) the right of pedestrian egress of the Grantee Panics and Grantee’s prisoners

and detainees horn the Sheriff CSB Holding Area, in, on, along, through, across, and ova the

LEOALO2J3IZ$7U10,3- 2

DescrLptIon, San D1.ga,QA Docuatat-Year,VoaIfl 2009.208513 Pages 2 of 13

Order, 125 eots —

.B-2

6796

Easement Area for purposes of accessing and entering into the Bridge that connects the Old Jail tothe Central Jail.

3. Duration of Easement.

Tho Easement, and all of the terms, provlsion, ccndttions, covcnanLs, and restriction, setforth herein with respect to the Easement, shall be deemed effective upon the Effective Date andshall continue through and terminate upon the date on which the Superior Court of California,County of San Diego pennanentiy ceases the handling of criminal cases within the CountyCourthouse. if requested by Granto; at any time upon and after such termination of theEasement, Grantee shall sign a document, in recordable thnn, to evidence and memorialize thetermination of the Easement

4, IndemnIfication.

Grantee shall, and it hereby does, indemnit, defend, and hold harmless Grantor from anagainst all damages, liabilities, settlements, penalties, fines, costs, expenses, losses, or attorneyand consultant fees and costs incuued by Grantor to the extent that the same arise out of thenegligence or willful misconduct of the Grantee Parties, and/or any of their respective officers,agents, and/or employees1 and/or any of their respective successors or assigns, relating to the useof the Easement; provided, however, that Grantee shall have no obligation to indemnify, defend,and hold harniless Grantor from and against any damages, liabilities, settlements, penalties, fines,costs, expenses, losses, or attorney and consultant fees and costs to the extent that the same ariseout of the negligence or wiliflul misconduct of Grantor, the Judicial Council of California, theAdminisuative Office of the Courts, and/or the Superior Coun of California, County of SanDiego, and/or any of its or their respective officers, agents, and/cr employees, and/or any of its ortheir respective successors or assigns; provided further, however, that any Grantee shall have noobligation to indemnitSi, defend, and hold harmless Grantor from and against any such damages,liabilities, settlements, penalties, fines, costs, expenses, losses, or attorney and consultant fees andcosts to the extant that the factual basis for the same arises on or after the date that such Granteano longer owns any interest Ui the Grantee’s Property.

5. Successors and Assigns.

This Agreement, and the covenants. indemnification, defense, and hold hanulessobligations, and the Easement contained herein, shalt bind and inure to the benefit of,respectively, the heirs, personalrepresentaflves, successors, and assigns of the Parties, and to allsuccessors in interest to all or any portion of the Grantor’s Property and the Grantee’s Property,respectively. The covenants set forth in this Agreement constitute covenants running with theland pursuant to section 1462 of the California Civil Code.

LROM,Ot2IS3Ol3v5 3

Dsscripti,n, Ban ni.go.cA Docunn’Yeax.DocIfl 3009.708313 Pag.r 3 of 1Order, 126 Cbrn.nt,

WI

6797

6. Miscallapeous

(a) Counterparts. This Agreement may be executed in one or moit counterparts,

each of which shall be deeMed in original, but all of which together shall constitute but one and

the same insiniment.

(ii) Entire Agreement. This Agreement contains the entire agreement between

the Panics relating to the rights herein granted and the obligations herein assumed. Any prior or

contemporaneous oral representations concerning this instnment shall be of no force or effect

This Agreement can be amended only by a subsequent modification in writing, signed by the

Party or Parties to be charged.

IN WiTNESS WHEREOF, the Parties have executed this Agreement on the day and year

set forth below their respeclh’e signatures.

.. ‘GRANTEE”

COUNTY OF SAN DIEGO, & politicalsubdivision of theState of California

By:_______. Name; April F. Heinzc

Title: Director, Department of General ServicesDate; ii IJ/.o I

. I, ‘

APPROVED AS TO FORM2 “GRANTOR”

ADMINISTRATIVE OFFICE OF THE JUDICIAL COUNCIL OF CALIFORNIA,

COURTS. OFFICE OF THE GENERAL ADMINISTRATIVE OFFICE OF THE

COUNSEL COURTS

By: C 2Name; Charles Martel Name: Grant Walker

Title: Attorney Title: Senjor Mapager, Business Services

Date; IDI.aoo1 Date:_________________

LEOALA3aIS$1OjO,J 4

V..ariptjon, San Dlego.Q eQOUa.nt-Fear.DQCIt 2009.768513 Page: 4 of 13Order, 125 coent, - -,.

B-4

STATE OF CAliFORNIA

GRAI’TEE’S ACKNOWLEDGEMEN1

6798

) SSCOUNTY OP SAN DIEGO

On jJ_ 3—OS before mc, Thomas 0. Hanington, Deputy County Clerk in and for saidCounty and State, pasoimily appeared April F. ((clan, P.E, Director, Department of CentralServices, who proved to me on the basis of satisfactory evidence to be the person(s) whosename(s) is/are subscribed to the within insuimn and acknowledged to me that he/she/theyexecuted the same in his/bet/their authorized capacity(ies) and by hisiber/thefr signature(s) on Urinstnmitnt the person(s), or the emily upon behair of which the penon( acted, executed theinsmtment

I cenift under PENALTY OF PERJURY under the laws of the State of California that theforegoing paragraph is true and çontct.

(seal)

LEGALOhi3I557tt4

WIThESS my hand and official seal.

DAVID L BUTLER, Assessor/Recorder/County Clerk

5

Thomas C. Hanlngton - Deputy

peserlptlone Sen D1.go.Ca Vceunnt-Ycar.DoaZD 2009.7fl513 Page: 5 of 13crdni 135 coont, —

3-5

4

6799

GRANTOR’S ACKNOWLEDGEMENT

STATE OF CALIFORNIA )) sa.

