Hale-Mills Construction, Ltd., Hale-Mills Construction, Inc., and HMC Contracting South Texas LLC v. Willacy County

• Court: Court of Appeals of Texas
• Decided: July 22, 2015
• Docket: 13-15-00174-CV
• Status: Published

Opinion

ACCEPTED 13-15-00174-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 7/22/2015 8:09:32 PM CECILE FOY GSANGER CLERK

No. 13-15-00174-CV In The FILED IN Thirteenth Court of Appeals 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS Corpus Christi, Texas 7/22/2015 8:09:32 PM CECILE FOY GSANGER HALE-MILLS CONSTRUCTION, LTD., HALE-MILLS CONSTRUCTION, Clerk INC., and HMC CONTRACTING SOUTH TEXAS, LLC Appellants, v. WILLACY COUNTY, Appellee.

On Interlocutory Appeal from the 197th District Court of Willacy County Texas (Cause No. 2014-CV-0103-A)

APPELLEE’S BRIEF

Mazin Sbaiti Ramon Garcia State Bar No. 24058096 State Bar No. 07641800 Bruce Steckler Emerson E. Arellano State Bar No. 00785039 State Bar No. 24067490 Steckler, LLP Law Office of Ramon Garcia, P.C. 12720 Hillcrest Road, Ste. 1045 222 West University Drive Dallas, TX 75230 Edinburg, Texas 78539 Telephone: (972) 387-4040 Telephone: (956) 383-7441 Fax: (972) 387-4041 Facsimile: (956) 381-0825 mazin@stecklerlaw.com rgarcia@ramongarcia-law.com bruce@stecklerlaw.com earellano@ramongarcia-law.com Manuel Solis Daniel G. Rios State Bar No. 18826790 State Bar No. 00784844 Law Office of Manuel Solis Law Office of Daniel G. Rios, PC 6657 Navigation Boulevard 323 W. Nolana Avenue Houston, TX 77011 McAllen, TX 78504 Telephone: (713) 844-2700 Telephone: (956) 630-9401 Fax: (281) 754-4681 Facsimile: (956) 682-0566 msolis1882@yahoo.com dan@danrioslaw.com Counsel for Appellee ORAL ARGUMENT REQUESTED IDENTITIES OF PARTIES AND COUNSEL The following is a complete list of all parties to the trial court’s order and the

names and addresses of all trial and appellate counsel.

APPELLANTS HALE-MILLS CONSTRUCTION, LTD., HALE-MILLS CONSTRUCTION, INC., and HMC CONTRACTING SOUTH TEXAS, LLC

Represented in the trial court and in this appeal by:

William B. Westcott Robert A. Plessala Andrews Myers, P.C. 3900 Essex Lane, Suite 800 Houston, TX 77027-5109

APPELLEE WILLACY COUNTY Represented in the trial court and in this appeal by:

Mazin Sbaiti Ramon Garcia State Bar No. 24058096 State Bar No. 07641800 Bruce Steckler Emerson E. Arellano State Bar No. 00785039 State Bar No. 24067490 Steckler, LLP Law Office of Ramon Garcia, P.C. 12720 Hillcrest Road, Ste. 1045 222 West University Drive Dallas, TX 75230 Edinburg, Texas 78539 Telephone: (972) 387-4040 Telephone: (956) 383-7441 Fax: (972) 387-4041 Facsimile: (956) 381-0825 mazin@stecklerlaw.com rgarcia@ramongarcia-law.com bruce@stecklerlaw.com earellano@ramongarcia-law.com Manuel Solis Daniel G. Rios State Bar No. 18826790 State Bar No. 00784844 Law Office of Manuel Solis Law Office of Daniel G. Rios, PC 6657 Navigation Boulevard 323 W. Nolana Avenue Houston, TX 77011 McAllen, TX 78504 Telephone: (713) 844-2700 Telephone: (956) 630-9401 Fax: (281) 754-4681 Facsimile: (956) 682-0566 msolis1882@yahoo.com dan@danrioslaw.com

i TABLE OF CONTENTS

REQUEST FOR ORAL ARGUMENT ...................................................... …..cover

IDENTITIES OF PARTIES AND COUNSEL…………………………………............i

TABLE OF CONTENTS……………………………………………………………….ii

TABLE OF AUTHORITIES…………………………………………………...............v

STATEMENT REGARDING ORAL ARGUMENT .............................................. ix

RESPONSE ISSUES PRESENTED ........................................................................ x

SUMMARY OF THE ARGUMENT………………………………………………xi

STATEMENT OF FACTS ......................................................................................1

I. Defendants/Appellants Propose to Build Three Facilities Using Taxpayer Dollars…………………………………………………………………….......1

II. The Scandal……………………………………………………………………2

III. The State of the Facilities……………………………………………………..4

STANDARD OF REVIEW .....................................................................................6

ARGUMENTS AND AUTHORITIES…………………………………………..……6

I. The District Court did not Abuse Its Discretion in Denying Arbitration as to Any of the Three Facilities at Issue…………………………………………………6

A.Appellant has Waived any Argument Challenging the District Court’s Finding that the Contracts were Unconscionable when Made…………………………...8

B.Appellant has Waived any Argument Challenging the District Court’s Finding that Compelling Arbitration Would be Substantively Unconscionable………..10

ii C.Appellants have Waived any Challenge to the District Court’s Finding of Insufficient of Evidence to Support the Existence of a Valid Agreement……..14 II. The District Court did not Abuse Its Discretion in Denying Arbitration on the Basis of Sovereign Immunity………………………………………………….15

A.The District Court Properly Found that there had been no Waiver of Sovereign Immunity…………………………………………………………...15

B.Willacy County Has Not Waived Its Sovereign Immunity Because It Has Not Signed the Agreements………………………………………………………...16

C. Texas Local Government Code Does Not Waive Sovereign Immunity...18

1. Local Government Code Section 271 Does Not Waive the County’s Sovereign Immunity………………………………….18

2. Appellant’s Contentions Regarding the Local Government Corporations’ Agency are Inapt and Irrelevant………………..19

3. Local Government Code Section 262.007 Also Establishes Why the County has Not Waived Sovereign Immunity………………21

III. Willacy County has Not Filed Suit to Enforce the Agreements, Nor Does It Seek a “Direct Benefit” From Them, Therefore It Is Not Bound By the Arbitration Clause……………………………………………………………………….22

A. Texas Supreme Court Precedent and Persuasive Authority Support the District Court’s Discretionary Finding……………………………………….24

B. Under KBR, The Court at most Would Reverse as to the Warranty Claims………………………………………………………………….29

IV. This Court Should Affirm on Contractual Grounds…………………………..30

A. The Sherriff’s Office Agreement Does not Provide for Mandatory Arbitration by the County Because it Was Not a Party and the Provision is Patently Ambiguous…………………………………………………31

B. The County is Expressly Excluded from Mandatory Arbitration Regarding iii the Marshall’s Office………………………………………34

C. The Agreements’ Clauses are Limited to Disputes that Arise During Construction and Pendency of the Contracts- Not After………………35

D. Appellant Has Not Proven that All Pre-Requisites to Compelling Arbitration on the Detention Facility Have Been Met…………………38

CONCLUSION AND PRAYER……………………………………………..………39

CERTIFICATE OF SERVICE………………………………………………………41

CERTIFICATE OF COMPLIANCE………………………………………………...41

iv TABLE OF AUTHORITIES

Aldridge v. Thrift Fin. Mktg., LLC, 376 S.W.3d 877 (Tex. App.–Fort Worth 2012, no pet.)………………..….30, 36

Amir v. Int’l Bank of Commerce, 419 S.W.3d 687 (Tex. App.–Houston [1st Dist.] 2013, no pet.)………..……..38

Bankhead v. Maddox, 135 S.W.3d 162 (Tex. App –Tyler- 2004, no pet.) …………………………8, 15

Bridas S.A.P.I.C. v. Turkmenistan, 345 F.3d 347 (5th Cir. 2003)…………………………………………………...23

Britton v. Texas Dep't of Criminal Justice, 95 S.W.3d 676 (Tex. App. - Houston [1st Dist.] 2002, no pet.)………….7, 8, 13

Carr v. Main Carr Dev., LLC, 337 S.W.3d 489 (Tex. App. Dallas 2011)………………………………….25, 27

Cruikshank v. Consumer Direct Mortgage, Inc., 138 S.W.3d 497 (Tex. App. - Houston [14th Dist.] 2004, pet. den). 9, 10, 13, 15

First Option of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)……………………………………………………..…30, 36

Fluor Daniel, Inc. v. Travis County, 2003 U.S. App. LEXIS 8138, *4 (5th Cir. Tex., Apr. 30, 2003)………...…….17

Freis v. Canales, 877 S.W.2d 283 (Tex. 1994) (orig. proceeding)…………………………….14

Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734 (Tex. 1990)…………………………………………31, 33, 37

Green Tree Find. Corp. v. Randolph, 531 U.S. 79 (2000)……………………………………………………………..12

Hill v. G.E. Power Sys, Inc.,

v 282 F.3d 343 (5th Cir. 2002)…………………………………………………..25

In re Choice Homes, Inc., 174 S.W.3d 408 (Tex. App.–Houston [14th Dist.] 2005, no pet.)…………35, 37

In re First Merit Bank N.A., 52 S.W.3d 749 (Tex. 2001)…………………………………………………11

In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002)……………………………………….………11, 13

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (orig. proceeding)…14, 24, 25, 26, 27, 28, 29, 30

In re Luna, 175 S.W.3d 315 (Tex. App. Houston 1st Dist. 2004)………………………….12

In re Pisces Foods, L.L.C., 228 S.W.3d 349 (Tex. App–Austin 2007, orig. proceeding)………………….38

In re Poly-America, L.P., 262 S.W.3d 337 (Tex. 2008)……………………………………9, 10, 11, 12, 13

In re Serv. Corp. Intern., 355 S.W.3d 655 (Tex. 2011)……………………………………………….31, 37

In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005)……………………………………………..23, 24

Intergen N.V. v. Grina, 344 F.3d 134 (1st Cir. 2003)………………………………………20, 26, 27, 32

Int’l Paper Co. v. Schwabedissen Maschinen Anlagen GMBH 206 F.3d 411 (11th Cir. 2000)………………………………………………….23

Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266 (Tex. 1992) (orig. proceeding)……………………………….6

J.M. Davidson Inc. et al. v. Webster, 128 S.W.3d 228 (Tex. 2003)

vi 128 S.W.3d at 227……………………………………………………………...14

Landmark Org., L.P. v. Tremco Inc., 2010 Tex. App. LEXIS 5052, *29 (Tex. App. Austin 2010)………………….29

Morrison v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003)…………………………………………………...12

Okorafor v. Uncle Sam & Assocs., Inc., 295 S.W.3d 27 (Tex. App.–Houston [1st Dist.] 2009, pet. denied)…………..6

Olshan Found. Repair Co. v. Ayala, 180 S.W.3d 212 (Tex. App.-San Antonio 2005, pet. denied)………………….10

R.J. Griffin & Co. v. Beach Club II Homeowners Ass’n, 384 F.3d 157 (4th Cir. 2004)…………………………………………………25

Schlumberger Technology Corp. v. Baker Hughes Inc., 355 S.W.3d 791 (Tex. App.–Houston [1st Dist.] 2011)…………….............6

Schwartz v. Forest Pharmaceuticals, Inc., 127 S.W.3d 118 (Tex. App. - Houston [1st Dist.] 2003, pet. den)……9, 10, 13

Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342 (Tex.2006)……………………………………………….31, 37

Town of Highland Park v. Iron Crow Construction Incorporated, 168 S.W.3d 313 (Tex. App. Dallas 2005)…………………………16, 17, 18, 22

Texas Natural Resource Conservation Commission v. IT-Davy, 74 S.W.3d 849 (Tex. 2002)……………………………….………………17, 18

Venture Cotton Coop. v. Freeman 395 S.W.3d 272 (Tex. App. Eastland 2013)…………………………………...13

Webb County v. Khaledi Props., 2013 Tex. App. LEXIS 9063, *3 (Tex. App. San Antonio, July 24, 2013)……18

Wortham v. Otis Elevator Co.,

vii 2000 Tex. App. LEXIS 3443, *8 (Tex. App. Dallas May 25, 2000)…………..14

Secondary Authorities

Tex. Civ. Prac. Rem. Code § 171.001………………………………………………14

Tex. Loc. Gov. Code § 262.001…………………………………………………….20

Tex. Loc. Gov. Code § 262.007…………………………………………………21, 22

Tex. Loc. Gov. Code § 262.011……………………………………………………..21

Tex. Loc. Gov. Code § 271.151…………………………………………………18, 19

Tex. Loc. Gov. Code § 271.152……………………………………………………..18

Tex. Loc. Gov. Code § 271.154……………………………………………………..19

Tex. Loc. Gov. Code § 271.160……………………………………………………..20

W. Wendall Hall et al., Hall’s Standards of Review in Texas, 42 St. Mary’s L.J. 1, 78 (2010)…………………………………………………6

viii STATEMENT REGARDING ORAL ARGUMENT

Appellee respectfully requests that this Court grant oral argument. Due to the

novelty of the arguments raised by Appellants, Appellee believes oral argument will be

of assistance in this matter.

ix RESPONSE ISSUES PRESENTED

1. Texas law states that a party who does not raise evidentiary objections before the district court waives them on appeal. Here, Appellants failed to raise any evidentiary objections before the district court seeking to strike Willacy County’s evidence supporting the district court’s finding of unconscionability. Did Appellants waive these objections on appeal?

2. Texas law states that an appellant’s failure to raise points of error in an opening brief waives them for the appeal. Texas law also requires proof of a valid agreement before ordering arbitration. Here, Appellants’ opening brief fails to challenge the district court’s adopted finding that Appellants’ motion was unsupported by competent evidence of a valid agreement. Have the Appellants waived any right to argue against this finding?

3. Texas law states that a County has sovereign immunity from enforcing an arbitration clause, and that only the legislature may waive sovereign immunity. Texas statutes have only waived sovereign immunity for a county with regards to specific contracts to which the County is a party, and even then immunity is waived only to the extent suit is brought in a district court in that county. Here it is undisputed that Willacy County is not a signatory to any of the Agreements. Was the district court correct in finding that sovereign immunity applied and had not been statutorily waived for Willacy County?

4. Texas law states that the doctrine of “direct benefits estoppel” may apply to a third party to a contract where that party’s claims seek a direct benefit from enforcement of the contract. Texas courts review such determination for abuse of discretion. Here, the district court found that the County’s claims for fraud, unjust enrichment, warranty and negligence did not seek derive a direct benefit from the Agreements. Did the district court abuse its discretion in finding that direct benefits estoppel did not apply to one or more of the County’s claims?

5. This court may affirm on any basis in the record. Texas law requires that arbitration agreements be construed by their terms. Here, two of the Agreements are limited by their terms to the signatories to the contracts, and the others are limited to claims arising during the time period during which the work was in progress. Do these support the district court’s denial of the motion to compel arbitration on a harmless error standard?

x SUMMARY OF THE ARGUMENT

This appeal arises from the improvident motion by Appellants to compel Willacy

County to arbitration. The record is clear that Willacy County is not a signatory to any

of the Agreements. The Agreements are project specific, and therefore, must be

evaluated on their own terms.

However, Appellants’ motion to compel arbitration, and this Appeal, suffer from

four common flaws:

First, the district court’s adopted finding on unsconscioability was predicated on

evidence that Appellants never challenged below—therefore, Appellants have waived

their appeal on this issue which is sufficient to affirm in full.

Second, the district court’s conclusion is supported by its adopted finding that

Appellants’ motion was not supported by competent evidence of a valid agreement to

arbitrate—Appellants fail to address this issue in their opening brief and therefore, have

waived their appeal on this issue which is sufficient to affirm in full.

Third, it is well established that only the Texas legislature can waive immunity.

Here, the district court’s conclusion is supported by the fact that the County is immune

from suit to compel arbitration, and its immunity has not been waived by the Texas

legislature for suits brought on contracts to which the county is not a signatory. The

only statute that remotely speaks to the issue only applies to signatories, and even then

xi only waives immunity from suits brought in district court.

Fourth, the Texas Supreme Court in KBR said that “direct benefits estoppel”

only applies to a non-signatory who “seeks, through the claim, to derive a direct benefit

from the contract.” The Court very clearly excluded any non-contractual claims from

arbitration. Courts have consistently held that extra-contractual warranty claims are not

the types of claims that invoke the estoppel doctrine. Here, Appellants have failed to

demonstrate how the district court abused its discretion in concluding that the county’s

claims for fraud, unjust enrichment, negligence and implied warranty did not seek to

derive a direct benefit from the Agreements. Under KBR, even if this Court thinks that

the warranty claim triggers estoppel, it should only reverse as to the warranty claim and

affirm on the other claims.

The foregoing demonstrate four independent and sufficient reasons to affirm.

But before this Court must also consider the individual Agreements’ terms. There

are three facilities and each is governed by its own arbitration provision. However, (i)

Two of the arbitration clauses by their terms are limited to the parties to the respective

agreements unless otherwise stated in writing. Binding authority holds that arbitration

cannot be compelled under those circumstances. (ii) The other arbitration clause is by

its terms, limited to the pre-dispute resolution provisions, which itself only applies to

disputes that arise during the pendency of the construction project. It lacks any

language taking it beyond to any and claims arising under the agreement before or after xii the contract terminates.

xiii STATEMENT OF FACTS

I. DEFENDANTS/APPELLANTS PROPOSE TO BUILD THREE FACILITIES USING TAXPAYER DOLLARS

Defendants Hale Mills Construction, Ltd., Hale-Mills Construction, Inc., and

HMC Contracting South Texas, LLC (“Appellants”) approached members of

Willacy County’s board of commissioners proposing to build a detention center for

the U.S. Marshall’s Office, a detention center for pre-deportation inmates of the

Immigration and Customs Enforcement agency (aka “ICE”), and a new jail for the

Willacy County Sherriff’s office in Raymondville (altogether, the “Facilities”).

To that end, over the course of years, four principal agreements were entered

into between one or more of the Defendants/Appellants and one of the County’s

local government entities (altogether, the “Agreements”)1.

 For the Marshall’s Office, Willacy County Public Facility Corporation

contracted with Hale Mills Construction, Ltd., and Hale-Mills Construction, Inc.

(CR 106 - 130). Attached hereto as Exhibit A (the “Marshall’s Office Agreement”).

 For the Willacy County Sherriff’s office, Hale-Mills Construction Ltd.

contracted with the County Jail Public Facility Corporation of Willacy County,

1 Below, Appellee moved to strike any such evidence as not properly for the district court. See Exhibit F; CR 90-91). The district court adopted this finding in its Order. Appellee’s citation to the agreements in the record is without waiving their contention that such evidence was not properly before the district court or the contention that Appellants have waived the challenge on appeal since they did not raise it in their opening brief. See Section I(c) supra.

1 Texas, on June 29, 2004 (CR 132 - 158). Attached hereto as Exhibit B (the “Jail

Agreement”).

 For the Detention Center for ICE, the ICE Facility was constructed

under an agreement between the Willacy County Local Government Corporation

and HMC Contracting South Texas, LLC, and was executed on July 19, 2006 (CR

160-196). Attached hereto as Exhibit C. An addition was constructed pursuant to an

agreement executed on August 2, 2007 between The Willacy County Local

Government Corporation and HMC Contracting South Texas, LLC. (CR 198-239).

Attached hereto as Exhibit D (Exhibits C and D together, the “ICE Facility

Agreements”).

There is no dispute that the Facilities were substantially completed by January

2008, (CR 130, 158, 196, 239) 2 and that the completion of the facilities terminated

the contractual relationships cited above.

II. THE SCANDAL

The Agreements were neither negotiated, nor made without substantial

controversy. (CR 92). They were procured through a system of bribery that

ultimately saw two Willacy County officials get indicted and plead guilty with a

third official to criminal charges. (CR 92).3 Jose Jimenez and Israel Tamez were

2 Appellants admit as much in the brief. See Appellant’s Opening Br. at 1). 3 Citing http://www.myplainview.com/article_439ed742-bbc0-51de-8368-26bf030b4c35.htm (“Two former Willacy County commissioners pleaded guilty Tuesday to accepting bribes for their votes on federal

2 sentenced to six months in prison each for their roles in voting in favor of the

Facilities projects. (Id.)

Yet, these men’s names are all over the Local Government Entities’

paperwork that Appellants attach to their opening briefs. For example, in Appellants’

Opening Brief, Appendix 2, the Articles of Incorporation of Willacy County Public

Facility Corporation, Israel Tamez is named on the Board of Directors (pg 2) and

Jose Jimenez is additional board member (pg 2(A)). In Appellants’ Opening Brief,

Appendix 3, the Articles of Incorporation of County Jail Public Facility

Corporation, Israel Tamez is the “Incorporator” (Art. IX) and is named to the Board

of Directors (Art. VIII).

What makes the scandal so insidious is that the Facilities were financed

through public bond issuances that the Taxpayers undertook to bear and repay in

reliance on the representations that the Facilities would not only perform a function,

but also on the basis that the Marshall’s Office and the ICE Facility would generate

revenue and jobs to the County. (CR 92; see also Willacy County Commissioner Bd.

prison contracts. Jose Jimenez, 67, of Sebastian, and Israel Tamez, 58, of Raymondville, waived indictment and admitted accepting more than $10,000 each from companies competing for work on the Willacy County Adult Correctional Center. The $14.5 million prison was being built to house federal inmates.”); and see http://www.myplainview.com/article_92fb86e1-aa11-504a-94cf-49820f746300.html (“The last of three county commissioners to plead guilty in a bribery scandal involving a Rio Grande Valley federal detention facility has been sentenced…Webb County Commissioner David Cortez, 72, of Laredo was given three months in prison Tuesday in federal court for his role in funneling $39,000 in bribes to former Willacy County Commissioners Jose Jimenez and Israel Tamez in 2002. The money was given in exchange for favorable votes on contracts to design, build or manage a 500-bed facility in Raymondville that opened in 2003.”).

3 Resolutions attached to Appellant’s Brief).4 This is reflected in the various board

resolutions attached to Appellants’ Opening Brief. See also Appellants’ Br. app’x 3,

Art. XIII.

III. THE STATE OF THE FACILITIES

While what was promised by Appellants was state-of-the-art facilities, what

was delivered was substandard. After only a few years of use, the facilities are in

complete disrepair, revealing the fraud and slipshod workmanship done by the

Defendants. (CR 06 et. seq.)

The Facilities are in no shape to last their useful lives. As revealed in the

Original Petition (CR 06 et. seq.), poor materials were used in place of proper

construction materials, thus requiring constant repairs (Id. at ¶ 17). The site

preparation was irremediably flawed, with building sitting below grade, subjecting

them to shifting, flooding and improper drainage (Id. at ¶ 18). Whereas the typical

home houses 3 to 4 people, and has 8 to 12 inches of foundation, the buildings are

based on less than that (Id. at ¶ 19). Moreover, the quality of the concrete is

substandard. The concrete throughout reveals flaking, chipping, and spalding—all

of which should not happen had minimally appropriate concrete and cement been

used. (Id. at ¶ 21) There are structural defects in load-bearing walls—these are

4 Appellants have attached several appendices to the Opening Brief that are not part of the record. These should be stricken to the extent Appellants have not made them a part of the record, but also serve as admissions.

4 cracking and showing signs of failure. Walls without sufficient internal structure are

bearing heavy steel beams that cause a danger of failure. (Id. at ¶ 22). There are

cracks and chipping in all walls and ceilings that continually have to be repaired.

This is cumulatively worse in quarantine and isolation rooms, since cracks in interior

walls allow contamination to pass through the walls that are supposed to prevent that

from happening. (Id. at ¶ 23). There are have been hundreds of roof leaks due to poor

roofing installation techniques. (Id. at ¶ 24). There is evidence of serious water

penetration and leakage into the Centers. These are dangerous and cause electrical

wiring failures, and have caused shorting wiring and otherwise damage conduits and

electrical appliances and equipment (HVACs, grid ceiling, etc.). (Id. at ¶ 26) The

sewage and drainage system is demonstrably deficient and exhibits signs of

improper construction and building techniques. The sewage line is (singular) far too

small for the Centers and the number of people in them—causing constant grotesque

backup of sewage and human waste into the dormitories and cafeterias. (Id. at ¶ 27)

The list is endless.

The County in filing the instant suit, presciently observed in its Original

Petition:

Make no mistake: What is at stake here is the potential loss of the contracts and eventually closure of the Centers (all of them) because they fail to meet even the most basic requirements of suitable construction. Such a cataclysmic event would cost jobs

5 in addition to County revenue. (CR 07)

Thus, it surprised absolutely no one at the County when a riot broke out at the

ICE Facility in February 2015 precipitating its closure and the dismissal of all but a

skeleton crew of employees.5 Appellants’ misconduct has contributed to the loss of

the government contract with the Bureau of Prisons for the ICE Facility, costing over

400 Willacy County residents their livelihood, and costing the County fiscally as

well. (Id.) That is just one building; the rest are soon to fall.

STANDARD OF REVIEW This Court reviews the trial court’s denial of a motion to compel arbitration

for abuse of discretion. See Schlumberger Technology Corp. v. Baker Hughes Inc.,

355 S.W.3d 791, 800 (Tex. App.–Houston [1st Dist.] 2011); Okorafor v. Uncle

Sam & Assocs., Inc., 295 S.W.3d 27, 38 (Tex. App.–Houston [1st Dist.] 2009, pet.

denied); see also W. Wendall Hall et al., Hall’s Standards of Review in Texas, 42

St. Mary’s L.J. 1, 78 (2010) (citing Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d

266, 271–72 (Tex. 1992) (orig. proceeding).

ARGUMENTS AND AUTHORITIES

I. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING ARBITRATION AS TO ANY OF THE THREE FACILITIES AT ISSUE The District Court denied arbitration on several independent grounds. (CR

5 See http://www.valleymorningstar.com/news/local_news/article_bf112990-cc4a-11e4-ba2f- e3c024760e63.html.

6 418) (the “Order”). The Order is attached hereto as Exhibit E. The district court ruled

that the County had sovereign immunity because it was not a signatory to the

agreements and was not seeking to enforce the Agreements; that Defendants’ had

failed to properly authenticate their evidence to establish their contractual right to

arbitrate; and that the arbitration clauses were unconscionable.6

Appellants expends the entirety of their Appellate briefing on the first of these

arguments. But they never address the other independent grounds for the denial of

their motion to compel arbitration. For that reason, Appellants have waived them

and this Court need not wade into the mire of sovereign immunity.

An appellant “must attack all independent bases or grounds that fully support

a complained-of ruling or judgment.” Britton v. Texas Dep't of Criminal Justice, 95

S.W.3d 676, 681 (Tex. App. - Houston [1st Dist.] 2002, no pet.). If the appellant

fails to do so, the court of appeals “must affirm the ruling or judgment.” Id. The

reason is that:

If an independent ground fully supports the complained-of ruling or judgment, but the appellant assigns no error to that independent ground, then (1) [the appellate court] must accept the validity of that unchallenged independent ground, … and thus (2) any error in the grounds challenged on appeal is harmless

6 The District Court’s Order cited sovereign immunity, and incorporated as independent grounds the balance of the issues raised in Willacy County’s Response below (Willacy County’s Plea to the Jurisdiction and Response to Plea in Abatement and Opposition to Arbitration Before AAA (CR 84 et seq.) is attached hereto as Exhibit F). This Court thus must treat the Willacy County Response below as incorporated by reference into the Court’s Order.

7 because the unchallenged independent ground fully supports the complained-of ruling or judgment.

Id. at 681-682. It is not enough for the Appellants to try and cure this waiver in their

reply brief. That would sandbag the Appellee and be patently unfair. The failure to

address these issues in the opening brief constitutes an irrevocable waiver. See

Bankhead v. Maddox, 135 S.W.3d 162, 164-65 (Tex. App –Tyler- 2004, no pet.)

(holding issues not raised in appellant's initial brief are deemed waived on appeal).

Accordingly, the waiver of the issues provides ample ground for affirmance.

A. Appellant Has Waived any Argument Challenging the District Court’s Finding that the Contracts Were Unconscionable When Made

The District Court adopted the argument set forth in Willacy County’s

opposition to arbitration. (CR 418, 84; see Exhibits E and F). Below, the County

contended that the Contracts were contracts of adhesion, procured in the midst of a

criminal bribery scandal during which two of Appellant’s affiliates (former county

commissioners) were tried, convicted, and sent to prison. (CR 92) The District Court

adopted this argument in its Order, thus holding that the Agreements were

unconscionable when made. (CR 418).

These facts were never controverted nor even addressed by Appellant before

the district court. They never objected to the evidence, and never obtained a ruling

on their objections. Appellants have thus failed to preserve the alleged evidentiary

error for this Appeal.

8 In Cruikshank v. Consumer Direct Mortgage, Inc., 138 S.W.3d 497 (Tex.

App. - Houston [14th Dist.] 2004, pet. denied), appellant argued that the trial court

had erroneously sustained objections to the appellant's summary judgment affidavit.

The court of appeals held that the appellant had not preserved error because he had

not filed a response to the objecting party's motion to strike, he did not object to the

trial court's ruling, and he did not request the court to reconsider its ruling. Id. at 499.

Also, the fact that Appellants did not specifically object to the evidence

anywhere, and failed to obtain a ruling means they have irrevocably preserved the

error. Accord Schwartz v. Forest Pharmaceuticals, Inc., 127 S.W.3d 118, 120 (Tex.

App.- Houston [1st Dist.] 2003, pet. den) (holding that failure to specifically raise

relevance or sufficiency objection before trial court and obtain a ruling failed to

preserve the objection for appeal even though same evidence had been objected to

on other grounds).

The failure to preserve error on appeal deprives the appellate court of any

jurisdiction to reverse on that basis. Id. That is true even if the Appellate court

believes it might have otherwise ruled in the appellant’s favor.

Furthermore, Texas law applies to determine the validity or revocability of the

arbitration clause. See In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008).

There is no presumption favoring arbitration when it comes to determining whether

there is a valid and enforceable agreement to arbitrate. Id. “Unconscionable

9 contracts, however – whether relating to arbitration or not – are unenforceable under

Texas law.” Id. at 348.

Here, Appellant neither raised Willacy County’s support of unconscionability

as a matter of factual or legal error before the district court. Therefore, Appellant

cannot argue that the District Court abused its discretion or applied the wrong law,

and has thus waived any contention to that effect in this appeal. Schwartz, 127

S.W.3d at 120; Cruikshank, 138 S.W.3d at 499. Moreover, this Court would be duty-

bound to defer to the district court’s findings even without a finding waiver. See

Olshan Found. Repair Co. v. Ayala, 180 S.W.3d 212, 214 (Tex. App.-San Antonio

2005, pet. denied) (when reviewing “the trial court's decision concerning the

unconscionability of an arbitration agreement . . . we defer to the trial court's factual

determinations”). Appellants’ waiver of their challenges thus conclusively requires

affirmance.

Therefore, it is undeniable that Appellant has waived any point of error on the

District Court’s finding that the agreements are unconscionable. See id. Its waiver

provides prima facie, independent and uncontroverted grounds for affirming the

District Court’s Order.

B. Appellant Has Waived any Argument Challenging the District Court’s Finding that Compelling Arbitration Would be Substantively Unconscionable

Below, the County contended that the arbitration clauses were unconscionable

10 because they imposed on Willacy County and the county taxpayers an insupportable

burden and expense in filing and litigating before the Arbitral panel. (CR 92). The

District Court adopted this position in its Order, thus holding that the Agreements

were unconscionable when made. (CR at 418).

Contrary to Appellants’ position that, under In re In re First Merit Bank N.A.,

52 S.W.3d 749 (Tex. 2001), substantive unconscionability lies within the exclusive

realm of the arbitrator, the Texas Supreme Court overruled that opinion and held

that a court may find that procedural or substantive unconscionability is sufficient

to invalidate an arbitration clause. See In re Halliburton Co., 80 S.W.3d 566, 572

(Tex. 2002) (“We therefore clarify that courts may consider both procedural and

substantive unconscionability of an arbitration clause in evaluating the validity of an

arbitration provision.”).

The case law is littered with courts invalidating arbitration clauses for being

substantively unconscionable. The Texas Supreme Court specifically held that an

arbitration provision is unconscionable if it imposes on the party raising the claim

the obligation to pay the costs of arbitration which render access to the forum

unaffordable. See In re Poly-America, L.P., 262 S.W.3d at 355. There, the Supreme

Court agreed that:

[I]n some cases, the potential of incurring large arbitration costs and fees will deter potential litigants from seeking to vindicate their rights in the arbitral forum . . . . [I]f the fees and costs of the

11 arbitral forum deter potential litigants, then that forum is clearly not an effective, or even adequate, substitute for the judicial forum . . . [T]he burden of demonstrating that incurring such costs is likely under a given set of circumstances rests, at least initially, with the party opposing arbitration.

Id. (quoting Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 659-60 (6th Cir.

2003) (invalidating arbitration provision that imposed excessive fees on litigant)).

While the Supreme Court held that there was no “per se” rule, it ruled that such a

determination would be a question of fact. Id. The lower court had found that there

was sufficient evidence of the litigants inability to afford access to the arbitral forum.

In re Luna, 175 S.W.3d 315, 322 (Tex. App. Houston 1st Dist. 2004). The Supreme

Court disagreed, noting that the fee provisions were not unconscionable because the

arbitrator was permitted to adjust any unconscionable terms including the fee split

between the parties, and therefore, he had a remedy. In re Poly-America, L.P., 262

S.W.3d at 355. Here, the District Court implicitly found that the County is required

to foot the entire cost of filing arbitration which is substantial, and the Agreements

afford no discretion to the arbitrator to reduce the amount(s).

Similarly, under Green Tree Find. Corp. v. Randolph, 531 U.S. 79, 90 (2000),

the U.S. Supreme Court held that prohibitively high arbitration costs that would

“preclude a litigant...from effectively vindicating [her] rights in the arbitral forum”

are unsconsionable, and held that it raised a question of evidentiary fact, not law.

Following these precedent, Texas courts have invalidated arbitration clauses that

12 substantively deny a litigant the right of redress. See, e.g., Venture Cotton Coop. v.

Freeman, 395 S.W.3d 272, 276 (Tex. App. Eastland 2013),

Applying these precedents, it is clear that Appellant has waived any challenge

to the district court’s factual finding of unconscionability due to the expense and cost

to be imposed on the County.

While Appellants contend that there was insufficient evidence to support this

finding, Appellants never specifically raised that objection before the district court.

Appellants thus fail to preserve the factual and legal error for appeal. See

Cruikshank, 138 S.W.3d at 499 (failure to raise matters before trial court does not

preserve error on appeal and waives such issues); Schwartz, 127 S.W.3d at 120

(holding that objection to ruling on one issue—in that case, Rule 401 prejudice, does

not preserve objections on relevance of evidence).

Accordingly, Appellants have waived any challenge to the District Court’s

finding of substantive unconscionability. The finding of unconscionability is

sufficient in and of itself to vitiate the arbitration clause and its enforcement. See In

re Poly-America, L.P., 262 S.W.3d 337, 348; In re Halliburton Co., 80 S.W.3d at

572. This Court need not address the other issues as they are rendered moot. See

Freeman, 395 S.W.3d at 277 (“Because we have held that the arbitration agreement

is substantively unconscionable…we need not consider appellants’ remaining

arguments attacking appellees’ other substantive unconscionability and procedural

13 unconscionability defenses.”); Britton, 95 S.W.3d at 681 (failure to attack all

independent grounds requires affirmance).

Therefore, the district court’s order may be summarily affirmed.

C. Appellants Have Waived Any Challenge to the District Court’s Finding of Insufficient of Evidence to Support the Existence of a Valid Agreement

To compel arbitration, a party must show that there is a valid arbitration

agreement and that the claims raised fall within the agreement's scope. In re Kellogg

Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding); see also

Tex. Civ. Prac. Rem. Code § 171.001(a). Without an agreement to arbitrate,

arbitration cannot be compelled. J.M. Davidson, 128 S.W.3d at 227 (citing Freis v.

Canales, 877 S.W.2d 283, 284 (Tex. 1994) (orig. proceeding)).

Below, Willacy County attacked the insufficiency of Defendants’ evidence in

their motion to compel arbitration, and moved to strike the supporting evidence as

being unsubstantiated, inauthentic, and incomplete. (CR 91-92). This objection was

sustained by the district court (see Order, CR 418), despite Appellants’ last-ditch

effort to supplement their motion papers with the agreements. (CR 103 et seq.).

Appellants never obtained a ruling overruling the objection, meanwhile, the Order

plainly adopts it as independent grounds to deny arbitration and is correct. See

Wortham v. Otis Elevator Co., 2000 Tex. App. LEXIS 3443, *8 (Tex. App. Dallas

May 25, 2000) (sustaining trial court striking of evidence where “documents

14 constituted hearsay and were not properly authenticated”).

However, Appellants also fail to raise the issue in the opening brief before this

Court. This waives the issue on appeal. In Cruikshank, the court held that raising a

general point of error only preserves such errors if the errors are expressly and

specifically addressed in the briefing. 138 S.W.3d at 502. The court of appeals

concluded that, because the appellant only generally addressed the issue in its brief,

those issues and the error had been waived. Id. at 503. Furthermore, such waiver

cannot be cured in an Appellant’s reply brief. See Bankhead, 135 S.W.3d at 164-65

(holding issues not raised in appellant's initial brief are deemed waived).

Accordingly, Appellants have likewise waived yet another independent

grounds for affirming the district court’s Order denying arbitration against Willacy

County.

II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING ARBITRATION ON THE BASIS OF SOVEREIGN IMMUNITY

A. The District Court Properly Found That There Had Been No Waiver of Sovereign Immunity

The district court, after considering the parties’ motion papers and hosting a

lengthy hearing, found that the County was protected by sovereign immunity from

a suit to compel arbitration because it was not a signatory to the Agreements, found

that the County’s factual allegations at best merely touched upon the Agreements,

but that the County was not seeking to enforce the Agreements. See Order.

15 The fault in this appeal lies in the fact that Appellant side-steps the salient

argument. Rather than address the district court’s finding head-on, Appellant hangs

its hat on the premise that the County as a third-party beneficiary of the Agreements

is attempting to enforce the Agreements, and therefore, is bound by the Arbitration

clauses. These premises rest on a faulty and simplistic construction of the allegations

and the law. We address the issues one by one.

B. Willacy County Has Not Waived Its Sovereign Immunity Because It Has Not Signed the Agreements

Appellant does not dispute that Willacy County is a sovereign cloaked in

sovereign immunity from suits to compel arbitration. This was clarified by the

Supreme Court initially in Town of Highland Park v. Iron Crow Construction

Incorporated, 168 S.W.3d 313, 319 (Tex. App. Dallas 2005) (“Because its contract

with Highland Park provided for binding arbitration in the event of a dispute between

the parties, Iron Crow was seeking to enforce Highland Park's performance under

that contract. Therefore, sovereign immunity was indeed implicated here.”).

In Town of Highland Park, the town was a signatory to the contract and the

Supreme Court refused to allow it to be compelled to arbitration because merely

signing the agreement did not waive sovereign immunity. 168 S.W.3d at 319. The

Court held that a motion or action to enforce an Arbitration clause is essentially a

suit to enforce the terms of a contract, a suit against which the County has sovereign

16 immunity. Id. The Court noted that only the legislature can waive immunity which

it did not do in this case. Id. The court of appeals also held that the Federal

Arbitration Act did not apply because both the plaintiff and the defendant were Texas

residents (as is the case here: Willacy and Hale-Mills are Texas residents); and even

if the FAA did apply, it could not preempt the sovereign rights of the County. Id. at

317-318. Town of Highland Park thus stands for the proposition that a sovereign is

generally immune from suit to compel arbitration, even if it is a counterclaim to a

suit brought by the sovereign.

In another case analogous to this one, in Texas Natural Resource

Conservation Commission v. IT-Davy, 74 S.W.3d 849 (Tex. 2002), the Texas

Supreme Court rejected the argument that a contractual provision providing that

disputes could be decided by arbitration could be enforced against a County. Id. at

857-58. The court held that since only the Legislature could waive sovereign

immunity, “administrative agents,” even those with authority to enter into contracts

such as the County Judge, had no authority to bind the County. Id.

Likewise, in Fluor Daniel, Inc. v. Travis County, 2003 U.S. App. LEXIS

8138, *4 (5th Cir., Apr. 30, 2003), the Fifth Circuit held that Travis County had not

waived its rights as a sovereign in a contract with Fluor, despite the fact that the

County Judge had signed the contract. The Court held that only “the legislative body

of the county—the commissioner’s court—can waive sovereign immunity.” Id. at

17 *5. And moreover, even then it must be “clear and unambiguous.” Id. In that case,

the Court held that Travis County—even though it arguably invoked the jurisdiction

of the court by filing counterclaims—had not waived any of its sovereign rights not

to be brought into court without its express consent. It is also well-established that

these rights cannot be waived through the conduct of the county. See Webb County

v. Khaledi Props., 2013 Tex. App. LEXIS 9063, *3 (Tex. App. San Antonio, July

24, 2013).