COUNTY OF JAW ,R8UCO

On OeIDMe 2o, 2009 before me, I C/RSLt. a notarypublic, personally appared GRANT WALKER, who proved to me on the basis of satisfactory

evidence to be the pereoaçs$ whose nameçsS isM subscribed to the within instrument andacknowledged to me that hels)z6Jd34’ executed the same in hW9nbfr authorized CapaCt3Id),

and that by his/hpOth5t sigiwure5 on the iostnnncnt the persoØ or the entity upon behalf ofwhich the penonç5 acted, executed the insmirnent

I cenit’ under PENALTY OF PERJURY under the laws of the StaIc of California that the

foregoing paragmph is tnt and cOrrect

____________________

WIThESS my hand and official seal

PUBLIC (Seal)

STATE OF CALIFORNIA$5.

COUNTY OF SQiQ fla9MCiSCo

On OL’SE4Q /9, 2oy before me, F Bussig. a notarypbltc, personally appeared CHARLES MARTEL, who proved to me on the basis of satisfactory

evidence to be the pcrsonpl whose nameØ ‘W subscribed to the within instrument and

acknowledged to mc that hetØIdi4 executed the same in hisfl)ef/Ør authorized capscitØs5.

and that by M%u/tbe* signahu4’on the Instrument the pcrsonL4, or the entity upon behalf of

which the person$ acted, encwed the Lnstwmeat.

I cedi’ under PENALTY OF PERJURY undr the laws of the State of California that the

foregoing paragraph is tire and correct.

WITNESS my hand and official seal.

I t’=’

N&FARY PUBLIC (Seal)

LWALA2flI5570 6

D.scrlptlofl. Ben Dlego.CA Doaumiat-Yaar.DooW 2009.708513 Page: 6 of 13Ordars 135 Cens _._.________ —

.B-6

6800

EXHIBIT “A”

LEGAL DESCRIPTION OF GRANTOR’S lAND

Grantor’s Land is located in the City of San Diego, County of San.Dlego, State ofCalifornia, and is described as follows:

PARCEl. NO. 2006-0063-A-t (9.25-2009) (WALTGI4:pet)

Lots 1 through 6, inclusive in Block 2 as shown on Map of MIDDLETOWN, in the Cityof San Diego, County of San Diego, State of California, according to Partition Mapthereof made by order of the m&rence in the Case of Baldwin, ci al. vs. Coat,. ci at, inthe District Court of the Eighteenth Judicial District of the State of California, by 3,2,

- Jackson, filed in the Office of the Clerk ofSan Diego County, January 1874 and Lots 0through I, inclusive, of Block “K” of HORTON’S ADDITION according to Map thereofmade by LI,. Lackling, in the City of San Diego, County of San Diego, State ofCalifornia, according to Map thereof filed in the Office of the CLeric of San DiegoCounty, June 1871.

EXCEPTING THEREFROM that portion of said Block “K” moic particularly describedas follows:

COMMENCING at the Southeast cornet of Block “K”, also being en intersection of the80 foot wide sidelines of C Street and Front Street;THENCE aLong the Easterly line of Block “K”, North QQ°Q1’34” East, $8.91 feet to anintersection of the centerline of the East-West Seismic Expansion joint in the CotuthotmeBuilding as shown on the As Built plans on file in the Office of the County Engineer ofsaid San Diego County and the Easterly line of said Block “K” also being the TRUEPOINT OF BEGINNING;1IWNCE along the centerline of said Seismic joint, North 89°52’26” West, 56.07 feet toan angle point in said Seismic joIntiTHENCE continuing along said Seismic joint and the exteilor of the existing Easterlywing of said Courthouse Building, North 0O00134n East 204.48 feelTHENCE continuing to follow the exterior of the existing Easterly wing of saidCourthouse Building, North 89°52’26” West, 19.92 feet;THENCE continuing to follow the exterior or the existing Easterly wing of saidCourthouse Building and its Northerly projection, North 0O°07’34” East, 31.38 feet to apoint on the Nmtherly line of said Block “K”;

LEOAI.03515570uv5 A-i

Dnscrtp1on: Ban Diego,a Docuaent-Year.DocIfl 3003.708513 Pager 7 t 13Order, 125 roasuat,

8-7

.

6801

THENCE along said Northerly line of Block “K”, South 89°34’39” East, 75.99 feet to theNortheasterly cower of said Block aK;

THENCE along the Easterly line of said Block “K”, South 89°34’39” West, 241.47 feetto the TRUE POINT OF BEGINNING.

TOGEThER WITH any of the fee owner’s fee interests in the adjoining streets.

PARCEL NO. 20064863-A-2: (9-25-2009) (WAThTGN:pet)

A portion of We H through L, inclusive, of Block “K” of HORTON’S ADDITIONaccording to Map thereof made by L.L. Cockling, In the City of San Diego, County ofSan Diego, State of California, according to Map thereof filed in the Office of the ClerkciSc Diego County, June 1871, mow particularly described as follows:

COMMENCING at thu Southeast corner of Block “IC’, also being an. intetsection of the80 foot wide sidelines of C Street and Front Street;THENCE along the Easterly line of Block “K”, North G0’07’34” East, 58.97 feet to anIntersection of the centerline of the East-West Seismic Expansion joint in the CourthouseBuilding as shown on the As Built plans on file In the Office of the County Engineer ofsaid San Diego County and the Easterly line of said Block “K” also being the TRUEPOINT OF BEGINNING;THENCE along the centerline of said Seismic joint, North 89°52’26” Wa; 56.07 feet toan angle point in said Seismiejoint;THENCE continuing along said Seismic joint and the exterior of the existing Easterlywing of said Courthouse Building, Worth C0°07’34” East 204.48 feetiTHENCE continuing to follow the exterior of the existing Easterly wing of saidCourthouse Building, North 89°52’26” West, 19.92 feet;THENCE continuing to follow the exterior of the existing Easterly wing of saidCourthouse Building and its Northerly projection, North 0O°07’34” East, 37,38 feet, to apoint on the Northerly line of said Block “K”;THENCE along said Northerly line of Block “K”, South 89°34’39” East, 75.99 feet to theNortheasterly corner ofsaid Block “K”;THENCE along the Eaáterly tine of said Block “K”, South 89°34’39” West, 241.47 feetto the TRUE POINT OF BEGINNING.