The Texas legislature amended the statutes after Town of Highland Park and

It-Davy to provide that sovereign immunity could be waived in the limited

circumstances. See Tex. Loc. Gov. Code § 271.151 et seq. However, outside of these

amendments, Town of Highland Park is still good law.

Appellant apparently does not disagree that Willacy County is not a signatory

to the Agreements. And it cannot show how Section 271 of the Texas Local

Government Code applies to Willacy County as a non-signatory to the agreements.

C. Texas Local Government Code Does Not Waive Sovereign Immunity

1. Local Government Code Section 271 Does Not Waive the County’s Sovereign Immunity

Appellant attempts to expand the reach of the waiver of sovereign immunity

by invoking Local Government Code section 271.

However, Local Government Code section 271.152 states that “A local

governmental entity that is authorized by statute or the constitution to enter into a 18 contract and that enters into a contract subject to this subchapter waives sovereign

immunity to suit for the purpose of adjudicating a claim for breach of the contract,

subject to the terms and conditions of this subchapter.”

And Texas Local Government Code 271.154 states that “Adjudication

procedures, including requirements for …engaging in alternative dispute resolution

proceedings before bringing a suit or an arbitration proceeding, that are stated in the

contract subject to this subchapter or that are established by the local governmental

entity and expressly incorporated into the contract or incorporated by reference are

enforceable except to the extent those procedures conflict with the terms of this

subchapter.”

The definition of a “contract” includes the fact that the contract “is properly

executed on behalf of the local governmental entity.” See Tex. Loc. Gov. Code §

271.151(2)(A). And the definition of “Local Government Entity” excludes a County.

See id. at § 271.151(3).

Therefore, even if the local government entities’ execution of the Agreements

waives sovereign immunity, it does not extend to the County as a non-signatory.

Nothing in Section 271 extends the waiver of sovereign immunity for signing the

Agreements to the County.

2. Appellant’s Contentions Regarding the Local Government Corporations’ Agency Are Inapt and Irrelevant Appellants take the position that the founding and structure of the various

19 local government corporations and their signatory authority creates an agency

relationship with the County. Appellants ask this Court to conclude that the agency

relationship binds the County to the Arbitration clause.

This argument is inapt and irrelevant.

First, if there is there is no agency, then there can be no binding authority.

Intergen N.V. v. Grina, 344 F.3d 134, 148 (1st Cir. 2003). Here, the local government

entities were not serving as agents of the County. If they were, they would have been

signing the Agreements on behalf of the County as a party. The Agreements

expressly disclaim such a relationship, relegating the County to anything from

complete stranger (Exhibit A, at CR 106-130) to assignee (Exhibit B, at CR 132-

158) to third party beneficiary (Exhibits C, at CR 160-196 and D at CR 198-239).

Second, Texas Local Government Code section 271.160 expressly precludes

Appellants’ argument. That provision states that “A contract entered into by a local

government entity is not a joint enterprise [with the county] for liability purposes.”

In other words, where a local government entity signs an agreement, under Chapter

271 it would waive immunity. This provision states that it only waives immunity as

to itself—not as to the local governing body (e.g., here, the County).

This stands in distinction to Appellants’ invocation of Local Government

Code section 262.001(b). That states that “A contract or other act of an agent

appointed under this section that is properly executed on behalf of the county and

20 is within the agent's authority binds the county to the contract for all purposes.”

However, Willacy County did not appoint any of the local government entities as its

agents—the documents attached to Appellants’ brief clearly show the decision to

create the local government entities to do the work themselves. Moreover, nothing

says that creating local government entities is the same as “appointing” an agent

under section 262 as agents of the County. See Tex. Loc. Gov. Code § 262.011 or

0115 (purchasing agents). Appellants also never demonstrate how the local

government entities were appointed as agents under the section.

Therefore, Willacy County is not liable for any contractual liabilities—

including liability for the contract’s arbitration provision—entered into by one or

more of the local government entities.

3. Local Government Code Section 262.007 Also Establishes Why the County Has Not Waived Sovereign Immunity

Section 262.007 only applies to contracts and waives sovereign immunity for

a County that is a signatory to the contract. See Tex. Loc. Gov. Code § 262.007(a)

(“A county that is a party to a written contract for engineering, architectural, or

construction services or for goods related to engineering, architectural, or

construction services may sue or be sued, plead or be impleaded, or defend or be

defended on a claim arising under the contract.”) (emphasis added). Therefore, this

section only applies to contracts where the County is a signatory.

Consequently, the section specifically requires all suits to be brought in court. 21 It provides that even where the county is a signatory to the contract, “a suit on the

contract brought against a county shall identify the county by name and must be

brought in a state court in that county.” Id. (emphasis added). No exception is made

for a contract that contains an arbitration clause.

It is now well established that only the Texas legislature can waive sovereign

immunity, or delegate the specific power to do so to subordinate entities, such as the

County or municipal entity. See Town of Highland Park v. Iron Crow Constr., Inc.,

168 S.W.3d 313, 319 (Tex. App. Dallas 2005).

The Texas legislature has spoken and stated that where the County is a

signatory to a contract for specified goods, it may only be sued in the state court of

that county. See Tex. Loc. Gov. Code § 262.007(a). Nowhere has the Texas

legislature stated that a County may be compelled to arbitration on a contract, much

less on a contract to which it is not a signatory. The inclusion of only a means to sue

a county in state court (e.g., irrespective of an arbitration agreement), necessarily

implies the exclusion of the right to impose arbitration on a signatory, much less to

do so on a county that is not even a signatory to an arbitration agreement.

III. WILLACY COUNTY HAS NOT FILED SUIT TO ENFORCE THE AGREEMENTS, NOR DOES IT SEEK A “DIRECT BENEFIT” FROM THEM, THEREFORE IT IS NOT BOUND BY THE ARBITRATION CLAUSE

Finding no statutory grounds for the premise that the Texas legislature has

22 waived sovereign immunity to compel the County into arbitration, Appellants’

primary argument is the equitable contention that the County cannot bring suit to

enforce the Agreements, but evade the Agreements’ arbitration provisions. They cite

the “direct benefits estoppel” argument for this position.

The district court has substantial discretion in deciding whether the equitable

doctrine applies. See In re Weekley Homes, L.P., 180 S.W.3d 127, 135 (Tex. 2005)

(“the equitable nature of the [direct benefits estoppel] doctrine may render firm

standards inappropriate, requiring trial courts to exercise some discretion based on

the facts of each case.”) (citing Bridas S.A.P.I.C. v. Turkmenistan, 345 F.3d 347,

360 (5th Cir. 2003) (“The use of equitable estoppel is within a district court's

discretion.”)).

Appellants rely exclusively the contention that the district court committed

legal error. Appellants conveniently gloss over the fact that in its cited cases, the

sovereign at issue had brought to suit to enforce a contract’s specific provisions, or

the record had evidence that the plaintiff had specifically adopted the contract as its

own prior to instituting suit. See Weekley, 180 S.W.3d at 131 (also discussing lnt'l

Paper Co. v. Schwabedissen Maschinen Anlagen GMBH, 206 F.3d 411 (11th Cir.

2000) (estopping non-signatory from denying agreement to arbitrate "when he has

consistently maintained that other provisions of the same contract should be

enforced to benefit him.”)).

23 A. Texas Supreme Court Precedent and Persuasive Authority Support the District Court’s Discretionary Finding

In Weekely, the Supreme Court reiterated that “a nonparty may be compelled

to arbitrate ‘if it seeks, through the claim, to derive a direct benefit from the contract

containing the arbitration provisions.’ On the other hand, claims can be brought in

tort (and in court) if liability arises from general obligations imposed by law.” Id.

(citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 741 (Tex. 2005)). The

Supreme Court created a two part test: “Claims must be brought on the contract (and

arbitrated) if liability arises solely from the contract” and if the claims “must be

determined by reference to [the contract].” Weekley, 180 S.W.3d at 132.

The narrowness of Weekely’s adoption of the direct benefits estoppel doctrine

was clarified by the Texas Supreme Court in In re Kellogg Brown & Root, Inc., 166

S.W.3d 732, 741 (Tex. 2005) (“KBR”). There, the Supreme Court addressed

whether by alleging damages due to non-payment under color of a claim for unjust

enrichment or declaratory relief of valid liens, KBR has in effect sought to enforce

a contract and could be subject to arbitration as a non-litigant. The Supreme Court

said no. The Supreme Court agreed that KBR was seeking to enforce a right that was

“based on the fabrication subcontract in the sense that KBRs labor and services were

linked inextricably to that subcontract.” Id. at 739-740. But it held that it was not

enough. “[U]nder ‘direct benefits estoppel,’ a non-signatory plaintiff cannot be

compelled to arbitrate on the sole ground that, but for the contract containing the 24 arbitration provision, it would have no basis to sue.” Id. at 740.

The KBR court further elucidated: “We conclude that, under ‘direct benefits

estoppel,’ although a non-signatory's claim may relate to a contract containing an

arbitration provision, that relationship does not, in itself, bind the non-signatory to

the arbitration provision. Instead, a non-signatory should be compelled to arbitrate a

claim only if it seeks, through the claim, to derive a direct benefit from the contract

containing the arbitration provision.” Id. (emphasis added). The Supreme Court held

that “we conclude that the court of appeals abused its discretion to the extent it

compelled KBR to arbitrate its quantum meruit claim[.]” Id. at 741.

As a Texas Court of Appeals likewise explained, “a non-signatory cannot be

compelled to arbitrate when claims merely ‘touch matters’ covered by a contract or

‘are dependent upon’ a contract; instead, the claims must rely on the terms of the

contract.” Carr v. Main Carr Dev., LLC, 337 S.W.3d 489, 498 (Tex. App. Dallas

2011) (citing Hill v. G.E. Power Sys, Inc., 282 F.3d 343, 348-49 (5th Cir. 2002).

“Where the obligations arise under general law”—e.g., here, the law of negligence,

anti-fraud and implied warranty—then a non-signatory to the agreement cannot be

compelled to arbitrate. Id.

Furthermore, it is well-established that a warranty and defect claims can be

brought by third parties to the contract without enforcing any specific terms of the

contract. Highly instructive is R.J. Griffin & Co. v. Beach Club II Homeowners

25 Ass'n, 384 F.3d 157 (4th Cir. 2004), on which the Texas Supreme Court heavily

relied on in KBR, 166 S.W.3d at 740. There, the Fourth Circuit denied application

of “direct benefits estoppel” to compel homeowners association who were non-

signatories to a development contract, even though they sued on the basis of breach

of contract/breach of warranty. Id. at 164. The circuit court recognized that the claim

did arise from the construction agreement—but they were not seeking to enforce

particular terms of the agreement; e.g., they were suing “to enforce extra-contractual

common law rights created by South Carolina to protect homeowners from shoddy

construction practices.” Id. Moreover, the circuit court noted that the doctrine did

not apply because “equitable estoppel operates to prevent one party from holding

another to the terms of an agreement while simultaneously avoiding the same

agreement's arbitration clause. Here, the Association is not attempting to hold

[defendant] to any term of” the agreement in question.” Id. at 165.

Similarly, in Intergen N.V. v. Grina, 344 F.3d 134, 145 (1st Mass. 2003), the

court of appeals refused to apply the direct benefits estoppel to force a plaintiff to

arbitration even though the plaintiff alleged breach of contract to which it was not a

signatory. The plaintiff had alleged that it was the “the successor to all rights of

predecessor entities related to the actions and omissions alleged.” Id. The court of

appeals noted that the plaintiff was not seeking to enforce the contract in its breach

of warranty claims because, inter alia, the “claimed damages are not contract

26 damages per se.” Id. The court further noted that the damages were instead a series

of “extra contractual” acts and representations. Id. at 145-146. Moreover, the court

held that where a non-signatory has been forced to arbitrate, it is only where the non-

signatory “during the life of the contract, have embraced the contract despite their

non-signatory status but then, during litigation, attempt to repudiate the arbitration

clause in the contract.” Id. at 146. The court saw no evidence before it of the plaintiff

attempting, during the life of the contract, to enforce the terms of the agreement to

its benefit. Id.

Here, the district court’s Order is fully consistent with binding precedent.

Appellants identify no grounds for finding that the district court abused its discretion

in holding that the claims in the case did not seek to enforce the terms of the

Agreements. Indeed, Appellants have identified no terms or provisions of the

Agreements that are being enforced. The Agreements contain no warranty language

being enforced, nor fraud nor unjust enrichment language. This is all a red herring.

Willacy County’s claims for breach of implied warranty, negligence, unjust

enrichment and fraud may “relate” to the Agreements to the extent they relate to the

Facilities, but they do not actually depend upon them or enforce them. See KBR, 166

S.W.3d at 740 (“under ‘direct benefits estoppel,’ a non-signatory plaintiff cannot be

compelled to arbitrate on the sole ground that, but for the contract containing the

arbitration provision, it would have no basis to sue”); Carr, 337 S.W.3d 489, 498

27 (contracts that merely “relate” or “touch upon” an agreement insufficient to impose

arbitration obligation). Nor do Appellants identify how the County seeks to obtain

“through the claim, to derive a direct benefit from the [Agreement],” KBR, 166

S.W.3d a 741.

There is no evidence in the record of any direct benefit obtained by the County

from the Agreements. The specific evidence in the Appendices shows that the

County got no direct benefit because the local government entities were handling the

work load and raised the funds to build the Facilities. Moreover, those Agreements

terminated a long, long time ago (CR 130, 158, 196, 239). Therefore, any alleged

benefit to the County from this lawsuit is incidental.

For these reasons, Appellants’ continual recitation of the fact that the County

is a named third-party beneficiary in two of the three Agreements is a non-starter.

Being named a third party beneficiary does not change the fact that Willacy is a

stranger to the Agreements. No case has held that a sovereign entity can be bound to

the breadth of fundamental waivers of sovereign immunity even when it has not

signed the Agreement. Not a single case has held that.

To the extent that Appellants admit that in one of the Agreements—the

Sherriff’s Office Agreement—the County is NOT a third party beneficiary—that

justifies affirming prima facie. Thus, if as Appellants’ own contorted logic demands,

being a named third-party beneficiary is outcome determinative, this Court cannot

28 reverse the district court as to the Sherriff’s Office Agreement.

B. Under KBR, The Court At Most Would Reverse as to the Warranty Claims

Under KBR, the Texas Supreme Court has recognized that a non-signatory

cannot be compelled to arbitrate claims lying outside of the contract, even if it can

be compelled to arbitrate claims within the contract.

The KBR Court recognized the general rule that arbitration clauses can be read

expansively for signatory parties to include all claims arising between them; the

same is not true for non-signatories. The Court expalained:

A party to a contract may, however, seek alternative relief under both contract and quasi-contract theories. Pleading in the alternative does not defeat the effect of an arbitration clause that broadly covers all disputes between signatories that arise out of the underlying agreement. But in this case, KBR is not a signatory to the fabrication subcontract between MacGregor and Unidynamics; therefore, the scope of that subcontract's arbitration clause does not answer whether KBR must arbitrate.

KBR, 166 S.W.3d at 740. Thus, the KBR ultimately reversed as to the quantum

meruit claim because it was definitely not under the contract, and remanded for

further determination by the district court of whether the other claims could be

arbitrated. Id. at 742.

Therefore, at best, Appellants’ estoppel theory would place the warranty

claims in arbitration. Seeking restitution for negligence or unjust enrichment and

fraud in the inducement does not invoke any terms of the agreement. Landmark Org.,

29 L.P. v. Tremco Inc., 2010 Tex. App. LEXIS 5052, *29. These arise independent of

any contract. KBR, 166 S.W.3d at 740. Therefore, the claims for negligence, fraud

and unjust enrichment must be allowed to remain in district court.

IV. THIS COURT SHOULD AFFIRM ON CONTRACTUAL GROUNDS

An appellate court may affirm a trial court’s determination on any sufficient

ground in the record. Here, in the event this Court overrules the district court’s

sustaining of Willacy County’s objection to the lack of evidence and admits the

Agreements as evidence, the Agreements themselves provide textual grounds to

affirm.7

It is important to note that the three facilities were subject to independent

contracts, none of which had the same arbitration clause or arbitration language. A

close reading of these Agreement shows that they do not compel arbitration under

these circumstances and that the trial court did not abuse her discretion – or said

differently, any error was ultimately harmless.

Arbitration agreements are creatures of contract and are construed under the

same rules of construction as applied to other contracts. See Aldridge v. Thrift Fin.

Mktg., LLC, 376 S.W.3d 877, 882 (Tex. App.–Fort Worth 2012, no pet.); First

Option of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). When interpreting a

7 Because they were never provided in full, Appellee did not have the opportunity to raise the textual arguments herein except where noted. Thus, to the extent this court overrules the district court’s implicit evidentiary ruling, it should permit these arguments to be raised and find sufficient grounds to affirm the district court’s order.

30 contract, the primary concern is “to ascertain and give effect to the intent of the

parties as expressed in the contract.” In re Serv. Corp. Intern., 355 S.W.3d 655, 661

(Tex. 2011). “To discern this intent, we ‘examine and consider the entire writing in

an effort to harmonize and give effect to all the provisions of the contract so that

none will be rendered meaningless. No single provision taken alone will be given

controlling effect; rather, all the provisions must be considered with reference to the

whole instrument.’” Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d

342, 345 (Tex.2006) (citations omitted).

Furthermore, all of these agreements were presented and drafted by the

Defendants. And “[i]t is well-established law that where an ambiguity exists in a

contract, the contract language will be construed strictly against the party who

drafted it since the drafter is responsible for the language used.” Gonzalez v. Mission

Am. Ins. Co., 795 S.W.2d 734, 737 (Tex. 1990).

A. The Sherriff’s Office Agreement Does not Provide for Mandatory Arbitration by the County Because it Was Not a Party and the Provision is Patently Ambiguous

In addition to not naming the County as a third party beneficiary, the Sherriff’s

Office Agreement does not provide for mandatory arbitration involving the County.

That agreement only provides for arbitration or mediation of “Claims, disputes, or

other matters in question between the parties to this Agreement arising out of or

relating to this Agreement or breach thereof[.]” (see Exhibit B, at CR 132-158)

31 (emphasis added).

As revealed in the Record before this Court, the County is not a Party and is

not a named third party beneficiary to the Sherriff’s Office Agreement. (see Exhibit

B, at CR 132-158). In fact, that agreement specifically provides that “Nothing

contained in this Agreement shall create a contractual relationship between the

Owner [County Jail Public Facility Corporation] and any person or entity other than

the Design/Builder [Hale-Mills].” (see Exhibit B at § 1.2.3, at CR 132-158).

Thus, the express inclusion of the limitation of “parties” as persons bound by

the arbitration provision to the Agreement cannot be overridden by an equitable

catch-all. None of the cases cited by the Appellants addressed an arbitration

provision that was, by its terms, limited to the “parties” of that contract. To the

contrary, at least one appellate court has held that even a third party beneficiary to a

contract who brings suit cannot be compelled to arbitrate when the contract

specifically delineates who must arbitrate, and does not specifically identify the third

party. See Intergen, 344 F.3d at 146 (“Each purchase order's arbitration clause

applies to "any and all controversies, disputes or claims between Buyer and Seller."

The words "Buyer" and "Seller" are explicitly defined.”).

Additionally, the contract provision is ambiguous. It does not provide that

arbitration is the exclusive or mandatory means to settling disputes. Indeed, Section

10.1 specifically states that “Claims, disputes or other matters in question between

32 the parties to this Agreement arising out of or relating to this Agreement or breach

thereof shall be subject to and decided by mediation or arbitration.” (see Exhibit B,

at CR 132-158).

Section 10.2 then clarifies that if a party selects arbitration under Section 10.1,

it must be preceded by a demand for mediation. (See id.). But the opposite is plainly

not true. A party who elects mediation—as the County did—which then turns out to

be unsuccessful is nowhere required to then also seek arbitration. The “or” in

“mediation or arbitration” is disjunctive. Either the mediation, or the arbitration is

mandatory. Both are not.

Because neither Section 10.1 nor Section 10.2 states that once a demand for

mediation is made then a party must then also file for arbitration, arbitration is not

mandatory under the Sherriff’s Office Agreement. Indeed, Section 10.2, by its own

terms, only applies to mandatory mediation preceding arbitration.

This language can be juxtaposed to the ICE Agreements (see Exhibits C, at

CR 160-196 and D, at CR 198-239) which specifically states that if mediation is

unsuccessful, then the complaining party must move for arbitration. (See § 10.2 and

10.3).8 Thus, to the extent that the provision allows the party to select between

mandatory mediation or arbitration, it is patently ambiguous and must be construed

8 The Arbitration provision in the Ice Agreements do not compel arbitration for other reasons, however, as we spell out below.

33 against the Appellant. Gonzalez, 795 S.W.2d at 737.

Because the County is not a named third party beneficiary, is not a party to

the agreement required to bring an arbitration, and arbitration is not clearly

mandatory under the provision, this Court must affirm the district court’s denial of

arbitration as to the Sherriff’s Office Agreement.

B. The County is Expressly Excluded from Mandatory Arbitration Regarding the Marshall’s Office9

Appellants’ own arbitration clause in the Marshall’s Office Agreement

expressly excludes arbitration with non-signatories to the Agreement. (See Exhibit

A, at CR 106-130). Specifically, the agreement provides, for example, that:

No other arbitration arising out of or relating to this Part 2 Agreement shall include by consolidation, joinder, or in any other manner, an additional person or entity not a party to this Part 2 Agreement or not a party to an Agreement with [Hale- Mills], except by written consent[.]

See Exhibit B, at CR 132-158.

Thus, by the plain language in the Marshall’s Office Contract, Willacy County

cannot be compelled to arbitration over the marshal’s office facility because Willacy

County is not a signatory to any of the arbitration agreements with Hale-Mills, and

Willacy County has not otherwise agreed in writing to be bound.

Thus, the County is expressly excluded from being required to bring

9 This argument was raised and upheld by the district court.

34 arbitration under Marshall’s Office Agreement, and could not otherwise join the

non-signatory defendants.

C. The Agreements’ Clauses are Limited to Disputes that Arise During Construction and Pendency of the Contracts—Not After

In In re Choice Homes, Inc., 174 S.W.3d 408 (Tex. App.–Houston [14th Dist.]

2005, no pet.), the appeals court acknowledged that generally, events that occur after

a contract lapses or has terminated, they are not governed by the contract or its

arbitration provision unless expressly provided for. That is true even between the

same parties to the contract. Id. But, because the arbitration provision in that case

“encompassed claims that arose ‘during or after’” the contract period (there, the

period of employment), they were “thus subject to arbitration regardless of whether

the [events occurred] before or after [the contract] was terminated.” Id. at 413-14.

Under this language, the In re Choice Homes court held that the plaintiff’s

defamation claim was within the scope of the arbitration provision. Id.

While the court’s opinion in In re Choice Homes, Inc., turned on the “during

or after” language contained in the arbitration provision, no such language appears

in any of the Agreements at issue in this case. Appellants do not deny that the period

governed by the Agreements ended years ago, but that the latent infirmities and

cover-ups have only metastasized in recent years. Nonetheless, the disputes at issue

did not arise during the pendency of the Agreements—those contracts have long

lapsed, and therefore arguably, so have the Arbitration clauses. There is no dispute

35 that the Facilities were substantially completed by January 2008, (CR 130, 158, 196,

239)10 and that the completion of the facilities terminated the contractual

relationships.

This reading is consistent with the language in the Agreements. For example,

the ICE Agreements’ dispute resolution provisions address the parties relationship

“throughout the project.” See, e.g., Exhibit D, at CR 198-239 § 10.2 (§ 10.2.1). That

same provision then provides that “if disputes or disagreements do arise,” e.g.,

“throughout the project,” then the parties “commit to resolving such disputes or

disagreements in an amicable, professional, and expeditious manner so as to avoid

unnecessary losses, delays and disruptions to the Work.” Id. The balance of Section

10.2 describes the procedures for resolution thereof. Id. § 10.3.2-4.

Section 10.3 governs “Arbitration,” but by its own terms specifically and only

applies to disputes that arise and cannot be resolved under Section 10.2. See Exhibit

D, CR at 198-239 at § 10.3 (§§ 10.3.1). In other words, if the dispute arose under

Section 10.2 and was not resolved, only then would it be subject to Section 10.3.

Nothing in Section 10.2 suggests that it would apply to disputes that arose after the

completion of the “Project,”

It is black letter law that the provisions of contracts, especially those

containing an arbitration clause must be read to give each term its meaning, and to

10 Appellants admit as much in the brief. See Appellant’s Opening Br. at 1.

36 harmonize the terms thereof. See Aldridge, 376 S.W.3d at 882; Kaplan, 514 U.S. at

944. When interpreting a contract, the primary concern is “to ascertain and give

effect to the intent of the parties as expressed in the contract.” In re Serv. Corp.

Intern., 355 S.W.3d at 661. “To discern this intent, we ‘examine and consider the

entire writing in an effort to harmonize and give effect to all the provisions of the

contract so that none will be rendered meaningless. No single provision taken alone

will be given controlling effect; rather, all the provisions must be considered with

reference to the whole instrument.’” Seagull Energy, 207 S.W.3d at 345.

Here, the plain reading of Section 10.3 of the ICE Agreement renders it

limited in scope to the “disputes or disagreements” that arise under Section 10.2,

which is limited to disputes and disagreements that arise “throughout the project”—

e.g., while the construction project is still underway. Any other reading would

expand the scope of Section 10.3 beyond its textual moorings, and would render the

reference to Section 10.2 meaningless. Id.

Had the drafters intended for Arbitration to be mandatory regardless of when

the dispute arose—e.g., before or after, it would have expressly stated as much, and

it would not have referred to the limited scope of Section 10.2. Accord In re Choice

Homes, Inc., 174 S.W.3d at 413-14. Moreover, to the extent these provisions are

ambiguous, the ambiguity should be construed against Appellee as the drafter.

Gonzalez, 795 S.W.2d 734, 737.

37 Because there is no dispute in the record that the construct project is no longer

“underway,” and there is no risk of “unnecessary losses delays or disruptions to the

work” that could be avoided by mediation under Section 10.2, the plain language of

Section 10.3 renders the mandatory arbitration provision therein inapplicable to the

current litigation.

D. Appellant Has Not Proven that All Pre-Requisites to Compelling Arbitration on the Detention Facility Have Been Met

The Appellant has not proven that the pre-requisites to invoking arbitration

have been met. Where there are contractual prerequisites to invoking an arbitration

agreement, the party seeking an order compelling arbitration is not entitled to relief

if it cannot demonstrate that those pre-requisites were met. See In re Pisces Foods,

L.L.C., 228 S.W.3d 349, 353 (Tex. App–Austin 2007, orig. proceeding) (holding

trial court did not abuse its discretion by refusing to compel arbitration, and noting

that many courts have held “arbitration could not be compelled when parties who

were contractually required to mediate or follow other grievance procedures as a

precondition to arbitration had failed to do so.”); Amir v. Int’l Bank of Commerce,

419 S.W.3d 687, 692 (Tex. App.–Houston [1st Dist.] 2013, no pet.). (holding that

where it is clearly established that a strictly procedural requirement has not been met

and that procedural requirement precludes arbitration, a court can deny a motion to

compel arbitration).

38 Here, the ICE Agreement Section 10.1 requires that the Parties mediate in

good faith to resolve any dispute that arises during the project. Therefore, if the scope

of that clause is broadened, then Appellant as the movant bears the burden of proving

that all pre-requisites were met. The record is barren of any evidence that such a

prerequisite has been met.

CONCLUSION AND PRAYER

Therefore, for the foregoing reasons, any one of which is sufficient, Appellee,

Willacy County respectfully requests this Court affirm the Order of the Trial Court

denying Appellant’s motions to compel arbitration.

39 Respectfully submitted,

By_____/s/Mazin Sbaiti Bruce W. Steckler State Bar No. 00785039 Mazin Sbaiti State Bar No. 24058096 STECKLER, LLP 12720 Hillcrest Road, Ste. 1045 Dallas, TX 75230 Telephone: (972) 387-4040 Fax: (972) 387-4041 bruce@stecklerlaw.com mazin@stecklerlaw.com

Ramon Garcia State Bar No. 07641800 Emerson E. Arellano State Bar No. 00785039 LAW OFFICE OF RAMON GARCIA, P.C. 222 West University Drive Edinburg, TX 78539 T: 956-383-7441 F: 956-381-0825

Manuel Solis State Bar No. 18826790 LAW OFFICE OF MANUEL SOLIS 6657 Navigation Boulevard Houston, TX 77011 T: 713-844-2700 F: 281-754-4681 msolis1882@yahoo.com

Daniel G. Rios State Bar No. 00784844 LAW OFFICE OF DANIEL G. RIOS, PC 323 W. Nolana Avenue McAllen, TX 78504 T: 956-630-9401 40 F: 956-682-0566 dan@danrioslaw.com

ATTORNEYS FOR APPELLEE

CERTIFICATE OF SERVICE

This is to certify that on July 22, 2015, a true and correct copy of the foregoing Appellee’s Brief was served via U.S. Mail, Fax and/or Electronic Service, upon the following counsel of record in accordance with the Texas Rules of Appellate Procedure:

William B. Westcott Robert A. Plessala Andrews Myers, P.C. 3900 Essex Lane, Suite 800 Houston, TX 77027-5109 (713) 850-4211 (facsimile)

/s/Mazin Sbaiti Mazin Sbaiti

CERTIFICATE OF COMPLIANCE

Based on a word count run in Microsoft Word 2010, this Appellant’s Brief contains 9,415 words, excluding the portions of the document exempt from the word count under Texas Rule of Appellate Procedure 9.4(i)(1).

/s/ Mazin A. Sbaiti Mazin Sbaiti

41 EXHIBIT A JENKENS &GILCHRIST • Fax=214-855-4107 Aug ~ 2003 9:01 P.02

MA Document A191

Standard Form of Agreement Between Owner and Design/Builder THIS DOQ..;)/£NT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTKl'ION WffH AN AITORNEl•JS ENCOURAGED VlffH RESPECI10 ITS USE. CQ"'1PIE1'JON ORlrlODJF/CATION.

7bis d«umeru a>mprises tUJD Slljlarate~ Jbrt 1 ~ement and lbrl 2 ~- 10 tbe e:rumr n/enmced in tbae ~- subordinate pruolblf qrumena to A191 consisl of ALA Document ~l. Standard Farm of A8"emtetlts 811tKYnm Deslp,&dldtzr and Conrractor, and A/A Do<:umenl B!JOI, Standard Form of~ .8etr.wm Du/gn/Builder and ;.rcbitea.. . . PART 2 AGREEMENT 1996EDmON

AGR~ENT

made as oft~ Tenth day.of June in che year of two thousand two

BETWEEN rhe Owner. ~_,,atlJnsJ

Armando Ruba1caba-President Willacy c~unty Public Faciiity Corporation 546 W. Hidalgo Street Raymondville, Texas 78580

Hale-Mills Construction, Ltd. Bale-Mills Construction, Inc. 413Q Bellaire Blvd, Ste 210 Houston, Texas 77025

EXHIBIT

I I\ . C:•1flo/111(h1 i'lll~. O'Jl'l'lll 1"ho; Am'-"fll."ilA llll'lilulc 11( Ard11ln1,S, 1-~~ ~~w lork ,w..-11uc. ),"It; lr•ohln11tun. DC .!llUOl>o';l\I.!. llc1tr11(l\A~l\lll Ill 1hc "'"''-"""' h1t11ru"'I I•"""""'"., •1uut.:.U\\Jt\ 1•l 1b rhL" u.11hoU1 ttu.... ""'''-··.., JA'l"ln•Ultlft u( the AJJ\ \"Md.Ill") d11; ''"P'TI~hl b•·a 1.t 1·n11t,:d ~l.:ito ilnd w1U .. uh1~'' lh.,; ,.,,,~11or ,.. "-~I pt\NoL"l•utmn.

- 106 JENKENS &GILCl-RIST Fax:214-855-4107 ~ug ~ 2003 9:01 P.03

For the foUo"ing Projet.'t: ''""'""" l'roj«;t ....,.•. loctil1on and,..,,,._,,. "-t;rlptlan.1

See ParagraPi 1 of Apperdix "A".

T'" 'UChlt.caural services desc:ribcd in Article 3 will be pcovided by the fbllowing peaon or entity who is lawfully licensed .Cli

Norroal sa't;JctUral, medwUal and elccabl engineering services will be pn:mded contDClUally through me Archltea except llSindicaced below: , , . _ adt/twr,..Jttlilt:Jp/INJ ~IOllA/111....,.1 ('6JtdlatabipldJafp/llulld•I

107 JENKENS &GILCHRIST Fax:214-855-4107 Aug ~ 2003 9:01 P.04

I TERMS AND CONDITIO);"S-PART 2 AGREEMENT J ARTICLE 1 Design1BuiJder for information and reference In c:.:un.nec:· cion \\ith tbe Project except as pro..ided in Subpara- GENERAL PROVISIONS gnplis 1.3.2 and 1.3.3. 1.3.2 Ora\\"lngs. spedfotions, and other documcnlS and 1.1 BASIC DEFINJTIONS electronic data Curn1$hed by the Design/Builder shall not 1 .1.1 The Conttaet Documents consiSt of the Patt 1 be used "'. the Owner or others on ocher p.rojeccs, foe Agreement tQ rhe extent nOl modified by chis Pare 2 additions io thJs Project or for completion of thb Project Agreement, this Part 2 Agreement, the OeslgntBuiJdec'5 by ochers. except bv agreement in ~"tiring and with Proposal and ,..'Iitten 2ddC:nda tO the Proposal idcndticd approprta.r.e compcnSalion to the Desigrv'BuiJder. u~ess in Anidc: 14. the COnsmiaion Documents apprm'ed bv the DesigntBulJdcr is adjudged co be In default under che Owner in aa:oi;dance \\;th Sub~ph -3.2.3 and this Part 2 .-\greement or under any orher subsequently .Modifications issued after Qecudon of this Part 2 CKCCUced agreement. .Agreement.. A-·MOOificadon is a Change Order or :a Mit- ren amendment t0 chis Pan 2 ..;\greetnent 5igned bv both 1.3.3 If che Design/Builder d¢aults in the Desagnl partles, or a Consauaion Change Directive Issued h!' the Builder's obligations ro the Owner. the Arc:hitcct shall gtant a license m the Ownec t0 use the dawlngs, specifi- Owner in accordance "'ich Paragcaph 8.3. cations. and ochcc documc:ntS and eJecuonic: dat2 fur- 1.1.2 The cerm ''1Kibcku means die consuuction and set"· nished bv the Architttt to the .DesignlBuildet for the vices plO\llded by the Dcsi8IJ/Buildcr to ful.611 the completiOn of the Project, condlr.loned upon the 0wner·s Dcsign/Bllildet's obligations. exec:udon of an agreii:ment to ewe the Dcsipllluildet's defauk io pavment t0 the Architeet for setVk:es previous- 1.2 EXECUTION, CORRELATION AND 'NTENT ly performed and ro tndemn.lly the M:hima with repni to claims arising from such reuse Without lheMcbitca's t.1 k is dle inlel\t of the Owner and Dcs.lgrvBuildcr pmkssiooaJ involvement. ~t the COntraa Documents indude all items necessarv •.:ic proper execution md completion cf.the Wbdc. ThC 1.3.4 Submission or distribution of the DesignlSuildct's Conaaa Documents ace complemenrary, and wbar bi documentS to meet official cqulatory requ~ts or required by ooe shall be as bindiog as if rcquil'Cd bv all: for similar putpOSCS in conReaion with me Prajca JS nor perfonnance by the DesJgivBui.kb- shall ~ r~ircd to br: consuued as publ.icatiOn ln detoJption of the righ&:s caly to the exrenr consisr.ent with atJd ceasonablv infer· resem:d In Subparagraph 1.3.l- able f'rom me Comtaa Docurnems as being neceSsaiy ro pn:xiucc the intended a:sults. Words th2t have Wl!IJ.. known rechnic:al oc coosuuctiOll ipdwuy meanings ace used In die Contact Documents Jn accocdance wtch ARTICLE2 such ttCOgolz.ed meanJnss. OWNER · 1.2..2 If the De1ian1Buildcc bdic:va « Is advised bv 1he .An:h1u:a or by another des~ pro6:ssional ~ ro 2..1 The O~TICr shall daigllatc a represcnwtve auche>- pi:ovide sttviccs oo rhc Project thac implementation of riKd t0 ace on the owner·• behalf Wich respect ro du!: any instruction received from the Ownet would cause a Profeet. The OWner or such authoclzcd repreR:ruadve violation of any ~Ucable la-. the Design/Builder shall shall cxo.mine documencs submitted by the Desianl notify dte Owner m writing. Netdler the OesigntBuildec 8U1Jderand shall tender decisions in a timdy manner and nor the Archltca shall be obl(ga(ed co perform anv ace In accordance wfth the schedule accepted by the Owner. which either believes wtU Violate any appllablc law..· l"he Owner may obtain Independent review of me Contraet Documents by a sepaate ;architcet, eQRineer, '1 .2..3 Nothtog c:ontained in this Patt l Agreement shall con~r. or cost ~tor under contn.et to OC CR::3IC II conmu:wal relationship between me.Owner and em~ by- the Ownci: Such inde~nt ~shall any person or enrity orher than the Daisn/BUUder. be underckcn at che 0wncc·s cicpcn11e in a amely m211· ner :and 11hall ncl delay the orderly [>f'UKri:ss of ~he Wbc\. 1.3 OWNERSHIP AND USE OF DOCUMENTS 1.3.1 Drawings, spcdficatians. and other documents and 2.2 The Owner may appoint an on-site project rcpre.o;en- electronic data fumished by ~ .Dc$ign18uUdec :u:e iatiYC co ob;erve the Worlc 41nd co ha~ .such ocher tnsttUntems of secvtce. The OesiJ,wBuildcr's A.n:hltect responsibilities :JS the OwneC" :ind Dc.'fi~uildc:r agree lllld other providcn or profe$stonal ~ shaft ~rain in writing. all common law, $1attllory nnd other resenicd righu, ;.,dut.l1ng c=opyri8ht In those in.'itrumentli of service fur- 2.3 The O\\ncr sh:all ll>t>pc:race With the 0cs1Rnl13ulkkr in '1cd' by them. Dnlwini;tS, spccifac-Jtions. aru.l other doc- :;ecurinJt buildina and ocher pennies. 111.-.::nses md ilU~­ ienr.s and ela-cronic cJ:im are fumi:;hed lbr use sol<.."ly tioni;. ·nle O\\"n\."f sh~• not be requil\!d «> pay the li.-e.~ nn: wich l'C.!'ipect to this f3.n l J\qreemenc. The O\\ncr i;haU such permit.". li1."Cn.'K.-s :ind !mp."t.·dons unk::l.1 the t-'t>.>;l ot l.>~ p~rmitted ru re~ain cupl~. indodin~ reproducible: sud1 ft."c::I is 1:-'Q:ludec.I rrum the: Dcs~liuik.lc:r·, Propc:i.o;:JJ. t:,-Opic:;. of the drawings. ~1>ccif'i<.~dun.'i. and other cJocumc:nts and d~ctmnit.· dat:i. rurrti~hed hy chc 2..4 1"hc C)\m1.T shall fuml.~h l>&.:rvicc..'I of bnd ~urvt.·yor.;. ~~~------~~~T1Q8 JENKENS & GILCHRIST Fax:214-S55-4107 Aug ~ 2003 9:02 P.05

ge:otec:hnical engineei:s. and other consultants for subsoil the persons or entities identified In this hn 2 ~ent, air and \\-ater conditions. in addition ro chose prQ\;ded and any subsequent mod!ftcations. shall be in wridng. under the Pan l -"'8ret:ment. \\'hen such 5c:rvices are These a.gceemencs, including financial arrangements ~ith deemed nccessat)· ~- the Design Buildcc co properlr carry respect to tbis Protea. shall be prompt!~· and fully ou( the design senices required by d\is hct 2 .<\g(ecmcnt. disclosed to the Owner upon request