TOGETHER WITH any olDie fee owner’s fee interests in the adjoining streets.

LEOALamISflOioyS A-2

Description, Sea Diego, CA Dccoaent-Yee.DocXD 2309 709513 Peg., A of 13Order, flS Csatt

.B-S

.• 6802

EXHIBIT “B”

LEGAL DESCRIFFION OF GRANTEE’S LAND

Grantee’s Land is located In the City of San Diego, County of San Diego, State of

California, and is described as follows:

Lots A, B, C, 0,3, K and L, each of Block “fl’ of Horton’s Addition, in the City of San

Diego, County of San Diego, State of California, accordlpg to Map thereof in deed Book

13, Page 522, da file in the Office of the County Recorder of San Diego County.

LtGAL321)I5S7t2O$

Description, San Diega,C4 Docunnt-Year.DooZD 3339.708513 Pflel 9 of 13

Ord.ri 135 Caent,

B-9

a

6803

EXHIBIT “C”

DEPICrION OF EASEMENT AREA

Isec attcched.j

.

110 AU2jI5$7O8Oy$

Descripionz Sdn Dicgo.CA Dacuwaot-Ynr.DOCID 2009.708513 Page, 10 ot 13Orders 125 Canasta —

B-I 0

B-Il

flnariptlans Ban Oi&go,CA Eocunut-Tnx.Oocip 2C09.7O9sI3 Page, 11 of 13Order, 125 Ceot,

.

.Dnqrlptioo, Ban Dlna,CA Docua.nC.Ynr.Doow 2009.738513 Page: 13 of 3Orders 225 Cnts .. .

B- 12

.

CERTIFICATE OF ACCEPTANCE 6806

Agency JudiclalCouncil of CaNñiisProject San Dkgo County Courtbnure

Acanc, Part.! 37-AlAssssor Punt No. Cointyof San Diego

5333 Il4Iand a portion of533M6-O2’

DCSParnINo. IOOS

This Is to ccnl& that, pusu&itto Sections 15853, 27251 and 70301 Ct seq. of the CaliforniaGovernment Code, the interest in real property conveyed by the Temporary Prisoner TransitEasement Ageement dated November 3,2009 by and between the COUITrY OF SAN DIEGO,

a political subdivision of the State of California, to the STATh OF CALIFORETA acting byand througbthe JUDICIAL COUNCIL OF CALIFORNIA, ADMINISTRATIVEOFFICE OF THE COURTS is hereby accepted by the undernigpcd office ot behalf of theState Public Work! Board pursuant to authority conferred by resolution of said Board dulyadopted on December14. 2009 and the Grantee consents to the recordation thereof by its dulyauthorized officer.

Mole Si Recordat VIM, cviQ?casw r,fwa c0ffee1Id &s4 oil cu,wks .nd’o, cbxgn to Msprniouê ncar&ddad nunl& rnkwed andeoepiedty tin Sims pilot ii ,eeordoa esnato., deid All can&on aide nqwke ant. CertQ?ime WAcoepolnre rioted zvbsqwnr tonerdailos ofto, cr11101 deed or the mats neem correction deet ifoiy

AcceptedSTATE OF CALORNIAState Public Wa Board

8y

______________________

Dated;

___________

Name: e nj LiTitle; Assistant Administrative Secretary

Consent3UDICIAL COUNCIL OF CALIFORNIA,ADMINIAVE OFFICE OP THE COURTS

By;

_______________________________

Dated;

_________________

Name: Ronald 0. Ovvrhc)tTide: Chief Deputy Director

Approved as to formADMINISTRATIVE OFFICE OF THE COURTSOFFICE OF THE GENERAL COUNSEL

By:

_______________________

Daled: IZ. —/C—oNanw eIvØ Kinnedy /tile: Masiag.ng Attorney

Deaoflptioa Ban alegc,cA Doauaenc-YSàSDOCIV 3005. 708513 Page. 13 of 13

order, 135 Cotent, ——

B- 13

IISIHX3

EXHIBIT CLetter Agreement

RECED8.

Jithiciuf n&J øf a1ifnznkr 20?? NAY q pADMINIrRTIVE OFFICE OF ThE COURTS 3. 21t

OFFICE OF COURT CONSTRUCTION AND MAHOEMENT

455 CoI&n On,4nnu. • 5n FnnC, C.m94IOL36UTek1a 415-8654900 • Pa4151558fl5 ‘ito 4148$4Z12

VANI CANOL4AKAUYJ - WILLIAN C. VICflLY

A&JOt1d Can

•ONALD 0 OVSIKOLI04n,pe O*.w

LIt WILIQUOHITApa] 26,2011Cn,w .4Man

James BlackVice President, Western Region Detention Facility -

The OEO Group, Inc.nO WestCSteet -

San Diego, CalifornIa 92101

Re: Fee for Use of Trash Compacter and Trash Removal Service - -

Dear Mr. Bla&

As of July 1,2010, the Judicial Council of California, Administrative Office of the Courts(togetha, the “AOC”) took over from the County of San Diego (the “County”) operation andcontrol of the County Courthause (AOC Building #37-Al) located at 220 West Broadway, SanDiego (the “Courthouse”) including operation and coutol of the tush comptictor located there.Effective as of the same date, the AOC also assumed from the County the County’s connctwithAllied Waste for tush removal service for the Courthouse.