2.5 The 01\"tler shall disclose, co the extent kno\\-n to the 3.1.3 The DeslgnlBuilder shall be responsible w lhe OwnC(. the results and rcpons of prior cests. inspections Owner for aos and ombs.ions sf the Design/Builder's or invesligations conducted for the Project itl\'oidng: employees, subcontraetors and ·their agents and em- suuaui:al or mechanical .svsteans: dlemical. air and \\1lter ployees. and other persons. lnduding the Archirect and pollution; hazardous mar.Crials: or Other environmental other design prok:ssionals, pedocmlng any portion of the and subsurface conditions. The Owner shall disclose all Design/Builder·s obligations under rhis .Patt Z .~nc. information known to rhc Owner regarding the presence of pollutants at the Ptojea's site. 3.2 BASIC SERVICES 3.2.1 The Design/Bulldec's Basic Services ~ described 2.S The Owner shall fumi.sh all Jeg:d, accounling and below and in An:ide 14. insurance counsding senices as .inay be ncccssacy at any tlme for the Project. indudins such.aqdl.tjng senices as 3.2.2 The DesigolBuUde.r shall destgoace a re~ta­ me Owner may require tO \'lerify tbc Deslgn/BuUdcr's civi(auclioriled· to ace an rhe DesJgntBulldr:r's bChalf with Applic:adons for ~mc.ru. respect to the Pmjca. 3..2.3 The D~ullder shall submit Consuuc:don Document! for revtew and approval by the: Owner. Construaion Documcncs may IDdude tirn-'ingS. sped&· adons, and other docwnenrs and electronk; data setting forth In derail the requlrementS for c:onsauclion of the WOlk, and shall; .1 be consiste.nt with the intent of die Desiga/Build- er's Proposal: '-' If the Owner requires the Designl8u1kler to maintain .2 provide infonnation for the use of those in the any speci31 insurance ~. po1q amendment. or cider, the Owner shall pay the addidonal c:oSt thereof, building trades; and except as otherwise StlpWated ln this hn 2 Aareemcnt. .3 Include documents c:uscomarity required for tcguWory asenc:y appcova.1$. 2.1 If che Owner observes or ot.hctwJsc becomes aware of a fault ot defect in the Work or nonconformity \\'lth 3.2.4 The Ocsijp11Buj1der, with the assistance of the the Design/Builder's Proposal or che Construcdon Owner, shall rue documents required to obtdn nr.ces- Documeius. the Owner shall give prompt written nolice sary approvals of govcramennd authorities having thaeofm rhe D~ildet: jurisdiCtion over the Projec:t. 3.2.5 Unless orherwiSe proVided . in the COouact 2.10 The Owner shall, at the request of the Design/· Docurnents. dlc: De1ign1Buildec .shall pro\lide or cause to Bulk.lei-, pnor to QC!CUdon of this .P.ut 2 Aareement aod be pC'Ol'ided and shall paJ"tor desJ.gn services. labor, prompdy upon request thereafter, furnish to the materials. equipment, tooJs, constrUCdon equipment Design/Builder reasonable evidence that financial md machine~ water, heat. utillde., Uln&pon.adon and ~rs h«Ve been made to fulfill i:hc O\\ner·s other &dlides and scrvio:s n~ for proper CCCCU· obllgaiions under rhe Conrna. don and compledOn of the Work. whethcC temporary or pennancru and whether or nor incorporaed or to be 2.11 nu:C>wner shall com"1unlcate with persons or incorporated In rhe Work. entities empfoyed or reWllcd by me DcsfgntBullder through rhc Oeslgn/Bullder, unless othenvise directed 3.2.6 The OesignJBuilder ithall be responsible Cot all by the Design/Bulfder. C003trucdon DlCIOa, mcd\oc;ls, -=iudqWK.. ~ and procedures, and i>r coordinating all poniOnS of me ~.de under thi$ P..an: 1 Agreement. AATICLE3 3.2.7 The De20ign1Builder shall keep the Own« infuc- DESIGN/BUILDER med of the progress and qu~ty of the Work. 3.2.B The Df:sitn/Builucr shall be: responsible for 3.1 SERVICES AND ftESPONSIB1unES L-orrc:cting Work which <.lo.:J> nm conform ro the Contract Documen1:1. ' l'>c:!IJCO scn-lc:coc require:d by thL1 fart .2 :\J!reement he 1~cfonncd tw qualified irchlreas and ndu:r 3.2.1 Tilc! Design/Builder "~"rrants m the Owner that uc.~ pmlcs... iun:il'L The cunrcaawll abl~ttun.; 01' sui::h 1nareriaJs ;md equi1>rmmt fuml."il11..-d under the Conu-a£;t profr:s.'iiona.I per:-ion., or meides are undlm:ila:n :inti per· will be: uf l(iJ.{Nl3uikl1.:r :ind c.:nnstruc..·tiun \\itl c:onform \\ith Che: tcqUin:numtS of the ~~~--~~--~~~~~~~--~109 JENKENS &GILCHRIST Fax=214-855-4107 Aug 8 2003 9:02 P.06

Contract Documencs. Construction not conforming ro not included in Basic Senices unless so identified In these rcquiremencs, Including substitutions ncx properly .\cticlc 14. and they shall be paid for~ the Ql\·ner as pro- approved by the Owner. shaJJ be corrected in accoroancc \.ided in this Pan 2 Agreement. in addition to the com· \\ith Article 9. pensatlOn for Basic Services. The services described in thi' Paragraph 3.3 shall be provided onJy if aucoorized or 3.2.1 o The Design.IBuilder shall pay all saJc:s. consumer. confitmcd in writing b~· the Owner. use and similar mes which had been lcgallv enacted at chc rime the Or.:s.ign.IBuildcr's Proposal was n.x;i; submitted 3.3.2 Making revisions in dtawlngs, spccillcati00$. and co the ~er. :and shall secure and pay for buildlng and other documcntS or elecuonic data "·hen such revisions ~ pcnruts and govemmcnw kc:s, licenses and in.spcc- ace required by the enactment or te\islan of codes, l:a\\'5 t1ons necessary for the proper execution and completk>n or regulations subsequent to the: prepacatlon of such of the Work l\illch are dt:her customarih• secured after documentS or electr0nic data. c:edldously as Is conslatent with rCasonable s~ and Owner concurs, the OealgnJBullder shaH Issue a catt: and che ocdcdy progress of me Projca. Cenificate of Sub5lllntial Completion which shall estab- lish the Date of Substmdal Completion. shall swie the 4.2 Time limits seated in chc: Conmct Documents arc of responsibility m eadl pany ror securitv. mainceoance. the essence. TilC Work to be perfonned uC1der Pare mas heat. udlldes, damage to the \Vock and "tnsuranct!. sh:ill .? Agn:emenc sh:ill commence upon iec:dpt of a nonce to incluclc a list of lccins to be compleced or c:orrec:ted and proc:_eed unless otherwlile agreed aod, subject to autho- stwl fix the time within which the DesigntBuildcr shall rized Modlllcadons. Substantial compledon shall be achlcVcd on or bc:forc chc: date c;:smb11ahed tn Att1cle 14. complete items lism:l lheretn. -9isptrllCS between ~- -'>wRef ~Q11111p1Buil•f-f88&RillRtt ahe CIK-Cifiwe et: 4.3 Subsw.nd:il Completion L.; che stage in the progre:s.~ 4ubaaRlkal~~ RSQlt...c}Jn ac:GOR.laAQt ~AJ01ido10 of the Work when me wt>rk or d~ted portion there- of is :sufficiently complete in acconlance with the 3.2.15 11-.e Design/Builder shall maintain ac me :ilte for Conmct Documents so the Owner can occupy or utUize the Owner one tce0cd copy of the drawio~. itpt:etfk2- the Wbrk for it."i intended use. ric>no;, produce data, samples. shop dr:i\\inRS. Ch.:i~e Ordeni :and ocher modificarioos. in gou1.."SigrvBullcJc:r·11 Pmpo...:.il, :i cull!itnl\!· tiOR !;cheduic 1th::tll be r>roviuctl l.'UOllistCnt with P:lra- ~larly updarttl 10_ record the t.-Omplered construction. 'it: sNll be dcltven:d to the Own~ upon complt:tinn graph 4.2 ~bcn-c. .n:strUc."tion :md prior ro Ii~ p:iyn1ait. 4.5 If the 11c.si1lr\/Builth:r is c.lela~'t:O at any [lntc in the: 3.3 ADDmONAL SERVICES p~s of ch~ \'1;11rk br 41n nt.'l or n1..1flc.:t..1 of rhc O\mcr. 0Wncr·i; ltlll[)(C~"C~l'i. \ll" !iC!:r.lf;UC t;Ontr.u:mrs t.'mplu~·t.'tl 3-3.1 The services described in thi'I 1';1r.i~C"J.ph .3.3 are by the O\\'flcr. 111· I~· c:h~~'-"l:i urderttl ln chc '\M1rk. or hy

110 JENKENS &GILCl-RIST Fax:214-855-4107 Aug 8 2003 9:03 P.07

labor di:iputcs. fire, unusual delar In deliveries. aU\'ersc sti2ll become due until the Design/Builder submlts to weather conditions not fe2sonably anticip:uable. the Owner OJ an affldavit that payrolls. bills for materials unavoidable casualties or other causc:s be\•ond the and equipment. and ocher indebtedness connected with DesignlBuilder's conucl. or by delay authorized by the the Work for "·hich the Owner or Owner's property Owner pending arbitRtlon. or~· Ot'her causes "'hich the might be responsible or encumbered (less amounts Ownc:c and Design/Builder agree m:iy justi~· dela~·. then tVichhcJd b\• the Owner) have been pald or otherwise the Con~ Time shall be reasonablv extended bv saclstled: tk. .3 t~ of spedaJ wamanties required by the eon- 5.1.6 Neithct progress payment nor partial or entire use u:ux Document$. oc occupancy of r:he Project by rhc Owner shaO ccnsd- 5.2.4 ~lance of final payment shall constiture a rure an ac:ceplanCl! of 'Mlrk noc in accordance ~id\ me Contra.ct Documenrs. waM:r o( all daims by me ~uilder ~ those prcVlous1v made in writing and idcntitlcd by the Design/Builder as unsettled at the time or ftml 5.1.7 The De.sfgo/.Buildc:r wamw.1 rhat Ude IO all con- Application for P:t.ym~nt. ~truetioncowm:d by an ~ for Paymcnc will pass ro ~ OWncr no Jacec- tbail the dme uf payment. the 5.3 INTEREST PAYMENTS ~iJesignlBuildcr 01" any other pc:n;on ur in the ®sente of a spcclftcd rate. at the legal rate or r:ntity pcrlbrming c:unstruCtion m the site: or furnishln,g prevaillng u-lu:re the Project L'! IOOlced. marerial.'I or equipment relacing to the <.."OnStJU(..-tiun. 5.1.8 AL the time of Substanclal Curnplc.-titJD, the Owner s!la.11 par tile Ol.-sign/Builder the r<..'13in:ip;c, if :in~~ less the .....~on:ablc cu.,c w wrrecc or cumpk.-u: inc:um:a Clr incom· ARTICLE& ,, ~

PROTECTtON OF PERSONS AND PROPERTY ~ - u: ~irk. Final payment uf !iud1 \\.'ithbdd :turn :ihall be .1dc upon co1n..~'don or compleciuo of i;udl 'M>rk. 6.1 The Ocsi!tn1 BuiklL'1' :1h:sll be n:sponsible fur i1lil,i:U- 5.2 FINAL PAYMENT ing, m.11nrainini.t and pnwltling !lupervL'liun cif all :s;itcty prec..":lutio11:1 :mu pn>Nr.am:i i11 c:nnn~ctlun wich the 5.2.1 ~r:ilhc.:r tinal p.:t}'l11enc nor arnoums rr.:raiireU. if •lnY. pecfurmanec uf thL'I hrt l ~rt.-emem.

111 JENKENS &GILCHRIST Fax:214-855-4107 Aug S 2003 9:03 P.08

6.2 The besign!Builder shall take reasonable prccau· of ownershlp, maintenance or use of a motor tion.s for the safety of. and shall pCOYide reasonable vehicle; and protection co pre:vcnr damage:, injucy or loss co: (1) .7 claims involvlng comrac;tual liabilir:r insurance empl~es on the Work and other pe(So~ who ma~· be applicable to the DesigntBuilder·s obligations affected thereby; (2) rhe Work and materials and equip-. under Paragraph 11.5. mcru to be incorporated therein. whether In scora~e on oc off the sice, under care. custodl( or control or the 7.1.2 The insucancc required bv Subparagraph 7.1.l Design/Builder or the Dcsignlt!uilder's contractors: and shall be \\'rittcn foe not less titan limitS of liabiJlty (3) Other property at or adjacent thereto, 5uch as u-ees, spec:ifkd in this Part l Agreemcii.t or requ1n:d by law, shrubs, lawns. walks, pavements, roadways, structures whichever coverage i$ greater. Coverages, whether and utilities not dcslgf1ated for removal, relocation.. or "-'fitten on an occur.rence or claims-made basis, shall be replacemeoc in rhe course of constnJCtion. malnrained "1ilhout interruption frolll dale of com- mencemenc or the Wbrk until date of final paymtnc and 6.3 11\e Design/Builder shall give notices and comply termination of any covenge required to be mainwned with ~ laws, ·on:iinances, rule.&, regu)ations and after final payment. lawful Oaleas or public aut:hondes bearing on rhe safety of pe.rsons oc pcopercy or their prorecdon from damage. 7.1.3 Ccrdftcaces of lnsuta11cc acceptable to the Owner injucy CC" loss. . shllll be dellvete:d to che Owner immediately after execu- tion of dns Pan 2 Agrmnenc. These_Cerdfic:.:ard an~~. _ ..... 6.4 The Design/Builder shall promply remedy damage inSurance poUck:s required ~· this Pmgraph 7.1 SlllW and loss (odlcr than c:Wnage or Joss insured under cootaJn a provision that ooveJ38CS afl"orded under rhe property insua.na: provided or i:equired by the Conaaa palidcs wifl not be canceled or allowed to expJre until at Documerus) to property at the site caused In whole or least 30 davs' pd_51r written notice has beet\ given to the in pare by the Dcstgn/Builder. a conam:tor of che Owner. Jf my ol the Co~ lnsurance coverages arc ~ed ro remain in lDrcc after final payment, an Mkli· Oesi,gn/Builder ot anyone directly ar indirectly empl~ ::i:~ of them. oc by myonc for whose aas they may be tiOOal cenificacc evidencing contlnll2lion of such cow:r- agc shall be submitted with the appllcauon for ftnal pay- ment. lntormadon concerning ccdualon of' CO¥er2F .shall be Cumlshai by rhe Desigi1/Builder with reasonable prompcncss ln acCocdanc:e wkh the DesJanlBuiJdet's ARTICLE7 information and belie[ INSURANCE AND BONDS 7.2. OWNER'S UABIUTY INSURANCE T.1 DESIGN/BUILDER'S UABIUTY INSURANCE :::~,::e~~~~::t=:~ 7.1.1 The Design/Builder shall purchase from and ~Owawmaypu,.;._.ud Rlinl1liA od'• mainl2in. in a company or~ lawfully aulhor.izcd ~ (ef lelltw~~~~ .......... -.y to do buslnea in die furisdicdOn In whk:b die Profect is located, sud\ lmuraDce as will protea the DcslglvBullder from dalins set Cvnh below which may anse out or or ~~..::~:c=r:: llHI R'lliMdAWtg • ., epfie8lll OPIAet's liMilier IAsUllMEe - 1C$Ult from opetation5 under this Pan 2 Agreement by '1calc5S sptdlicall.¥ f8'1111RMI i..•• C9"m Oocz·•enti-- the DcsignlBuilder or by a c:oruraaor of the Design( BWldet, or by anyone dtrecdy or llldkecdy emplm'l:d bv 7.3 PROPeft'n" INSURANCa any of mcm, 0( by anyone for whose aas any of them ~At l::Jntess e~1-t:toder ehie- PHI 3 may be liable: •8""'ffl!"'1', the GWftef shall purchase and maintain, In .1 daiiN undet workecs' CIDl1lpeosation, disabillly a company or co~panic:S authorized to do busineSs in benefit and orher simiJar employee bcne6t laws · the jurisdiction In which the principal improvell'lCDt5 that :are applicable to dte 1ft:Jrk to be performed; are to be located, prl!lpe;ner insUl'lll'\U ttpeft lhe Wem • ...Z c:bims for dilv lniurv. dcach of a pc:r.mn or property c.i:lma~e :ari:;in~ ouc

112 JENKENS &GILCHRIST Fax:214-855-4107 Aug ~ 2003 9:04 P.09

professionals. contractors. subconmaaors. agents :and employee$. each of the Other. for damages caused by fire or other perils to the extent covered by prope«!f insur- ance obtained pursuant to this Paragraph : .3 or other propcn:y Insurance applicable to the '«'Ork, except such rtghts as th~· may haw: ro proceeds of such Insurance held by the Owner as trUStee. The 0\\-ner or Design/ Bullder. as appropriate, shall require Crom conuacrors and subcontraaors by approptiatc agreements, written v.ncrc legall~· required for validlry. similar waivm's each in favor of other pantes enumerated in this Paagraph 7.3. The policies shall provide such waivers of subrogation by endorsement or otherwtsc. A waiver of subropclon shall be efleaJve as to a person or entity ever> rhough that ~· son ()(' entity would othcrwi.se have a duty lndemnffi... or cation, conuaaual or otherwise, did not pay dle Jnsur- ance premium directly or lndireal~ and whedlcr or not the peaon or endcy had an insurable interest in the prope(t! damaged.

7.3.9 11 requfrcd in writing by a pany In inrcrest. the Owner as tn.IStee shall, upon oa:urrc:oce of an Insured 7.3.4 Unless ~e prot'idcd. me Owner shall pW'- loss, give bond tor fropcr performance of the Owner's duties. The eost o required bood5 shall be ~ chase and maintain such bollef and machinety Insurance requhcd by this Pan 2 ~enc or by law, which shall ~ proceeds recd\fed as ~ The Owner shall spedfu:aDy CCM:r such insured objeas dutiog insrallark>n deposit in a separate account p~ so received. which and until final m:qmancc by the Owner. This iDsuGlnCC rhe Owner shall dlsrn'bute In a

7.3.11 Partial ~pancy or use priot lO Subswldill Completion shad noc commcnc:e unril the insw'2nce 7.3,6 Before an exposure w loss mav occur, the Owner company or companies providing property lnsurance shall 61e wirh rhe DcsJgn.IBuiJder a Copy of each polJcy have consented to such partial occupancy or use by that includes lnsumu:c coveta&C$ rcJ:IUlred by ibis endor.;cmcnt or otherwise. The Owner and the Design/ P:lragraph 7..3. P.ach POiiey shall conrain all gcner.illy ap- Builder shall take reasonab!e steps to obtain consenc of p.11cabki CondldoN, clc:&nidone". c:rduBlona and ~ the in$~ company or ~ at\cl shall not, menu related to this Project. Each poltcv shall contain a \\ithour mutu:al wrtucn consent. cake 2'1Y action •Irh provision that the policy will not be canCeled oc aflowcd rcspea to panial occupancy or use that would cause co expire until at least 30 m,s· t'rior written nut.ice has \.ancellation. Jnpsc or tedw:tlon of covttage. been given t0 the De&ign/Bullc:Jer.

7.3.7 If the DcsiKnlBuilder requescs in writing that insur- :f."I<::> a~ainst t::ich ocher :ind the Architect lnd other dc.-slgn uue tU tit"U Uf other hazards. however <:aWICU.

.. --··-·- ........................""• ........,.,..,,. 113 JENKENS &GILCHRIST Fax:214-855-4107 Fk..tg 8 2003 9:05 P.10

AATICLI; B design services and revisions to che Contract ---- CHANGES IN THE WORK Documenrs. In case of an increase in chc COncract Sum. the cosc shall indude a ctlSonable allowance for overhead and pro.fiL In such case, rhe DcsigniBuilder 8.1 CHANGES shall keep and present an itemized accounting cogether with appropriate .supporting data for inclusion h1 a 8.1.1 Chang~ in the ~Ork ma~· be accomplished after Change Order. Unless otherwise provided ln the O(CCUtlon of this Pact Z -~t, whhout imralidal:lng Contraa Documc:na. co;,c:i tor ihcic pwposcs :shsl1 be rhis Pact 2 Agreement. bY Change Order, Constn.tc::don li.mltcd to the following< . Cb,anse Dlcective, or order for a minor change in the •1 costs or 1mor, including sodal security. old age Work. subject co rhe limiwkms stau:d in the Conuacr and unemployment \Nul;ill1Ce, fringe benefiu Documcncs. requ~ by agreement or cusmm, Nld workets' 8.1.2 A Change Ocdc:r sh'a.11 be based upon a~c:mcnt compenso.don lnsur:ancc; bl!t'\leen du~ Ownec- and rhe DesignlBui,Jdcr; i:a Cori.struc- .2 ~~ of rnau:.rials, $upplies $Ind equipment, in- tiOn Change Direaive may be issued by rhe Owner with- cluding cost of rransponacion, whether mcorpo- out rhc agra:m~t of the DcsigrvBuildcf; an order for a med of consumed: minor change ID rhe ~ may be issued b\• rhe .a cental coacs of m;ac:hinery and equipment exclu- Design/Builder alone. · .. slve. of h2od to0ls, whelh.ec l'CJlted .from the 8.1.3 Changes in lhe ~ shall be performed under Design/Builder or othttS; app~e ~c~ of the Conuaa Documents. and _4 c0$U of premiums foe all boods and lnSUr;3nCC the ~slmll ~ ~pdy. unlcs.1 othero. permit fees. and &ales. use: or similar c:axcs; wise provided In the Change Order, Consuuctlon .& Wdldonml cosrs of r;;up~ llJld field office Change DlcecUVe. or oRier for a mlJlOr change tn the Work. pemmnd directly att.dbutable m r.be diaoge; :znd fees paid to the Archlt:ect. engineers aod other 8.1.4 If.unit pdca are swed In me Conttact Documents professionals_ or subsequently agreed upon. and Jf quantities originally 8.U Pcm:llng lioa.l dctcrmloadon ol cost to the Owner, contemplared aR: so c:binged In a pcopo5ed Cfumge Orde.f o.r consuuc:uon awnge Ditealve mac applicatlOn amounm not in dispute maybe Included In~ - r 5uc:b unit priom '° quamldes of Work propo,ed wW b- PlilYmeOt. The sunount Of cn!!dlt w be allowed by the DcsWnlBulldcr t0 the Owner for ddedon or change 1e aubs12.0dlal Inequity m che Owner or the Des.lgoJ .kier, rhe appJiablc unir prices shall be ~tablv whidi results tn a ner decrease In Ibo Coaaact sum Wtll ~usted. ~~- . be aaull net cost. When both addidOllS and aa:iltS cov· l!dog related "Wbrk or substitutions are tnvol-.ed in a &.Z CtlANGI!! DRDl!RS chsnge, rhe allowance foe ovel'hmd and pro&t shall be ~ on the b2Sis o( the net inae:ISe. if IPY. with 8.2..1 A rt of proposed l'CYlslons tO the COncract lntonn the Owner, in wrldn& of minor changes in me Documenr.s. COllSU\lctlon Oocumenu mcl consuuaion.

8.3 CONSTRU~N CHANGE DIRECTIVES I.I CONCUL.m CONDITIONS

B.a.1 A Consttuetion Change Directive 15 a wtirtcn order 8.5.1 If conditions are encourucred at the sire which ace prepared and signed by lhe Owner. directing a change in (1) subsurface or othenWic cona:aled physbl condi- che Wlbri£ prior (0 agreement on adjustment, if :mv, in che uons Which differ nuu:Cl'lally ttom those fudiaa:d in chc ConU2Ct Sum or Conmaa nmc. or both. · Concraa: Documcnc:t or (2) unknown physical condi.. dON of Ill\ unusual nature, which di8'er inslterially from 8.3.2 Except as uthcnYisc agreed by me Owner and the those on::linacumems. then nodcc by . · aruJ savin~s of those performing the 'Mtrk ~tribut- che observing p:iny shllll be gi¥en co the other pacey m lhe change, lnduditlft Che c:xpcndtcures fur proniptly betOrc conditionS ;ire disturbed and in no

AIA OOCUllllENT A191, Pllt I o(J"VNEll~ICH.U&:llJ)tll At:llf'.£\IE...:T• "F.C0!'1D mmoN. AL\~. '"9'Jfi A191-1HI n1£ A.'\11".llit:AS L'l;smt.7E 01' NlOurectS. 17;\~ l'il!W' ")RK A\11.~Cr., :,"'I( "\FISMINCilCN, nc JO(llto-~J9J. WAl'VH!fG: UfMI.,.,,.... ~,... vfDIMH U.S. vapyrtgnc- HD •• llUCll- kl ..... pr-an. Part 2-P99e 9 114 JENKENS &GILCHRIST Fax:214-855-4107 Aug fl 2003 9:05 P.11

event later than 21 davs after first observance of the ouc the \~'ork io accordance t-.·irh che Coouact conditions. The Concract Sum shall be equitably adjust- Documents and (ails within SCVCl (i) days after receipt ed for such concealed or unknown conditions by of written notice from the Owner to ccmmence and con- Change Oeder upon daim by either patty made within 21 tinue correction of such default or neglect wich diligence: da~ after the daimanc becomes aware of the conditions. and promptness. the Owner m~ give a second written notice to the Design/Builder and. SC\-'Cn r.) da~'S fo~ow:· 8.6 REGULATORY CHANGES ing receipt bv the Design/Builder of chat second wnuen notice and ~ithout prejudice to orhcr remedies che 8.6.1 The Design/Builder shall be compensated for Owner mav ha"C, correct such ddldencies. tn such asl!! changes in the construction ncCCiSltarcd by the enact· an appropriate Change Order shall be issued deductJng mcnr or revisions of codes, laws or reguladons subse- from paymencs then or thereafter due the Design/ qucru t0 chc submission of the Oesign/Builder..s Prop052.I. Builder cosu of correcting such delidencics. U che pay- mcnrs then or thereafter due rhe DesJgntBullder are nor suffidenr re cover the amount ol the deduction, the ARTICLES Design/Builder .shall pay the difference to the Owntt. Such actlon by the Owner shall be subject to d15pote CORRECTION OF WORK resolution procedul'C$ as pt'OYided In .Artide 10.

9.1 1be Desigll/BuUdec shall prtJlJlptly coaea \Vork rtjc:ctc:I by rbc Owner or lmown by the DcsignJBuildcc to ARTICLE 10 be defcctivc oc f.Wlng co confi>cm to the requirements of the Contraet Documents, wh.erher obaerved before or· DISPUTE RESOLUTION- atitt Sllbswu:bl Cornplerion and whether or not f.abricat- MED~TION AND ARBITRATION ed, lnsralled occompleced. 1be ~shall bear' costS of correcdng such rejected Work, including 10.1 Claims. '"5putcS ·or other mauers in question adc:Utkxaal tesdng :and insptttiOns. between the patties to thlS Pan 2 Agreement a.riSin& our of tX relating to this Part 2 Agrttmcnc or bn:ach thereof 1.2 I( widUn one (l) year after &:he dale of Subscanlial sh;dl be subject to and decided by mediation ot abim- C' ·letion oI the \lClbrk oc, aftu the date for oommence- tlon. Such mediatioo or ubiuation s.ball be conducted in n. of W'llmUldc:s established ln a written agR:emc:nt accordance 'Mch the Consuuc:tion lndusuy Media~ or bct\Vttll rhe OWnet and me Dcsign/BUildcr, or by tcrmS Atbitration Rules of the AuieriC2'1 Arbkr.ation Association oI an applk:able special warranty required by the cummtly in eftCa. Conuaa Dacu.ments. any or me Wbrk is fi::Jund EC be not In acCoabnce 'l'llch the requimnc:nu of che ConU3ct 10,2 ln additton to and prior w adJJtration, the parties Oocumems, the Daign/Builder shall con:ect .it pxomptly shall endeavoc m settle disputcS by medladon. Demand afu:r receipt o! a wrtm:n ncxice from che owner ra do so fur mediation shall be lilc:d in writing with the orher unless lhe Own« has pccviously ~ the Desigpl pany to this fut 2 Agl'eemcnt and with the Amaic:an BUfldcr a written aa::epCllDCe of 5uch condldon.. Arbiindon Association. Adeuaand tor medlation shall be made within a reasonable time al\er the claim, dispute. 9.3 Nodling contained in rhis Anide 9 a;hall be coo- 01: ocher matter In questlon has arisen.· Jn no ~t shall suued ro esl2b!lsh a period of IJmiwioo With rcspca i:o the demand for mediation be made aftc:t the dare when otbec obli,pdons which the DesiplBuilder mighc haw! lnftltudon of legal or equh:lble proceedinas bslsed on under the Conrna Documents. Esrabllshmerit ofthe such clahn, dispure oc other mauer In quesdon would be dme period of one (1) year• desalJed in Subparagraph barred by the appllcable stature of repose or limbadons. 9.2 relates only to the specific obligadon of d\e Desf8n/BUlldCl' ro correct the '\lb'k, and has no relatiOn· 10.8 Demand For arbitl2don shall l:!F filed In writing with ship to d\e Wile Within whk:h the obligadon to comply · the other party to this Part 2 Agreement and Wir.h me with th.e c.onuaa Docwnems may be sought 1:c be Amcdcan Nblttation AssodarJon. A demand for acbitra-- enforced, nor ro rhe dmc within~ch e_cocee~ may tion shall be made wlthiil a reasonable dme afra' the be commenced to escabJJsh me ~uildcr's ffabuky claim, dJspure or Other matter in ~uesrion has amen. In W1ch ropc:a to the Dcir1.g111BufJd~t"':i oblfptlons Other no cvenc snau enc ctc:mand a wlt;ral:icn be mtadc after than spedflally to c:x>rrect the '1.brlt. the date when lnstkudon of lc;pl or equir.abJe proceed- ings based on $Uch claim, c.Jisputc or oc:her mattct' In 9.• If the Oesign/Bulldcr faiJ.'i ro correct nonconforming quesdon would be barred by the applicable srarures of W'ortl:: a.s n:quired or f.l1ls ro catty ouc \M:>(ic in a«ocdance repose or limitations. wirh !:fie Conuacr Docwnents, the Owner, t.,• wrtcceo order signed personally or by an agou spo:UkaJI~· so 10.4 An arbimuJ.oo pursunnc to thili Para~ph may be: t!nlpowcred by the Owner in writing, ma.y order rhe joined with :m arbitration involving common ls.slid or Desigri/Buildcr to stop the W'ork. or any portion thereof. law or fac.'t bctMCrt the ~ign/Builtlt!r :i.ntl any person untU che Cl.use for such onler has been ctiminaced: how· or entity \\.ith whom me Dcst.gnJBuUcler N.-c a concra<.."tu- r:v1 '1c Owner's right to srop rhc Work shall noc give al obligation tu .arbitr:ate disputes. No othtt a.rbiu;itiun ris a duty on the part of the Owner tQ exercise the arising uuc o( or n:latinR lO this Part l ~nt sh2JI ripu tor benefit or the Oec;1RnJBulldl!r or ocher persons include. by c;unsolid:uion. julndcr or in any other man- or entitie$. ner, :in addidon:d per.1on or endry noc a p:i.rty co thl

·* The indemni£ication of thits Article 11 • 5 shall be limited to the extent oi: t:ne insurance provided by Des 1/'Builder pursuant to Article 7 ?re of aro the payment and perrorniance bonds required therein. Specific ccterence to thiS Part 1.-\gr~ent signed b\· the ocner parry within a reasonable time nor exceeding 21 C?wnet, the Oesign.IBuJJder and any ocher person or ·cnti· days after first observance. The nO(ice shall provide ties sought to be joined. Consent t0 arbicratlon in,"Olving :iufficicm dccall to enable lhc ocher party ro investigate an addition.al pason or enti~· shall nor constltuce con· tnc matter. If a claim of additional cost or time rdarcd ro sent CD arbitrulon of any claim. dispute or other matter this claim is co be assened, it shall be flied in writing. in question not described in the written consent or with a person or cndcy n0t named Or described cherein. The 11.5 lNDEMNIFICAnON foregoing ~menc to arbitrate: and other agrcemct1rs ro ad>jtratc with an addltlonal person ur eodcy duly con· 11.6.1 To the fullC$t extent pc.nnitccd by law, the :sentcd to by the putia to thb Part 2 Agreement sf\all be . De5JgrvBuilder &hall indemnify and hoJd harmless the 'peci&co.fl~ enforceable in accordance -.ith applii;ablc Owner. OWnet''s consulcuus, :and ~cs snd employees law itl any coun havlns ;urisdiction cheteot of anv of thcim from and ~insc claims. damascs. Jo5SCS and expenses, inducting bur not limited to atmmeys' 1 o.sThe award rendered bv the arbitrator or arbitratots fets. arising out of or resulting from performance of the slWl be final, and iudgmeni may be entered upon it in Wt>rlc. provldcd thac such daJm, a.image, Joss or accordance wtdi applicable l2w In tny courc haVing expense is amibutable co bodily inlu.cy, sickness, dJse:asc jutisdiaioo thcn:of. or- dn.ch. or co injucy ~ or: daottuction of caagiblc: prop- etty (od>er cMn the We.it: lcs:e1f) indudtns roo of use resul~a thci;efrom. bur onty to che ~c caused in whole or in pan by negligcot aas or omwlons of the ARTICLE 11 Oesign/BuUder. anvone dJi:ectly or indlrecdy employed MISCELLANEOUS PROVISIONS by the Design/Builder oc anyone for whose aas the Ocsign/Bulldc:r may be liable. n:prdla5 of wllcctlu or not :iuch claim, damage, loss OC' apense is caused in 11.1 Unles$ odtccwisc provided. this Part z Agtttmeoc p2Ct by- a p:any indemnified hel'eundec Such obligation shall be g~cd by the law of che place where the shall not h! consrnied to ~ abfidae. or reduce Projea is located. · · other righu or obliptions of indemnity wh1ch Wl)Uld omerwise cxisc as to a pany or person described lo this 11.Z SU8CONTRACTS Pacagraph 11.5. 11.2.1 The Dc:sig.yBullder. as soon as praccicab~ a!ra 11.5.2 In claims apfnst :any peison °"entity indemnified ~ution or miS Pan 2 Agreement, shall furnish co the under this Pa.rasraPh 11.5 by an emp&oyee of the nee in wrtdng die names of rhe persons or entitia DcsilWIBuU".'a·-~ direcr:ly or indkecdy employed •••e DeeignlBuilder 1'11ijJ cngasc a:s COntraaor.5 for- the by dle DCSlgnll:SUlldCr or anyone tor whoise acrs die Profea. Oes.ign/Builder may be liable, die Ulde.mnificaEion oblig· adon under r1d3 Patagraph 11., ahall not be: JUPkc:d by a 11.J WORK BY OWNER OR llmlcadon an amount or type of daanagl:s, eompensation OWNER'S CONTRACTORS or benefits ~ by °' foe the Desien/Builder uru:le: wodccrs' compensadon acts, diubilir:y bene&t acts or 11.3.1 The Owner rescrw:s the right m pedorm c:on- struetlon ot opcr:adons related to lbe Project \\1th the other employee benefit aas. Owner's own fon:a, and IO a'l\'acd separate conuaas Jn conm:alon With other porttons of the Protect or other 11.8 SUC&:eSSORS AND ASSIGNs consuuaion or opc:radons on the~ under condidons 11.e.1 The OtMer and ~c:r, ac:s~ bind of imur.ancc and waiver of subcopdon idenc.tcal to the rhemsel'l<-es, their parmers., successocs, 8SSignS aod legal pl'DYisJoos of this Part 2 A.lircemenL lf the OeslenrBuikkr repl'Clic:matlVes 10 the ocher pany to dlf.5 Part 2 Claims dw delay or addldonal cosc is In~ 6ecause of Agreement and to the panncis.. :n.accic::soon and~ of :such aaion by the Ownes:, the OesignlBudder shall a$Sert such othel' P='"Y With respea co 1111 c:ovenams ol dds Part lJUdl daims·as pawfded in SUbparagraph 11.4. 2 Aarecmc:m.. Neither the Owne.r noc the De.siaol.Builder 11.3.2 The Des.ign/BuUdcc shall afford the O~"ner'.s shall :WiS!\ this Part 2 Agreement wilhout the written 5c:par,.te mntt:aet0a reasonable oppomanh:y foe inuo- consent Of the orher. The a.met may .assJgn this Part 2 duafon :and $10(3Be of didr m:uerillls and equipm•t .~em co :my insritudonal lender~ eon· ~d pcrfOnnancc ofthck aa1vn1es and shall connect :md :strucdoa financing. and rhc .DcslgnlB • l18la:3 to cooo:lin2ce the Dc:signlBuilder·s L'Onstruccion and opera- eecutc all cunsents ceasonablY required ao f:acilicace tions with theit5 35 required ~· the Coner-act Docvmems. 5uch an :assignment. II either patty mab:s such an assign- ment, th2t P.3ftY s112ll nevertheless remain leg:ally respon- 11,3.3 CusL'i t:1u.o;ed by rne bv the unless oc.herw;se agreed by- the other p:arty. parry n."5ponslblc rhcr:cfor. · 11.7 TEFIMINATION 01" 11.4 CLAIMS FOR DAMAGES PROFESSIONAL DESIGN SliRVICE8 11.4.1 If either party to rhls P.Jtt 1. ·"-t:erecmen( sutlers i1.1.1 PB t89tc~Mm/~mt .services or the injur~· or tbm::t~ co per.ion or pmpcny bet."au.'ic: of :in act Archircc';;~ any nther dc.':iign pmfessiunal desianatc:d in Of ontl"siun nftho other p:irt~ (Jf :1.ny lic: :&cti; o;uch m me O\,.m,.r in wrltinK lllloth l'C'.JSUnahlc ohjCL11Un, who WIO f)fU\•ide the ~C!C\'in:.'i

AJA DOCUMINT A 111. P•" 2 • 1111'!111'.ll·l>lil'k:i< bl :11.J)Kll .ACl<~IV.'T • i:tiCOND F'.Dl1'10l'r • All\ .e. • ., I 'I'"• 111£ AMl!lll~~'> l:o\:l'l1Tl:TF. Of •.\llCHITF.~. 1-i; !(f,... YOHK A\'FSl:F.. ;>."\II( •"'-~1 ll:St.TOlol. l'IC·!lllllte,.o\~\ll • A191-1996 WARNING: Unrlcemrord pit_ _,....,....,., u.s. copyrlgllt i.... ena 19 eaei-& It> legal ,'°'9cvllon. Part 2-Page 11 116 JENKENS & GILC~IST Fax=214-855-4107 Aug 8 2003 9:06 P.13

originally to have been provided by the: Arehirea or notice that the owner intends to lerminatc this Part Z other design professional whose services are being .o\gfccment. lf the Design/BuJlder £ails to cocrcct the cccmlnated. defaults. failure or neslect within seven (/J days after being given notice. the Oomer may then give a second 11.8 EXTENT OF AGREEMENT \\'Otten notice and, after an additional seven (';) days. the Qwner may without prejudice to any O(bei: remedy tCC'· 11.s.1 This P:u:t 2 Agreement represents che entire minate the employment of the Design/Builder and caltk c:ompleu:d and Cot proven toss sustained upon the Dcsign/Bullder fails.to receive payment within seven materials, equipment. wols, and co.nsuuctioo equipment (7) days after cecdpt of such noclce by the Owner, the and~ ioduding reasoo.ible p

ARTICLE 13 BASIS OF COMPENSATION

The Owner shall compensa1e the Design/Builder in accordance with Article 5, Payments, and che other provisions of diJs Pact Z ~t as dac.dbed below.

13..1 COMPl!NSATION Uh4a1 Pet' WI 9~dl!I''& paAaAllranQt.Qf..Jbe IGwk; ll!I ~ ift-~~~AIJ aRJ' QGl:a9F- -au wins l:isred ·bl ~ 44'11!!11Nlff"el IJasje &erl'H!~haD-pay the ~crildcr tn=cocteftl FHIMls dile -COt1U:acrSum'251bllow.

~ti.on p:oviai.ons are set :fort:h .in ~· 111" _

Total contract amount is $ 14,279 000 ( Fourteen million two hJlmdred seventy nine thousand dollars). ' · See Appendix B "the Schedule of Values.:"

117 JENKENS &GILC~IST Fax:214-855-4107 Aug 8 2003 9:07 P.14

1t1-..2-:fil::JrAdrttt1ona1 SetV1res;~irr~!'l"'3Tmd1nctottms~~eli'is Additional So +ices, wmpt:11S2tion shall be -asiollo111s.

1&.:2 REIMBURS \BL£ Etl'f'l!te9ES

~~=-ddidon-te-che e918feRstste11i fer BMie 8flEl..i'daitielUH-Servitm; -~ acQ•al cxpeadicur.s. ~AviWeHAd-dte D~s employc~-at'lfl~ irirthe intetcst ot tbe PuJJt;a; zs tbllutto: ·

.:a&.a:2 FeR nBMBUB5ABL£ BEl'EN6ES, wmpcosadoli shall be a auatrip!e: of t-- ) limes the antodlil$ apoidu:I:. 13.3 INTEREST PAYMENTS 13.3.1 'Il1C cue oflnterc$t for past due paymems shall be 25 follows: Lesser of 1-1/2% per llDlth or the highest interest ~ by law.

(Usury 1-11 llntl ,.,__..,, ,...._lh IWodl Jtw6 In ilendlngita, sfmifar-OJttl l.ocat aJIUUfJll!r'O#it law BUi/tW'I~ JJ/.tUm a/"""'-, Ill llM ~ oflH /'rOj«l t6llll.......,, and-.,.,..._,., ~ 4'fll lh lltllltilt,y ¢/tlJis pnwbltM. ilflM tldrlir.1 .ljpc#fc: llM ""1Mr'IMll D#i8rf/ lbtJultl i. obltdrwd ID.,,.,,,,,,_ ll"1irb ..-.p.:t modficWoit arOIW Nqllln-.ci; ad .a lflrlaen ~-or---.) 118 JEN

ARTICLE 14 OTHER CONDITIONS AND SERVICES following 14.1 TheBasicServicescobepedormedshallbecommencedon the date 5 days after all of the and, subject co authorized adjustments and to delays not caused by the Design/Builder, SubScantlal Completion shall be achieved in the Com12cc Time of three hundred ninet:t 3 9 9 ) calendar days. nine 14.2--~~~tbo5C-dcs.cRbn:Li11Al:cidc~-e.E&a5~-

Defined as: 1. Receipt of building permit 2. Receipt of confirmation of financial funding and first payment.