The CEO Group, Inc. (“CEO”) currently operates its Western Region Detention Facility (the“Detention FaeIlity’ inn building attached to thb Cousthouse (the “Old JaIl’ purtuant to thatceitain Standard Form Lease Agreement by and between the County and GEO’s predecessor-inInterest dated May 4, 1999 (the “Lease”) and that cethin Master Lease by and between theCounty and the AOC dated December 23, 2009.

We understand that pdorto July 1,2010, CEO paid the County $1,500 per month for its use ofthe trash compactor and for tush removal services. Since that time, CEO has continued usingthe trash compacter and trash removal services, but has not paid the AOC for that use and servicebecause of the lack of a aytitten agreement with the AOC providing for such payment -

C-I

*

a

Mr. James BlankApril 26, 20J1Page 2

AOC hereby agrees to continue to permit GEO to use the existing trash compactor and trash

removal services, and CEO hereby agrees to pay the AOC on or before May 1, 2011, a total of

$15,000 in compensation for its use of those services for thepedod of July 1,2010, through

AprIl 30,201 L Commencing May 1,2011, and continuing on the first day of each month

thereafter for so long as CEO continues to operate the Detention Facility in the Old Jail, OEO

will pay to the AOC, without farther demand or invoice from the AOC. $1,500 per month for use

of the trash compacter and trash removal services, partial months to be pro-rated.

Notwithstanding tha foregoing, in the event of an increase in the AOC’s cost to provide that use

of the nth compacter or. trash removal services, AOC may increase this monthly charge to CEO

to reasonably reflect that increase provided that the AOC provides CEO with not less than 60

days prior written notice of any such proposed increased and rrasonnNe supporting

documentation supporting of the AOC’s increase in costs.

CEO will send the initial payment of $15,000 and each monthly payment thereafter to:

Adminisfratie Office of the CourtsAttention: Finance Division, Accounting — General Ledger455 Golden Gate Avenue, Seventh FloorSan Francisco, CA 94102-3688

Each check shall be made payable to “The State of California, Mministrative Office of the

Courts”i&ntlfled as follows: “AOC Facility #37-Al.”

Questions, comments and concerns regarding the trash compactor and trash removal services or

the letter agreement should be directed to

Administrative Office of the Courts• Mtention: Bradford 3. Boutais, Supervising FacultiesManagement AdministratorOffice of Court Construction and ManagementMminjstradve Office of the Courts12396 World Trade Drive, Suite 218San Diego, CA 92128Telephone: 818-564-5584Fax: 858-674-4978bradford.boulai4jud.cagov

.C-2

Mr. James BlackApril 26 2011Page 3

MI written notices should be copied to:

Admthistajjve Office of the CourtsOffice of Court Consbiicflon and ManagemernAttention: Portfolio Administration Asialyst for the SouthernRegion455 Golden Gate Avenue, Eighth FiberSan Francisco, CA 94102-3688Voic: 415-865-4053

If the tezms ofthi letter agreement are accepiabie to GEO, please indicate by signing each copyof the letter at the place ‘mdicatcd below, keep one copy for your files and return the other to us.

JUDICIAL COUNCIL OF CALIFORNIA,ADMINISTRATIVE OFFICE OF ThE:rtm gjPrinted Name: Grant S. WalkerTitle: Senior Manage , Bj1siness ServicesDate: . [(I

I.

GEO GROUP, INC.

By:Printed Name: iesTitle: Vice Pre/$lcnt

Weste4egiqz Qetention FacilityDate: V 5/lUll

By: cZLQ0 2OMPrinted name: Charles It MartelTitle: AttorneyDate:

APPROVED AS TO FORM:Administrative Office of the Courts,Office of the General Crnmsel

C-3

EXHIBITDInsurance Requirements

Without limiting Lessee’s indemnification obligations to Lessor, Lessee shall provide andmaintain, during the Term and for such other period as maybe required herein, at its soleexpense, insurance in the amounts and form specified herein.

A. Liability Insurance. Lessee shall procure Private Detention Facility Liabilityinsurance on an occurrence basis applying to its use and occupancy of the Premises and theProperty, or any part thereof, or any areas adjacent thereto, and the business operated by Lesseeor any other occupant on the Premises in the amounts and form set forth below:

(1) Public Liability Insurance. A policy of Private Detention Facility LiabilityInsurance which provides limits of not less than:

(a) Each Occurrence: $10,000,000

(b) Annual Aggregate: $10,000,000

(2) Reguired Liability Policy Coverage. Any liability policy provided byLessee hereunder shall contain the following coverage:

(a) Professional Liability insurance that shall pay on behalf of Lesseeor other insured all damages resulting from a wrongful act or acts caused by any act, error oromission which arise out of the rendering or failure to render professional services, including anincident giving rise to a violation of civil rights, by an insured or by any other person for whoseacts Lessee or other insiders are legally liable solely in Lessee’s or other insured’s capacity as anowner, manager, or operator of the Detention Facility.

(b) Other Liability insurance that will pay on bchalf of Lessee or otherinsured all damages due to bodily injury, property damage, independent contractors, liabilityassumed under contract, personal and advertising injury, products hazard and completedoperations hazard which results from an occurrence or offense arising out of Lessee or otherinsured ownership, operations, or management of tbe Detention Facility. This insurance shallcontain a Severability of Interest clause providing that the coverage applies separately to eachinsured except with respect to the limits of liability.

(c) The insurance shall not include exclusion for the provision of lawenforcement activities; for bodily injury to any inmate, patient, or prisoner who is being providedmedical treatment, or is being cared for, detained or imprisoned in the Detention Facility, or forthe actual or threatened abuse or molestation of any person.