3. Receipt of approval to begin construction from ~he Texas Commission of Jail Standards. 4. Approval of design documents by county representative and operator.

14 .• 2

The owners Representative will be James Parkey-corplan Corrections The Representative for Hale-Mills Construction will be Kendall Phinney

14.4 The DesJgn/&_µilder shall submit an Application for Payment-00-tRlil- by the ( 5th ) day of each month. ·

... ~ ......-.. ....... - .. --- ----··---·- .. JENKENS &GILCHRIST Fax:214-855-4107 Aug ~.2003 9:07 P.16 )

14.6 The Design/Bu.Ude.r's Proposal includes the following documents: (1.($t tbs~ /ly JP«IJlc lllte anti~ lnduM "'9' f'flllll/l'ld ~ fl"'1 paytrtftll flcmdrJ

ntle Date

.. Appendix A

.

Th1s Agrce.m.cm enccred into as of the day :and year lh!t written above. OWNER

u ahauld sign an orJUinal AIA dOcument which Ila thl• cautian printed In red. sures that changes wtU not be ob•oured aa may acclir when dacumenta are reproduced.

:>WN!a-Pl!SIGM~l AGUEM8'IT ~ 199& IElmON • /dAe • Ol996 ~ ITSCl'S, 1735 tf8'I' YORK AYllflJB. h.W, Y~GTON, D.C. 10006·~ • A191-1fJ!I JENKENS &GILC~IST Fax:214-855-4107 Aug 8 2003 9:07 P.17

APPENDIX "A"

1. A minimum and medi\lJJl security coaecti.onal facility to house 500 inmates, to be located on the real property described in Exhibit "A" attached hereto, located in the Town of Raymondville, Willacy County, Texas, design to be. approved by the Texas Commission on Jail Standards.

2. Design/Build.er acknowledges the funds for the construction of the Project are to be provided through the issuance of Lease Certificates of Participation by Willacy County (the "County,,), the disbursement of which will be governed by a certain Trust Indenture between Municipal Capital Mafkets Coxporation (''Owner'') and U.S. Bank National Association C'Trustee''). Design/Builder had reviewed the Trust Indenture and hereby agrees to be bound by the terms thereof. Further, Design/Builder acknowledges and.understands the Owner, immediately upon cxerution hereof, will assign to the County this agreement and Design/Builder agrees that Owner should have no penonal liability whatsoever for any payments due to Design/Builder heremider and that Design/Builder shall look solely to the Construction Fund established pursuant to the Trust Indenture by the Tru.stcc for any and all payments due to Design/Builder hereunder. Notwithstanding the foregoing, Owner shall be liable to Design/Builder for any act or omissions of Owner which are negligent, grossly negligent or willful and which are directly related to the obligations of Owner hereunder.

3. This agreement is make and intended for the benefit of Owner and Design/Builder only, and is not made or intended for the benefit of any third party, except the County and the Trustee. Design/Builder makes no representations 11!1 to the com.merciality or profitability of the Project, and does not guarantee or. wanant any representations or statemeiits made by any other party in connection with the Project.

4. If the Desiga/Builder is delayed in the progress ofthe Project by acts of neglect of Ownec, Owner's employees, sepataie con.1ractorS employed by the Own.er, changes ordered in the Work except as provided in Paragraph 7 below, labor disputes, fire not caused by Design/Builder, wiusual delay in transportation, unavoidablo oMUnltic~, or another cause which the Owner and Design/Builder agree is justifiable, the contract time shall be reasonably extended by Change Order.

5. Should Design/Builder fail to substantially complete the Project within 1hirteen (13) months from the date of :funding, subject to any extensions pursuant to this Agreement ("Time of Completion of Work"). the Design/Builder agrees to pay the OWner as liquidated damages for each and evezy day of delay beyon~ the Time of Completion of Work the sum of $6,475 per day, which sum is hereby, in view of the difficulty of estimating such dam.ages, agrc:ed upon, :fixed, and

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per day, which sum is hereby, in view of the difficulty of estimating such damages. agreed upon, fixed, and detennined by the parties hereto, as the liquidated damages that the Owner will suffer by such default and not by way of . penalty, and shall be deducted as such from the "Balance Due Design/Builder." The facility will be considered substantially complete upon inspection and approval by tbB Texas Jail Standards Commission. :

6. Design/Builder's liability for damage or loss shall be limited to the amount of insurance coverage and payment and pmonnance bonds required by the teims of this Agreement. In no event shall Design/Builder by liable for any damages or losses, no matter how described, for amounts in excess of that cove.red by the insl11'81ice required hcrebv. 7. DesigliJBuilder shall receive a total of thirteen million eight hundred tbcusand and .n0/100 dollars ($ 14,279,000) as coinpensation for services provided under this Agreement, subject to the time and provisions he.reof. The parties hereto agree tb;lt the Project, as coDStructed in accordance with th.is Contlact, will not be . subject to state 8Jld local sales taxes. Owner will provide Des.igo/Builder an exemption certificate fur exemption from payment of state and local sales and use taxes in order to oomply with applicable sales tax lBWS of the State of Texas, this Agtcemcnt shall be separated contract, with the amount fOr, materials and services specified separat.ely:

Ma1a:iaJ.s - S 7,.350,000 Services - S 6,979,000

Application for payment will be for 100% of work completed, less I 0% retainage, which retainage shall be paid upon completion of the Project. The rctainage is not applicable to development insurance and bond costs. The price is subject to change only pursuant to the provisions contained in this Agreement .

8. Design/Builder and Owner agree that Design/Build.a need not present a complete set of docum.ent.s for Owner to approve prior to the begjnniDg of construction. Design/Builder will present for approval such documents as are reasonably avail.able at the time Design/Builder is xeady to commmwe construction of the Project and Dcisignmuildct shall be entitled. to commence construction based on partial documents. Notwithstanding the foregoin& Design/Builder repxesents and waxrants that the Project will be designed and conatrlletecl to house 500 im;wrtca, to be located on the real property described in Exhibit '"A" attached hereto, and to be approved by the Texas Commission 011 Jail Stand~,

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9. W eathettrime Extensions

The time quoted in this contract includes -0- days for weather related 4elays on the project and the contractor has made no allowance for time or cost above this number for delays caused by weather. Any delay or work stoppage due to a.o.y weather above the stated allowance will necessitate a change order to address this change to the contract The time quoted in the contract is in calendar days and the schedule of the project recognizes a S day work week, therefore, the loss of part or all of a day will need to be converted to calendar days.

10. Warranty

Hale-Mills Construction, Inc. wmants our finished product to be the project as defined on the plans aod specifications. Conttactor warrants all work. for one year after substantial completion. Contractor ~es to provide the OWncr with all wananties as required by the specifications. Some systems and/or products have been selected by the Design Professionals on this project for tbW value to the project and an extended warranty by the vendor is required by the couttaot documents. For any extended warranties .required in any conttact doCUIJBUts, the Contractor will provide and the Owner will rely Solely on the Product or ManuDcttirer or Subconfractor providing the syst.em, for 1be extended warranty.

11. Design Liability

Hale-Mills Construction, Inc. bas no licend professional design or engineering personnel nor do we engage in professional design work. Hale-Mills Construction. Inc. docs not represent that we have tht capability or expertise to evaluate such services or product The Architect is the design profcssiouaJ on this proj~ and is qualified to mab these ~uations and judgments. bl the event design or engineering work is required llllder the conftact, Hale-Milla Construction, blc. will provide and pay for the 'professiooal &sign work required but, Hale-Mills Construction, Inc. and the Qlmer are relying on the Architect and his project design professionals in evaluati:og and approving this design work. Hale-Mills C~struction, Inc. will assist the Owner 111d Architect in any 'Way, necessary and will, if request.eel, assign any rights Hale-Milla Construction, Inc. might have, to the Owner :regarding this professional design and engineering work and the entity or pe:rson providing the professional design or engineering services wider this contract.

12. Change Order Cost

Any increased cost to the project will increase the cost of the insurance and if applicable the cost of any bonds. The cost on 8ny chan&e order will cmy a added burden of 1.97% for insurance cost a.o.d 1.15% for bonds wh«e applicable.

Page3 of3

123 JENKENS &GILCHRIST Fax:214-855-4107 i:\J.g 8 2003 9:08 P.20

..

Willacy 500 Bed Detention Center 08/05/2002

Cash Flow anal}'Sis of a 500 bed Detention center Based on a total east of: $14,279,000

Many things effect the timing of draws and detemine progresss on a particular project. Sorre of these are: rain, approvals/inspection&, changes, deli\ery, schedules, etc. This is only a projection of work on the project and does not con\ey or guarantee the resorces needed for any particular month. ·

:·,,~:-, ,;-~ 1 : ~ •=~ r~~ --:;. ~~-' ' : ~; ~· :' ~ 5_;~ '. r ~~~~w~~fi-~':t,:~. :l .~•~\}(~':I~:·:~:~~-~·~,_;·~·~ 7}-_-,~~:~·.~~ 3,656,352 26% 1 At Closing 1,285,110 9% 2 September 1.142,320 8% 3 October 999,530 7% 4 November 999,530 7% 5 December 1,142,320 8% 6 January 999,530 7% 7 February 713.950 5% 8 March 713,950 5% 9 April 579,460 4% 10 May 571,160 4% 11 June 428,370 3% 12 July 1,047,418 7% 13 August 14,279,000 100%

124 _..APPLICATION AND CERTIFICATE FOR PAYMENT It) ro (OWl!Cr): WiUac.y Couty Public racillty Corp. l'!lOJ'BCTl Al'PUCA.TlON NO: 1 DiSlcflulim (A); N

~-- 5'16 West Hidalgo Sll'eel Willaey Coua(1 'I""

Raymondville, Tcx111 785 80 Deteatloa Ceater PBRJODTO: Start ARCHlTBC'r CX»mlACTOR ....... FROM {G'C): HaleeMllls Comlnldiou, Inc. VIA AB.CHmlC'l'~ INSPliCTOR N 0..: 4130 Bellaire Blvd. #210 Apll"re, lnc. • .•. HoUll:On, Texas no25 r.2100 Park ~ill>rive #~_.sos PIOJECrMO: 09-016 Atteatioa: Dallas, Texas ·1~251 l1m11 P•rkey CONTRACTOR'S APPLICATION FOR PAYMENT The umfenripd. C'bmnr.tor =tifn duic ID the best of .bis knowledge. Apphclltlon 13 maac tor l'Byment, as st\etow, 1n connecti.on w1Ul. tnc t;onua.c-.t. ~oa I.ad belld the WorJt CDftteci by thG APJ:'L.ltATLUN .t

3. CONTRACT SUM TO DATE. ••••.••••.••••••• s 14,279,000.00 DATE; 08/06/2002

4. TOTAL COMPLETED a: STORED TODATR ••.••••••.•_s_ _ _--'3,._9_.Q4_.,_l_IO_.o_o_ (Colmna G on Cllnli.DUlll(cm Sbeel) 5. R:ETAlNAGE .••••.• _ _ _ __;..lO....:'J-1_. • • • • • • • • • . • _s_____2_47_,,'-7S_8_.o_o_ {CollJl:IJDl OD ColllinualioaShecl) 6. TOTAL EARNED LESS RETAINAGE •••••••••.••••• ...;;s_ _ __..::.!3,t.::.6::..S6::.!,3;;;.;S::..;;;2:.:..o;;..;o;_

7. LESS PREVIOUS CERTIFICATES FOR PAYMENT •.••••• _s_______ o_.oo_ In accordanr.e With the 0:>11tna: Docune.or.a, hued on on-sim obse.rfttiou 8. CURRENT PAYMENT DUE •••••••••••••• '-''s_ _ _3_,_,6_56.....~_5_l._Oo_,I wi the d.ata coiqirising die above applialioc, the AGENT caci6es 10 die Oilmr dllt .die work lW progressed 10 the point indicad; chat to the ben 9. BALANCE TO FINISH (INCLUDING UTAINAGE of hil lmowhdge, .infutnlllticn aod belef, the quaaityof th.e "WO.tk~ i:i (Lino l lcas Liae 6) s 10,62.l,648.00 acccndw:ie with the Cmctact documro.tt; and tLat the <:oanctOl' is elllidorl to pa')lllellt of the AMOUNT CEKIFIED.

CHANGE OlU>Ell SUMMARY ADDl1tONS DEDUCJ'JONS Change Orders approved AMOUNT CER.111<'.IED ••••• , • in nrc.vious mnnths bv Owner COR-PI;AN OORREC1lONS

Tolal 8tlnroved this Month BY: DA"re: TOTALS 0.00 0.00 Thts c:ma tiu.lo ii not 111aati1ble. Th• AMOlNI' CEllTmBD is pt,yable obly 1o ll&Acc of 11•J1M11l are witbo11t Net changed bv Ch.a!ll!'e Orders 0.00 prajlld.ice ID 111Yrialill of

ITEM NO. DESCRIPTION OF WORK FROM PREVIOUS THIS PERIOD :rERW.S.. PRESENlLY TOTAi. COMPLETED · RE't:·At·NA·GE· TO FINISH 10t APPLICATION STORED AND STORED (C-G) (D-tE) (NOT IN TO DATE DOR F)

102 SITE PREPARATION 518,743 440,932 440,93'2 Bfi% 77,811 #,09: 109 SANITARY SEWER · · 180,805 153,684 153,884 85% 27, 121 15,361 110 MISCELLANEOUS SITE WORK 131,932 39,058 39,058 30% 92,874 3,90C 111 WATER MAINS 115,620 49,765 49,785 43% 85,855 4,97'. 116 SITE LIGHTING 95,912 D 0 95,912 ( 121 ASPHALT PAVING 301,065 D 0 301,065 ( 124 PARKING MARKERS/STRIPING 2,476 0 0 2,476 ( 128 FENCING 464,145 0 D 4&4,145 (

f,810,698 0 683,439 0 883,439 38% 1,127,259 68,3+

201 l:AY-Olff ENGINE NG 11,570 11,570 11,570 100% 0 1, 15: 219 TURN-KEY CONCRETE FOUNDATI 2.96,308 103,708 103,708 35% 192,600 10,37' 220 TURN-KEY CONCRETE PAVING 76,415 0 0 76,415 (

221 TURN-KEY CONCRETE FLAlWK 684,315 218,981 218,981 32.% 465,334 21,891 222 TURN-KEY CONCRETE WALLS 238,201 71,687 71,687 30% 166,514 7,161 223 TURN-KEY CONCRETE SITE-WK 6B, 117 0 D 68,117 I 234 WATERPROOFING 33,717 0 D 33,717 I 235 TESTING ALLOWANCE 17,449 10,385 10,385 60% 7,064 1,03! 1.426,092 0 416,33 0 <416,33 29% 1,0,09,761 41,63:

301 U TURAL El 316,270 56,467 56,487 18% 259,803 302 STRUCTURAL ERECTION 69,418 3,443 3,443 5% 66,975 303 MISCEUANEOUS STEEL 74,643 0 0 74,643 304 ROOFING 362.345 0 0 362,345 305 MASONRY 1,090,052 0 0 1,090,052 309 BUILDING MISCELLANEOUS 25,727 0 0 .25,727 AU.800 SERIES TOTALS 1,938,455 0 59,910 0 59,910 3% 1,878,545 5,99'

5C>1 INSULA N 52,3'19 0 0 52,349 5Q2 HOLLOW-CORE METAL DOORS 51, 103 10, 138 10,13& 20% 40,965 1,011 507 GLASS ANO GLAZING 24,701 0 0 24,701 ( ~09 CARPENTRY 48,795 0 0 48,795 ( 510 HARDWARE 37,6D1 0 0 37,601 ( 614 DRYWALL 150,917 0 0 150,917 ( 515 CEILINGS 12,408 0 0 12,40R ( 51~ OAINTING 288,257 0 0 288, ( - CO~TINUATION SHEET APPLICATION AND CERTIFICATE FOR ~AYMENT, containing APPLICATION NO: APPLICATION DATE: 1 Funding Contractor's signed Certification Is atfached. PERIOD TO: August14,2002 ....N In tabulatioml beeow, amounts are staead to the nearest dolar. WUlacy Count, Detention Cent9r 'I"" PROJECT NUMBER: 09-016

t<') RIALS TOTAL C'i PRESENTI..Y COMPt.E.TEO {G+C) TO FINISH a.. STORED AND STORED (C-G) (NOTIN TO DATE DOR +E+F 0 519 TILE AND MARBLE 28,610 0 a 26,610 .. .-1

Q) 52.1RESILIENT FLOORING 45,321 0 0 45,321 522.SPECIAL FLOORS 37,037 0 0 37,037 t<') 523 IVETAL PARTITIONS 5,901 0 0 5,901 (

8 525 PL:UMBING 1,101,421 399,620 399,820 36% 701,601 39,98: C'i 529 EQUIP~NT 496,000 a 0 496,000 r 00 530 HVAC 988,315 4'1,418 41\,418 5% 91Q,899 4.84: en 535 ELECTRICAL 1,122.,135 112,2.14 112.214 10% 1,00Q,921 11.22' 87~ ~ 540 FIRE SPRINKLER SYSTEM 174,352 8,718 8,71B 5% 165,634 545 MISCELLANEOUS SPECIALTIES 31,819 0 0 31,519 (

566 SECURITY MISCEUANEOUS .. 1,916,784 57,5°'4 57,504 3% 1,859,280 5,75! ALl.500 SERIES TO ALS 6,591,826 0 636,8 0 0 636,810 10% 5,955,0 6 63,68·

401 PROJECT SUPERVI ION 326,000 74,980 74,980 23% 251,02.0 7,49l r-- 402 JOB MOBILIZATION 43,176 1:7,270 17,270 40% 25,906 1,72i 0 60,225 13,852 13,852 23% "48,373 1,38! .-1 403 GENERAL CONDITIONS "" If') I 404 405 PROJECT UTILITIES PLANS & PERMITS 12,000 10,0_00 1,800 10,000 1,800 f0,000 15% 100% 10,200 0 18( 1,00( ~ '<:t 406 CLEAN-UP 30,000 0 0 30,000 ( ....... 407 TRAVELJPER DIEM EXPENSE 53,000 12,190 12.191> 23% 40,810 f,21E C'i 409 DEVELOPMENT/DESIGN COST 1,102,000 1,102,00Q 1,1Q2,00D 1otw. 0 55,10( x PRECONSTRUCTION EXPENSE 460,000 460,000 460,000 100% 0 c 410 L:! 420 INSURANCE 2.47,308 247,308 247,30& 100% 0 (

421 PMT/PERF. BOND 168,220 188,220 168,220 0 ( I- (fJ ALL400 SERIES TOTAL 2,511,92.9 0 2,10. 0 0 404,309 68,10E ....... ALL TOTAL NTRACTCOST 14. 79 DOD 0 3,904110 0 to 37<1,seo 24775E ~ u .....I ....... (!)

°" (/)

GJ ~ :z w IJ JENKENS &GILCHRIST Fax:214-855-4107 Aug 8 2003 9:10 P.24 ANC~JBI ~TE~ !J.CORD.. CERTIFIC, :E OF LIABILITY INSl 08/06/02 PROOUaER THIS CER11FICATE 18 lllUED MA. MATIER OF INFORMATION ONLY AM>CONFEM ND IUGHT8 wat.11111! CeRTFICATE Bows•, Inc. HOLDER. THIS CERTIFICATE DOU NOT A.Ml!!ND, EXTEND DR ~11 W~l~st Green flOS ALTER TH! COVl!RAGE AFFORDl!D BY TN! POLICIES llELOW. Ruua~on U 77042-4139 Phone:713-785-6785 raz:713-715-1785 INSURERS AFFORDING COVl!RAGl! INSUIU!D ~A: laott8dale %1111. Co.* IHSURERll l'i:r:~'• had. B!4.r-J'~Canstzuc:sti.an, :Ina. m :Bel z:e .Blvd. 1210 H0\18toll U 77025 I IHl!Ul5RC: INSURERD: INSIH;(l IC C::al.oni.al ft.a hX&8 •.=.'L.~--L... Comai::v llataal. W/C l'wad XZUAIZ.nae :- - :it:era COV!RAGES ~ PClJCllS or INIUlltANCE USTm IE.OW HAW l!DI _.,TO Tle IN&lR!D NM8J MtNe l'OR THI PCJl.JCY' Pl!RIOD NllCATl!D. NO'TWfrHSTNDHG ANY~. TeM4 OR COICIJTION OF ANYCON'l'MCT OR 01tDCIOCUlil!r4T wmt AalPEC'l" TO WHICH1ltl8 caTl'ICATEIMYllE lll8Ul!D OR MAY PeRTAIN. 111! IN$l:lllANCE Al'l'CRDE!D Sf THE POLICES D!SCRlllEO HERDI mSU9J8rr TO NJ. TH! W , l!Xa.U&IONS AND OONCmoNs Of" SUCH POUCES. ABGR!OATE I.MTS 8HOWN Mi\Y HAVI! RO RelJUCED BY PM> Cl.lllMS. L T'IPl!OI' llllUltAllCE flOUCY' . . . , _ UllTli maaaw. UAalLnv EACH CICCURAENC& 11,000 000 .& X ~OIHRAl.l.MlllUIY CUUMS MAOe ~ OCQJft BCS0002141 09/30/01 09/30/02 _,_,.., 150 000 l'lte DMIMGli; (AllJ-h) 1--~~~---~----+~---~~~--1 MB>BCP 15 000 X OWner/Con't Prot. ""80l'IAI.. N:N llUJR'f 11 000 000 GeeW.ASGAEOATli: 12 000 000 ~·CClllFIOPAGG s 1,000 000

AUTolloal! ug\JTY COMBN!D-.e uurr s 1 1 000 ,ODO C: X ~.AUTD CAG0012339 09/30/01 09/30/02 ......... 1--~~~~~~-+-~~~~~--1

ALLCWNl!D AU1W sa&lUUIDAUros . X llRED AIJT'OS ""',_,.., IODl.YWJUl\Y ' x NON-OWNB>NJrOS •

ot191™AM EAACC S

liXCliSS LIABILITY AUTDONl,Y; AGG •• 10 000 000 ~ x OCCUR D aAIMGMADE xrzoooatssooas 03/30/01 09/30/02 MGIU!GA1E I 10 ODO 000 1---~~~~~~-+--='-'-';;..;.....o..;;...;;..;;'--t

s s I

SBPDOD10410'4

&L~·POLIC'fUMT 11000000

DAOD7001003 03/30/02 03/30/03 $10,000,DDO

Certificate Holder is included as an AdW.lional tnsu:nd. u niapeot:.s Gene.:a1 Li.abi-11.~ as:id. 1fa.i:v.r of Subroga1:i.oa. appliea. Wo~' C!Oll!Pe.n•ation. l'ol.i.cy provides cove:ril.ge ;for olass c::ode 8809 - Bxecut:iv. O;f.fi.oe~.s.

CERTIFICATE HOLDER Y AODl110NAL INSURED; INSU!Ulft. L.Ef'fllR: CANCELLATION lJSBADDf afOUU>N« 01- TIIEABOW oectUll., l"OUCll!S IE~ EICl'ORETIIRll!lll'IRA 11.S. B;;a:ak R•ilona.l: Assaci•tion DATii ~. 11& ISSUING INSURER WILL l!NDirAllOK TO - L _l_Q_ OAYS Wlt1Tr8" As Trustee NOTICI! TO ?NI! CERTIFIOATI! H~ NAMm TOlHI! LEFT, llUJ FAll.llftl! TO DO 50 SHALL Attn: Linda Johnson IMl'OSI! ND OBUCATIOH OR LlA8IUTY Of Al4Y KINO ""°"THE INIURl!ll. rrs AOIUfTS OR 950 17th Sheet, Si;ait. 650 Denver, CO 80202

,l\CORJ> isi-S (7197) OACORD CORPORATION 1888 128 JENKENS &GILCHRIST ACORD.

Row•e , 'IJU: • 11111 w~lcreat Green 1106 Houston TX 770t2-4739 INSURERS APFORDING COVDAGI! Phorie:713-7BS-6785 rax:713-715-B785

U.1e-Jl:i.JJ.• Con•tJ:aoti.on, xac. Phil :eia.pp;- U30 Bell au.1;e Bl.vd. 1210 BOustoD TX 77025

L rtrl!OI'~ POUCY IWllllEK Dl!'llaAAi UlllllJT\' EACH OCCURRENCE S 1 ODO 00 0 A x ~~CIOl-1.11\-'IY 'BCSOOOa1.t1 Ol/30/01 09/30/02 t======:::;.:::?......li.=•..:5:=0.L•.::.0:::.00:::__ _ ClMMa llMDC ~ OCCUit •5 000 JC owner/Cont fta'b. s1 ODO 000 o&NlilW.~Tli I 2 ODO 000 PllOCUOl'8·CXIUPIDl"MG 11 000 000 LOC

c x AtNAUTO CAS0012339 09/30/01 --~ 09/30/02 lE'a 8"ldloll) ....... 11, 000 ,ooo

ALL OWNS> AUTOS SCHl!OULSI AUTOS ,..,.._. lllODLY~

' x 111REDAVtoS 9DCLT lllJUkY I (Per_..,,. x NON-OWIED WTDS

PAQP5Rrl' OMWll5 s. 11'91"""'*'""'1 URAd LIA8IUIV AN'f AIJTO AUft)

anu"tHM CIM.Y • CA .M:CllJl!iMT EAACC • s AUfOONLY: NI(;. I

EXCESS UAlllUTY ~ OOQU!'lllENCE • 10 000 000 B OCCUI' D CLAIMS MADI! ltrZODOB45600BS 0~/30/01 09/30/02 ~ 110 ,000 I 000 I

• I

SBP00010UOH 10/28/01 10/21/02 11000000 s 1000000 lii.L. DISMlit! • POUCf LIMIT 11000000

l>A007001003 03/30/02 03/30(03 ~ $10,000,001 ~

Re: WilliiLCy Ccnm.q Detenti.on hcility. Ccxli~i.c:sae& hol.clas i.• s.mu.UCIQ4 a,;; an Additional. ~ as :i::espect:a General IJ.ahi1ity. Waiver of subrogaUon applies. Wo:r:kers' Ccmpm:lllat1.on l'oJ.i.cy ~dee c::c:rvcu1:·;age ~or .i.-• _.ciao 8909 (ExeC'1tive Offi~ISJ on1y.

cERTIFICATE HOLDER CANCl!LLATION SHOUlD AlllY CIF 'IME/llJIJYE DE8CRf8EO l'OLICICI . . CANceu.s> HfCR& THE lilf'tAATll OATll TMlillePI". TIU! 1$8Ulllll INSIJRSR INILL ElllDEl\VOll. TO MAIL ~ QAYS Wl\ITTEfl Willacy County Puh1io Facil.ity NOTICli TO THW. Cl!ll1ll'ICATI!! HDLDllR NAMED TO THI! U9"T, l!IUT FAILUR!E TO DO ao .SHALL Cozporati.on SU 11'. lli.cSaJ.go s t . - t ~ymopctvi.11.• 1 TX '78500

ACOFW 21.S (7197) OACORD CORPORATION 1988

129 CERTIFICATE OF NER 0 SUBSTANTJAL 11..-_(HITECT 0 CONTRACTOR 0 COMPLETION FIELD 0 OTHER 0 AJA DOCUMENT G704

PROJECT: Willacy County Detention ARCHITECT: Aguir·re Corporation (name address) Facility 1601 Buffalo Drive ARCHITECT'S PROJECT NUMBER: Raymondville, Texas 78580 TO (Owner): CONTRACTOR: Hale-Mills Construction, Lt f'Willacy County Public --i CONTRACT FOR: Willacy County Detention Facility Corporation 546 W. Hidalgo Street Facility Raymondville, Texas 78580 L _J CONTRACT DATE: June 1 0, 2002 DATE OF ISSUANCE: October 6, 2003

PROJECT OR DESIGNATED PORTION SHALL INCLUDE:

The Work performed under this·Contract has been reviewed and found to be substantially complete. The Date of Substantial Completion of the Project or portion thereof designated above is hereby established as July 2 9, 2 3 oo which is also the date of commencement of applicable warranties required by the Contract Documents, except as stated below.

DEFINITION OF DATE OF SUBSTANTIAL·COMPLETION The Date of Substantial Completion of the Work or designated portion thereof is the Date certified by the Architect when construction is sufficiently complete, in accordance with the Contract Documents, so the Owner can occupy or utilize the Work or designated portion thereof for the use for which it is intended, as expressed in the Contract Documents.

A list of items to be completed or corrected, prepared by the Contractor and verified and amended by the Architect, is attached hereto. The failure to include any items on such list does not alter the responsibility of the Contractor to complete all Work· in accordance with the Contract Documents. The date of commencement of warranties for items on the attached list will be the da.te of final payment u~less otherwise agreed t~o;nw~~

Aguirre Corporation ~ /"t::J~~~ ARCHITECT BY . [)AjE

The Contractor will complete or correct the Work on the Ii days from the above Date of Substantial Completion.

Hale-Mills Construction, Ltd. 1u 11 } ) CONTRACTOR ~ The Owner accepts the Work or designated portion thereof as substantially complete d will assume full possession thereof at (time) on 1 , {date).

Willacy County Public Facility II 0/o1 OWNER corpora ti on BY DA1E

The responsibilities of the Owner and the Contractor for security, maintena and insurance shall be as follows: (Note-Owner's and Contractor's legal and insurance counsel should determine and review insurance requirements and coverage; Contractor shall secure consent of surety company. if any.)

Nner assumes all responsibility for security, maintenance, utilites and insurance.

AIA DOCUMENT G704 • CERTIFICATE OF SUBSTANTIAL COMPLETION • APRIL 1976 EDITION • AIA 8 130 © 1978 •THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVE., N.W., WASHINGTON, D.C 20006 (;704-1978 EXHIBIT B AGREEMENT

Made as of the twenty-ninth day of June in the year of 2004.

BETWEEN the owner:

County Jail Public Facility Corporation of Willacy County, Texas 546 West Hidalgo Street

Raymondville, Texas 78580

and the Design/Builder:

Hale-Mills Construction, Ltd. 4130 Bellaire Boulevard, Suite 210 Houston, Texas 77025

For the following Project:

~and constructionof the will consist of a one story, 96 bed, secure adult detention facility, expandable by 96 beds, with an area of approximately 26,000 square feet. The facility will be designed to meet the requirements of the Texas Commission on Jail Standards and will comply with applicable local, state and national codes. The facility will be monitored through closed circuit television and operable remotely through the use of a central control panel located in the central Control Room.

The Sheriffs administrative offices will contain all functional spaces necessary to support the sheriffs office and his stafl: including a sheriff's lobby with public restrooms, clerical office, multi-agency office, chiefs offices, Sheriffs office, dispatch room, 911 room, communications sergeants office, investigators offices, civil process office, deputies office, patrol sergeants office evidence storage, arsenal and keIUlel for the drug dogs. On the opposite side of the sheriff's lobby will be a squad room/conference room, break room and multi-purpose room. A separate Department of Public Safety ("DPS'') room will be located in the administrative area and will have a private entranc.e. The jail lobby will have a separate entrance for the public, adjacent to the DPS. The ceiling in these areas will be acoustical ceiling tile. The floors in these areas will be carpet or vinyl composition tile. The walls will be metal studs with gypsum wall board or concrete masonry unit.

The Intake Area will contain an intake/booking counter, female holding, male holding, violent cell, shakedown, female detox, male detox, inmate property storage, and inmate clothing issue. The ceiling in the Intake Area will be composed of hollow core concrete planks. The floors will be sealed concrete and the walls will be grouted, reinforced concrete masonry units.

a e 1 of26 EXHIBIT 132 cQ The Secure Area (inmate housing area) will contain (12) separation cells, (10) 8- person multi-occupancy cells, and (1) 4-person multi-occupancy cell. Inmate Visitation and Public/Attorney Visitation rooms will be located near the Jail Lobby. The Line-Up room will be located across from the Viewing/Statement room. The Medical Room will be located adjacent to the Kitchen and the Laundry will be adjacent to Intake. There is a Multi-purpose Room, Commissary, ample Storage and Janitor's Closets. The inmate outdoor recreation area will be configured as an interior courtyard and will be visible from Central Control. The Jail Administrator's office will be located next to Central Control. All passage from the secure area to non-secure area will be through security vestibules with interlocking doors. The ceiling in the Secure Area will be composed of hollow core concrete planks. The floors will be sealed concrete and the walls will be grouted, reinforced concrete masonry units. All inmate plumbing fixtures will be security-type stainless steel fixtures. The doors in the secure area will be security hollow metal and the door hardware will be detention hardware.

The kitchen will be designed to accommodate food preparation for 100-200 inmates. It wiH be fully equipped with the appropriate kitchen equipment and food storage areas. The ceiling in the kitchen will be security gypsum board and /or hollow core concrete planks. The floors will be sealed, non-porous concrete and the walls will be reinforced concrete masonry units.

The vehicular sallyport will be fully secured and will accommodate a full size inter-city bus.

The facility will be constructed of tilt-up concrete panel exterior walls. The building structure will be steel framed with a metal roof. The architectural services described in Article 3 will be provided by:

F. C. Cuny Corporation 4222 Rosehill Rd., Suite 7 Garland, Texas 75043

who is lawfully licensed to practice architecture in the State of Texas.

ARTICLE 1

GENERAL PROVISIONS

1.1 BASIC DEFINITIONS

1.1.1 The Contract Documents consist of this Agreement; the Design/Builder's Proposal and written addenda to the Proposal identified in Article 14, the Construction Documents approved by the Owner in accordance with Subparagraph 3.2.3 and Modifications issued after execution of this Agreement. A Modification is a Change Order or a written amendment to this Agreement signed by both parties, or a Construction Change Directive issued by the Owner in accordance with Paragraph 8 .3.

Page 2 of26

133 1.1.2 The tenn ''Work" means the planning, design., construction, fmancing, operation and management services provided (or caused to be provided) by the Design/Builder to fulfill the Design/Builder's obligations.

1.2 EXECUTION, CORRELATION AND INTENT

1.2.1 It is the intent of the Owner and the Design/Builder that the Contract Documents include all items necessary for proper execution and completion of the Work. The Contract Documents are complementary, and what is required by one shall be as binding as if required by all; performance by the Design/Builder shall be required only to the extent consistent with and reasonably inferable from the Contract Documents as being necessary to produce the intended results. Words that have well known technical or construction industry meanings are used in the Contract Documents in accordance with such recognized meanings.

1.2.2 If the Design/Builder believes or is advised by the Architect or by another design professional retained to provide services on the Project that implementation of any instruction received from the Owner would cause a violation of any applicable law, the Design/Builder shall notify the Owner in writing. Neither the Design/Builder nor the Architect shall be obligated to perform any act which either believes will violate any applicable law.

1.2.3 Nothing contained in this Agreement shall create a contractual relationship between the Owner and any person or entity other than the Design/Builder.

1.3 OWNERSHIP AND USE OF DOCUMENTS

1.3.1 Drawings, specifications, and other documents and electronic data furnished by the Design/Builder are instruments of service. The Design/Builder's Architect and other providers of professional services shall retain all common law, statutory and other reserved rights, including copyright in those instruments of service furnished by them. Drawings, specifications, and other documents and electronic data are furnished for use solely with respect to this Agreement. The Owner shall be permitted to retain copies, including reproducible copies, of the drawings, specifications, and other documents and electronic data furnished by the

Design/Builder for information and reference in connection with the Project except as provided in Subparagraphs 1.3.2 and 1.3.3.

1.3.2 Drawings, specifications, and other documents and electronic data furnished by the Design/Builder shall not be used by the Owner or others on other projects, for additions to this Project or for completion of this Project by others, except by agreement in writing and with appropriate compensation to the Design/Builder, unless the Design/Builder is adjudged to be in default under this Agreement or under any other subsequently executed agreement.

1.3.3 If the Design/Builder defaults in the Design/ Builder's obligations to the Owner, the Architect shall grant a license to the Owner to use the drawings, specifications, and other documents and electronic data furnished by the Architect to the Design/Builder for Page 3 of26

134 the completion of the Project, conditioned upon the Owner's execution of an agreement to cure the Design/Builder's default in payment to the Architect for services previously performed and to indemnify the Architect with regard to claims arising from such reuse without the Architect's professional involvement.

1.3.4 Submission or distribution of the Design/Builder's documents to meet official regulatory requirements or for similar purposes in connection with the Project is not to be construed as publication in derogation of the rights reserved in Subparagraph 1.3.1.

ARTICLE2

OWNER 2.1 The Owner shall designate a representative authorized to act on the Owner's behalf with respect to the Project. The Owner or such authorized representative shall examine documents submitted by the Design/Builder and shall render decisions in a timely manner and in accordance with the schedule accepted by the Owner. The Owner may obtain independent review of the Contract Documents by a separate architect, engineer, contractor or cost estimator under contract to or employed by the Owner. Such independent review shall be undertaken at the Owner's expense in a timely manner and shall not delay the orderly progress of the Work.

2.2 The Owner may appoint an on-site project representative to observe the Work and to have such other responsibilities as the Owner and the Design/Builder agree in writing.

2.3 The Owner shall cooperate with the Design/Builder in securing building and other permits, licenses and inspections. The Design/Builder shall be required to pay the fees for such pennits, licenses and inspections.

2.4 The Owner shall disclose, to the extent known to the Owner, the results and reports of prior tests, inspections or investigations conducted for the Project involving: structural or mechanical systems; chemical, air and water pollution; hazardous materials; or other environmental and subsurface conditions. The Owner shall disclose all information known to the Owner regarding the presence of pollutants at the Project's site.

2.5 The Owner shall furnish all legal, accounting and insurance counseling services as may be necessary at any time for the Project, including such auditing services as the Owner may require to verify the Design/Builder's Applications for Payment.

2.6 Those services, infonnation, surveys and reports required by Paragraphs 2.4 through 2.6 which are within the Owner's control shall be furnished at the Owner's expense, and the Design/Builder shall be entitled to rely upon the accuracy and completeness thereof, except to the extent the Owner advises the Design/Builder to the contrary in writing.

2.7 If the Owner requires the Design/Builder to maintain any special insurance coverage, policy, amendment, or rider, the Owner shall pay the additional cost thereof, except as otheiwise stipulated in this Agreement. Page 4 of26

135 2.8 If the Owner has actual knowledge of a fault or defect in the Work or nonconformity with the Design/Builder's Proposal or the Construction Documents, the Owner shall give prompt written notice thereof to the Design/Builder.

2.9 The Owner shall, at the request of the Design/Builder, prior to execution of this Agreement and promptly upon request thereafter, furnish to the Design/Builder reasonable evidence that financial arrangements have been made to fulfill the Owner's obligations under the Contract.

2.10 The Owner shall communicate with persons or entities employed or retained by the Design/Builder through the Design/Builder, unless otherwise directed by the Design/Builder. However, breach of contract by the Design/Builder shall allow direct communication with persons or entities employed or retained by the Design/Builder.

ARTICLE3

DESIGN/BIDLDER

3.1 SERVICES AND RESPONSIBILITIES

3.1.1 Design services required by this Agreement shall be performed by quaJified architects and other design professionals. The contractual obligations of such professional persons or entities are undertaken and perfonned in the interest of the Design/Builder.

3 .1.2 The agreements between the Design/Builder and the persons or entities identified in this Agreement, and any subsequent modifications, shall be in writing. These agreements, including financial arrangements with respect to this Project, shall be promptly and fully disclosed to the Owner upon request.

3.1.3 The Design/Builder shalJ be responsible to the Owner for acts and omissions of the Design/Builder's employees, subcontractors and their agents and employees, and other persons, including the Architect and other design professionals, performing any portion of the Design/Builder's obligations under this Agreement.

3.2 BASIC SERVICES

3.2. t The Design/Builder's Basic Services are described below and in Article 14.

3.2.2 The Design/Builder shall designate a representative authorized to act on the Design/Builder's behalf with respect to the Project.

3 .2.3 The Design/Builder shall submit Construction Documents for review and approval by the Owner. Construction Documents may include drawings, specifications, and other documents and electronic data setting forth in detail the requirements for construction of the Work, and shall:

.1 be consistent with the intent of the Design/Builder's Proposal; Page 5 of26

136 .2 provide information for the use of those in the building trades; and

.3 include documents customarily required for regulatory agency approvals.

3.2.4 The Design/Builder, at the expense of the Design/Builder, with the assistance of the Owner, shall file documents required to obtain necessary approvals of governmental authorities having jurisdiction over the Project.

3.2.5 Unless otherwise provided in the Contract Documents, the Design/Builder shall provide or cause to be provided and shall pay for design services, labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation and other facilities and services necessary for proper execution and completion of the Work, whether temporary or pennanent and whether or not incorporated or to be inco1porated in the Work.

3.2.6 The Design/Builder shall be responsible for all construction means, methods, techniques, sequences and procedures, and for coordinating all portions of the Work under this Agreement.

3.2.7 The Design/Builder shall keep the Owner and Trustee informed of the progress and quality of the Work on a monthly basis.

3.2.8 The Design/Builder shall be responsible for correcting Work which does not confonn to the Contract Documents.

3.2.9 The Design/Builder warrants to the Owner that materials and equipment furnished under the Contract will be of good quality and new unless otherwise required or permitted by the Contract Documents, that the construction will be free from faults and defects, and that the construction will conform with the requirements of the Contract Documents. Construction not conforming to these requirements, including substitutions not properly approved by the Owner, shall be corrected in accordance with Article 9.

3.2.10 The Design/Builder shall pay all sales, consumer, use and similar taxes which had been legally enacted at the time the Design/Builder's Proposal was first submitted to the Owner, and shall secure and pay for building and other permits and governmental fees, licenses and inspections necessary for the proper execution and completion of the Work which are either customarily secured after execution of a contract for construction or are legally required at the time the Design/Builder's Proposal was first submitted to the Owner. It being clearly understood that this is a Separated Contract and the Owner shall cause to be provided to the Design/Builder, by the County Jail Public Facility Corporation of Willacy County, Texas, a Tax Exemption Certificate, which will allow the material and equipment purchased for this project to be purchased without any State Taxes being owed or paid. In order to comply with the sales tax law of the State of Texas, this Agreement shall be considered a separated contract with the costs of Materials and Equipment to be $2,741,364.00 and the costs of Services to be $2,335,236.00, when combined the total contract amount is $5,076,600.00.

Page 6 of26

137 3.2.11 The Design/Builder shall comply with and give notices required by laws, ordinances, rules, regulations and lawful orders of public authorities relating to the Project.

3.2.12 The Design/Builder shall pay royalties and license fees for patented designs, processes or products. The Design/Builder shall defend suits or claims for infiingement of patent rights and shall hold the Owner harmless from loss on account thereof, but shall not be responsible for such defense or loss when a particular design, process or product of a particular manufacturer is required by the Owner. However, if the Design/Builder has reason to believe the use of a required design, process or product is an infringement of a patent, the Design/Builder shall be responsible for such loss unless such information is promptly furnished to the Owner.

3.2.13 The Design/Builder shall keep the premises and surrounding area free from accumulation of waste materials or rubbish caused by operations under this Agreement. At the completion of the Work, the Design/Builder shall remove from the site waste materials, rubbish, the Design/Builder's tools, construction equipment, machinery, and surplus materials.

3.2.14 The Design/Builder shall notify the Owner when the Design/Builder believes that the Work or an agreed upon portion thereof is substantially completed. If the Owner concurs, the Design/Builder shall issue a Certificate of Substantial Completion which shall establish the Date of Substantial Completion, shall state the responsibility of each party for security, maintenance, heat, utilities, damage to the Work and insurance, shall include a list of items to be completed or corrected and shall fix the time within which the Design/Builder shall complete items listed therein. Disputes between the Owner and Design/Builder regarding the Certificate of Substantial Completion shall be resolved in accordance with provisions of Article 10.

3.2.15 The Design/Builder shall maintain at the site for the Owner one record copy of the drawings, specifications, product data, samples, shop drawings, Change Orders and other modifications, in good order and regularly updated to record the completed construction. These shall be delivered to the Owner upon completion of construction and prior to final payment.

3.2.16 The Design/Builder shall facilitate, at the Owner's request the acquisition of the land and furnish services of land surveyors, geotechnical engineers and other consultants for subsoil, air and water conditions when such services are deemed necessary by the Design/Builder to properly carry out the design services required by this Agreement.

3 .2.17 The Design/Builder shall use his best efforts to develop subcontractor interest in the Project and shall furnish to the Owner and Architect for their information a list of possible subcontractors, including suppliers who are to furnish materials or equipment fabricated to a special design, from whom proposals will be requested for each principal portion of the Work. The Architect will promptly reply in writing to the Design/Builder if the Architect or Owner knows of any objection to such subcontractor or supplier. The receipt of such list shall not require the Owner or Architect to investigate the qualifications of proposed subcontractors or suppliers, nor shall it waive the right of the Owner or Architect later to object to or reject any proposed subcontractor or supplier. Page 7 of26

138 The Design/Builder shall seek to solicit bids from these qualified subcontractors and suppliers to furnish services for all construction aspects of the Project covered by this Agreement.

3.3 ADDITIONAL SERVICES

3.3.1 The services described in this Paragraph 3.3 are not included in Basic Services unless so identified in Article 14, and they shall be paid for by the Owner as provided in this Agreement, in addition to the compensation for Basic Services. The services described in this Paragraph 3.3 shall be provided only if authorized or confirmed in writing by the Owner.

3.3.2 Making revisions in drawings, specifications, and other docwnents or electronic data when such revisions are required by the enactment or revision of codes, laws or regulations subsequent to the preparation of such documents or electronic data.

3.3.3 Providing consultation concerning replacement of Work damaged by fire or other cause during construction, and furnishing services required in connection with the replacement of such Work. However, replacement of Work damaged by acts of the Design/Builder or his sub-contractors shall not be considered additional services.

3.3.4 Providing services in connection with a public hearing, arbitration proceeding or legal proceeding, except where the Design/Builder is a party thereto.

3.3.5 Providing coordination of construction performed by the Owner's own forces or separate contractors employed by the Owner, and coordination of services required in connection with construction performed and equipment supplied by the Owner.

3.3.6 Preparing a set of reproducible record documents or electronic data showing significant changes in the Work made during construction shall not be an additional charge.

3.3.7 Providing assistance in the utilization of equipment or systems such as preparation of operation and maintenance manuals, training personnel for operation and maintenance, and consultation during operation.

ARTICLE4

TIME

4.1 Unless otherwise indicated, the Owner and the Design/Builder shall perform their respective obligations as expeditiously as is consistent with reasonable skill and care and the orderly progress of the Project.

4.2 Time limits stated in the Contract Documents are of the essence. The Work to be performed under this Agreement shall commence upon receipt of a notice to proceed unless otherwise agreed and, subject to authorized Modifications, Substantial Completion shall be achieved on or before the date established in Article 14. Page S of26

139 4.3 Substantial Completion is the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so the Owner can occupy or utilize the Work for its intended use.

4.4 Based on the Design/Builder's Proposal, a construction schedule shall be provided consistent with Paragraph 4.2 above.

4.5 If the Design/Builder is delayed at any time in the progress of the Work by an act or neglect of the Owner, Owner's employees, or separate contractors employed by the Owner, or by material changes ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, adverse weather conditions not reasonably anticipatable, unavoidable casualties or other causes beyond the Design/Builder's control, or by delay authorized by the Owner pending arbitration, or by other causes which the Owner and Design/Builder agree may justify delay, then the Contract Time shall be reasonably extended by Change Order.

ARTICLES

PAYMENTS

5.1 PROGRESS PAYMENTS

.1 S.1.1 The Design/Builder shall deliver to the Owner itemized Applications for Payment in such detail as indicated in Article 14.

5.1.2 Within ten (10) days of the Owner's receipt of a properly submitted and correct Application for Payment, the Owner shall make payment to the Design/Builder less retainage of 5% of the amount otherwise payable.

5.1.3 The Application for Payment shall constitute a representation by the Design/Builder to the Owner that the design and construction have progressed to the point indicated, the quality of the Work covered by the application is in accordance with the Contract Documents, and the Design/Builder is entitled to payment in the amount requested.

5.1.4 Upon receipt of payment from the Owner, the Design/Builder shall promptly pay the Architect, other design professionals and each contractor the amount to which each is entitled in accordance with the tenns of their respective contracts.

5.1.5 The Owner shall have no obligation under this Agreement to pay or to be responsible in any way for payment to the Architect, another design professional or a contractor performing portions of the Work.

5.1.6 Neither progress payment nor partial or entire use or occupancy of the Project by the Owner shall constitute an acceptance of Work not in accordance with the Contract Documents.

Page 9 of26

140 5.1.7 The Design/Builder warrants that title to all construction covered by an Application for Payment will pass to the Owner no later than the time of payment. The Design/Builder further warrants that upon submittal of an Application for Payment all construction for which payments have been received from the Owner shall be free and clear of liens, claims, security interests or encumbrances in favor of the Design/Builder or any other person or entity performing construction at the site or furnishing materials or equipment relating to the construction.

5.1.8 At the time of Substantial Completion, the Owner shall pay the Design/Builder the retainage less the reasonable cost to correct or complete incorrect or incomplete Work. Final payment of such withheld sum shaJI be made upon correction or completion of such Work.

S.2 FINAL PAYMENT

5.2.1 Neither final payment nor amounts retained, if any, shall become due until the Design/Builder submits to the Owner: (1) final application for payment; (2) an affidavit that payrolls, bills for materials and equipment, and other indebtedness connected with the Work for which the Owner or Owner's property might be responsible or encumbered (less amounts withheld by the Owner) have been paid or otherwise satisfied; (3) a certificate evidencing that insurance required by the Contract Documents to remain in force after final payment is currently in effect and will not be canceled or allowed to expire until at least 30 days' prior written notice has been given to the Owner; (4) a written statement that the Design/Builder knows of no substantial reason that the insurance will not be renewable to cover the period required by the Contract Documents; (4) consent of surety, if any, to final payment. If a contractor or other person or entity entitled to assert a lien against the Owner's property refuses to furnish a release or waiver required by the Owner, the Design/Builder may furnish a bond satisfactory to the Owner to indemnify the Owner against such lien. If such lien remains unsatisfied after payments are made, the Design/Builder shall indemnify the Owner for all loss and cost, including reasonable attorneys' fees incurred as a result of such lien.

5.2.2 When the Work has been completed and the contract fully perfonned, the Design/Builder shall submit a final application for payment to the Owner, who shall make final payment within 30 days of receipt.

5.2.3 The making of final payment shall constitute a waiver of claims by the Owner except those arising from:

.1 liens, claims, security interests or encumbrances arising out of the Contract and unsettled;

.2 failure of the Work to comply with the requirements of the Contract Documents; or

.3 terms of special warranties required by the Contract Documents.

Page 10 of26

141 5.2.4 Acceptance of final payment shall constitute a waiver of all claims by the Design/Builder except those previously made in writing and identified by the Design/Builder as unsettled at the time of final Application for Payment.

5.3 INTEREST PAYMENTS

5.3.1 Payments due the Design/Builder under this Agreement which are not paid when due shall bear interest from the date due at the rate specified in Article 13, or in the absence of a specified rate, at the legal rate prevailing where the Project is located.

5.3.2 Payments due the Owner under this Agreement which are not paid when due shall bear interest from the date due at the rate specified in Article 13, or in the absence of a specified rate, at the legal rate prevailing where the Project is located.

ARTICLE6

PROTECTION OF PERSONS AND PROPERTY

6.1 The Design/Builder shall be responsible for initiating, maintaining and providing supervision of all safety precautions and programs in connection with the performance of this Agreement.

6.2 The Design/Builder shall take reasonable precautions for the safety of, and shall provide reasonable protection to prevent damage, injury or loss to: (1) employees on the Work and other persons who may be affected. thereby; (2) the Work and materials and equipment to be incorporated therein, whether in storage on or off the site, under care, custody, or control of the Design/Builder or the Design/Builder's contractors; and (3) other property at or adjacent thereto, such as trees, shrubs, lawns, walks, pavements, roadways, structures and utilities not designated for removal, relocation or replacement in the course of construction.

6.3 The Design/Builder shall give notices and comply with applicable laws, ordinances, rules, regulations and lawful orders of public authorities bearing on the safety of persons or property or their protection from damage, injury or loss.

6.4 The Design/Builder shall promptly remedy damage and loss {other than damage or loss insured under property insurance provided or required by the Contract Documents) to property at the site caused in whole or in part by the Design/Builder, a contractor of the Design/Builder or anyone directly or indirectly employed by any of them, or by anyone for whose acts they may be liable.

ARTICLE?

INSURANCE AND BONDS

7.1 DESIGN/BUILDER'S LIABILITY INSURANCE

Page 11 of26

142 7.1.1 The Design/Builder shalJ purchase from and maintain, in a company or companies lawfully authorized to do business in the jurisdiction in which the Project is located and approved by Owner, such insurance as will protect the Design/Builder from claims set forth below which may arise out of or result from operations under this Agreement by the Design/Builder or by a contractor of the Design/Builder, or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable:

.1 claims under workers' compensation, disability benefit and other similar employee benefit laws that are applicable to the Work to be performed;

.2 claims for damages because of bodily injury, sickness or disease, or death;

.3 claims for damages because of bodily injury, sickness or disease, or death of persons other than the Design/Builder's employees;

.4 claims for damages for personal injury liability coverage which are sustained (1) by a person as a result of an offense directly or indirectly related to employment of such person by the Design/Builder or (2) by another person;

.5 claims for damages, other than to the Work itself, because of injury to or destruction of tangible property, including loss of use resulting therefrom;

.6 claims for damages because of bodily injury, death of a person or property damage arising out of ownership, maintenance or use of a motor vehicle; and

.7 claims involving contractual liability insurance applicable to the Design/Builder's obligations under Paragraph 11.5.

7.1.2 The insurance required by Subparagraph 7.1.1 shall be written for not less than limits of liability specified in this Agreement or required by law, whichever coverage is greater. Coverages, whether written on an occurrence or claims-made basis, shall be maintained without interruption from date of commencement of the Work until date of final payment and termination of any coverage required to be maintained after final payment. Schedule of coverage is attached herewith as Exhibit I.

7.1.3 Certificates of insurance acceptable to the Owner shall be delivered to the Owner immediately after execution of this Agreement. These certificates and the insurance policies required by this Paragraph 7.1 shall contain a provision that coverages afforded under the policies will not be canceled or allowed to expire until at least 30 days' prior written notice has been given to the Owner. If any of the foregoing insurance coverages are required to remain in force after final payment, an additional certificate evidencing continuation of such coverage shall be submitted with the application for final payment.

7.2 OWNER'S LIABILITY INSURANCE

7 .2.1 The Design/Builder shall be responsible to provide "Additionally Insured" coverage for the Owner to satisfy the usual liability exposures of the Owner for work performed by the Design/Builder. Optionally, the Owner may purchase and maintain Page 12 of26

143 other insurance for self-protection against claims which may arise from operations under this Agreement. The Design/Builder shall not be responsible for purchasing and maintaining this optional Owner's liability insurance unless specifically required by the Contract Documents.

7.3 PROPERTY INSURANCE

7.3.1 Unless otherwise provided under this Agreement, the Design/Builder shall purchase and maintain, in a company or companies authorized to do business in the jurisdiction, and acceptable to the Owner, in which the principal improvements are to be located, property insurance upon the Work to the full insurable value thereof on a replacement cost basis without optional deductibles. Such property insurance shall be maintained, unless otherwise provided in the Contract Documents or otherwise agreed in writing by all persons and entities who are beneficiaries of such insurance, until substantial completion. This insurance shall include interests of the Owner, the Design/Builder, and their respective contractors and subcontractors in the Work.

7.3.2 Property insurance shall be on an all-risk policy fonn and shall insW"e against the perils of fire and extended coverage and physical loss or damage including, without duplication of coverage, theft, vandalism, malicious mischief, collapse, falsework, temporary buildings and debris removal including demolition occasioned by enforcement of any applicable legal requirements, and shall cover reasonable compensation for the services and expenses of the Design/Builder's Architect and other professionals required as a result of such insured loss. Coverage for other perils shall not be required unless otherwise provided in the Contract Documents.

7.3.3 Reserved.

7.3.4 Unless otherwise provided, the Design/Builder shall purchase and maintain such boiler and machinery insurance required by this Agreement or by law, which shall specifically cover such insured objects during installation and until final acceptance by the Owner. This insurance shall include interests of the Owner, the Design/Builder, the Design/Builder's contractors and subcontractors in the Work, and the Design/Builder's Architect and other design professionals. The Owner and the Design/Builder shall be named insureds.

7.3 .5 A loss insured under the property insurance purchased by the Design/Builder described above in 7.3.2 shall be adjusted by the Owner and made payable to the Owner for the insureds, as their interests may appear, subject to requirements of any applicable mortgagee clause and of Subparagraph 7.3 .10. The Design/Builder shall pay contractors their shares of insurance proceeds received by the Design/Builder, and by appropriate agreement, written where legally required for validity, shall require contractors to make payments to their subcontractors in similar manner.

7.3.6 If the Design/Builder requests in writing that insurance for risks other than those described herein or for other special hazards be included in the property insurance policy, the Owner shall, if possible, obtain such insurance, and the cost thereof shall be charged to the Design/Builder by appropriate Change Order.

Page 13 of26

144 7.3.7 Before an exposure to loss may occur, the Owner shall file with the Design/Builder a copy of each policy that includes insurance coverages required by this Paragraph 7.3 .Each policy shall contain all generally applicable conditions, definitions, exclusions and endorsements related to this Project. Each policy shall contain a provision that the policy will not be canceled or allowed to expire until at least 30 days' prior written notice has been given to the Design/Builder.

7.3.8 The Owner and the Design/Builder waive all rights against each other and the Architect and other design professionals, contractors, subcontractors, agents and employees, each of the other, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this Paragraph 7.3 or other property insurance applicable to the Work, except such rights as they may have to proceeds of such insurance held by the Owner. The Owner or Design/Builder, as appropriate, shall require from contractors and subcontractors by appropriate agreements, written where legally required for validity, similar waivers each in favor of other parties enumerated in this Paragraph 7.3. The policies shall provide such waivers of subrogation by endorsement or otherwise. A waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.

7.3.9 If required in writing by a party in interest, the Owner shall, upon occurrence of an insured loss, give bond for proper performance of the Owner's duties. The cost of required bonds shall be charged against proceeds received. The Owner shall deposit in a separate account proceeds so received, which the Owner shall distribute in accordance with such agreement as the parties in interest may reach, or in accordance with an arbitration award in which case the procedure shall be as provided in Article 10. If after such loss no other special agreement is made, replacement of damaged Work shall be covered by appropriate Change Order.

7.3.10 The Owner shall have power to adjust and settle a loss with insurers unless one of the parties in interest shall object in writing, within five (5) days after occurrence of loss to the Owner's exercise of this power, if such objection be made, the parties shall enter into dispute resolution under procedures provided in Article 10. If distribution of insurance proceeds by arbitration is required, the arbitrators will direct such distribution.

7.3.11 Partial occupancy or use prior to Substantial Completion shall not commence until the insurance company or companies providing property insurance have consented to such partial occupancy or use by endorsement or otherwise. The Owner and the Design/Builder shall take reasonable steps to obtain consent of the insurance company or companies and shall not. without mutual written consent, take any action with respect to partial occupancy or use that would cause cancellation, lapse or reduction of coverage.

7.4 PERFORMANCE AND PAYMENT BOND

7.4.l The Design/Builder shall furnish bonds covering faithful performance of the Agreement and payment obligations arising thereunder. Bonds may be obtained through the Design/Builder's usual source, with Owner's approval, and the cost thereof shall be

Page 14 of26

145 included in the Guaranteed Maximum Price stipulated in Section 13.1.1. The amount of each bond shall be equal to one hundred percent (100%) of the GMP.

7.5 LOSS OF USE INSURANCE

7.5.1 The Design/Builder will add coverage to their Builders Risk policy and maintain such insurance as will insure the Owner against loss of use of the Owner's property, for a period not-to-exceed 12-months, due to fire or other hazards, however caused. Such coverage is limited to an insurable loss, as defined in the property insurance provisions, and an amount of $ 1,977.00 per day.

CHANGES IN THE WORK

8.1 CHANGES

8.1.1 Changes in the Work may be accomplished after execution of this Agreement, without invalidating this Agreement, by Change Order, Construction Change Directive, or order for a minor change in the Work.

8.1.2 A Change Order shall be based upon agreement between the Owner and the Design/Builder; a Construction Change Directive may be issued by the Owner without the agreement of the Design/Builder, an order for a minor change in the Work may be issued by the Design/Builder alone.

8.1.3 Changes in the Work shall be performed under applicable provisions of the Contract Documents, and the Design/Builder shall proceed promptly, unless otherwise provided in the Change Order, Construction Change Directive, or order for a minor change in the Work.

8.1.4 If unit prices are stated in the Contract Documents or subsequently agreed upon, and if quantities originally contemplated are so changed in a proposed Change Order or Construction Change Directive that application of such unit prices to quantities of Work proposed will cause substantial inequity to the Owner or the Design/Builder, the applicable unit prices shall be equitably adjusted.

8.2 CHANGE ORDERS

8.2.1 A Change Order is a written instrument prepared by the Design/Builder and signed by the Owner and the Design/Builder, stating their agreement upon all of the following:

.1 a change in the Work;

.2 the amount of the adjustment, if any, in the Contract Sum; and

.3 the extent of the adjustment, if any, in the Contract Time.

Page IS of26

146 8.2.2 If the Owner requests a proposal for a change in the Work from the Design/Builder and subsequently elects not to proceed with the change, a Change Order shall be issued to reimburse the Design/Builder for any costs incurred for estimating services, design services or preparation of proposed revisions to the Contract Documents.

8.3 CONSTRUCTION CHANGE DIRECTIVES

8.3.1 A Construction Change Directive is a written order prepared and signed by the Owner, directing a change in the Work prior to agreement on adjustment, if any, in the Contract Sum or Contract Time, or both. Both parties to this Agreement agree to make every effort to not issue or use any Construction Change Directives in this work.

8.3.2 Except as otherwise agreed by the Owner and the Design/Builder, the adjustment to the Contract Sum shall be determined on the basis of reasonable expenditures and savings of those performing the Work attributable to the change, including the expenditures for design services and revisions to the Contract Documents. In case of an increase in the Contract Sum, the cost shall include a reasonable allowance for overhead and profit. In such case, the Design/Builder shall keep and present an itemized accounting together with appropriate supporting data for inclusion in a Construction Change Directive. Unless otherwise provided in the Contract Documents, costs for these puzposes shall be limited to the following:

.1 costs of labor, including social security, old age and wiemployment insurance, fringe benefits required by agreement or custom, and workers' compensation insurance;

.2 costs of materials, supplies and equipment, including cost of transportation, whether incorporated or consumed;

.3 rental costs of machinery and equipment exclusive of hand tools, whether rented from the Design/Builder or others;

.4 costs of premiums for all bonds and insurance permit fees, and sales, use or similar taxes;

.5 additional costs of supervls1on and field office personnel directly attributable to the change; and fees paid to the Architect, engineers and other professionals.

8.3.3 Pending final determination of cost to the Owner, amounts not in dispute may be included in Applications for Payment. The amount of credit to be allowed by the Design/Builder to the Owner for deletion or change which results in a net decrease in the Contract Sum will be actual net cost. When both additions and credits covering related Work or substitutions are involved in a change, the allowance for overhead and profit shall be figured on the basis of the net increase, if any, with respect to that change.

8.3.4 When the Owner and the Design/Builder agree upon the adjustments in the Contract Sum and Contract Time, such agreement shall be effective immediately and

Page 16 of26

147 shall be recorded by preparation and execution of an appropriate Construction Change Directive.

8.4 MINOR CHANGES IN THE WORK

8.4.1 The Design/Builder shall have authority to make minor changes in the Construction Documents and construction consistent with the intent of the Contract Documents when such minor changes do not involve adjustment in the Contract Sum or extension of the Contract Time. The Design/Builder shall promptly inform the Owner, in writing, of minor changes in the Construction Documents and construction.

8.5 CONCEALED CONDITIONS

8.5.1 If conditions are encountered at the site which are (1) subsurface or otherwise concealed physical conditions which differ materially from those indicated in the Contract Documents, or (2) unknown physical conditions of an unusual nature which differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents, then notice by the observing party shall be given to the other party promptly before conditions are disturbed and in no event later than 21 days after first observance of the conditions. The Contract Sum shall be equitably adjusted for such concealed or unknown conditions by Change Order upon claim by either party made within 21 days after the claimant becomes aware of the conditions.

8.6 REGULATORY CHANGES

8.6.1 The Design/Builder shall be compensated for changes in the construction necessitated by the enactment or revision of codes, laws or regulations subsequent to the submission of the Design/Builder's Proposal.

ARTICLE9

CORRECTION OF WORK

9.1 The Design/Builder shall promptly correct Work rejected by the Owner, or his designee, or known by the Design/Builder to be defective or failing to conform to the requirements of the Contract Documents, whether observed before or after Substantial Completion and whether or not fabricated, installed or completed. The Design/Builder shall bear costs of correcting such rejected Work, including additional testing and inspections.

9.2 If, within one (1) year after the date of Substantial Completion of the Work or, after the date for commencement of warranties established in a written agreement between the Owner and the Design/Builder, or by terms of an applicable special warranty required by the Contract Docwnents, any of the Work is found to be not in accordance with the requirements of the Contract Documents, the Design/Builder shall correct it promptly after receipt of a written notice from the Owner to do so unless the Owner has previously given the Design/Builder a written acceptance of such condition.

Page 17 of26

148 9.3 Nothing contained in this Article 9 shall be construed to establish a period of limitation with respect to other obligations which the Design/Builder might have under the Contract Documents. Establishment of the time period of one (1) year as described in Subparagraph 9.2 relates only to the specific obligation of the Design/Builder to correct the Work, and has no relationship to the time within which the obligation to comply with the Contract Documents may be sought to be enforced, nor to the time within which proceedings may be commenced to establish the Design/Builder's liability with respect to the Design/Builder's obligations other than specifically to correct the Work.

9.4 If the Design/Builder fails to correct nonconforming Work as required or fails to carry out Work in accordance with the Contract Documents, the Owner, by written order signed personally or by an agent specifically so empowered by the Owner in writing, may order the Design/Builder to stop the Work, or any portion thereof, until the cause for such order has been eliminated; however, the Owner's right to stop the Work shall not give rise to a duty on the part of the Owner to exercise the right for benefit of the Design/Builder or other persons or entities.

9.5 If the Design/Builder defaults or neglects to carryout the Work in accordance with the Contract Docmnents and fails within seven (7) days after receipt of written notice from the Owner to commence and continue correction of such default or neglect with diligence and promptness, the Owner may give a second written notice to the Design/Builder and, seven (7) days following receipt by the Design/Builder of that second written notice and without prejudice to other remedies the Owner may have, correct such deficiencies. In such case an appropriate Change Order shall be issued deducting from payments then or thereafter due the Design/Builder, the costs of correcting such deficiencies including Owner costs and expenses related thereto. If the payments then or thereafter due the Design/Builder are not sufficient to cover the amount of the deduction, the Design/Builder shall pay the difference to the Owner. Such action by the Owner shall be subject to dispute resolution procedures as provided in Article I 0.

ARTICLE 10

DISPUTE RESOLUTION, MEDIATION AND ARBITRATION

10.1 Claims, disputes or other matters in question between the parties to this Agreement arising out of or relating to this Agreement or breach thereof shall be subject to and decided by mediation or arbitration. Such mediation or arbitration shall be conducted in accordance with the Construction Industry Mediation or Arbitration Rules of the American Arbitration Association currently in effect.

10.2 In addition to and prior to arbitration, the parties shall endeavor to settle disputes by mediation. Demand for mediation shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. A demand for mediation shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for mediation be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes ofrepose or limitations.

Page 18of26

149 10.3 Demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes of repose or limitations.

10.4 An arbitration pursuant to this Article may be joined with an arbitration involving common issues of law or fact between the Design/Builder and any person or entity with whom the Design/Builder has a contractual obligation to arbitrate disputes. No other arbitration arising out of or relating to this Agreement shall include, by consolidation. joiner or in any other manner, an additional person or entity not a party to this Agreement or not a party to an agreement with the Design/Builder, except by written consent containing a specific reference to this Agreement signed by the Owner, the Design/Builder and any other person or entities sought to be joined. Consent to arbitration involving an additional person or entity shall not constitute consent to arbitration of any claim, dispute or other matter in question not described in the written consent or with a person or entity not named or described therein. The foregoing agreement to arbitrate and other agreements to arbitrate with an additional person or entity duly consented to by the parties to this Agreement shall be specifically enforceable in accordance with applicable law in any court having jurisdiction thereof.

10.S The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

ARTICLE11

MISCELLANEOUS PROVISIONS

11.1 Unless otherwise provided, this Agreement shall be governed by the law of the place where the Project is located.

11.2 SUBCONTRACTS

11.2.1 The Design/Builder, as soon as practicable after execution of this Agreement, shall furnish to the Owner in writing the names, address, telephone numbers, fax numbers and representatives names of the persons or entities the Design/Builder will engage as contractors for the Project.

11.3 WORK BY OWNER OR OWNER'S CONTRACTORS

11.3 .1 The Owner reserves the right to perfonn construction or operations related to the Project with the Owner's own forces, and to award separate contracts in connection with other portions of the Project or other construction or operations on the site under conditions of insurance and waiver of subrogation identical to the provisions of this Agreement. If the Design/Builder claims that delay or additional cost is involved because of such action by the Owner, the Design/Builder shall assert such claims as provided in Subparagraph 11.4. Page 19 of26

150 11.3.2 The Design/Builder shall afford the Owner's separate contractors reasonable opportwiity for introduction and storage of their materials and equipment and perfonnance of their activities and shall connect and coordinate the Design/Builder's construction and operations with theirs as required by the Contract Documents.

11.3.3 Costs caused by delays or by improperly timed activities or defective construction shall be borne by the party responsible therefor.

11.4 CLAIMS FOR DAMAGES

11.4.1 If either party to this Agreement suffers injury or damage to person or property because of an act or omission of the other party, of any of the other party's employees or agents, or of others for whose acts such party is legally liable, written notice of such injury or damage, whether or not insured, shall be given to the other party within a reasonable time not exceeding 21 days after first observance. The notice shall provide sufficient detail to enable the other party to investigate the matter. If a claim of additional cost or time related to this claim is to be asserted, it shall be filed in writing.

11.S INDEMNIFICATION

11.5.l To the fullest extent permitted by law, the Design/Builder shall indemnify and hold hannless the Owner, Owner's consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) including loss of use resulting therefrom, but only to the extent caused in whole or in part by negligent acts or omissions of the Design/Builder, anyone directly or indirectly employed by the Design/Builder or anyone for whose acts the Design/Builder may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Paragraph 11.5.

11.5.2 In claims against any person or entity indemnified under this Paragraph 11.5 by an employee of the Design/Builder, anyone directly or indirectly employed by the Design/Builder or anyone for whose acts the Design/Builder may be liable, the indemnification obligation under this Paragraph 11.5 shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Design/Builder under workers' compensation acts, disability benefit acts or other employee benefit acts.

11.6 SUCCESSORS AND ASSIGNS

11.6.1 The Owner and Design/Builder, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors and assigns of such other party with respect to all covenants of this Agreement. Neither the Owner nor the Design/Builder shall assign this Agreement Page 20 of26

151 without the written consent of the other. The Owner may assign this Agreement to any institutional lender providing construction financing, and the Design/Builder agrees to execute all consents reasonably required to facilitate such an assigrunent. If either party makes such an assigrunent, that party shall nevertheless remain legally responsible for all obligations under this Agreement, unless otherwise agreed by the other party.

11.7 TERMINATION OF PROFESSIONAL DESIGN SERVICES

11.7.1 Prior to termination of the services of the Architect or any other design professional designated in this Agreement, the Design/Builder shalJ identify to the Owner in writing another architect or other design professional with respect to whom the Owner has no reasonable objection, who will provide the services originally to have been provided by the Architect or other design professional whose services are being terminated.

11.8 EXTENT OF AGREEMENT

11.8.1 This Agreement represents the entire agreement between the Owner and the Design/Builder and supersedes prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by written instrument and signed by both the Owner and the Design/Builder.

ARTICLE12

TERMINATION OF mE AGREEMENT

12.1 TERMINATION BY mE OWNER

12.1.1 This Agreement may be terminated by the Owner upon 14 days' written notice to the Design/Builder in the event that the Project is abandoned. If such termination occurs, the Owner shall pay the Design/Builder for Work completed and for proven loss sustained upon materials, equipment, tools, and construction equipment and machinery, including reasonable profit and applicable damages.

12.1.2 If the Design/Builder defaults or persistently fails or neglects to carry out the Work in accordance with the Contract Documents or fails to perform the provisions of this Agreement, the Owner may give written notice that the Owner intends to terminate this Agreement. If the Design/Builder fails to correct the defaults, failure or neglect within seven (7) days after being given notice, the Owner may then give a second written notice and, after an additional seven (7) days, the Owner may without prejudice to any other remedy terminate the employment of the Design/Builder and take possession of the site and of all materials, equipment, tools and construction equipment and machinery thereon owned by the Design/Builder and finish the Work by whatever method the Owner may deem expedient. If the unpaid balance of the Contract Sum exceeds the expense of finishing the Work and all damages incurred by the Owner, such excess shall be paid to the Design/Builder. If the expense of completing the Work and all damages incurred by the Owner exceeds the unpaid balance, the Design/Builder shall pay the difference to the Owner. This obligation for payment shall survive termination of this Agreement. Page 21 of26

152 12.2 TERMINATION BY THE DESIGN/BUILDER

12.2.l If the Owner fails to make payment when due, or the work is stopped for 30 days by causes outside of the control of the Design/Builder, the Design/Builder may give written notice of the Design/Builder's intention to terminate this Agreement or seek adjustment in price and time. If the Design/Builder fails to receive payment within seven (7) days after receipt of such notice by the Owner, the Design/Builder may give a second written notice and, seven (7) days after receipt of such second written notice by the Owner, may terminate this Agreement, or the Design/Builder will receive an adjustment for price and time, and recover from the Owner payment for Work executed and for proven losses sustained or increases anticipated upon materials, equipment, tools, and construction equipment and machinery, including reasonable profit and applicable damages.

The owner shall compensate the Design/Builder in accordance with Article 5, Payments, and the other provisions of this Agreement as described below.

ARTICLE13

BASIS OF COMPENSATION

13.1 COMPENSATION

+3-:t:+-F61'--t:he..D.efil&!i!Rnilctr.r'i:: nerfonnance of the Work, as described in Paragraph 3.2 and including any other services IiSfedin-J\rticle-14.as.p!'rt nflhci;r. ~P.TVir.P.~ thP. OwnP.r shall pay the Design/Builder in current funds the Contract Sum as follows: The sum of the cost of the Work, including the Design/Builder's fee are guaranteed by the Design/Builder as a Stipulated Sum, subject to additions and deductions by changes in Work as provided in the Agreement, the Stipulated Sum of Five Million, Seventy-Six Thousand, Six Hundred and No cents ($5,076,600.00). In order to comply with the sales tax law of the State of Texas, this Agreement shall be considered a separated contract, with the Cost of Materials and Equipment to be $2,741.364.00 and the Cost of Services to be $2,335.236.00, when combined, the total contract amount is $5,076,600.00. The Stipulated Sum includes $100,00.00 for furniture, fixtures and equipment.

13:T:2-Notwithstanding-afty-provis1en-herei.n.1Q.11)e_~ontrary, any obligations or liabilities of any kind of Owner or any of its officers, employees, agents or representatives under this Agreement shall be payable solely from the proceeds of the County Jail Public Facility Corporation of Willacy County, Texas Project Revenue Bonds, Series 2004, and the Construction Account established pursuant to a Trnst Indenture, dated as of the 1st day of July, 2003 (the "Indenture''), by and between Owner and U.S. Bank, National Association, (the "Trustee"). This Agreement is not intended to create nor does it create any liability on the part of the persons or entity referenced in the previous sentenance except to the extent such liabilities are paid and can be paid from funds in the above referenced constust account.

Page 22 of26

153 ARTICLE 14

OTHER CONDITIONS AND SERVICES

14.1 The Basic Services to be performed shall be commenced on June 29, 2004 and, subject to authorized adjustments and to delays not caused by the Design/Builder, Substantial Completion shall be achieved in the contract time of three hundred and sixty-five (365) calendar days (Contract Time).

Should the Design/Builder fail to substantially complete the Project within the Contract Time, subject to extensions pursuant to this Agreement, the Design/Builder agrees to pay the Owner as liquidated damages for each and everyday of delay beyond the Contract Time the sum of One Thousand Nine Hundred Seventy Seven Dollars and No Cents ($1,977.00) per day, which sum is hereby, in view of the difficulty of estimating such damages, agreed upon, fixed, and determined by the parties hereto, as the liquidated damages that the Owner will suffer by such default and not by way of penalty, and shall be deducted as such from the "Balance Due Design Builder."

14.2 The Basic Services beyond those described in Article 3 are as follows:

NONE

14.3 Additional Services beyond those described in Article 3 are as follows:

14.4 The Design/Builder shall submit an Application for Payment on the First (1st) day of each month.

14.5 The Design/Builder shall provide monthly progress reports with current photographic documentation with each pay request. NONE 14.6 The Design/Builder shall provide documentation of acceptable roofing preparation and installation from roofing manufacturer prior to substantial completion, and during installation, inspection of roofing continuously to insure compliance.

14.7 The Design/Builder will provide updated graphic monthly schedule.

14.8 To the extent that any Owner covenants contained in this Agreement or the performance thereof conflict with the provisions(or performance thereof) of the Indenture Agreement, dated as of , by and between the Owner and Hudspeth County, Texas, the provisions of the Indenture Agreement shall control.

Page 23of26

154 This Agreement entered into as of the day and year first written above.

OWNER DESIGN/BUILDER

!(~~P~nney, 1- { !Kendall . -I President of KGP' County Jail Public Facility Corporation of Management, LLC .' Willacy County, Texas Hale-Mills Construction, Ltd. I

Page24of26

155 EXHIBIT 1 ACORD. CERTIFICATE OF LIABILITY INSURANCE 3- ftt!Oal"''1 °"IUllODIW'Y1 06/24/04 TllllCERTIFIC4TlllllSUEDASAllATTUOFltl..._TIDN ONLY AllD COltPl!llS llOtUOHT$ UJllOlt Tiii! Cl!llT1f1CATI! !Ibo 'fr;m•p~tioa. aro11p, Lt

. ........... 11,000.000 • A lC BC.!10006745 09/'J0/03 : 011/30/04 I ,

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Cl!'R'JlflCATI! llOLllEll C:IUICEl.LATIOll ~AO AHf ~ 1., .\I~ CSJCMIO•OVC1f.lal' C/.JrilcaLIO Mf'OPill l'WliJAA:TIQH °"1'! n-M:;, i'MH18..ltb r41UM.JI ..... tNmA¥Gll 10 iMM. 3~ DA'f1 WRtm'lt wi11~ay Co!Ulty ?llb1ic ro:aci1ity N1.mc:.-rur.,.1..vt1•11,;4"ttr~i...,...o1'1t,.l.W-f,\Vl .. ~rQt.>.Jl:J~L C:ocporaUon 546 Mht IU.d.fl190 Street 1'4~DdVil1e 'l:lC 71580 .........,...,.,,.. lilPOll 1.0 oaUO.AllC.fi CR IJAALITY Cl ..,, KltlO lPzJN M NJUMA, fTI IGINTS :::ia

Page25 of26

156 ACORD. CERTIFICATE OF LIABILITY INSURANCE TI411CER11FICATE • ISIUEOA8A llAT11!R Of'ntl'ORMA1ION ONLY AHO COIWPl,_S HO RlGltTll Ul'Olt THI! Cl!ft.Tlf!CATI!: !l'bc '1'.t:."lllSpoZ't~tJ.OD CJ.t:oup, X.td. HOLCE1!. TNll C:!Anl'JCAff OOIES NOT AlllEND. U.TENO 011 11111 w11crest Gre

._ _________ -----··" ------·-· COllERAOt!S Texas . ,.,.., Mutual- ....,., ••,,;. I~•· Co, ce• --......_________ - _, ~.,.