(d) Defense and Supplementary Payment - The private detentionfficility liability policy shall have the duty to defend any claim or suit against Lessee or otherinsured even if the allegations of the claim or suit are groundless, false or fraudulent. The policy

Di

will pay in addition to the applicable limit of liability expenses including but not limited to thefollowing:

(i) all expenses incurred by the insurance company, all costsincurred by Lessee or other insured in any claim or suit defended by the company, and anyinterest on the entire amount of any judgment which does not exceed the limit of liabilityindicated on the policy;

(ii) Premium on appeal bonds required in any suit defended bythe insurance carder, premium on bonds to release attachments in any such suit for any amountwhich does not exceed the limit of liability indicated on the policy;

(iii) Reasonable expenses incurred by Lessee or other insured atthe insurance carder’s request for assisting the insurance carder in the investigation or defense ofany claim or suit, including his or her attendance at hearings or trials;

(iv) Expenses incurred by Lessee or other insured for first aid toothers at the time of accident for bodily injury.

(3) Additional Insured Endorsement. Any liability policy provided by Lesseehereunder shall contain an endorsement which applies its coverage to the Lessor, including,without limitation, the Judicial Council of California, the Administrative Office of the Courts,the Superior Court-County of San Diego, the County of San Diego and their respective electedand appointed officials, judges, subordinate judicial officers, officers, employees, individuallyand collectively, as additional insured.

(4) Primary Insurance Endorsement. The coverage afforded by the publicliability insurance described above shall apply as primary insurance, and any other insurance, orprogram of self-insurance maintained by the Judicial Council of California, the AdministrativeOffice of the Courts, the Superior Court-County of San Diego, the County of San Diego and theirrespective elected and appointed officials, judges, subordinate judicial officers, officers,employecs shall be excess only and not contributing with such coverage.

(5) Form of Liability Insurance Policies. All liability policies shall be writtento apply to all bodily injury, including death, property damage, personal injury and other coveredloss, however occasioned, occurring during the policy term, and shall specifically insurc theperformance by Lessee of that part of the indemnity agreement contained in the Lease relating toliability for injury to or death of persons and damage to property. If the coverage contains one ormore aggregate limits, a minimum of 50% of any such aggregate limit must remain available atall times; if over 50% of any aggregate limit has been paid or reserved, Lessor may requireadditional coverage to be purchased by Lessee to restore the required limits. Lessec maycombine primary, umbrella and as broad as possible excess liability coverage to achieve the totallimits indicated above. Any umbrella or excess liability policy shall include the AdditionalInsured Endorsement described below.

B. MI Risk Property Insurance. A commercial property insurance policy includingall-risk or special form perils including flood and earthquake, providing replacement cost of theBuilding and Improvements, without deduction for depreciation including costs of demolition

D-2

and debris removal. Such policy or policies of insurance shall include coverage for (1) fixtures Sowned by Lessee, (ii) any items identified in the Lease as improvements to the Premises

constructed by Lessee and owned by Lessor, and (iii) the personal property of Lessee, its agents

and employees.

(1) Deductible. The deductible for the required commercial property

insurance policy shall not exceed $50,000 per occurrence and shall be borne by Lessee.

(2) Rental Income Insurance. Lessee shall, at its sole cost and expense,

maintain rental income insurance which shall assure Lessor of receiving the minimum monthly

rent from the time the Premises are damaged or destroyed by a risk insured against by the

commercial property insurance policy including all-risk or special form perils, until such time as

they are returned to a tenantabic condition, with a minimum period of coverage of eighteen

months.

(3) Loss Payee. The required commercial property insurance policy shall

name Lessor as Loss Payee.

(4) Proceeds of Insurance. In the event of damage or destruction to the

Premises covered by the commercial property insurance required of Lessee hereunder, the

proceeds of such insurance shall be allocated as follows:

(a) Proceeds from any or all of said insurance policies shall be

payable, first, to the holder of any mortgage or deed of trust permitted under the Lease to the

extent required by said mortgage or deed of trust;

(b) Any balance remaining after application of insurance proceeds in

the manner indicated in subparagraph (a), above, shall be credited to Lessee. If Lessee, or Lessor,

is required to rebuild or restore the Premises pursuant to the provisions of the Lease, the amount

of insurance proceeds credited to Lessee shall be impounded with an independent depository

acceptable to Lessor in accordance with an endorsement to the insurance policy setting forth this

procedure, to be disbursed to pay, to the extent such portion of proceeds may be sufficient,

Lessee’s obligations to repair and restore the Premises pursuant to the provisions of the Lease;

(c) In the event that, after paying all of the costs and expenses ofrepair and restoration referenced in subparagraph (b), above, any balance of insurance proceedsremains, it shall be retained by Lessee. Should it be anticipated that the proceeds of insurance tobe received by Lessee will be insufficient to repair or restore the Premises as required by the

Lease, Lessee shall have the option to either (i) terminate the Lease and turn over all insurance

proceeds from the impound account to Lessor, or (ii) repair or restore the Premises as required

hereunder using the available insurance proceeds, with any shortfall in the amount necessary to

repair or restore the Premises being contributed, in cash, by Lessee. (See, Article 20, “Damageand Destruction,” of the Lease.)

(d) Notwithstanding any provision of the foregoing to the contrary,

upon any termination of the Lease all proceeds from Lessee’s insurance, but excluding such

.D-3

proceeds attributable to damages sustained by Lessee’s merchandise or personal property, shallbe disbursed and paid to Lessor.

(5) Increased Cost of Construction and Demolition Costs. Lessee shallmaintain coverage for the cost of repair or reconstruction that is in excess of replacement costdue to building codes. Lessee shall maintain coverage for the cost of demolition of theundamaged portion of the building as required by building codes.