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a , auildK• • at.re ,___ .,_,.,. ~--"eo.T•tt.1:•~ ·'A>~·:a Ol/JOID•' OJ/J0/05. ··~·,u.;;ai~.,.-Oil;:li-"'. Rof'.1tr•11ee--Cou11ty Jail. Cert1t1eau Koldltt' 1• inaluc!H aa a;n Additiooal :i:aauHd u reapects eeuerlll Liabtl1ty ud wa1-ver ~ lllbr09ation applie•. =-------------------1 ·- Oac:r. .....--....--.;;.;._i

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CEllTIFICATlr lfOLDFR tHo,.l\b AW cw,,.~ CA:tc1n•10 PQ.H;lit: . . C:&H!Jl.LIO ll'ON nc U.PJt.A110ff O.l'f-'-",-IUll...,>MU"'•"'u.ttt0t......,.'ta...._ 30 0..-.-rn-1 U.5. llllnJc Rational. Aaaociation rt01a 1c,, ••cucr•r..1.ltHUl.OUI lMNW ru ftllr.LY.1 •u'F ,.• .Mt. 1t,1u,~..: """"'" l&D 11th at.ra.t, Suite ftSO lilPOlr Ml 0...~TIOlt CA LIA&Lfl'I 01 >-"'""°""°""" NMJllOA ITS Mlllwuuax c:o 80242 "'"""""''~)

Page 26 of26

157 Hale-Mills APR l 3 70W1

I AJA Document G704'" - 2000 Construction, Ltd

Certificate of Substantial Completion PROJECT: PROJECT NUMBER: /04-01 OWNER: 181 (Name and addres.v); CONTRACT FOR: General Construction Willacy County Sheriffs Office ARCHITECT: 181 CONTRACT DATE: June 29, 2004 1371 Industrial Park Drive CONTRACTOR: 181 Raymondville, Texas 78580 FIELD: 181 TO OWNER: TO CONTRACTOR: (Name and address): (Name and address): OTHER:O County Jail Public Facility Corporation Hale-Mills Construction, Ltd. of Willacy County, Texas 4130 Bellaire Boulevard, Suite 210 546 West Hildalgo Houston, Texas 77025 Raymondville, Teicas 78580

PROJECT OR PORTION OF THE PROJECT DESIGNATED FOR PARTIAL OCCUPANCY OR USE SHALL INCLUDE:

Entire Project

The Work perfonned under this Contract has been reviewed and found, to the Architect's best knowledge, information and belief, to be substantially complete. Substantial Completion is the stage in the progress of the Work when the Work or designated portion 1s sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use. The date of Substantial Completion of the Project or portion designated above is the date of issuance established by this Certificate, which is also the date of commencement of applicable warranties required by the Contract Documents, except as stated below:

Warranty Date of Commencement March 30, 2005 March 30, 2005

FCCunyCorporation -AR-CH---'ITE--CT____,______ ~_-ri~__.. ~/5 /05 ~ .....,.D-AT=e-1-6F,,.....,J5s~s-=uA:;....,.biC~e--:;_.,;:=---

A list of items to be completed or corrected is auached hereto. The failure to include any items on such list docs not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents. Unless otherwise agreed lo in writing, the date of commencement of warranties for items on the allached list will be the date of issuance of the final Certificate of Payment or the date of final payment.

Cost estimate of Work that is Incomplete or defective: s o.oo

The Contractor will complete or correct the ork on e ist of items attached hereto within 111irty ( 30) days from the above date of Substantial Completion. . J ) Hale-Mills Construction, Ltd. CONTRACTOR ' • ~ DA E/ fI {;...~ The Owner accepts the Work or designated portion as substantially co cte and will assume full possession at 10:00 a.m. (time) on March 30, 2005 (date).

County Jail Public Facility Corporation of Willacy County, Teicas OWNER

AIA Document G704TI• -2000. Copyright C) 1963, 1978, 1992 and 2000 by The American lnstltule ol Architects. All rights res&rved. WA!'NING: This AIA9 Document Is protected by U.S. Cop~lght Law and 1n1ernetlonal Trealles. Unauthorized reproduction or distribution of this AIA Document, or 1 any portion of It, may result In &evete clvll and crlmJnal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 13:51 :19 on 04/01/2005 under Order No.1000120966_ 1 which expires on 5/28/2005, and Is not for resale. uaer Notea: (885531343)

158 EXHIBIT C Standard Form of Agreement Between Owner and Design-Builder - Lump Sum This document has been amended and revised from its standard form.

This AGREEMENT is made as of the /'lJ.c.,day of 1 Lin the year of 2006, by and between the following parties, for services in conne~ with the Project identified below.

OWNER:

The Willacy County Loca] Government Corporation 190 North 3rc1 Street Courthouse Annex Raymondville, Texas 78580

DESIGN-BUILDER: HMC Contracting South Texas, L.L.C. 4130 Bellaire Boulevard, Suite 210 Houston, Texas 77025-1044

PROJECT:

Willacy County 2000 Bed ICE Facility WiUacy County, Texas

In consideration of the mutual covenants and obJigations contained herein, Owner and Design-Builder agree as set forth herein.

Article l Scope of Work

1.1 Design-Builder shall perform all design and construction services, and provide all material, equipment, tools and labor, necessary to complete the Work described in and reasonably inferable from the Contract Documents.

154912 2068.1 EXHIBIT

160 1.2 A description of the Project is attached as part of Exhibit A. This description is for general purposes only - the Project may have different technical attributes not described in this Exhibit or described differently in this Exhibit.

Article 2 Contract Documents

2.1 The Contract Documents are comprised of the following:

.1 All written modifications, amendments and change m:dei:s. to this Agreement issued in accordance with DBIA Document J'ln '\~'\ Standard Form of General Conditions of Contract Between Owner-and Design- Builder (1998 Edition) as amended ("General Conditions of Contract");

.2 This Agreement, including all exhibits and attachments1 executed by Owner and Design-Builder;

.3 The General Conditions of Contract;

.4 Construction Documents prepared in accordance with Section 2.4 of the General Conditions of Contract along with a description of the Project, attached as Exhibit A;

.5 Attached as Exhibit B, Design-Builder's Applications for Payment.

.6 Attached Exhibit C, Design-Builder's Certificate of Insurance .

.7 Attached Exhibit D, Payment and Performance Bonds .

.8 Attached as Exhibit E, the list of drawings as of the effective date of this Agreemen~ which may be modified.

Article 3 Interpretation and Intent

3.1 The Contract Documents are intended to permit the parties to complete the Work and all obligations required by the Contract Documents within the Contract Time(s) for the Contract Price. The Contract Documents are intended to be complementary and interpreted in harmony so as to avoid conflict, with words and phrases interpreted in a manner consistent with construction and design industry standards. In the event of any inconsistency, conflict, or ambiguity between or among the Contract Documents, the Contract Documents shall take precedence in the order in which they are listed in Section 2.1 hereof.

3.2 Terms, words and phrases used in the Contract Documents, including this Agreement, shall have the meanings given them in the General Conditions of Contract.

154912 2066.1 2

161 3.3 The Contract Documents form the entire agreement between Owner and Design- Builder and by incorporation herein are as fully binding on the parties as if repeated herein. No oral representations or other agreements regarding the Work have been made by the parties except as specifically stated in the Contract Documents.

Article 4 Ownership of Work Product

4.1 Work Product. All drawings, specifications and other documents and electronic data furnished by Design-Builder to Owner under this Agreement ("Work Product") are deemed to be instruments of service and Design-Builder shall retain the ownership and property interests therein, including the copyrights thereto.

4.2 Upon Owner's payment in full for all Work perfonned under the Contract Documents, the drawings, specifications, models, renderings, work product, instruments of service and other documents shall become the property of the Owner. Owner may utilize such drawings, specifications, models, renderings, work product, instruments of service and other documents only for the repair, maintenance, modification, expansion or renovation of the Project. Nevertheless, it is understood by Owner that all such Drawings, Specifications, models, renderings, work product, instruments of service and other documents may be inappropriate for use in the construction of any other project. Therefore, Design-Builder shall not be responsible for the use or workability of such drawings, specifications, models, renderings, work product, instruments of service and other documents in connection with any project other than the Project for which they were specifically prepared. OWNER SHALL INDEMNIFY, DEFEND AND HOLD DESIGN-BUILDER HARMLESS OF AND FROM ANY AND ALL CLAIMS, DEMANDS AND CAUSES OF ACTION, INCLUDING ATIORNEY'S FEES AND LITIGATION COSTS, ARISING OUT OR RELATING TO OWNER'S USE OF DRAWINGS, SPECIFICATIONS, MODELS, RENDERINGS, WORK PRODUCT, INSTRUMENTS OF SERVICE AND OTHER DOCUMENT FOR THIS PROJECT ON ANY OTHER PROJECT.

Article 5 Contract Time

5.1 Date of Commencement. The Date of Commencement shall be June 21, 2006 ("Date of Commencement").

5.2 Substantial Completion and Final Completion

5.2.1 The Project will be completed in two phases. The First Phase ("Phase l ")shall be the substantial completion of facilities (excluding the support building) to be able house 500 inmates and shall be substantially completed within 40 days of the Date of Commencement. The Second Phase ("Phase 2") will be the substantial completion of faci1ities to be able to house an additional 1500 imnates (for a total of 2000 inmates), as well as substantial completion of the support building, within 90 days of the Date of

154912 2068.1 3

162 Commencement. The substantial completion of Phase 2 shall be referred to in the Contract Documents as the "Scheduled Substantial Completion Date."

5.2.2 Intentionally left blank. 5.2.3 Final Completion of the Work, including the support building, shall be achieved 120 days after the Date of Commencement.

5.2.4 AU of the dates set forth in this Article 5 ("Contract Time(s)") shall be subject to adjustment in accordance with the General Conditions of Contract. The Contract Time shall be extended if ICE grants time extensions to Owner and/or Willacy County, Texas, for the same amount of time granted by ICE, unless agreed otherwise.

5.3 Time is of the Essence. Owner and Design-Builder mutually agree that time is of the essence with respect to the dates and times set forth in the Contract Documents.

5.4 Liquidated Damages. Design-Builder understands that if Substantial Completion is not attained by the Scheduled Substantial Completion Date, Owner will suffer damages which are difficult to determine and accurately specify. Design-Builder agrees that if Substantial Completion is not attained by thirty (30) days after the Scheduled Substantial Completion Date (the "LO Date"), Designer-Builder shall pay Owner Twenty Five Thousand Dollars ($25,000) as liquidated damages for each day that Substantial Completion extends beyond the LD Date. The liquidated damages provided herein shall be in lieu of all liability for any and all extra costs, losses, expenses, claims, penalties and any other damages, whether special or consequential, and of whatsoever nature incurred by Owner which are occasioned by any delay in achieving Substantial Completion.

Article 6 Contract Price

6.1 Contract Price. Owner shall direct the Trustee to pay Design-Builder's Applications for Payment attached to this Agreement in the total sum of Fifty Million Dollars ($50,000,000) ("Contract Price"), subject to adjustments made in accordance with the General Conditions of Contract.

6.2 Materials incorporated into this project are exempt from State Sales tax according to provisions of the Texas Tax Code, Chapter 151, Subsection H. The Owner shall provide to Design-Builder a limited sales, excise and use tax permit or exemption certificate which shall enable Design-Builder to buy the materials to be incorporated into the Work without paying tax due at time of purchase. This is a separated contract as that term is used the Texas Tax Code and applicable Texas law and the Owner agrees and acknowledges that it is purchasing the material for the Work separately from the labor for the Work. Material for the Work totals $19,997,000 and labor for the Work totals $30,003,000. This paragraph is meant to meet the separated contract definition under the Texas Tax Code and the laws of Texas.

154912 2068.1 4

163 6.3. Upon Substantial Completion of the Project, Design Builder will provide Owner a certification that the Project has been substantially completed. Design-Builder will also provide a final release for all payments made by Owner and a consent of surety. Upon Final Completion, Design-Builder shall supply a list of all subcontractors utilized by Design-Builder and all applicable warranties.

6.4 Design-Builder guarantees to complete the Project for the Contract Price, which cannot be modified by either party except by a Change Order signed by both parties pursuant to Article 9 of the General Conditions.

Article 7 Procedure for Payment

7 .1 Progress Payments

7.1.l Design-Builder's Applications for Payment are attached to this Agreement as Exhibit B. By the execution of this Agreement, Owner hereby approves the Applications for Payment and agrees to take all actions necessary to fund such Applications for Payment.

7.1.2 Owner agrees that the Trustee can pay the Applications for Payment upon submission by Design-Builder of the Applications for Payment to the Trustee.

7 .2 Source of Funds. Design-Builder and Owner acknowledge and agree that the funding for payments due under this Agreement shall come from the Construction Fund established pursuant to the Trust Indenture by the Trustee, U.S. Banlc, N.A. (the "Trustee").

7.3 (Intentionally Left Blank)

7 .4 Record Keeping and Finance Controls. In light of the fact that this is a stipulated swn contract, Design-Builder shall have no obligation to keep records, books, correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda or other data relating to the Work and no records shall be open for inspection by any party. Design-Builder agrees to cooperate with Owner in coajunction with any reporting required of Owner by ICE or the Federal Government in connection with the Project.

Article 8 (Intentionally Left Blank)

Article 9 Representatives of the Parties

154912 2068.1 5

164 9 .1 Owner's Representatives

9.1.1 Owner designates the individuals listed below as its Senior Representatives ("Owner's Senior Representatives"), which such individuals have the authority and responsibility for avoiding and resolving disputes under Section 10.2.3 of the General Conditions of Contract:

Emilio Vera, President Abiel Cantu, Vice-President Aurelio Guerra, Secretarytrreasurer Noe Loya Simon Salinas

9.1.2 Owner designates the individual listed below as its Owner's Representative, which individual has the authority and responsibility set forth in Section 3.4 of the General Conditions of Contract: (Identify individual's name, title, address and telephone numbers) Mr. Emilio Vera, President The Willacy County Local Government Corporation 190 North 3rd Street Courthouse Annex Raymondville, Texas 78580

9.1.3. Owner may designate another representatfVe by providing written notice to Design- Builder (the "Assigned Representative"). Design-Builder shall reimburse Owner for Assigned Representative's costs, not to exceed $30,000.

9.2 Design-Builder's Representatives

9.2.1 Design-Builder designates the individual listed below as its Senior Representative ("Design-Builder's Senior Representative"), which individual has the authority and responsibility for avoiding and resolving disputes under Section 10.2.3 of the General Conditions of Contract:

Mr. Philip K. Packer President ofHMC Contracting South Texas, L.L.C. 4130 Bellaire Blvd., Suite 210 Houston, Texas 77025-1044 (713) 665-1100

9.2.2 Design-Builder designates the individual listed below as its Design-Builder's Representative, which individual has the authority and responsibility set forth in Section 2.1. l of the General Conditions of Contract: Mr. Philip K. Packer President of HMC Contracting South Texas, L.L.C. 4130 Bellaire Blvd., Suite 210

154912 2068.1 6

165 Houston, Texas 77025-1044 (713) 665-1100

Article 10 Bonds and Insurance

10.1 Insurance. Design-Builder shall procure in accordance with Article 5 of the General Conditions of Contract the insurance coverages set forth iri Exhibit C.

10.2 Bonds and Other Perfonnance Security. Design-Builder shall provide the folJowing performance bond and labor and material payment bond or other performance security:

See Exhibit D.

Article 11 Other Provisions

11.1 Other provisions, if any, are as follows: (Insert any additional provisions)

11.1.1 Willacy County, Texas shall be a direct, third party beneficiary of this Agreement and shall be bound by the dispute resolution procedures contained in Article 10 of the General Conditions of the Contract.

In executing this Agreement, Owner and Design-Builder each individually represents that it has the necessary financial resources to fulfill its obligations under this Agreement, and each has the necessary corporate approvals to execute this Agreement, and perform the services described herein.

OWNER: DESIGN-BUILDER: THE WILLACY COUNTY LOCAL HMC CONTRACTING GOVERNMENT CORPORATION SOUTI-1 TEXAS, L.L.C.

154912 2068.1 7

166 7-- ~· ~/ . C ..~&' ~,- .

President

.) _./

154912 2068.1 8

167 EXHIBIT "An LIST OF DRAWINGS

Willacy 2000 Bed Federal Temporary Detention Facility 1800 Industrial Drive Raymondville, Texas 78580

Sheet Title Date Addendum Cl of B Sheet Title 06/14 '06 C2of8 Gradina Plan 06/14 06 C3of B Dimension Control Plan 06J'14 06 C4of8 SWPPP 06 14106 CS of B Water and Sanltarv Sewer Plan 06, 14 06 C6 of B S.H. 186 R.O. Water and Sanltarv Sewer Aerial 06/14, 06 C7of 8 Off-Site Water and Sanitarv Sewer Plan 06/14,'06 CB ofB Sanitary Sewer Forced Main from S.H. 186 06/14 06 A0.1 General Information 06/14/06 A1.0 Phasina Site Plan 06/14/06 Al.1 Site Plans and Details 06/14/06 A2.1 Overall Admin Floor Plan 06/14 06 A2.1A-B Admln Aoor Plan Areas "A" and "B" 06/14/06 A2.2 Housina Floor Plan 06/14/06 A2.3 Overall Admin Reflected CellinQ Plan 06/14/06 A2.4 Admin Reflected Celling Plan Areas "A" and "B" 06/14/06 A3.1 Admln Exterior Efevations 06/14/06 A8.1 Wall tvoes/Miflwork elevatlons/Millwork details 06/14/06 51.0 General Notes 06/14/06 52.0 Foundation Plan and Sections 06/14/06 52.1 Foundation Plan 06/14/06 52.2 Foundation Sections 06/14/06 P06126.0 70.0' x 205.0' Corrections Facllitv 06/13/06 P06126.1 Column Base Lavout 06/13/06 P06126.2 70.0' x 205.0' Concrete Details 06/13/06 S-1 70.0' Structures Section and Base Details 06/14/06 S-2 70.0' Structure Purlln and Solice Details 06/14/06 5-3 70.0' Hemispherical End Details 06/14/06

168 HMC Contracting South Texas, L.L.C. SOLD TO: The Willacy County Local Government Corporation 546 W. Hidalgo Raymondville, Texas 78580

Project Willacy County 2000 Bed ICE Facility Invoice Date: June 22, 2006 Pay Application No. 1

Description Amount

Trustee to fund@ Financial Closing $25,000,000.00

SUB-TOTAL $25,000,000.00

TOTAL $25,000,000.00

WIRING INSTRUCTIONS

FROST NATIONAL BANK HOUSTON,TEXAS77040

ROUTINGNO.: 114000093

HMC CONTRACTING SOUTH TEXAS, L.L.C. ACCOUNTNO.: 5099-46349

Submitted to the Trustee pursuant to Article 7.1.2, for the payment due from the Trustee.

4130 Bellaire Boulevard, Suite 210 Houston, Texas 77027 Telephone 713.665.1100 Facsimile 713.665.4944

169 HMC Contracting South Texas, L.L.C. SOLD TO: The Willacy County Local Government Corporation 546 W. Hidalgo Raymondville, Texas 78580

Project Willacy County 2000 Bed ICE Facility Invoice Date: June 22, 2006 Pay Application No. 2

Trustee to fund 30 days after payment of Pay Application No. 1 $12,500,000.00

SUB-TOTAL $12,500,000.00

TOTAL $12,500,000.00

FROST NATIONAL BANK HOUSTON, TEXAS 77040

ROUTING No.: 114000093

Submitted to the Trustee pursuant to Article 7.1.2, for the payment due from the Trustee.

4130 Bellaire Boulevard, Suite 210 Houston, Texas 77027 Telephone 713.665.1100 Facsimile 713.665.4944

170 HMC Contracting South Texas, L.L.C. SOLD TO: The Willacy County Local Government Corporation 546 W. Hidalgo Raymondville, Texas 78580

Project: Willacy County 2000 Bed ICE Facility Invoice Date: June '12, 2006 Pay Application No. 3

Trustee to fund 30 days after payment of Pay Application No. 2 $12,500,000.00

FROSTNATJONAL BANK HOUSTON,TEXAS77040

HMC CONTRACTING SOUTH TEXAS, L.L.C. ACCOUNT No.: 5099-46349

Submitted to the Trustee pursuant to Article 7.1.2, for the payment due from the Trustee.

4130 Bellaire Boulevard, Suite 210 Houston, Texas 77027 Telephone 713.665.1100 Facsimile 713.665.4944

171 ACORD. CERTIFICATE OF LIABILITY INSURANCE CSR JN 3-HALJ:M I OAT& (MMIDOIYYYYJ 07/07/06 I l'IWOUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE C!RT1FICATE le ~ransportation Group, Ltd. HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR illll Wilcrest Green, 1325 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. Houston TX 77042 Phone:713-785-6785 rax:713-7&5-B7&5 INSURERS AFFORDING COVERAGE NAIC# IN~ INSURER"'- l l • t - t. . .l'uqlUo JdnH z.... INSURERS:

nxas. HMC Contractin9 South LLC 30 Bellaire l~vd. 1210 Houston TX 770 INSURERC: INSURERO: -·-- INSURERE COVERAGES THE POLICIES Of INSUR!'J>ICE LISTED BEi.OW HAVE BEEN ISSUED TO THE INSURED NAMED /ISOVE FOR THE POI.ICY PERIOD INDICATED NOTWITI ~ST)ljl/()ING />NYREOUIRE~NT. TERM OR CONDITION OF /'HI CONTRACT OR OTHER OOCLMENT WITii RESPECT TO WICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURAJ>iCE AFFORCEO BY TH: POLICIES DESCRIBED HEREIN IS SUB..ECT TO ALL THE TERMS. EXCLLSIONS AND CONDfTIONS Of SUCH POLICIES AGGREGATE LIMITS SliO'l\"N MAY HAVE BffN REDUCED DY PAID CLAIMS

i.m ~ 'l'll'E OF -..RANCE POLICY NUMBER Dll11i .~ ... 11AT1i IMllllWm') LIMITS

-GENERAL UA81UTY

- :J COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE

~(&oCN.nc.1 's - CLAIMS MADE D OCCl.R ~D >---· EXP (Any one person) $

- PERSON.al. & ADV 1"4.AJRY GENERAL AGGREGATE • $ ·- -GENt AGGREGAlE LIMIT l'PPllES PER PROOUCTS • CO"IPIOP AGG s -1POLICYn~ nLOC ----- AUTOMOBILE LIABILITY ,_.. Cot.elNED SINGLE LIMIT $ (Ee accident) - ANY ALITO ALL OWNED ALITOS - BOOIL Y INJURY

-,.._ SCHEDULED ALITOS HIRED AUTOS {Pe< person) ' EIODIL Y INJl.RV $ NON-OWNt;ll !WTOS (Per 1cc1dertl ,.._ ,.._ PROPERTY DA'llAGE (Per eccidort) ' FlllARAGEUABLllY

ANY AUTO AUTO ONL V • EAACCIDENT

OTHER JtWi AUTOONLV: EAACC AGG ' ' $ EACH OCCURRENCE liXCE5&1UMBRELLA LIASILl'IY

:Joccun D -·· AGGREGATE ' CLAIMS r.wJE ' =i DEOUCTIBLE RETENflON $ -·~' ' $ I WORKERS COMPENSATION NID Efil'LOYERS' LIABILITY lrciRV'Lw I IVEit E L EACH ACCIDENT $ ANY PROPRIETOflA"AATNER/EXECUTIVE OfflCERIMEhEER EXO.UDEO? If VU•. doscr1be tnder SPECIAL PROVISIONS b - E L. DISEASE • EA EMPLOYEE EL. DISEASE· POLICY LIMIT ' I OTHl!R

A suilders Risk IMC 120667643 001 07/07/06 11/07/06 Per occ. $50,000,000 ,......,_ Wind oco. $10,000,000 ,w~-· "" ,,_,OF QPERA,.....,.. f LOC:A11yow r ._.es f Y•

ae: Willacy County 2000 Bed ICB !'acility. Deductible•: $50,000 per occurrence; $250,000 or Sl of the Total Value• Installed Of the project(s) suffering loss at the time of loss whichever i• greAter.

CERTIFICATE HOLDER CANCELLATION SHOUl.11 Nff Of THE ABOVE DESCRIBED POLICES BE CANCELLED BEFORll TI-E EXPIRATION WILCllY DATE THEREOF. TIE ISSUING IN8URM WILL ENDEAVOR TO MAIL 30 DAYS wmTEN Willacy County Public Facility NOTICE TO THE CERTIFICATE HOl.DER NAMED TO THE l.&FT, BL.IT FAILURE TO DO SO SHALL Corporation IMPOIE NO OBUOATION OR LIABILl'IY OF Ntf KlND UPON ™E INSURER, ITS AGEHTS OR 546 w. Hir:Salgo street RE!PRESEHTATIVE8. Raymondville, TX 78580

ACORD 2512001/Dll} @ACORD CORPORATION 1988

172 AC080. CERTIFICATE OF LIABILITY INSURANCE CSR .JN 3-IUU.DS I DAlli fMMIDDNYYYI 07/07/06 IPROOUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE ~e Transportation Group, Ltd. HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXT!ND OR 11111 Wilcrest Green, 1325 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. Houston '1'X 77042 Phone:713-785-6785 rax:713-7B5-B785 INSURERS AFFORDING COVERAOE NAIC# ·--~ INSURED INSURER A: W•1tchMte1: Sut:plus Lin•• lnJ.. INSURERS HMC contracting south INSURERC; Texas. LLC 4130 Bellai~e Blvd. #210 INSURERD: Houston TX 7025 INSURER E'

COVElllAGES n£ POLICIES Of INSl.RANCE LISTED BElOW HAVE BEEN ISSUED TO THE INS!JlED NAMED /'BOVE FOR Tl-IE POLICY PERIOD INDICATED NOTWITHSTANDING ANY REQUIREMENT. TERM OR COfl[)JnON Of N>IV CONTRACT OR 01lER DOCUMENT WITrl RESPECT TO WHICH Tl-115 CERTIFICATE lllAY BE ISSUED OR MAY PERTAIN. THE INSU1ANCE Af'FORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SIJCH POLICIES AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS

"LiR NSRi TIPE OF INSURANCE POl.ICf NUMBER i>Aii~~.... UATE•-u~ L!Mln

GENERAL LIABIUTY EACH OCCURRENCE $ - PR£MISES~"::;~., - ._ COMMER<: 1AL GENERAL l IABILllY

:=J CLAIMS MADE D OCCUR MEO EXP (Any one person) $ $ ·-

-- PERSONAL & NJV INJLA1Y GENERAi. AOORFGAlE $ $ GENt. AGGREGATE LIMIT APPLIES PER

n POLICY r111& nlOC PRODUCTS • COWP/OP AGG ' -- AVTOMOBILE LIAlllLITY

Nl'INJTO H.l D'MED AIJfOS COMBll'ED SING! E LIMIT [Ee SCCldOnl) $

- !iOElll.lEO AUfOS BOOIL Y IN..URY (Per pmon) $ -- HIREDMJTO& ···---- - BOOIL Y INJURY

-- NCll+O't'IM!O AIJl'OS {Per acclaert) ' - PROPERTY DAA'ACE {Per ecctderi) • GARAGE UABUTY AUTO OM. Y • EA ACCIDENT $ ----- •' EAACC RANYl'JJTO 011-I AUTO ONLY· N3G EACH OCCURRENCE EXCESSIUlllllREUA LIABllllY

:J OCCUR D CLAIMS M'IDE AGGREGATE $' =i DEDUCTIBLE RElENTION $ $

•' WORKER8 COMPENSATION AND EMPLOYER8' UABll.rrY lrciiWi:iMiiS I 1-Eii EL EACH ACCIDENT $ /WY PROPRIETOR/PllITTNER/EXECUTlVE OFFICERMB

'"""" ' A Builders aisk IMC 120667643 001 07/07/06 11/07/06 Per Occ. $50,000,000 Kind Occ. $10,000,000 DESClles: $50,000 per occurrence; $250,000 o.r 5% of the Total values Installed Cf the projec::t(s) suffering loss at the time Of loss whichever is greater.

CERTlflCATE HOLDER CANCELLATION SHOULD Nfi OF THE ABOVE DESCRIBED l'OLICIE9 BE ClololCELLED BEFORE TIE E~PIRATION USBADl!!N u.s. Bank National ASsociation DATE THEREOF, THE 188UING INSURER WLL ENDEAVOR TO MAL 30 DAYS Wllll"TEN As 'l'rustee NOTICE TO THE CER11~1CATE MOLDER NAMED TO THE LEFT, BUT FAl.URE TO DO SO SHAU. 950 17th Street, Suite 650 IMPOSE NO OBLIGATION OR LIMIL11Y Of~ KIND UPON THE INSURER, ITS AGENTS OR Mail stop CNDT 0665 Denver, CO 80202 REPRESliNTAllVES,

ACORD 25 12001/08) Ii ACORD CORPORATION 1988

173 The Willacy County Local Government Corporation PAYMENT BOND

Bond #61BCSEB5978 PAYMENT BOND

STATE OF TEXAS § § COUNTY OF WILLACY §

KNOWN ALL MEN BY THESE PRESENTS: That HMC Contracting South Texas, L.L.C., as principal, and Hartford Fire Insurance Company authorized under the laws of the State of Texas to act as surety on bonds for principals, are held and finnly bound unto The Willacy County Local Government Corporation as Obligee (Owner), in the penal sum of Fifty Million DoJJars ($50,000,000.00) for the payment whereof, the said Principal and Surety bind themselves, and their heirs, administrators, executors, successors arid assigns, jointly and severally, by these presents:

WHEREAS, the Principal has entered into a certain written contract with the Owner, effective as of the 29th day of June, 2006, (the "Contract"} to commence and complete the construction of certain improvements described as follows:

Willacy County 2000 Bed ICE Facility Willacy County, Texas

which Contract, including the Contract Documents as defined therein, is hereby referred to and made a part hereof as fulJy and to the same extent as if copied at length herein.

NOW THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the said Principal shall pay all claimants supplying labor or material to it or a subcontractor in the prosecution of the Work provided for in said Contract, then, this obligation shall be void; otherwise to remain in full force and effect;

PROVIDED, HOWEVER, that this bond is executed pursuant to the provisions of Chapter 2253 of the Texas Govenunent Code as amended and all liabilities on this bond shall be determined in accordance with the provisions of said Statute to the same extent as if it were copied at length herein.

Surety, for value received, stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Contract, or to the Work performed thereunder, or the plans, specifications, or drawings accompanying the same, shall in any way affect its obligation on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the tenns of the Contract, or to the Work to be perfonned thereunder.

154173 1562.0 174 The Willacy County Local Government Corporation PAYMENT BOND

IN WITNESS 1 WHEREOF, the said Principal and Surety have signed and sealed this instrument this 28 h day of June, 2006.

NOTICE: THE ADDRESS OF THE SURETY COMPANY TO WHICH ANY NOTICE OF CLAIM SHOULD BE SENT MAY BE OBTAINED FROM THE TEXAS DEPARTMENT OF INSURANCE BY CALLING ITS TOLL-FREE TELEPHONE NUMBER: 1-800-252-3439.

154173 1562.0

175 The WiUacy County Local Goverrunent Corporation PERFORMANCE BOND

Bond #61BCSEB5978 PERFORMANCE BOND

KNOWN ALL MEN BY THESE PRESENTS: That HMC Contracting South Texas, L.L.C., as principal, and Hartford Fire Insurance Company authorized under the laws of the State of Texas to act as surety on bonds for principals, are held and firmly bound unto The Willacy County Local Government Corporation as Obligee (Owner), in the penal sum of Fifty MiJJion Dollars ($50,000,000) for the payment whereof, the said Principal and Surety bind themselves, and their heirs, administrators, executors, successors and assigns, jointly and severaUy, by these presents:

WHEREAS, the Principal has entered into a certain written contract with the Owner, effective as of the 291h day of June 2006, (the "Contract") to commence and complete the construction of certain improvements described as follows:

WilJacy County 2000 Bed ICE Facility Willacy County, Texas

which Contract, induding the Contract Documents as defined therein, is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein.

NOW THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the said Principal shall faithfully perform said Contract Work, then this obligation shall be void; otherwise to remain in full force and effect;

Whenever, Contractor shalJ be, and be declared by Owner in a written notice to Surety, to be in default under the Contract, the Owner having performed Owner's obligations thereunder, the Surety may promptly remedy the default, or shall promptly:

I. Complete the Contract in accordance with its tenns and conditions, or

2. Obtain a bid or bids for completing the Contract in accordance with its terms and conditions, and upon determination by Surety of the lowest responsible bidder, or, if the Owner elects, upon determination by the Owner and the Surety jointly of the lowest responsible bidder, arrange for a contract between such bidder and Owner, and make available as Work progresses (even though there should be a default or succession of defaults under the contract or contracts of completion arranged under this paragraph) sufficient funds to pay the cost of completion less the balance of the Contract Price; but not exceeding, including other costs and damages for which

154172 1562.0 176 The WiJlacy County Local Government Corporation PERFORMANCE BOND

the Surety may be liable hereunder, the amount set forth in this first paragraph hereof. The term ..balance of the Contract Price," as used in this paragraph, shall mean the total amount payable by Owner to Contractor under the Contract and any amendments thereto, less the amount properly paid by Owner to Contractor.

Surety shalJ have no further or other obligations other than those set forth above.

As a condition precedent to coverage under this Bond, Owner must give Surety its written notice of Contractor's default no later than ninety one (91) days from the earliest to occur of the following: (i) the date of any abandonment or tennination of the Contract; (ii) the date final payment is made to the Contractor under the Contract; or (iii) the date Contractor last performed Work under the Contract, excluding any warranty work. Any default declared by Owner or demand made against the Surety by Owner outside of this time frame is not covered by this Bond and Surety shall have no liability therefore.

Any suit under this bond must be instituted before the expiration of twenty-five (25) months from the date on which the right of action accrues, but if this provision is prohibited by law or if any Jaw provides for a lesser period of time then it shall be deemed to be amended as so to be equal to the minimum period of limitation allowed by such Jaw.

No right of action shall accrue on this Bond to or for the use of any person or entity other than the Owner and its successors or assigns. The terms and conditions of this Bond shall be binding upon Contractor, Surety, Owner and their respective successors or assigns. Surety, for value received, stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Contract, or to the Work performed thereunder, or the plans, specifications, or drawings accompanying the same, shall in any way affect its obligation on this Bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Contract, or to the Work to be perfonned thereunder.

IN WITNESS WHEREOF, the said Principal and Surety have signed and sealed this instrument this 28th day of June 2006.

154172 1562.0

177 The Willacy County Local Government Corporation PERFORl\tlANCE BOND

Principal, H1'1C Contracting South Texas, L.L.C.

By: (~L­ Title:zf;l:~i- AddrlsS: 41:".- i..Jli.1 , 1 ~ :J 1L 1k 11i- 1 /,, _, Telephone: (713) 665-1100 ' Fax: (713) 665-4944

154172 1562,0

178 HARTFORD FIRE INSURANCE COMPANY Hartford, Connectlcut

POWER OF ATTORNEY Know all man by these Presents, That HARTFORD FIRE INSURANCE COMPANY, a corporation duly organized under the laws of ltla State of Connecticut, and having its principal office in the Cily of Hartford, County of Hartford, Slate of Connecticut, does hereby make, constitute and appoint

JIM HOWSE and/orJODI N.EAL of HOUS1'0N, TEXAS Its true and lawful Attorney(s)-ln-Facl, with lull power and aulhority to each ol said Allomey(s)-in-Fac;t. In the.Ir separate capacity if more than one is named above, lo sign, execute and ac:lcnowladga any and •ff bonds and Ul1dertakings and other wrl"ngs obligatory in the natute lhetaof on behalf of Iha Company In ils business of guaranteeing the fldellty of pefSOOS holding places of public or privare trust: guaranteeing the per!om\ance of contn;icts other lhan insurance polcies; guaranteeing the perlormarn;e of insurance contracts where surety bonds are accaptecl by stales and municipalities. end executing or guarenlUing bonds and undel1akif1!1S required or permllled in all actions 01 ptoeffdings 0t by law aHowed, and to bind HARTFORD FIRE INSURANCE COMPANY thereby as ftilly and to lhe same exlenl as if such bGnds and under1akings afld other writings obllgatory in Iha nature thereof were signed by an Executive Offieer of HARTFORD FIRE INSURANCE COMPANY and sealed and etteslecl by one olher of such Officers. and hereby ratifies and confirms an thar lls said Attorney(s)-ln-Facl may do In pursuance hereof. This Power of AUomey is granted under and by aulhorfty of the By-Laws of HARTFORD FIRE INSURANCE COMPANY, ("the Company") as amended by the Board of Directors at a meeting duly called and held on July 9, 1997. as follows:

ARTICLE IV

SECTION 7. The President or any Vice President or Ass!Slant Vlca-Pruldllftl, acting with any Secimiy or Assistant Seaelafy shal have power and llUlllOlllY lo 9ign and necuta ind attach the seal of the company to bond& and -attaklngs, l1ICllftglVUnee. contracts of Indemnity and other wtllift911 obllgaloiy in the llelure thereof, and suC11 lns11ument• so llgnlld and .-tell. with or without the - SHI, shaM be valld and binding upon llleCompall)I

SECT!QN I. Tiie P!Hidllftl or •'"I Vk:e-PretilMRI or ~ Asliltlnl Va PnttldM! llCtinO wilh any Secretary or Aaslstant SeCl9tl•)'. aliaW have power and ..,ll!Orily lo appcrinr, lot p.uposes Ont>/ of •xecutlng and aa.slln!I bonClr. Hd ~ and other writings obfi9alory in rhe nature theJeOf.

rw-.. one or mot• residllnl Vice Presidents. AISldlftl Assislllnl SllCtei.rles llftd AtlCrnlryll-ln-Fact and It any time to"'"'°"" any cUCll residellt Voce-Presklenr. resident Aui«Canl Seet.wty, OI AllOM•)"/n.FllCI, and revolCe Ille - r Md aulllclrily giWll IO him.

llosolved, lhol UHr .,._...of_,,~ - ol fie~ ...,. ~. . ._ID ... ~ - ol - - or lo any c.llllclla ~ lheJelO by

- the - oucuted ond eatliledby,....,........,__ ......,. lacslmlle, and any sudl power ol-..., artna •udl r.-..1e slgnalunts or taCllimle Hal Shal be - - -,. - fie ~nY - .,, such - IUl lhdbe walicl-bindlng UP"" N C - I l l . . M.,._mpoclllo llljl bon6 orV--.. lowlllcll Kil ro

In Wttnea Whereof, HARTFORD FIRE INSURANCE COMPANY hlS caused Chase presents to be signed by Jes Asaistanl I/lee President, and its c;orporate seal to be hereto affiqd, duly attested by q Secnllary, this 15111 day of September, 1997. Attest:

~L.a.--- cY- ~ ~ HARTFORD FIRE INSURANCE COMPANY

Richard A. Hermanson. Secretary John F. Burke, Asaislant Vice President

STATE OF CONNECTICUT} SS. COUHlY OF HARTFORD

On this 15th day of September, A.O. 1997, before me penionally came John F. Burke, to me known, who being by me duly sworn. did depose and say: that he resides in the County of Haltfon:I. State of Connecticut. that he is the Assistant Vice-President of HARTFORD FIRE tNSURANCE COMPANY. the c:orporallon described in end which llll8Qlled the above instrument that he knows the seat of lhe aeld corporation: that the seal effilled IO the saJd lnelrument is such corporate seal; that it was 10 affixed by order of the Board of Oltedora of said cotporalion and that he signed his name thereto by like oofer.

STATE OF CONNECTICUT}

COUNlY OF HARTFORD SS. @~~~ Cl:RTIFICATE M:rCommisri1111 hpiao1 M. 30, 199!1 I, the undersigned. Secrelary of HARTFORD FIRE INSURANCE COMPANY. I Connedk:ut Corpotallol\, 00 HEREBY CERTIFY that lhe foregoing and attached POWER OF ATTORNEY remains In fua force and has not been revoked; and fuf1hermant, lhat Mic:lo IV. Sections 7 and 8 of Iha By-I.awl of HARTFORD FIRE INSURANCE COMPANY, set lofth Ill the Power of Attorney, are hO'N In force.

Signed amhealed at the City of Haftfonl. Dated Iha 28th day or June 1 2006

Robert L. Post, Secretary

Form $JS07·9 (Hll) Printed in U.S.A. 179 DI I A

DlSIGN·IUflD INSTITUTE OF AMERICA

STANDARD FORM OF GENERAL CONDITIONS OF CONTRACT BETWEEN OWNER AND DESIGN-BUILDER

180 DI I A

Dr5161·1UflD INSTllUTE Of AMERICA

Standard Form of General Conditions of Contract Between Owner and Design-Builder This document has been amended and revised from its standard form.

Table of Contents

Article 1: General ......................................................................................................................................3

Article 2: Design-Builder's Services and Responsibilities .........................................................................3

Article 3: Owner's Services and Responsibilities ......................................................................................6

Article 4: Hazardous Conditions and Differing Site Conditions .................................................................7

Article 5: Insurance and Bonds .................................................................................................................7

Article 6: Payment .....................................................................................................................................8

Article 7: lndemnification .........................................................................................................................10

Article 8: Time .........................................................................................................................................11

Article 9: Changes to the Contract Price and Time .................................................................................11

Article 10: Contract Adjustments and Oisputes ......................................................................................... 12

Article 11: Stop Work and Termination for Cause ....................................................................................13

Article 12: Miscellaneous ..........................................................................................................................15

181 Article 1 1.2.9 Subcontractor is any person or entity retained by Design-Builder as an independent contractor to perfonn a General portion of the Work and shalJ include materialmen and suppliers. 1.l Mutual Obligations 1.2.10 Sub-Subcontractor is any person or entity 1.1.l Owner and Design-Builder commit at all times retained by a Subcontractor as an independent contractor to cooperate fully with each other, and proceed on the to perform any portion of a Subcontractor's Work and basis of trust and good faith, to pennit each party to shall include materialmen and suppliers. realize the benefits afforded under the Contract Documents. 1.2.J 1 Substantial Completion is the date on which the Work, or an agreed upon portion of the Work, is 1.2 Basic Definitions sufficiently complete so that Owner can occupy and use the Project. 1.2.J Agreement refers to the executed contract between Owner and Design-Builder ,DBIA Document 1.2.12 Work is comprised of all Design-Builder's No. 525, Standard Form ofAgreement Between Owner design, construction and other services required by the and Design-Builder c Lump Sum (1998 Edition) as Contract Documents, including procuring and furnishing amended by the parties. all materials, equipment, services and labor reasonably inferable from the Contract Documents. 1.2.2 Day or Days shall mean calendar days unless otherwise specifically noted in the Contract Documents. Article 2 1.2.3 Design Consultant is a qualified, licensed design Design-Builder's Services and professional who is not an employee of Design-Builder, Responsibilities but is retained by Design-Builder, or employed or retained by anyone under contract with Design-Builder or 2.1 General Services Subcontractor, to furnish design services required under the Contract Documents. 2.1.1 Design-Builder's Representative shall be reasonably available to Owner and shall have the 1.2.4 Hazardous Conditions are any materials, wastes, necessary expertise and experience required to supervise substances and chemicals deemed to be hazardous under the Work. Design-Builder's Representative shall applicable Legal Requirements, or the handling, storage, communicate regularly with Owner and shall be vested remediation, or disposal of which are regulated by with the authority to act on behalf of Design-Builder. applicable Legal Requirements. Design-Builder's Representative may be replaced only with the mutual agreement of Owner and Design-Builder. 1.2.5 General Conditions of Contract refer to this DBIA Document No. 535, Standard Form of Gene1·a/ Conditions of Contract Between Owner and Design- 2.1.2 Design-Builder shall provide Owner with a Builder ( 1998 Edition) as amended by the parties. monthly status report detailing the progress of the Work.