(6) Builder’s Risk / Installation Insurance. Lessee shall maintain coverage forthe renovation, replacement, or rehabilitation of the Premises during the course of construction atthe Premises, at any temporary off-site location, and while in transit. Included within the temasof coverage shall be all materials, supplies scaffolding, falsework, and temporary structureslocated at the Premises that are to be used in or incidental to the fabrication, erection, testing, orcompletion of the renovation, replacement, or rehabilitation. The builder’s risk insurance shallcover the cost of removing debris, including demolition as may be made necessary by theoperations of any law, ordinance or regulation.

C. Boiler and Machinery Coverpge. Lessee shall procure Boiler and Machinerycoverage against loss or damage by explosion, accidental breakdown or electrical arcing of steamboilers, pressure vessels or similar apparatus now or hereafter installed on the Premises in anamount of not less than the replacement cost of the Improvements. Such insurance may includea deductible clause not to exceed $50,000 for any one loss.

0. Comprehensive Automobile Liability Insurance. Lessee shall procureComprehensive Automobile Liability Insurance, applying to its use and occupancy of thePremises and the business operated by Lessee or any other occupant on the Premises. Suchpolicy shall be written for bodily injury, including death, and property damage, howeveroccasioned, occurring during the policy term, in the amount of not less than Five Million Dollars($5,000,000), combined single limit per occurrence, applicable to all owned, non-owned andhired vehicles. This covetage shall include contractual liability.

F. Statutory Workers’ Compensation and Employer’s Liability Insurance. Lesseeshall provide the statutory amount of workers’ compensation insurance, with a broad form all-states endorsement, and with employer’s liability coverage of no less than Five Million Dollars(S5,000,000) per occurrence for all employees engaged in services or operations under the Lease.Lessee shall also provide Federal Employees’ Compensation Act, and U.S. Longshore andHarbor Workers’ Compensation Act coverage, when applicable.

F. Professional Errors and Omissions Liability Insurance. If Lessee provides andlorengages the services of any type ofprofessional, including, but not limited to, engineers andarchitects, whose failure due to a mistake or deficiency in design, formula, plan, specifications,advisory, technical or other services could result in liability, Lessee shall obtain projectprofessional errors and omissions liability insurance in an amount of not less than $5,000,000 perclaim, with an aggregate limit of not less than $10,000,000. If this policy contains a self retainedlimit, it shall not be greater than Fifty Thousand Dollars ($50,000) per occurrence/event; if thecoverage contains one or more aggregate limits, a minimum of 50% of any such aggregate limitmust remain available at all times; if over 50% of any aggregate limit has been paid or reserved,

0-4

Lessor may require additional coverage to be purchased by Consultant to restore the required alimits. The policy shall include limited contractual liability coverage. This coverage shall be

maintained for a minimum of three (3) years following termination or completion ofConsultant’s work pursuant to the Agrecment.

G. Subcontractors’ Insurance. Lessee shall make certain that any and all

Subcontractors hired by Lessee are insured in accordance with this Agreement. If any

Subcontractor’s coverage does not comply with the foregoing provisions, Lessee shall indemnify

and hold Lessor hannlcss of and from any damage, loss, cost or expense, including attorneys’fees, incurred by Lessor as a result thereof. However, if in the opinion of the Lessee, and with theprior permission of the Lessor’s Risk Manager, any Subcontractor may be authorized to maintaininsurance with different coverage and limits of liability as appropriate to the work and/orservices being performed.

H. General Provisions.

(1) Evidence of Insurance. Lessee shall, as soon as practicable following the

placement of insurance required hereunder, but in no event later than ten (10) days prior to the

Commencement Date, deliver to Lessor certificates of insurance evidencing that the required

insurance is in effect, together with appropriate separate endorsements evidencing that all

additional insureds have been added to the policies, that all rights recovery or subrogation have

been waived, and that all insurance is primary and non-contributing with insurance or selfinsurance programs of the Judicial Council of California, the Administrative Office of theCourts, the Superior Court of California, County of San Diego, or the County of San Diego.Thereafter, certificates and appropriate separate endorsements thereof, shall be delivered to

Lessor within ten (10) days following the expiration of the term of any policy required herein.

Lessee shall permit Lessor at all reasonable times to inspect any policies of insurance of Lessee.

Lessor may at any time request and will receive within ten (10) days of such request completecertified copies of any or all of the required policies of insurance.

(2) Claims Made Coverage. If coverage is written on a “claims made” basis,the Cçrtificate of Insurance shall clearly state so. In addition to the coverage requirementsspecified above, such policy shall provide that:

(a) The policy retroactivç date coincides with or precedes Lessee’spossession of the Premises (including subsequent policies purchased as renewals orreplacements).

(I,) Lessee will make every effort to maintain similar insurance duringthe required extended period of coverage following expiration of the Lease, including therequirement of adding all additional insured.

(c) If insurance is terminated for any reason, Lessee shall purchase anextended reporting provision of at least two years to report claims arising in connection with theLease.

(d) The policy allows for reporting of circumstances or incidents that

might give rise to future claims.

D-5

(3) Failure to Obtain or Maintain Insurancez Lessor’s Remedies. Consultant’sfailure to procure the insurance specified herein, or failure to deliver certified copies andappropriate certificates of such insurance, or failure to make the premium payments required bysuch insurance, shall constitute a material breach of the Lease, and Lessor may, at its option,terminate the Lease for any such default by Consultant.

(4) No Limitation of Obligations. The foregoing requirements as to the typesand limits of insurance coverage to be maintained by Lessee, and any approval of said insuranceby the Lessor or its insurance consultant(s), are not intended to and shall not in any manner limitor qualify the liabilities and obligations otherwise assumed by Lessee pursuant to the Agreement,including, but not limited to, the provisions concerning indemnification.