1.2.6 Legal Requirements arc all applicable federal, state and local Jaws, codes, ordinances, rules, reguJations, 2.2 Design Professional Services orders and decrees of any government or quasi- govemment entity having jurisdiction over the Project or 2.2.l Design-Builder shall, consistent with applicable Site, the practices involved in the Project or Site, or any state licensing laws, provide through qualified, licensed Work. design professionals employed by Design-Builder, procured from qualified, independent licensed Design l.2.7 (lntentionaJJy Left Blank) Consultants or from subcontractors/vendors fabricating materials and/or equipment for the Project, the necessary 1.2.8 Site is the land or premises on which the Project design services, including architectural, engineering and is located. other design professional services, for the preparation of the required drawings, specifications and other design

Page 3

182 submittals to permit Design-Builder to complete the 2.6.1 Except as identified in an Owner's Permit List Work consi~1ent with the Contract Docwnents. Nothing which may be attached as an exhibit to the Agreement, in the Contract Documents is intended or deemed to Design-Builder shall obtain and pay for all necessary create any legal or contractual relationship between permits, approvals, licenses, government charges and Owner and any Design Consultant. inspection fees required for the prosecution of the Work by any government or quasi-government entity having 2.3 Standard of Care for Design Professional jurisdiction over the Project. Services 2.6.2 Owner shall provide reasonable assistance to 2.3.1 The standard of care for all design professional Design-Builder in obtaining those pennits, approvals and services performed to execute the Work shall be the care licenses that are necessary for the design and construction and skill ordinarily used by members of the design of the Project. profession practicing under similar conditions at the same time and locality of the Project. 2.7 Design-Builder's Construction Phase Services 2.4 Design Development Services 2.7.1 Design-Builder shall provide through itself or 2.4.1 Design-Builder has provided Owner Subcontractors the necessary supervision, labor, design/conccptua1 submissions that have been approved inspection, testing, start-up, material, equipment, by Owner and are attached as Exhibit A to the machinery, temporary utilities and other tempordry Agreement. facilities to permit Design-Builder to complete construction of the Project consistent with the Contract 2.4.2 Design-Builder may submit to Owner Documents. Construction Documents setting forth in greater detail drawings and specifications describing the requirements 2.7.2 Design-Builder shall perform all construction for construction of the Work. The Construction activities efficiently and with the requisite expertise, skill Documents shall be consistent with the intent defined in and competence to satisfy the requirements of the the previously approved design submissions identified in Contract Docwnents. Design-Builder shall at all times the Agreement. Owner acknowledges that the Project exercise complete and exclusive control over the means, will not be designed to meet or comply with any type of methods, sequences and techniques of construction. State, Federal or voluntary jail or prison design standards that may or may not be applicab]e to the Project. Design- 2.7.3 Design-Builder shaJl employ only Builder shall proceed with construction in accordance Subcontractors who are duly licensed and qualified to with the Construction Documents, if any are created. perfonn the Work consistent with the Contract Documents. 2.S Legal Requirements 2.7.4 Design-Builder assumes responsibility to Owner 2.5.1 Design-Builder shall perform the Work in for the proper performance ofthe Work of Subcontractors accordance with atJ Legal Requirements and shall provide and any acts and omissions in connection with such all notices applicable to the Work as required by the performance. Nothing in the Contract Documents is Legal Requirements. intended or deemed to create any legal or contractual relationship between Owner and any Subcontractor or 2.5.2 The Contract Priceand/orContractTime(s) shall Sub-Subcontractor, including but not limited to anythird- be adjusted to compensate Design-Builder for the effects party beneficiary rights. of any changes in the Legal Requirements enacted after the date of the Agreement affecting the performance of 2.7 .S Design-Builder shall coordinate the activities of the Work. Such effects may include, without limitation, all Subcontractors. If Owner performs other work on the revisions Design-Builder is required to make to the Project or at the Site with separate contractors under Construction Documents because of changes in Legal Owner's control, Design-Builder agrees to reasonably Requirements. cooperate and coordinate its activities with those of such separate contractors so that the Project can be completed 2.6 Government Approvals and Permits in an orderly and coordinated manner without unreasonable disruption.

Pagc4

183 2.9.1 Design-Builder warrants to Owner that the 2.7.6 Design-Builder shall keep the Site reasonably construction, including all materials and equipment free from debris, trash and construction wastes to pennit furnished as part of the construction, shall be new unless Design-Builder to perfonn its construction services otherwise specified in the Contract Documents, of good efficiently, safely and without interfering with the use of quality, in conformance with the Contract Documents and adjacent land areas. Upon Substantial Completion of the free of defects in materials and workmanship. Design- Work, or a portion of the Work, Design-Builder shall Builder's warranty obligation excludes defects caused by remove all debris, trash, construction wastes, materials, abuse, alterations, or failure to maintain the Work by equipment, machinery and tools arising from the Work or persons other than Design-Builder or anyone for whose applicable portions thereof to pennit Owner to occupy the acts Design-Builder may be liable. Nothing in this Project or a portion of the Project for its intended use. warranty is intended to limit any manufacturer's warranty which provides Owner with greater warranty rights than 2.8 Design-Builder's Responsibility for Project set forth in this Section 2.9 or the Contract Documents. Safety Design-Builder will provide Owner with all manufacturers• warranties upon either Substantial or Final 2.8.1 Design-Builder recognizes the importance of Completion. Where a manufacturer's or third party perfomling the Work in a safe manner so as to prevent warranty has been provided to Owner, Owner agrees that damage, injury or loss to (i) all individuals at the Site, Design-Bui Ider will have oo further liability with respect whether working or visiting, (ii) the Work, including to the subject of the manufacturer's or third party materials and equipment incorporated into the Work or warranty and Owner agrees to look solely to such stored on-Site or off-Site, and (iii) all other property at manufacturer or third party for any warranty claim with the Site or adjacent thereto. Design-Builder assumes respect to such items and hereby ·specifically releases responsibility for implementing and monitoring all safety Design-Builder of and from any such claims. precautions and programs related to the performance of the Work. 2.10 Correction of Defective Work

2.8.2 Design-Builder and Subcontractors shall comply 2.10.1 Design-Builder agrees to correct any Work that with all Legal Requirements relating to safety, as well as is found to not be in confonnance with the Contract any Owner-specific safety requirements set forth in the Documents, including that part of the Work subject to Contract Documents, provided that such Owner-specific Section 2.9 hereof, within a period of one year from the requirements do not violate any applicable Legal date of Substantial Completion of the Work or any Requirement. Design-Builder will immediately report in portion of the Work, or within such longer period to the writing any safety-related injury, loss, damage or accident extent required by the Contract Documents, provided arising from the Work to Owner's Representative and, to such work is not the subject of a manufacturers warranty the extent mandated by Legat Requirements, to all as described in Article 2.9.1 above. government or quasi-government authorities having jurisdiction over safety-related matters involving the 2.10.2 Design-Builder shaH, within seven (7) days of Project or the Work. receipt of written notice from Owner that the Work is not in conformance with the Contract Documents, take steps 2.8.3 Design-Builder's responsibility for safety under to commence correction of such nonconforming Work, this Section 2.8 is not intended in any way to relieve including the correction, removal or replacement of the Subcontractors and Sub-Subcontractors of their own nonconforming Work and any damage caused to other contractual and legal obligations and responsibility for (i) parts of the Work affected by the no~conforming Work, complying with all Legal Requirements, including those provided such work is not the subject of a manufacturer's related to health and safety matters, and {ii) taking all or third party warranty as described in Article 2.9.1 necessary measures to implement and monitor all safety above. If Design-Builder fails to commence the precautions and programs to guard against injury, losses, necessary steps within such seven (7) day period, Owner, damages or accidents resulting from their performance of in addition to any other remedies provided under the the Work. Contract Documents, may provide Design-Builder with written notice that Owner will commence correction of 2.9 Design-Builder's Warranty such nonconforming Work with its own forces. If Owner does perfonn such corrective Work, Design-Builder shall be responsible for all reasonable costs incurred by Owner

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184 in performing such correction. If the nonconforming Work creates an emergency requiring an immediate 3.4 Owner,s Representative response, the seven (7) day periods identified herein shall be deemed inapplicable. 3.4. 1 Owner's Representative shall be responsible for providing Owner-supplied information and in a timely 2.10.3 The one year period referenced in Section 2.10.1 manner to pennit Design-Builder to fulfill its obligations above applies only to Design-Builder's obligation to under the Contract Documents. Owner's Representative correct nonconforming Work not the subject of a shall also provide Design-Builder with prompt notice ifit manufacturer's or third party warranty and is not intended observes any failure on the part of Design-Builder to to constitute a period oflimitations for any other rights or fulfill its contractual obligations, including any errors, remedies Owner may have regarding Design-Builder's omissions or defects in the performance of the Work. other obligations under the Contract Documents. Failure to provide such notice to Design-Builder shall constitute a complete waiver of any claims by Owner Article 3 relating to such matters.

Owner's Services and Responsibilities 3.5 Government Approvals and Permits

3.1 Duty to Cooperate 3.5.1 Owner shall provide reasonable assistance to Design-Builder in obtaining those permits, approvals and 3.1.1 Owner shall, throughout the performance of the licenses that are Design-Builder's responsibility. Work, cooperate with Design-Builder and perfonn its responsibilities, obligations and services in a timely 3.6 Owner,s Separate Contractors manner to facilitate Design-Builder's timely and efficient performance of the Work and so as not to delay or 3.6.1 Owner is responsible for all work performed on interfere with Design-Builder's performance of its the Project or at the Site by separate contractors wider obligations under the Contract Documents. Owner's control. Owner shall contractually require its separate contractors to cooperate with, and coordinate 3.1.2 If required by this Agreement, Owner shall their activities so as not to interfere with, Design-Builder provide timely reviews and approvals of submissions in order to enable Design-Builder to timely complete the consistent with the tumarowtd times set forth in Design- Work consistent with the Contract Documents. Builder' s schedule. 3.7 Owner,s Responsibility for Maintenance 3.2 Furnishing of Services and Information 3.7.1 Owner shall be responsible for maintaining the 3.2.1 Owner is responsible for securing and executing Work after Final Completion by Design-Builder. Owner all necessary agreements with adj accnt land or property warrants and represents to Design-Builder that it will owners and any easements that are necessary to enable provide all necessary maintenance and upkeep of the Design-Builder to perfonn the Work. Owner is further structure, systems, equipment and appurtenances responsible for all costs, including attorneys' fees, furnished and installed by Design-Builder hereunder. incurred in securing these necessary agreements.

3.3 Financial Information

3.3.1 Design-Builder shall cooperate with the reasonable requirements of Owner's lenders or other financial sources. Notwithstanding the preceding sentence, after execution of the Agreement, Design- Builder shall have no obligation to execute for Owner or Owner's lenders or other financial sources any documents or agreements that require Design-Builder to assume obligations or responsibilities greater than those existing obligations Design-Builder that may exist under the Contract Documents.

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185 Article 4 INCLUDING ATTORNEYS' FEES AND EXPENSES, ARISING OUT OF OR RESULTING FROM THE Hazardous Conditions and Differing PRESENCE, REMOVAL OR REMEDIATION OF Site Conditions HAZARDOUS CONDITIONS AT THE SITE.

4.l Hazardous Conditions 4.1.6 Notwithstanding the preceding provisions ofthis Section 4.1, Owner is not responsible for Hazardous 4.1.1 Unless otherwise expressly provided in the Conditions introduced to the Site by Design-Builder, Contract Documents to be part of the Work, Design- Subcontractors or anyone for whose acts they may be Builder is not responsible for any Hazardous Conditions liable. DESIGN-BUILDER SHALL INDEMNIFY, encountered at the Site. Upon encountering any DEFEND AND HOLD HARMLESS OWNER AND Hazardous Conditions, Design-Builder will stop Work OWNER'S OFFICERS, DIRECTORS, EMPLOYEES immediately in the affected area and duly notify Owner AND AGENTS FROM AND AGAINST ALL CLAIMS, and, if required by Legal Requirements, all government WSSES, DAMAGES, LIABILITIES AND EXPENSES, or quasi-government entities with jurisdiction over the INCLUDING AITORNEYS' FEES AND EXPENSES, Project or Site. ARISING OUT OF OR RESULTING FROM THOSE HAZARDOUS CONDITIONS INTRODUCED TO THE 4.1.2 Upon receiving notice of the presence of SITE BY DESIGN-BUILDER, SUBCONTRACTORS suspected Hazardous Conditions, Owner shall take the OR ANYONE FOR WHOSE ACTS THEY MAY BE necessary measures required to ensure that the Hazardous LIABLE. Conditions are remediated or rendered harmless. Such necessary measures shal1 include Owner retaining 4.l Differing Site Conditions qualified independent experts to (i) ascertain whether Hazardous Conditions have actually been encountered, 4.l.l Concealed or latent physical conditions or and, if they have been encountered, (ii) prescribe the subsurface conditions at the Site that (i) materially differ remedial measures that Owner must take either to remove from the conditions indicated in the Contract Documents the Hazardous Conditions or render the Hazardous or (ii) are of an unusual nature, differing materially from Conditions harmless. the conditions ordinarily encountered and generaJiy recognized as inherent in the Work are collectively 4.J.3 Design-Builder shalJ be obligated to resume referred to herein as "Differing Site Conditions." If Work at the affected area of the Project only after Design-Builder encounters a Differing Site Condition, Owner's expert provides it with written certification that Design-Builder will be entitled to an adjustment in the (i) the Hazardous Conditions have been removed or Contract Price and/or Contract Time(s) to the extent rendered harmless and (ii) all necessary approvals have Design-Builder's cost and/or time of performance are been obtained from all government and quasi-government adversely impacted by the Differing Site Condition. entities having jurisdiction over the Project or Site. 4.2.2 Upon encountering a Differing Site Condition, 4.1.4 Design-Builder will be entitled, in accordance Design-Builder shall provide prompt written notice to with these General Condltions of Contract, to an Owner of such condition, which notice shall not be later adju&1ment in its Contract Price and/or Contract Time(s) than fourteen (14) days after such condition has been to the extent Design-Builder's cost and/or time of encountered. Design-Builder shall, to the extent performance have been adversely impacted by the reasonably possible, provide such notice before the presence of Hazardous Conditions. Differing Site Condition has been substantially disturbed or altered. 4.1.5 TO THE FULLEST EXTENT PERMITTED BY LAW, OWNER SHALL INDEMNIFY, DEFEND Article 5 AND HOLD HARMLESS DESIGN-BUILDER, DESIGN CONSULTANTS, SUBCONTRACTORS, Insurance and Bonds ANYONE EMPLOYED DfRECTL Y OR INDIRECTLY FOR ANY OF THEM, AND THEIR OFFICERS, 5.1 Design-Builder's Insurance Requirements DIRECTORS, EMPLOYEES AND AGENTS, FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, 5.1.1 Design-Builder is responsible for procuring and DAMAGES, LIABILITIES AND EXPENSES, maintaining from insurance companies authorized to do

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186 business in the state in which the Project is located, the Subcontractors and Sub-Subcontractors, and shall insure insurance coverages set forth in the attached Exhibit C. against the perils of fire and extended coverage, theft, vandalism, malicious mischief, collapse, flood, 5.1.2 Design-Builder's liability insurance set forth in earthquake, debris removal and other perils or causes of Exhibit C shall specifically delete any design-build or loss as called for in the Contract Documents. The similar exclusions that could compromise coverages property insurance shall include physical loss or damage because of the design-build delivery of the Project. to the Work, including materials and equipment in transit, at the Site or at another location as may be indicated in 5.J .4 To the extent Owner requires Design-Builder or Design-Builder's Application for Payment and approved any Design Consultant to provide professional liability by Owner. insurance for claims arising from the negligent performance of design services by Design-Builder or the 5.3.2 Owner and Design-Builder waive against each Design Consultant, the coverage limits, duration and other and Owner's separate contractors, Design other specifics of such insurance shall be as set forth in Consultants, Subcontractors, agents and employees of the Agreement. Any professional liability policy shall each and all of them, all damages covered by property specifically delete any design-build or similar exclusions insurance provided herein, except such rights as they may that could compromise coverages because of the design- have to the proceeds of such insurance. Design-Builder build delivery of the Project. Such policies shall be and Owner shall, where appropriate, require similar provided prior to the commencement of any design waivers of subrogation from Owner's separate services hereunder. contractors, Design Consultants and Subcontractors and shall require each of them to include similar waivers in S.1.S Prior to commencing any construction services their contracts. hereunder, Design-Builder shall provide Owner with certificates evidencing that (i) all insurance obligations 5.4 Bonds and Other Performance Security required by the Contract Docwnents are in fuJl force and in effect and will remain in effect for the duration 5.4.1 Copies of the performance and payment bonds required by the Contract Documents and (ii) no insurance for the Project are attached as Exhibit D to the Standard coverage will be canceled, renewal refused, or materially Fonn of Agreement Between Owner and Design-Builder changed unless at least thirty (30) days prior written - Lump Sum. The owner acknowledges that the surety on notice is given to Owner. such bonds (and the Design-Builder) shall not be liable or responsible in any way for the items, or the 5.2 Owner's Liability Insurance reimbursement of items, set forth in the Initial Application for Payment as described in Article 6.2.4 5.2.1 Owner shall procure and maintain from below. insurance companies authorized to do business in the state in which the Project is located such liability Article 6 insurance to protect Owner from claims which may arise from the performance of Owner's obligations under the Payment Contract Documents or Owner's conduct during the course of the Project. 6.1 Applications for Payment

S.3 Property Insurance 6.1.1 The proposed Application for Payments are attached to the Agreement. Design-Builder shall submit 5.3.J Unless otherwise provided in the Contract for Owner's review its Application for Payment. The Documents, Design-Builder shall procure and maintain Applications shall be paid in accordance with the terms of from insurance companies authorized to do business in the Agreement. the state in which the Project is located property insurance upon the entire Project to the full insurable 6.2 Initial Application for Payment value of the Project, including professional fees, overtime premiums and all other expenses incurred to replace or 6.2.1 Design-Builder's Initial Application for Payment repair the insured property. The property insurance will include funds for disbursements to third parties for obtained by Design-Builder shall include as additional land acquisition, all pre-construction development costs insureds the interests of Owner, Design Consultants, and fees, insurance, bond fees, travel and legal expense

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187 reimbursement, design consultant and pre-development 6.6 Substantial Completion fees. Design-Builder is performing this function at the request of Owner and has not participated in the 6.6.J Design-Builder shall notify Owner when it negotiation or creation of these obligations and, therefore, believes the Work, or to the extent pennitted in the does not assume, and express disclaims, any liability or Contract Documents, a portion of the Work, is warranty obligations with respect to such activities. This substantially complete. Within five (5) days of Owner's Initial Application for Payment will be paid at the receipt of Design-Builder's notice, Owner and Design- financial dosing of the transaction for the Project Builder will jointly review such Work. Design-Builder shall prepare and issue a Certificate of Substantial 6.3 Disputes over Payments Completion that will set forth (i) the date of Substantial Completion of the Work or portion thereof, (ii) the 6.3.1 On or before the date established in the remaining items of Work that have to be completed Agreement, Owner shall pay Design-Builder all amounts before final payment, (iii) provisions (to the extent not properly due. If Owner determines that Design-Builder is already provided in the Contract Documents) establishing not entitled to all or part ofan Application for Payment, it Owner's and Design-Builder's responsibility for the will notify Design-Builder in writing at least five (5) days Project's security, maintenance, utilities and insurance prior to the date payment is due. The notice shall indicate pending final payment and (iv) an acknowledgment that the specific amounts Owner disputes, the reasons and warranties commence to run on the date of Substantial contractual basis for such disputes, and the specific Completion, except as may otherwise be noted in the measures Design-Builder may take to rectify Owner's Certificate of Substantial Completion. concerns. Design-Builder and Owner will attempt to resolve Owner's concerns prior to the date payment is 6.6.2 Owner, at its option, may U.'le a portion of the due. If the parties cannot resolve such concerns, Owner Work which has been determined to be substantially must pay Design-Builder and Owner may pursue its rights complete, provided, however, that (i) a Certificate of under the Contract Documents, including those under Substantial Completion has been issued for the portion of Article 10 hereof. Work addressing the items set forth in Section 6.6.1 above, (ii) Design-Builder and Owner have obtained the consent of their sureties and insurers, and to the extent 6.4 Right to Stop Work and Interest applicable, the appropriate government authorities having jurisdiction over the Project, and (iii) Owner and Design- 6.4.1 If Owner fails to pay Design-Bw1deranyamount Builder agree that Owner's use or occupancy will not that becomes due, Design-Builder, in addition to all other interfere with Design-Builder's completion of the remedies provided in the Contract Documents, may stop remaining Work. Work pursuant to Section 11.3 hereof. All payments due and unpaid shall bear interest at the rate set forth in the 6.7 Final Payment Agreement. 6.7.l After receipt ofa Final Application for Payment from Design-Builder, Owner shall make final payment by 6.5 Design-Builder's Payment Obligations the time required in the Agreement, provided that Design- Builder has completed all of the Work in conformance 6.5.1 Design-Builder wilJ pay Design Consultants and with the Contract Documents. Subcontractors in accordance with its contractual obligations to such parties. Design-Builder will impose 6.7.2 At the time of submission of its Final similar requirements on Design Consultants and Application for Payment, Design-Builder shall provide Subcontractors to pay those parties with whom they have the following infonnation: contracted. Design-Builder will indemnify and defend Owner against any claims for payment and mechanic's .1 (intentionally left blank); liens as set forth in Section 7.3 hereof. .2 a general release executed by Design- Builder waiving, upon receipt of final payment by Design-Builder, a11 claims, except those claims previously made in

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188 writing to Owner and remaining unsettled time, Design-Builder shall promptly, at Design-Builder's at the time of final payment; option and at Design-Builder's expense, (i) modify the Work so as to avoid infringement of any such patent or .3 consent ofDesign-Builder's surety, if any, copyright or (ii) replace said Work with Work that does to finaJ payment; not infringe or violate any such patent or copyright.

.4 all operating manuals, warranties and other 7.1.3 Sections 7.1.1 and 7.1.2 above shall not be deliverables required by the Contract applicable to any suit, claim or proceeding based on Documents; and infringement or violation of a patent or copyright (i) relating solely to a particular process or product of a .5 certificates of insurance confirming that particular manufacturer specified by Owner and not required coverages will remain in effect offered or recommended by Design-Builder to Owner or consistent with the requirements of the (ii) arising from modifications to the Work by Owner or Contract Documents. its agents after acceptance of the Work. If the suit, claim or proceeding is based upon events set forth in the 6.7.3 Upon making final payment, Owner waives all preceding sentence, Owner shall defend, indemnify and claims against Design-Builder except claims relating to hold harmless Design-Builder to the same extent Design- (i) Design-Builder's failure to satisfy its payment Builder is obligated to defend, indemnify and hold obligations, if such failure affects Owner's interests, (ii) hamlless Owner in Section 7 .1.1 above. Design-Builder's failure to complete the Work consistent with the Contract Documents, including defects appearing 7.1.4 The obligations set forth in this Section 7.1 shalt after Substantial Completion and (iii) the terms of any constitute the sole agreement between the parties reJating special warranties required by the Contract Documents, to Ii ability for infringement of violation of any patent or specifically excluding manufacturers' warranties. copyright.

Article 7 7.2 Tu Claim Indemnification

Indemnification 7.2.1 If, in accordance with Owner's direction, an exemption for all or part of the Work is claimed for taxes, 7.1 Patent and Copyright Infringement Owner shall indemnify, defend and hold harmless Design- Builder from and against any liability, penalty, interest, 7.1.l Design-Builder shall defend any action or fine, tax assessment, attorneys' fees or other expenses or proceeding brought against Owner based on any claim costs incurred by Design-Builder as a result of any action that the Work, or any part thereof, or the operation or use taken by Design-Builder in accordance with Owner's of the Work or any part thereof, constitutes infringement directive. of any United States patent or copyright, now or hereafter issued. Owner shall give prompt written notice to 7.3 Payment Claim lndemnitlcation Design-Builder of any such action or proceeding and will reasonably provide authority, information and assistance 7.3.1 Providing that Owner is not in breach of its in the defense of same. Design-Builder shall indemnify contractual obligation to make payments to Design- and hold hann.less Owner from and against all damages Builder for the Work, Design-Builder shall indemnify, and costs, including but not limited to attorneys' fees and defend and hold hannless Owner from any claims or expenses awarded against Owner or Design-Builder in mechanic's liens brought against Owner or against the any such action or proceeding. Design-Builder agrees to Project as a result of the failure of Design-Builder, or keep Owner informed of all developments in the defense those for whose acts it is responsible, to pay for any of such actions. services, materials, labor, equipment, taxes or other items or obligations furnished or incurred for or in connection 7.1.2 If Owner is enjoined from the operation or use with the Work. Within three (3) days ofreceiving written of the Work, or any part thereof, as the result of any notice from Owner that such a claim or mechanic's lien patent or copyright suit, claim, or proceeding, Design- has been filed, Design-Builder shall commence to take Builder shall at its sole expense take reasonable steps to the steps necessary to discharge said claim or lien, procure the right to operate or use the Work. If Design- including, if necessary, the furnishing of a mechanic's Builder cannot so procure such right within a reasonable Hen bond.

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189 8.2.1 If Design-Builder is delayed in the performance 7.4 Design-Builder's General Indemnification of the Work due to acts, omissions, conditions, events, or circumstances beyond its control and due to no fault of its 7.4. l Design-BuiJder, to the fullest extent pennitted by own or those for whom Design-Builder is responsible, the law, shall indemnify, hold hannless and defend Owner, its Contract Time(s) for performance shall be reasonably officers, directors, employees and agents from and againi.t extended by Change Order. By way of example, events claims, losses, damages, liabilities, including attorneys' that will entitle Design-Builder to an extension of the fees and expenses, for bodily injury, sickness or death, Contract Time(s) include acts or omissions of Owner or and property damage or destruction (other than to the anyone under Owner's control (including separate Work itself) to the extent resulting from the negligent acts contractors), changes in the Work, unavailability of or omissions of Design-Builder, Design Consultants, materials/equipment at the price contemplated by Design- Subcontractors, anyone employed directly or indirectly by Builder when establishing the Contract Price, Differing any of them or anyone for whose acts any of them may be Site Conditions, Hazardous Conditions, wars, floods, liable. labor disputes, unusual delay in transportation, epidemics abroad, earthquakes, adverse weather conditions not 7.4.2 lf an employee of Design-Builder, Design reasonably anticipated, and other acts of God. Consultants, Subcontractors, anyone employed directly or indirectly by any of them or anyone for whose acts any of 8.2.2 In addition to Design-Builder's right to a time them may be liable has a claim against owner, its extension for those events set forth in Section 8.2.1 officers, directors, employees, or agents, Dcsign- above, Design-Builder shall also be entitled to an Builder's indemnity obligation set forth in Section 7.4.1 appropriate adjustment of the Contract Price. above shall not be limited by any limitation on the amount of damages, compensation or benefits payable by Article 9 or for Design-Builder, Design Consultants, Subcontractors, or other entity under any employee Changes to the Contract Price and benefit acts, including workers' compensation or Time disability acts. 9.1 Change Orders 7.S Owner's General Indemnification 9.1.1 A Change Order is a written instrument issued 7.5.1 Owner, to the fullest extent permitted by law, after execution of the Agreement signed by Owner and shall indemnify, hold harmless and defend Design- Design-Builder, stating their agreement upon an of the Builder and any of Design-Builder's officers, directors, following: employees, or agents from and against claims, losses, damages, liabilities, including attorneys' fees and .I The scope of the change in the Work; expenses, for bodily injury, sickness or death, and property damage or destruction (other than to the Work .2 The amount of the adjustment to the itself) to the extent resulting from the negligent acts or Contract Price; and omissions of Owner, Owner's separate contractors or anyone for whose acts any of them may be liable. .3 The extent of the adjustment to the Contract Time(s). Article 8 9.1.2 All changes in the Work authorized by Time applicable Change Order shall be performed under the applicable conditions of the Contract Documents, 8.1 Obligation to Achieve the Contract Times provided that Owner covenants to Design-Builder that it has sufficient funds to pay for any changes in the Worlc. 8.1. l Design-Builder agrees that it will commence Owner and Design-Builder shall negotiate in good faith performance of the Work and achieve the Contract and as expeditiously as possible the appropriate Time(s) in accordance with Article 5 of the Agreement. adjustments for such changes.

8.2 Delays to the Work 9.1.3 If Owner requests a proposal for a change in the Work from Design-Builder and subsequently elects not to

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190 proceed with the change, a Change Order shall be issued reasonable time, not to exceed twenty-one (2 I) days, after to reimburse Design-Builder for reasonable costs incurred the occurrence giving rise to the claim for relief or after for estimating services, design services and services the claiming party reasonably should have recognized the involved in the preparation of proposed revisions to the event or condition giving rise to the request, whichever is Contract Documents. later. Such notice shall include sufficient information to advise the other party of the circumstances giving rise to 9.2 (intentionally left blank) the claim for relief, the specific contractual adjustment or relief requested and the basis of such request.

9.3 Minor Changes in the Work 10.2 Dispute Avoidance and Resolution

9.3.l Minor changes in the Work do not involve an 10.2.1 The parties are fully committed to working with adjustment in the Contract Price and/or Contract Time(s) each other throughout the Project and agree to and do not materially and adversely affect the Work, communicate regularly with each other at all times so as including the design, quality, perfonnance and to avoid or minimize disputes or disagreements. If workmanship required by the Contract Documents. disputes or disagreements do arise, Design-Builder and Design-Builder may make minor changes in the Work Owner each commit to resolving such disputes or coni.istent with the intent of the Contract Documents, disagreements in an amicable, professional and provided, however that Design-Builder shall record such expeditious manner so as to avoid unnecessary losses, changes on the documents maintained by Design-Builder. delays and disruptions to the Work.

9.4 Contract Price Adjustments 10.2.2 Design-Builder and Owner will first attempt to resolve disputes or disagreements at the field level 9.4.1 The increase or decrease in Contract Price through discussions between Design-Builder's resulting from a change in the Work shall be determined Representative and Owner's Representative. by the agreement between Owner and Design-Builder. 10.2.3 Jf a dispute or disagreement cannot be resolved 9.5 Emergencies through Design-Builder's Representative and Owner's Representative, Design-Builder's Senior Representative 9.5.l In any emergency affecting the safety ofpersons and Owner's Senior Representative, upon the request of and/or property, Design-Builder shall act, at its either party, shall meet as soon as conveniently possible, discretion, to prevent threatened damage, iajury or loss. but in no case later than thirty (30) days after such a Any change in the Contract Price and/or Contract Time(s) request is made, to attempt to resolve such dispute or on account of emergency work shall be determined as disagreement. Prior to any meetings between the Senior provided in this Article 9. Representatives, the parties will exchange relevant information that will assist the parties in resolving their Article 10 dispute or disagreement.

Contract Adjustments and Disputes 10.2.4 If after meeting the Senior Representatives determine that the dispute or disagreement cannot be 10.1 Requests for Contract Adjustments and resolved on terms satisfactory to both parties, the parties Relief shall submit the dispute or disagreement to non-binding mediation. The mediation shall be conducted by a 10.1.1 If either Design-Builder or Owner believes that mutually agreeable impartial mediator, or if the parties it is entitled to relief against the other for any event cannot so agree, a mediator designated by the American arising out of or related to the Work or Project, such Arbitration Association ("AAA") pursuant to its party shall provide written notice to the other party ofthe Construction Industry Mediation Rules. The mediation basis for its claim for relief. Such notice shall, if will be governed by and conducted pursuant to a possible, be made prior to incurring any cost or expense mediation agreement negotiated by the parties or, if the and in accordance with any specific notice requirements parties cannot so agree, by procedures established by the contained in applicable sections of these General mediator. The local of the mediation shall be conducted Conditions of Contract. In the absence of any specific in Houston, Texas. notice requirement, written notice shall be given within a

Page 12

191 l 0.3 Arbitration WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, INCLUDING 10.3.l Any claims, disputes or controversies between BUT NOT LIMITED TO LOSSES OF USE, PROFITS, the parties arising out of or relating to the Agreement, or BUSINESS, REPUTATION OR FINANCING. the breach thereof, the Project or any transaction or occurrence arising out of or relating to the Project which 10.S.Z The consequential damages limitation set forth have not been resolved in accordance with the procedures in Section 10.5.I above is not intended to affect the set forth in Section 10.2 above shall be decided by payment ofliquidated damages, if any, set forth in Article arbitration in accordance with the Construction Industry 5 of the Agreement, which both parties recognize has Arbitration Rules of the AAA then in effect, unless the been established, in part, to reimburse Owner for some parties mutually agree otherwise.. The hearing locale damages that might otherwise be deemed to be shall be in Houston, Texas. consequential.

10.3.Z The award of the arbitrator(s) shall be final and Article 11 binding upon the parties without the right of appeal to the courts. Judgment may be entered upon it in accordance Stop Work and Termination for Cause with applicable law by any court having jurisdiction thereof. 11.1 Owner's Right to Stop Work 10.3.3 Design-Builder and Owner expressly agree that ll.1.J Owner may, without cause and for its any arbitration pursuant to this Section 10.3 may be convenience, order Design-Builder in writing to stop and joined or consolidated with any arbitration involving any suspend the Work. Such suspension shall not exceed other person or entity (i) necessary to resolve the claim, sixty ( 60) consecutive days or aggregate more than ninety dispute or controversy, or (ii) substantially involved in or (90) days during the duration of the Project. affected by such claim, dispute or controversy. Both Design-Builder and Owner will include appropriate 11.1.1 Design-Builder is entitled to seek an adjustment provisions in all contracts they execute with other parties ofthe Contract Price and/or Contract Time(s) if its cost or in connection with the Project to require suchjoinder or time to perform the Work has been adversely impacted by consolidation. any suspension of stoppage of work by Owner.

10.3.4 The prevailing party in any arbitration, or any 11.2 Owner's Right to Perform and Terminate for other final, binding dispute proceeding upon which the Cause parties may agree, shall be entitled to recover from the other party reasonable attorneys' fees and expenses 11.2.1 If Design-Builder persistently fails to (i) provide incurred by the prevailing party. a sufficient number of skilled workers, (ii) supply the materials required by the Contract Oocumcnt'I, (iii) 10.4 Duty to Continue Performance comply with applicable Legal Requirements, (iv) timely pay, without cause, Design Consultants or 10.4.t Unless provided to the contrary in the Contract Subcontractors, (v) prosecute the Work with promptness Documents, Design-Builder shall continue to perform the and diligence to ensure that the Work is completed by the Wark and Owner shall continue to satisfy its payment Contract Time(s), as such times may be adjusted, or (vi) obligations to Design-Builder, pending the final perform material obligations under the Contract resolution of any dispute or disagreement between Documents during the perfonnance of the Work, then Design-Builder and Owner. Owner, in addition to any other rights and remedies provided in the Contract Documents, shall have the rights 10.S CONSEQUENTIAL DAMAGES set forth in Sections 11.2.2 and 11.2.3 below. 10.5.lNOTWITHSTANDING ANYTHING HEREIN 1 t.Z.Z Upon the occurrence of an event set forth in TO THE CONTRARY (EXCEPT AS SET FORTH IN Section 11.2.1 above, Owner may provide written notice SECTION 10.5.2 BELOW), NEITHER DESIGN- to Design-Builder that it intends to tenninate the BUILDER NOR OWNER SHALL BE LIABLE TO THE Agreement unless the problem cited is cured, or OTHER FOR ANY CONSEQUENTIAL LOSSES OR commenced to be cured, within seven (7) days ofDesign- DAMAGES, WHETHER ARISING IN CONTRACT, Builder's receipt of such notice. If Design-Builder fails

Page 13

192 to cure, or reasonably commence to cure, such problem, .2 Owner's failure to pay amounts properly then Owner may give a second written notice to Design- due under Design-Builder's Application Builder of its intent to terminate within an additional for Payment. seven (7) day period. If Design-Builder, within such second seven (7) day period, fails to cure, or reasonably 11.3.2 Should any of the events set forth in Section commence to cure, such problem, then Owner may 11.3.1 above occur, Design-Builder has the right to declare the Agreement terminated for default by provide Owner with written notice that Design-Builder providing written notice to Design-Builder of such will stop work unless said event is cured within seven (7) declaration and after obtaining written approval from the days from Owner's receipt of Design-Builder's notice. If Trustee of the same, which shall be an express condition Owner does not cure the problem within such seven (7) precedent to tenninating this agreement for default. day period, Design-Builder may stop work. In such case, Design-Builder shall be entitled to make a claim for 1 1.2.3 Upon declaring the Agreement terminated adjustment to the Contract Price and Contract Time(s) to pursuant to Section 11.2.2 above, Owner may enter upon the extent it has been adversely impacted by such the premises and take possession, for the purpose of stoppage. completing the Work, of all materials, equipment, scaffolds, tools, appliances and other items thereon, 11.4 Design-Builder's Right to Terminate for which have been purchased or provided for the Cause performance of the Work and paid for by Owner, all of which Design-Builder hereby transfers, assigns and sets 11.4.1 Design-Builder, in addition to any other rights over to Owner for such purpose, and to employ any and remedies provided in the Contract Documents or by person or persons to complete the Work and provide all law, may terminate the Agreement for cause for the of the required labor, services, materials, equipment and following reasons: other items. In the event of such termination, Design- Builder shall not be entitled to receive any further .1 The Work has been stopped for sixty (60) payments under the Contract Documents until the Work consecutive days, or more than ninety (90) shall be finally completed in accordance with the days during the duration of the Project, Contract Documents. At such time, if the unpaid balance because of court order, any government of the Contract Price exceeds the cost and expense authority having jurisdiction over the incurred by Owner in completing the Work, such excess Work, or orders by Owner under Section shall be paid by Owner to Design-Builder. If Owner's I 1.1.1 hereof, provided that such cost and expense of completing the Work exceeds the stoppages are not due to the acts or unpaid balance ofthe Contract Price, then Design-Builder omissions of Design-Builder or anyone for shall be obligated to pay the difference to Owner. Such whose acts Design-Builder may be costs and expense shall include not only the cost of responsible. completing the Work, but also losses, damages, costs and expense, including attorneys' fees and expenses, incurred .2 Owner's failure to provide Design-Builder by Owner in connection with the reprocurement and with any infonnation, pennits or approvals defense of claims arising from Design-Builder's default, that are Owner's responsibility under the subject to the waiver of consequential damages set forth Contract Documents which result in the in Section 10.5 hereo[ Work being stopped for sixty (60) consecutive days, or more than ninety (90) 11.3 Design-Builder's Right to Stop Work days during the duration of the Project, even though Owner has not ordered 11.3.1 Design-Builder may, in addition to any other Design-Builder in writing to stop and rights afforded under the Contract Documents or at law, suspend the Work pursuant to Section stop work for the following reasons: 11.1.I hereof.

,l Owner's failure to provide financial .3 Owner's failure to cure the problems set assurances as required under Section 3.3 forth in Section l I .3. 1 above after Design- hereof; or Builder has stopped the Work.

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193 11.4.2 Upon the occurrence of an event set forth in 11.5.2 The rights and remedies under Section I l .5.1 Section 11.4.1 above, Design-Builder may provide above shall not be deemed to limit the ability of the non- written notice to Owner that it intends to terminate the Bankrupt Party to seek any other rights and remedies Agreement unless the problem cited is cured, or provided by the Contract Documents or by law, including commenced to be cured, within seven (7) days of its ability to seek relief from any automatic stays under Owner's receipt of such notice. If Owner fails to cure, or the United States Bankruptcy Code or the right ofDesign- reasonably commence to cure, such problem, then Builder to stop Work under any applicable provision of Design-Builder may give a second written notice to these General Conditions of Contract. Owner of its intent to terminate within an additional seven (7) day period. If Owner, within such second seven (7) Article 12 day period, fails to cure, or reasonably commence to cure, such problem, then Design-Builder may declare the Miscellaneous Agreement tenninated for default by providing written notice to Owner of such declaration. In such case, 12.1 Assignment Design-Builder shall be entitled to recover in the same manner as if Owner had tenninated the Agreement for its 12.1.1 Neither Design-Builder nor Owner shall, without convenience under Article 8 of the Agreement. the written consent of the other assign, transfer or sublet any portion or part of the Work or the obligations 11.5 Bankruptcy of Owner or Design-Builder required by the Contract Documents.