(5) Notice of Cancellation or Change of Coverage. All certificates ofinsurance provided by Lessee must evidence that the insurer providing the policy will giveLessor thirty (30) days’ written notice, at the address shown in the section of the Lease entitled“Notices,” below, in advance of any cancellation, lapse, reduction or other adverse changerespecting such insurance.

(6) Oualifying Insurers. All policies of insurance required hereby shall beissued by companies which have been approved to do business in the State of California by theState Department of Insurance, and which hold a current policy holder’s alphabetic and financialsize category rating of not less than A, VII according to the current Best’s Key Rating Guide, ora company of equal financial stability that is approved in writing by Lessor’s Risk Manager.

(7) Review of Coverage. Lessor shall retain the right at any time to reviewthe coverage, form and amount of insurance required herein and may require Lessee to obtaininsurance reasonably sufficient in coverage, form and amount to provide adequate protectionagainst the kind and extent of risk which exists at the time a change in insurance is required.

(8) Self-Insurance. Lessee may, with the prior written consent of Lessor’sRisk Manager, flalfill some or all or the insurance requirements contained in the Lease under aplan of self-insurance. Lessee shall only be permitted to utilize such self-insurance, however, iiçin the opinion of Lessor’s Risk Manager, Lessee’s (i) net worth, and (ii) reserves for payment ofclaims of liability against Lessee, are sufficient to adequately compensate for the lack of otherinsurance coverage required by the Lease. Lessee’s utilization of self-insurance shall not in anyway limit liabilities assumed by Lessee under the Lease.

(9) Sublessees’ Insurance. Lessee shall require any sublessee, and any subsublessee, of all or any portion of the Premises to provide the insurance coverage describedherein prior to occupancy of the Premises. However, if in the opinion of the Lessee, and with theprior permission of the Lessor’s Risk Manager, any sublessee or any sub-sublessee may beauthorized to maintain insurance with different coverage and limits of liability as appropriate tothe occupancy of the Premises.

(10) Waiver of Subrogation. Lessee and Lessor waive all rights to recoveragainst each other or against any other tenant or occupant of the building, or against the officers,directors, shareholders, partners, elected and appointed officials, judges, subordinate judicial

0-6

officers, employees, agents or invitees of each other or of any other occupant or tenant of thebuilding, from any Claims (as defined in section 13.3.2 entitled “Definition of Claims” above)against either of them and from any damages to the flxthres, personal property, Improvements,and alterations of either Lessor or Lessee in or on the Premises and the Property, to the extent

that the proceeds received from any insurance carried by either Lessor or Lessee, other thanproceeds from any program of self-insurance, covers any such Claim or damage. Included in

any policy or policies of insurance provided by Lessee hereunder shall be a standard waiver ofall rights of recovery or subrogation against Lessor by the insurance company issuing said policy

or policies.

.

D-7

.Judicial Council of CaliforniaReal Estate and Facilities Management

455 Golden Gate Avenue, San Francisco, CA 94102-3688

FIRST AMENDMENT TO LEASE AGREEMENT

This FIRST AMENDMENT TO LEASE AGREEMENT dated December 1,2014 (“First Amendment”), is entered into by and between the Judicial Council ofCalifornia, (“Judicial Council”), as Lessor, and The GEO Group, Inc., as Lessee(referred to herein individually as “Party” and together as “Parties”).

RECITALS

A. Lessor and Lessee entered into that certain Lease Agreement dated July26, 201 1 (the “Lease”). pursuant to which Lessee agreed to lease from Lessor theDetention Facility Building and the Courthouse Space located at 220 West “C” Street,San Diego, California. A complete copy of the Lease is attached to this FirstAmendment as Exhibit “A.”

B. The Term of the Lease will expire on January 6, 2016, and the Partiesnow wish to extend that Term.

C. On July 29, 2014, the Judicial Council of California adopted CaliforniaRules of Court. Rule 10.81 which retired the use of the name of the “AdministrativeOllice of [he Courts” as well as the use of”AOC.”

D. Pursuant to California Rules of Court, Rule 10.81 all references in theLease to the “Administrative 0111cc of the Courts” or “AOC” may be replaced with“Judicial Council.”

NOW, THEREFORE, for good and valuable consideration the receipt andadequacy of which is hereby acknowledged, the Parties do hereby agree as follows:

1. Incorporation of Recitals; Defined Terms. The foregoing provisions of theRecitals are true arid correct and are incorporated into this Amendment by thisreference. Any defined terms not defined herein will have the definition meaninggiven those terms in the Lease.

.Court Facility: I! 37-A3

2. Amendments to Lease. The Lease shall be amended as follows:

(a) Term. The Term of the Lease is hereby extended for an additionalperiod commencing at midnight on January 7. 2016. until 11.59 p.m. on March 31.2017.

(b) Rent. Base Rent for thc extended Term is payable monthly in advanceon the first day of the extended Term and on the first day of each month thereafter.partial months to be prorated, in the amounts set forth in this table:

Period Monthly Base Rent

January 7.2016 - January 31, 2016 $212,903.23

February I. 2016 through December 31, 2016 $275,000.00

January 1. 2017 through March 31, 2017 $285,000.00

(c) Delivery of Rent, Section 4,3 of the Lease is hereby deleted andreplaced with the following new section 4.3:

4.3 Delivery of Rent Payments. All Base Rent and Additional Rentduc under this Lease shall be made payable to “State of California,Judicial Council’, and shall be considered paid when delivered to:

Judicial CouncilAttention: Finance455 Golden Gate Avenue, 6th FloorSan Francisco, CA 94 102-3688

Each check shall be identified as follows: “RENT - Facility #37-A3”.

Lessor may, at any time, by written notice to Lessee, designate adifièrent address to which Lessee shall deliver the payments of BaseRent and Additional Rent.

3. Amendment of”AOC” to “Judicial Council.” All references to “AdministrativeOffice of the Courts” or “AOC” in the Lease, and any amendments to the Lease, shallbe replaced by “Judicial Council.” There is no prejudice to the substantive rights of’the Parties, and Judicial Council shall be obligated to perform all of the duties andobligations of AOC in the Lease and any amendments thereto.

.2

Court Facility: # 37-A]

4. No Other ModifIcations. This First Amendment shall not diminish, modift, orotherwise affect any other duty or obligation of the Judicial Council or Lessee withrespect to the Lease or the Premises, and except as expressly modified by the terms ofthis First Amendment, all rights, duties, and obligations of the Judicial Council andLessee shall remain in full three and effect as provided for in the Lease as amended.

[SIGNATURES ON FOLLOWING PAGEJ

.3

Court Facility: II 37-A3

IN WITNESS WHEREOF, the Parties have executed this First Amendmenton the dates below their respective signatures.

By:Name:Title:Date:

By:Name:Title:Date:

LESSEE: THE GEO GROUP, INC,a Florida corporation, doing businessas GEO CALIFORNIA, Inc.

By:Name:Title:Date:

APPROVED AS TO FORM:Judicial Council of California,Legal Services

LESSOR: JUDICIAL COUNCIL OFCALIFORNIA

e /LCharles R. MahelAttorney

_____

-

‘%St’ep$en SaddlerLjMarfaer. Business Services

/ 1/3 / is

AMBER D. MARflNxecutive VP Contract Administraflon

The Ceo Group, Inc.i/i /z—

.

.4

Cotirl Facility: # 37-A3

Judicial Council of CaliforniaReal Estate and Facilities Management

455 Golden Gate Avenue, San Francisco, CA 94102-3688

SECOND AMENDMENT TO LEASE AGREEMENT

This SECOND AMENDMENT LEASE AGREEMENT, dated March3j, 2016(the “Second Amendment”), is entered into by and between the Judicial Council ofCalifornia (“Lessor”), as lessor, and The GEO Group. Inc, a Florida corporation, doingbusiness as CEO California, Inc. (“Lessee”), as lessee (referred to herein individually as“Party” and together as “Parties”).

A. Lessor and Lessee entered into that certain Lease Agreement, dated July 26,2011, as amended by that certain First Amendment to Lease Agreement, dated December1. 2014 (collectively, the “Lease”), pursuant to which Lessee agreed to lease from Lessorthe Detention Facility Building and the Courthouse Space located at 220 Vest “C” Sweet,San Diego, California. A complete copy of the Lease is attached to this SecondAmendment as Exhibit “A.”

B. The Term of the Lease will expire on March 31, 2017 and the Parties nowwish to further extend that Term.

NOW, THEREFORE, for good and valuable consideration, the receipt andadequacy of which are hereby acitowledged, the Parties do hereby agree as follows:

1. Incorporation of Recita1s Defined Terms. The foregoing provisions ofthe Recitals are true and correct and are incorporated into this Second Amendment by thisreference. Any capitalized terms not defined herein will have the definitional meaninggiven those terms in the Lease.

2. Amendments to Lease. The Lease shall be amended as follows:

,,—iJ’Term. The Term of the Lease is h er extended for anadditional period commencing at midnight o April 1, 2017, u til 11:59 p.m. on

(March 3I_j)

7b) Rent. Base Rent for the further extended Term is payable monthlyin advance on the first day of the further extended Term and on the first day ofeach month thereafter, partial months to be prorated, in the amounts set forth inthis table:

9138 9994 .4

Period Monthly Base Rent

April 1, 2017 through $296,400.00December31, 2017

January 1, 2018 through $308,256.00December31, 2018

January I, 2019 through $320,586.00March 31, 2019

3. Further Lease Amendment. On or promptly following July 1, 2016, theParties shall use their good faith efforts to negotiate and agree upon a further amendmentto the Lease, the provisif which sRiifinclude without limitation the following: (a) aThither extension of the Tenn for an initial term of ten (10) years and, at Lessor1s solediscretion, two (2) five (5)-year options to renew; (b) four percent (4%) annual rentescalations in Base Rent; and (c) subject to the Parties’ agreement on specific terms andconditions, Lessee’s agreement to assist Lessor in the demolition of the existingCourthouse Space and/or the construction of a prisoner tunnel between the DetentionFacility Building and the new Courthouse Space, all on a cost-reimbursement basis.Notwithstanding the foregoing, Lessee aclwrnwledges that an extension of the Term asproposed in this section 3 may require authorizing legislation, pproved by theLegislature and signed into law by tbe Govemo3in order to be effective.

4. No Other Modifications. This Second Amendment shall not diminish,modify or otherwise affect any other duty or obligation of the Lessor or Lessee withrespect to the Lease or the Premises, and except as expressly modified by the terms ofthis Second Amendment, all rights, duties and obligations of the Lessor and Lessee shal]remain in frill force and effect as provided for in the Lease as further amended.

ISIGNATURES ON FOLLOWING PAGEJ

.913899944 2

IN WITNESS WHEREOF, the Parties have executed this Second Amendmenton the dales below their respective signatures.

APPROVED AS TO FORM:Judicial Council of California,Legal Services

By:Name: Charles R. MartelTitle: AttorneyDate:

LESSOR: JUDICIAL COUNCIL OFCALIFORNIA

By: IA.

Name:Title:Date:

SIeqheAadd1e( IMager, Bysinets Services

‘1 ,qfri

LESSEE: THE CEO GROUP, INC,a Florida corporation, doing businessas GEO CALIFORNIA, Inc.

9I]99g4.4 3

EXHIBIT “A”

EXISTING LEASE AGREEMENT

913S9994.4 A—I