11.S.1 If either Owner or Design-Builder institutes or 12.2 Successorship has instituted against it a case wider the United States Bankruptcy Code (such party being referred to as the 12.2.1 Design-Builder and Owner intend tllat the "Bankrupt Party"), such event may impair or frustrate the provisions of the Contract Documents are binding upon Bankrupt Party's ability to perfonn its obligations under the parties, their employees, agents, heirs, successors and the Contract Documents. Accordingly, should such event assigns. occur: 12.3 Governing Law .1 The Bankrupt Party, its trustee or other successor, shall furnish, upon request of 12.3.1 The Agreement and all Contract Documents the non-Bankrupt Party, adequate shall be governed by the laws of the place of the Project, assurance of the ability of the Bankrupt without giving effect to its conflict oflaw principles. Party to perform all future material obligations under the Contract Documents, 12.4 Severability which assurances shall be provided within ten (10) days after receiving notice of the 12.4.1 If any provision or any part of a provision of the request; and Contract Documents shall be finally detennined to be superseded, invalid, illegal, or otherwise unenforceable .2 The Bankrupt Party shall file an pursuant to any applicable Legal Requirements, such appropriate action within the bankruptcy determination shall not impair or otherwise affect the court to seek assumption or rejection of the validity, legality, or enforceability of the remaining Agreement within sixty (60) days of the provision or parts of the provision of the Contract institution of the bankruptcy filing and Documents, which shall remain in full force and effect as shall diligently prosecute such action. if the unenforceable provision or part were deleted.

If the Bankrupt Party fails to comply with its foregoing 12.5 No Waiver obligations, the non-Bankrupt Party shall be entitled to request the bankruptcy court to reject the Agreement, 12.5.1 The failure of either Design-Builder or Owner to declare the Agreement terminated and pursue any other insist, in any one or more instances, on the performance recourse available to the non-Bankrupt Party under this of any of the obligations required by the other under the Article 11. Contract Documents shall not be construed as a waiver or relinquishment of such obligation or right with respect to future performance.

Page 15

194 person to the individual intended to receive such notice, 12.6 Headings (ii) four (4) days after being sent by registered or certified mail, postage prepaid to the address indicated in the 12.6.1 The headings used in these General Conditions Agreement or (iii) if transmitted by facsimile, by the time ofContract, or any other Contract Document, are for ease stated in a machine generated confirmation that notice of reference only and shall not in any way be construed to was received at the facsimile number of the intended limit or alter the meaning of any provision. recipient.

12.7 Notice 12.8 Amendments

12.7.1 Whenever the Contract Documents require that 12.8.1 The Contract Documents may not be changed, notice be provided to the other party, notice will be altered, or amended in any way except in writing signed deemed to have been validly given (i) if delivered in by a duly authorized representative of each party.

Page 16

195 106 16:44 9404540798 PAGE 01/01 1008 D4:38pm Fralll"HALE I CONSTRUCTION r..549 P.002/002 F-914

-AJA Document G704" - 2000 Celtificate of Substantial Completion PROJECT: PROJEcTNtJ11sER:.. ICE F flit Otterator ~ (f./tJmeandadrin:uJ: cDNTRACTFOR·ZOOO Bed ac: Y · l~ Wi 11 acy Count}' 2000 Bed ICE CONTRACT L'IATE: July 19' 2006 ..;q I.:; ARCl11TECT: 181 Facil 1·ty 0 CONTAACTOR: ® 1800 Industrial Drive, Raymondvi11e. TX 7858 TO OWHER: TO CCNTUCTOR: HMC Contract;iing south Texas, LLCFIELC: 181 (Nnm~ ""'"dtlru1J: fN~mi c:ndOtldrrvJ: 4130 Bel 1a He Blvd J. Ste. 210 OTHER: 0 The Willacy County Local Gov. Corp Heaston, Texas 77u25 190 North 3rd-Street Raymondville, Texas 78580 PROJF.CT OR PORTION OFTHS PllOJ!ef flHlatlATED FOR PARTIAL OCCUPANCY CR USE 8HAl.L INtlUDE:

The occupancy Certificate was issued by t~e City of Raymondville on ~eptembe~ 8, 2006 'Jbe Work pcrtonne.f under di.la Cotuncr his bc:cn revic:wc:d •nd fbuncl. co 1hc Anihl•' i; bm knewledp. lntonnatio.n and beliu(, to be subsbtlllllllY D)lllplttl!. Sllbsunllal Complcdon Sit lltc •blp In die Pftlllftlll DC die Work whi=n the Work or dcaignaied ponion Is sufflclcndy complcre In ue11ntani:i: with 1hc ConlrBCt Documents sa diat I.ho Ownllf c1n oceisp1 or udtl:rc me Wark rar Its Intended u.ce. Tbr- dare oM11b1ttu11laJ Complctjon of die PR)jec1 or portion desigaatcd above is r.ila de of l.uu:11tca mrablbhed by Cl1is Ccrtl~, ~'hid! it also 1hc dace ot COfnGICllCC"911iat of Op,pJicable wunndet requited by chc Ccmcnct D~menn. i:xccpt ., s~tcd below:

A list oflrcms 1a be o:amplcted or corrected is machi:d lll!nKo. The tillun: ro include any ilems on svdl llsr docs nor :alter the re!lflD~iliL)J ol lhc Cannc:t111r to compl&Ua all Work in =il!Cort!:mG15 wllh the CQ11trac' DOCllllllUlll. Unlc:l1 odle.rwlae llfil'lllld (O in wrldnf. the date ar O.lmmtl\l:Cl1Vlftt Of Wllmlnlies fot hc:nu On lhc: lltl.acihcd list wlJl be tho dPla of lniJlftlCC Of TJle fin I( Cc:nfru:au: of Payment ar Illa date at final paymmr.

Cost estimate otWarkihat ls·incomplAto ord~fcctiYl!: The Contractor will aalnfJalC Ot COrt9Ct chc Wart Oil date ar SubstmtiDI Campktioa.

HMC contrac.ti ng Sou!bh Texas~ LLC~.--+-...w:..,~~---­ coNTRACTDR BY

11\e 09.'ne:t acceprs d~ Wort "'° doalsna,itd po a,m.{1imi::) an :lace).

Management Tra1n~ng Corppratio.,."--------- Opel"itor DATE t maintenance, utilities and insurance. owner assume:; a11 responsibi11t.Y f or secur1 :y, EXHIBIT D Standard Form of Agreement Between Owner and Design-Builder ... Lump Sum 1 'his document has been amended and revised from its standard form.

This AGREEMENT is made as of the . ?O~ day of~n the year of 2007, by and between the following parties, for services in connection with the Project identified below.

The Willacy County Local Government Corporation 190 North 3rd Street Courthouse Annex Raymondville, Texas 78580

DESIGN-BUfLDER: HMC Contracting South Texas. L.L.C. 2900 Wesleyan, Suite J75 Houston, Tex.as 77027

I 000 Bed Addition to the Willacy County fCE Detention Facility Willacy County, Texa~

In consideration of the mutual covenants and obligations contained herein, Owner and Design-Builder agree as set forth herein.

Artide 1 Scope of Work

I. I Design-Builder shall perform all design and constmction services, and provide all material, equipment, tools and labor, necessary to complete the Work described in and reasonably inferable from the Contract Documents.

q 198 1.2 A description of the Project is attached as part of Exhihit A. This description is for general purposes only - the Project may have different technical attributes not described in this Exhibit or described differently in this Exhibit.

2.1 The Contract Documents nrc comprised of the following:

.I All written modifications, amendments and change orders to this Agreement issued in accordance with DBIA Document No. 535, Standard Form of General Conditions of Contract Between Owner and Design- Builder (1998 Edition) as amended ("General Conditions of Contract");

.2 This Agreement, including all exhibits and attachments, executed by Owner and Design-Builder;

.4 Construction Documents prepared in accordance with Section 2.4 of the General Conditions of Contract along wilh a description of the Project, attached as Exhibit A;

.5 Attached as Exhibit 8, Design-Builder's Ap1>lications for Payment and Requisitions for Payment to Trustee .

.6 Attached Exhibit C, Design-Builder's Certificate ofinsurance.

.8 Attached as Exhibit E, the list of drawings as of the effective date of this Agreement, which may be modified.

3.1 The Contract Documents are intended to permit the parties to complete the Work and all obligations required by the Contract Documents within the Contract Time(s) tbr the Contract Price. The Contract Documents are intended to be complementary and interpreted in hannony so as to avoid conflict, with words and phrases interpreted in a manner consistent with construction and design industry standards. fn the event of any inconsistency, conflict, or ambiguity between or among the Contract Documents, the Contract Documents shall take precedence in the order in which they are listed in Section 2.1 hereof.

171620 2066 1 2

199 3.2 Terms, words and phrases used in the Contract Documents, including this Agreement, shall have the meanings given them in the General Conditions of Contract.

3.3 The Contract Documents fonn the entire agreement between Owner and Design- Builder and by incorporation herein are as fully binding on the parties as if repeated herein. No oral representations or other agreements regarding the Work have been made by the parties except as specifically :;laled in the Contract Documents.

4. I Work Product. All drawings, specifications and other documents nnd electronic data furnished by Design-Builder to Owner under this Agreement (''Work Product") are deemed to be instruments of service and Design-Builder shall retain the ownership and property interests therein, including the copyrights thereto.

4.2 Upon Owner's payment in full for all Work perfonned under the Contract Documents, the drawings, specifications, models, renderings, work product, instruments of service and other documents shall become the property of the Owner. Owner may utilize such drawings, specifications, models, renderings, work product. instruments of service and other documents onJy for the repair, maintenance, modification, expansion or renovation of the Project. Nevertheless, it is understood by Owner that all such Drawings, Specifications, models. renderings, work product, instruments of service and other documents may be inappropriate for use= in the construction of any other project. Therefore. Design-Builder shall not be responsible for the use or workability of suc;:h drawings, spt..oeiflcations, models, rendering.~ work product, instruments of service and other documents in connection with any project other than the Pr~ect for which they were specifically prepnrcd. OWNER SHALL INDEMNIFY, DEFEND AND HOLD DESIGN-BUILDER HARMLESS OF AND FROM ANY AND ALL CLAIMS, DEMANDS AND CAUSES OF ACTION, INCLUDING AITORNEY'S FEES AND LITrGATION COSTS, ARISING OUT OR RELATING TO OWNER'S L'SE OF DRA WTNGS, SPECIFICATIONS, MODELS, RENDERINGS, WORK PR.ODlXT, lNSTRUMENTS Of SERVICE AND OTHER DOCUMENT FOR THIS PROJECT Ol'i ANY OTHER PROJECT.

5. I Date of Commencement. The Work shall commence within five (5) days of Contractor's receipt of I) Owner's Notice to Proceed 2) the execution of this Agreement by both parties and the receipt of some by Contractor, and 3) payment of Contractor's initial Application for Payment payable at the financial closing of the transaction for the Project (..Date of Commencement") ~111less the parties mutually agree otherwise in writing.

171620 2068.1 3

200 5.2.l Substantial Completion of the entire Work shall be achieved no later than 180 calendar days after the Date of Commencement ("Scheduled Substantial Completion Date").

5.2.2 Intentionally left blank.

5.2.3 Final Completion of the Work, including the support building, shall be achieved 120 days after the Date of Commencement.

5.2.'1 All of che dates set forth in this Article 5 ("Contract Time(s)") shall be subject to adjustment in accordance with the General Conditions of Contract. The Contract Time shall be extended if ICE grants time extensions to Owner and/or Willacy County, Texas, for the same amount of time granted by ICE, unless agreed otherwise.

5.3 Time is of the Essence. Owner and Design-Builder mutually agree that time is of the essence with respect to the dates and times set forth in the Contract Documents.

5.4 Liquidated Damages. Design-Builder understands that if Substantial Completion is not attained b) the Scheduled Substantial Completion Date, Owner will suffer damages which are difficult to determine and accurately specify. Design-BuilJer agrees lhat if Substantial Completion is not attained by thirty (30) days after the Scheduled Substantial Completion Date (the "LO Date"), Designer-Builder shall pay Owner Thirteen Thousand Seven Hundred Twenty Five Dollars ($13,725.00} as liquidated damages for each day that Substantial Completion extends beyond the LO Date. The liquidated damages provided herein shall be in lieu of all liability for any and all extra costs. losses. expenses. claims, penaltieli and any other damages, whether special or consequential, and of whatsoever nature incurred by Owner which are occasioned by any 1.hday in achieving Substantial Completion.

6. I Contract Price. Owner shall direct the Trustee to pay Design-Builder's Applications for Payment attached to this Agreement in the total sum of Forty-three Million One Hundred Seventy-two Thousand Three Hundred Twenty Seven Dollars ($43, 172,327) ("Contract Price"), subject to adjustments made in accordance with lh1: General Conditions of Contract.

6.2 Materials incorporated into this project are exempt from State Sales tax according to provisions of the Texas Tax Code, Chapter 151, Sub!lection H. The Owner shall provide to Design-Builder a limited sales, excise and use tax permit or exemption certificate which shall enable Design-Builder to buy the materials to be incorporated into the Work without paying tax due at time of purchase. This is a separated contract as that term is used the Texas Tax Code and applicable Texas law and the Owner agrees and acknowledges that it is purchasing th~ material for the Work separately from the lahor for the Work. Material for the Work totals $24,176,503 and labor for the Work totals

171620 2068 1 4

201 ;

$18,995,824. This paragraph is meant to meet the separated contract definition under the Texas Tax Code and the laws of Texas.

6.3. Upon Substantial Completion of Lhe Project, Design Builder will provide Owner a certification that the Project has been substantially completed. Design-Builder will also provide a final release for all payments made by Owner and a consent of surety. Upon Final Completion, Design-Builder shall supply a list of all subcontractors utilized by Design-Builder and all applicable warranties.

6.4 Design-Builder guarantees to complete the Project for the Contract Price, which cannot be modified by either party except by a Change Order signed by both parties pursuant to Article 9 of the General Conditions.

7.1 Progress Paymenlc;

7.1. l Design-Builder's Applications for Payment are attached to this Agreement as Exhibit B. By the execution of this Agreement, Owner hereby approves the Applications for Payment and agrees to take all actions necessary to fund such Applications for Payment, including the execution of the Requisitions attached as Exhibit B at closing.

7.1.2 Owner agrees that the Trustee can pay the Applications for Payment upon submission by Design-Builder of the executed Requisitions for Payment to the Trustee, without the need for any additional information or consent from the Owner.

7.2 Source of Funds. Design-Builder and Owner acknowledge and agree that the fonding for payments due under this Agreement shall come from the Construction Fund established pursuant to the Trust Indenture by the Trustee, U.S. Bank, N.A. (the "Trustee").

7.4 Record Keeping and Finance Controls. In light of the fact that this is a stipulated sum contract, Design-Builder shall have no obligation to kl.-ep records, books, correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda or other data relating to the Work and no records shall be open for inspection by any part). Design·Builder agrees to cooperate with Owner in conjunction with any reporting required of Owner by !CE or the Federal Government in connection >Aith the Project.

171620 2068.1 s

202 Article9 Representatives of the Parties

9.1 Owner's Representatives

9.1. I Owner designates the individuals listed below as its Senior Representatives ("Owner's Senior Representatives"), which such individuals have the authority and responsibility for avoiding and resolving disputes under Section 10.2.3 of the General Conditions of Contract:

9.1.2 Owner designates the individual listed below as its Owner's Representative, which individual has the authority and responsibility set forth in Section 3.4 of the General Conditions of Contract; (Identify individual's namc.1idc. add~s ind telephone numbmJ

The Willacy County Local Government Corporation 190 North 3r:1 Street Courthouse Annex Raymondville, Texas 78580

9.2 Design-Ruilder's Representatives

9.2.J Design-Builder designates the individual listed below as its Senior Representative ("Design-Builder's Senior Representative"), which individual has the authority and responsibility for avoiding and reo;olving disputes under Section I 0.2.3 of the General Conditions of Contract:

Mr. Philip K. Packer President ofHMC Contracting South Texas. L.L.C. 2900 Weslayan, Suite 375 Houston, Texas 77027 (713) 665-1100

9.2.2 Design-Builder designates the individual listed below as its Design-Builder's Representative, which individual has the authority and responsibility set forth in Section 2.1.l of the General Conditions of Contract: Mr. Philip K. Packer President of HMC Contracting South Texas, L.L.C. 2900 Wesleyan, Suite 375 Houston, Texas 77027 (713) 665-1100

171620 206&.1 6

203 Article 10 Bonds and Insurance

l 0.1 Insurance. IJesign-Builder shall procure in accordance with Article 5 of the General Conditions of Contract the insurance coverages set forth in Exhibit C.

10.2 Bonds and Other Performance Security. Design-Builder shall provide the following perfonnance bond and labor and material payment bond or other performance security:

11.1 Other provisions, if any, are as follows: (lnsen 11ny addftlon•I ~\lsions) 11.1.l Willacy County, Texas shnll be a direct, third party beneficiary of this Agreement and shall he bound by the dispute resolution procedures contained in Article I0 of the General Conditions of the Contract.

In executing this Agreement, Owner and Design-Builder each individually represents that it has the necessary financial resources to fulfill its obligations under this Agreement, and each has the necessary corporate approvals to execute this Agreement, antl perfonn the services descrihed herein.

OWNER: DESlGN-BUILDER: THE WILLACY COUNTY LOCAL HMC CONTRACTING

SOffel~/ GOVERNMEl'T CORPORATION . _,.-;

c~~President yfusi ent

-----------------------------------·-·-·--·-- 204 DB I A

~ DESIGH•IUllD INSTJTllTE OF AMUICA

STANDARD FORM OF GENERAL CONDITIONS OF CONTRACT BETWEEN OWNER AND DESIGN-BUILDER

205 DB I A

~ DHIGN·JOILD IHSTll UIf OF AMEllC4

Standard Form of General Conditions of Contract Between Owner and Design-Builder This documr.nt Jra.y heen amemkd and revised/ram it.s stando.rdform.

Article 1: General ......................................................................................................................................3

Article 2: Design-Bullder·e Services and ResponslblllUes ......................................................................... 3

Article 3: Owner's Services and Responaibilities ...................................................................................... 6

Article 4: Hazardou5 Conditions and Differing Site Conditions .............................................................. 7

Article 5: Insurance and Bonds ................................................................................................................... 7

Article 6: Payment. ....................................................................................................................................8

Article 7: lndemniflcation .......................................................................................................................... 10

Article 8: Tlme ..........................................................................................................................................11

Article 9: Changes to the Contract Price and Time ................................................................................. 11

Article 10: Contract.Adjustments and Disputes .........................................., ........................................ 12

Article 11: Stop Work and Termination for Cause ................................................................................... 13

Article 12: Miscellaneous ......................................................................................................................... 15

206 Article 1 1.2.9 Subcontractor ls any person or entity retained by Design-Builder as an independent contractor to perfonn a General po11lon of the Work and shall include materialmen and suppliers. 1.1 Mutual Obligations 1.2.10 Sub-Subcontractor is any person or entity 1.1.l Owner and Design-Builder commit at all times retained by a Subcontractor as an independent contractor to cooperate fully with each other, and proceed on the to perfonn any portion of a Subcontractor's Work and basis of trust and good faith, to permit each party to shall include materialmen and suppliers. realize the benefits afforded under the Contract Documents. 1.2.11 Substantial Completion is the date on which the Work, or an agreed upon portion of the Work, is 1.2 Buie DefloHiolls ~ufficiently complete so that Owner and/or Operator would be able to use the Project for training andtor l,2.1 Agreement refenc to the txi:cuted contract operations. between Owner llJ1d Design-Builder ,DBIA Document No. 525, Standard Form of Agreement Betw~en Owner 1.2.12 Work is comprised of all Design-Builder's and Design-Builder - Lump Sum (1998 Edition) as design, construction and other services requited by the amended by the parties. Contract Documents, including procuring and furnishing all materials, equipment. servicu and labor reasonably 1.2.l Day or Days shall mean calendar days unless inferable from the Contract DoCUlJ'lents. otherwise specifically noted in the Contract Documents. Article 2 1.2.3 DeJign Consultant is e qualified, licensed design professional who Is noc an employee of Design-Builder, Deslgn-Bullder's Services and but Is retained by Design-Builder, or employed or ResponslbllltJes retained by anyone under contract with Design-Builder or Subcuntractor, to furnish design services required under 2.1 General Services the Contract Documents. 1..1.1 Design·Bullder's Representative shall be l.l.4 Hazardous Conditions are any materials, wastes, reasonably available to Owner end shall have the substances and chemicals deemed to be hazardous under necessary expertise and experience required to supervise applicable Lesa I Rcquiremenl1, or the h1111dling, storage, the Work. Design·Bullder's Representative shall remediation, or disposal of which are regulated by communicate regulady with Ownel' a11d shall be vested applicable Legal Requirements. w'ith the authority tc act on behalf of Design-Builder. Design-Builder's Representative may be replaced only 1.2.5 GenemJ Conditions of Contract refer to lhi5 with lhe mutual agreement of Owner and DesigTI-Builder. DBIA Document No. 53S, Stamlard Form of Genaral CondJ1ionJ of Contracs Berween Owne1· and Destl{l'l- Bul/der (1998 Edition) as amended by the parties. 2.1.2 Design-Builder shall provide Owner with a monthly status report detailing the progress oi !he Wurk. 1.2.6 ugal Requirements are all 11pplicable federal, state ll!ld local laws, codes, ordillllllces, rules, regulations, orders and decrees of 1111y government or quasi· l.2 DesI:n Professional Services government entity havingjurudiction over the Project or Site, the practices involved In the Project or Site, or any l.2.1 Design-Builder shall, consistent with appliC11.ble Work. state licensing laws, provide through qualified, licensed design professionals employed by Design-Builder, 1.2. 7 (Intentionally Left Bl Mk) procured from qualified, independent licensed Design Consultants or from subcontr8Ctors/vendors fabricating 1.2.8 Site is the land or premises on which the Project materials and/or equ\ pment for the Project, the necessary ls located. design services, including architecturul, engineering and other design professional services, for the preparation of

Page3

207 lhe required drawings, specifications and other design submitto.ls to pennlt Design-Builder to complete the 2.6.1 Except as identified in an Owner's Pennit List Work consistent with the Contracl. Documents. Nothini: which may be attached as an exhibit to the Agreement, Jn the Contract Documents Is intended or deemed to Design-Builder shall obtain a11d pay for all necessary create any legal or conll"actual relationship between permits, approvals, licenses, government charges and Owner and any Design Consultant. inspection fees required for the prosecution of the Work by any government or quasi-government entity having l.3 Standard of Cart for Design Profes1lon11l jurisdiction over the Project. Services 2.6.2 Owner shall provide reasonable assistance to 2.3.1 The standard of care for all desi~ professional Design-Bullder in obtaining those pennits, approvals and seivices perfonned to ~ecute the Work shall be the care licenses that arc ne~sary for the design and construction and skill ordinarily used by members of the design of the ProjecL profession practicing under similar conditions at the same time and locality of the Project. 2.7 Deslgn-Bul1d•r's Construction PhQe Servic~s l.4 Design Development Services 2.7.1 Desl~n-Builder sh.all provide through itself or l.4.1 Design-Builder has provided Owner Subcontractors the necessary supervision, labor, design/conceptual submissions that have been approved inspection, testing, start-up, material, equipment, by Owner 11ml llTC isllached as Exhibit A to the mechh1eiy, temporary utilities and other temporary Agreement. facilities to permit Design-Builder to CQmpiete construction of the Project consistent with the Contract 2.4.2 Desii!l·Builder may submit to Owner Documenls. Construction Documents setting forth in greater detail drawings and specifications dc:lcrlblng the requirements 2.7.2 Design-Builder shall perfonn all construction for construction of the Work. The construction activities efficiently and with the requisite expertise, skill Documents shall be consistent with the intent defined In and competence to satisfy the requirements of the the previously approved design submissions identified in Contract Documents. Design-Builder shall at all times the Agreement. Owner acknowledges that the Projecl exercise complete and exclusive control over the means, will not be designed to meet or comply with any type uf methods, sequences and techniques ot' construction. State, Federal or voluntary jail or prison design standards that may or may not be applicable to the Project. Design· 2.7.3 Design-Builder shall employ only Builder shall proceed with construction In accordance Subcontractors who ore duly licensed and qualified to with the Construction Documents, if any are created. perform the Work consistent with the Contract Documents. l.S ~Ill Requlresnenu 2.7.4 Design-Builder assumes responsibility to Owner 1.5.1 Design-Builder shall perfonn the Work in for the proper performance of the Worl< ofSubcon1ractors accordance with all Legal Requirements and shall provide 1111d any acts and omissions In connection with such o.11 notices applicable to the Work as required by I.he performtlnce. Nothing in the Contract Documents is Legal Requirements. intended or deemed to create any legal or contractual relationship between Owner and any Subcontractor or 2.5.2 The Contract Price and/or Contract Time(s) shall Sub-Subcontractor, including but not limited to any third· be adjusted to compensate Design-Builder for the effects party beneficiary rights. of' any changes in the Legal Requirements enacted after the date of the Agreement affecting the pcrfonnance of l. 7.5 Design-Builder shall coordinate the activities of the Work. Such effectS may include, without limitation, all Subcontractors. lfOwner performs other work on the revisions Design-Builder is required to make to the Project or at the Site with separate contractors under Construction Documents because of changes in Leglll Owner's control, Design-Builder agrees to reasonably Requirements. cooperate and coordinate its activities wilh those of such separate contractors so that the Project can be completed 2.6 Government Approvals and Permits

208 in an orderly ond coordinated manner without unreasonable disruption. 2.9.l o~sign-BLlilder warrants to Owner that the construction, including all materials and equipment 2.7.6 Design-Builder shall keep the Site reusonably furnished as part of the construction, shall be new unless free from debris, trash and construction wastes to pennit otherwise specified In the Contract Documents, of good Design-Builder to perform Its construction services quality, in conformance with the Contract Documents and efficiently, safely and without interfering with the use of free of defects in materials and workmanship. Design. adjacent land areas. lipon Substantial Completion of the Builder's warranty obligation excludes defects caused by Work, or a portion of the Worlc, Desien-Builder shall abuse. elterations. or failure to maintain the Worlc by remove all debris, trash, construction wastes, materials. persons other than Design-Builder or anyone for whose equipment, machinery and tools arising from the Work or acts Design-BuUder may be liable. Nothing in this applicable portions thereof to pennit Owner to occupy the warranty is intended to limit any manufacturer's warranty Project or a portion of the Project for its intended use. which provides Owner with greater warranty rights than set forth in this Section 2.9 or the Contract Documents. 2.8 Design-Builder's ResponslbUity fur Project Design-Builder will provide Owner with all Safefy manufacturers' warranties upon either Substantial or Final Complet[on. Where a manufacturer's or third party 2.8.1 Design-Builder recognizes the Importance of warranty has been provided to Owner, Owner agrees that performing the Work in a safe manner so as to prevent Design-Builder will have no further liability with respect damage, iajury or loss to (i) all individuals at the Site, to the subject of the manufacturer's or third party whether working or visitfog, (ii) the Work, including warranty and owner agrees to look solely to such materials and equipment incorporated into the Work or manufacturer or third party f1Jr >111y warranty claim with stored on-Site or off-Site, 1111d (iii) all other property at respect to such items and hereby specifically releases lhe Site or adjacent thereto. Design-Builder assumes Design-Builder of end from any such claims. responsibility for implementing and monitoring all safety precautions and programs related to the perfonnance of 2.10 Correction of Defective Work the Work. 2.10.1 Design-Builder agrec.1 to correct iUIY Work \hat 2.8.2 Design-Builder and :Subcontractors shall comply is found to not be in conformance with the Contract with all Legal Requirements relatlng to safety, as well as Documents, including that part of the Work subject to any Owner-specific safety requirements set forth In the Section 2.9 hereof, within a period of one year from tbe Contract Documents, provid1;:d that such Owner-specific date of Substantial Completion of the Work or any requirements do not violate any applicable Legal portion of the Work, or within such longer period to the Rcquircmenl Design-Builder will Immediately report In extent required by the Contract Documents, provided writing any safety-related injury, loss, damage or accident ~w:h work ls not the subject of a manufacturers warranty arising from the Work to Owner's Representative and, to as described in Article 2.9. l above. the extent mandated by Legal Requirements, to all government or quasi-government authorities having Z.10.l Design-Builder shafl, within seven (7) days of jurisdicLion over safety-related matters involving the receipt of written notice from Owner that the Work is not Project or the Work. in conformance with the Contract Documents, take steps to commence correction of such nonconfonning Work, 2.8.3 lJesign-Builder's responsibility for safety under Including the correction, removal or replacement 1,1f th" this Section 2.8 is not Intended in any way to relieve nonconforming Work and any dam1111e caused to other Subcontractors and Sub-Subcontractors of their own parts of the Work ftffected by the nonconforming Work, contr11Ctual and legal obligations and responsibility for (i) provided such work is not the subject of a manufacrurer' s complyin& with all Legal Requirements, including those or third party warranty as described in Article 2.9. I related to health and safety maners, and (ii) taking ell above. If Design-Builder fails to commence the necessary measures lo implement and monitor all safety necessary steps within such seven (7) day period, Owner, precautions 11nd programs to guard against injury, losses, in addition to any other remedie.~ provided under the damage.~ or accidents resulting from their performance of Conlract Documents, may provide Design-Builder with the Work. written notice tbal Owner will commence correction of such nonconfonning Work with its own forces. If Owner 2.9 De.sign-Builder's W11rranty does perform such corrective Work, Design-Builder shall

age

209 be responsible for all reasonable costs incurred by Owner 3.3.1 Design-Builder shall cooperate with the in performing such correction. If the nonconforming rellllOnable requirements of Owner's lenders or other Work creates an emergency requiring an immediate financial sources. Nohvithstanding the preceding response, the seven (7) day periods identified herein shall sentence, after execution of the Agreement, Design- be deemed inapplicable. Buildcr shall have no obligation to execute for Owner ur Owner's lendor& or other financial sources any documents 2.10.3 The one year period referenced in Section 2.10.1 or agreements that require Design-Builder to assume above applies only to Dt:Sigr1-Builder's obligation to obligations or re.'lponsibilitiCll greater than those existing correct nonconfonning Work not the subject of a obligations Design-Builder that may exist under the manufacturer'~ or third party warranty and Is not Intended Contract Documents. to constitute a period oflimltations for any other rights or remedies Owner may have regarding Design-Builder's 3.4 Owner's Representative other obligations under the Contract Documents. 3.4.l Owner's Representative shall be responsible for Article 3 providing Owner-supplied infonnation and in a timely manner to permit IJesign-Builder to fulfill its obligations owner's Services and Responsibilities under the Contract Documents. Owner's Representative shalt also provide Design-Builder with prompt notice if it 3.1 Duty to Cooperate observes any failure on the part of Design-Builder to fulfill its contractual obligations, including any errors, 3.1.1 Owner 5hall, throughout the performance of the omissions or defects in the performance of the Work. Work, cooperate with Design-Builder and perform lts Fllilure to provide such notice to Design-Builder shall responsibilities, obligations 11nd services in a timely constitute a complete waiver of any daims by OWner manner to facilitate Design-Builder's timely and efficient relating to such matters. performance of the Work and so as not to delay or interfere with Design-Builder's performance of Its 3.5 Government Approvall and Permits obli,&ations under the Contract Documents. 3.5.1 Owner shall provide reasonable assistance to 3.1.2 If required by this Agreement, Owner shall Deslgn-Huilder in obtaining those pennits, approvals and provide timely reviews and approvals of submissions licenses thal are Design-Builder's responsibility. consistent with the turnaround times set forth in Design· Builder's schedule. 3.6 Owner's Separate Coatractors

3.2 Furnbhin& of Servien and IJaformatlon 3.6.1 Owner is responsible for all work perfonned on the Pruj~cl or at the Site by separate contractors under 3.2.1 Owner is responsible for securing and executing Owner's control. Owner shall contractually require its all necessary agreements with adjacent land or property separate contr11Ctors to cooperate with, and coordinate owners and any easements that are necessary to enable their activities so as not to inteTfere with, Design-Builder Design-Builder to perform the Work. Owner is further in order lo enable D1;11ign-Buildcr to timely complete the respo1111ible for all costs, including attorneys' fees, Work consistent with the Contract Documents. incurred in securing these necessary e.greemcnts. 3.7 Owner's Rerponslbllity ror Maintenance 3.3 Finanetal Information 3.7.I Owner shall be n::spon8ible for maintaining the Work after Final Completion by Design-Builder. Owner warrants and represents to Design-Builder that it will provide all necessary maintenance and upkeep of the llinJcture, systems, equipment and appurtenances furnished and installed by Design-Auilder hereunder.

210 Article 4 INCLUDINO ATIORNEYS' FEES AND EXPENSES, ARISING OUT OF OR RESULTING FROM THE Hazardous Conditions and Differing PRESENCE, REMOVAL OR REMEDIATION OF Site Conditions HAZARDOUS CONDITIONS AT THE SITE.

4,1 Ha:r.ardons Conditionx 4.1.6 Notwithstanding the preceding provisions of this Section 4.1, Owner is not responsible for Hazardou3 4, t.1 Unless otherwise expressly provided in the Conditions introduced to the Site by Design-Builder, Contract Documents to be part of the Work, Design· Subcontractors or anyone for whose acts they may be Builder is not re.sponsible for any Hazardous C'.tmdition~ liable. DESION-BUILDER SHALL INDEM?\TFY, encountered at the Site. Upon encountering any DEFEND AND HOLD HARMLESS OWNER AND Hazardous Conditions, Design-Builder will stop Work OWNER'S OFFICERS, DIRECTORS, EMPLOYEES Immediately in the affected area and duly notify Owner AND AGENTS FROM AND AGAINST ALL CLAIMS, and, if required by Legal Requirements, all government LOSSES, DAMAGES, LIABILI'nES AND EXPENSES, or quasi-government entities with jurisdiction over the IJ;;CLUDING AlTORNEYS' FEES AND ID

211 business In the state In which the Project is located, the Subcontractors and Sub-Subcontractors, and shall insure l11surancc cover11acs set forth In the 11ttaohcd Exhibit C. againet tho pcrilu of fiftl ond 111d.ended coverage, theft, vandalism, malicious mischief, collapse, flood, !1.1.2 Design-Builder's liability insurllllcc set forth in earthquake, debris rcmovlll and other perils or causes of Exhibit C shall specifically delete any d~isn-bulld or loss as called for in the Contract Documents. The similar exclusions that could compromise coverages property insurance shall include physical loss or damage because of the design-build delivery of the Project. to the Work, includin& materials and equipment in transit, at the Site or at another location ns may be indicated in 5.1.4 To the extent Owner requires Design-Builder or Design-Builder's Application for Payment and approved any Design Consultant tu provide professional liability by Owner. insurance for claims arising Crom the negligent perfonnance of design services by Design.Builder or the 5.3.2 Owner and Design-Builder waive against each OeBign Consultant, the coverage limits, duration and other and Owner's separate contractors, Design other specifics of such insurance shall be as set forth in Consultants, Subcontractors, agents and employees of the Agreement. Any professional liability policy ~hall each lllld all of them, all damage$ covered by property specifically delete any design-build or similar exclusions insurllllce provided herein, except such rights as they may that could compromise coverages because ofthc de&ign- have to the proceeds of such Insurance. Design· Builder build delivery of the Project. Such policies shall be and Owner shall, where appropriate, require similar provided prior to th~ commencement of any design waivers of subrogation from Owner's separate services hereunder. contractol'll, De.~ign Consultants and Subcontractors and shall require each or them to include similar waivers In 5.1.5 Prior to commencing any constroctlon services their contracts. hereunder, Design-Builder shall provide Owner with certificates evidencing that (i) all insurance obligations 5.4 Bonds and Other Performance Security required by the Contract Documents are in full force and in effect and will remain in effect for the duration 5.4.t Copies of the performance and payment bonds required by tile Contract Documents and (ii) no insurance for the Project are attached as Exhibit D to the Standard coverage will be canceled, renewal refused, or materially Form of Agreement Between Owner and Design-Builder ch1111ged unless at least thirty (30) days prior written - Lump Sum. The owner acknowlcd&es that the surety notice is given to Owner. on puch bonds (and the Design-Builder) shall not be liable or responsible in any way for the items, or the S.l Owner's Liability Insurance reimbursement of items, set forth in the Initial Application for Payment 11S described in Article 6.2. I 5.2.1 Owner shntl procure nnd maintain from below. insurance companies authorized to do business in the state in which the Pro.iect is located such liability Artjcle 6 insurance to protect Owner from claims which may 11ri:ie from the performance of Owner' a obligations under the Payment Contract Documents or Owner's aonduct during the course of the Project. 6. t Applicati11ns for Payment

5.3 Property lnsarauce 6.1.1 The proposed Application fur P1tymcnts are attached to the Agreement. Dcaign·Builder shall submit 5.3.1 Unless otherwlRe provided in the Contract for Owner'R review it~ Application for Payment. The Documents, Design-Builder shall procure lllld maintain Applications sball be paid In aocordance wlth thetenns of from insurance companies authorized to do business in the Agreement. the state in which the Proje~ Is localed property Insurance upon the entire Pruj1:cl lo the full Insurable 6.1 Initial Application for Payment value of the: Project, including professional tees, overtime premiums and all other expenses incurred to replace or 6.1.1 Design-Builder's Initial Application for Payment rcpni r tile insured property. The property insurance will Include funds for disbursements to third plll'tiea for obtained by Design-Builder shall include: as additional land acquisition, all pre-construction development costs insureds the interests of Owner, De,ign C'.onsultants, and fees, insurance, bond fees, travel and legal expense

Page

212 reimbursement, design consultant and pre-development 6.6 Substantial Completion fees. Design-Builder is performing this function at the request of Owner and has not participated in the 6.6.1 Design-Builder shall notify Owner when it negotiation or creation or these obllgations and, therefore, believes the Work, or to the extent permitted in the does not assume, and express disclaims, any liability or Contract Documents, a portion of the Work, is warranty obligations with respect to such activities. This substantially complete. Within ftve (S) days of Owner's fnitlal Application for Payment will be paid at the receipt of Design-Builder's notice, Design-Builder shall financial closing of the l.ransaction for the Project. prepare and issue a Ce1tifica.te of Substantial Completion that will set forth (i) the date of Substantial Completion 6.3 Disputu over Payment.I of the Work or portion !hereof, (li) provlsions (to 1he extent not already provided in the Contract Documents) 6.J.l On or before the date established in the establishing Owner's and De.~ign-Builder's responsibllity Agreemenl, Owner :;hall pay Design-'Ruilder all amount.~ fur the Project's security, maintenance, utilities and properly due. If Owner determines that Design-Builder is insurance pending final payment and (iii) an nol entitled to all or part of an Application for Payment, it acknowledgment that warranties commence to run on the will notify Design-Builder in writing at least five (S) days date of Substantial Completion, except as may otherwise prior to the date payment is due. The notice shall indicate be noted in the Certificlll.e of Substantial Completion. the specific amounts Owner disputes, the reasons and contractual basis for such dispute11, and the !!pccific 6.6.2 Owner, at its option, may use a portion of the measures Design-Builder may take to rectify Owner's Work which has been detennined to be substantially concerns. Design-Builder and Owner will attempt to complete, provided, however, that (i) a Certificate of resolve Owner's concerns prior to the date payment is Substantial Completion hflS been issued forthe portion of due. If the parties cannot resolve such concerns, Owner Work addressing the Items set forth In Section 6.6.l must pay Design-Builder and Owner may pursue its above, (ii) Design-Builder and Owner have obtained the rights under the Contra.;;! DocWtlents, including those consent of thelr sureties and insurers, and to the extent under Article 10 hereof. applicable, the appropriate government authorities having jurisdiction over the Project, and (iii) Owner and Design- Builder 11gro:e Lhal Owner's use or occupancy will not 6.4 Right to Stop Work 110.d Interest interfere with Design-Builder's completion of the remaining Work. 6.4.1 If Owner fails to pay Design-Builder any amount that becomes due, Design-Builder, in addition to 6.7 Final Payment all other remedies provide.d in the Contract Documents, may atoµ Work pursuant to Section 11.3 hereof. All 6.7.1 At the time of submission of its Final payments due and unpaid shall bear Interest at the rate set Application for Payment, Design-Builder shall provide forth in the Agreement. the following information:

.1 (intentionally left blank); 6,5 Design-Builder's Payment Obligations ,2 a general release executed by Design- 6.5.J Oe~iwi-Builder will pay Design Consultants and Bullder waiving, upon receipt of final SubcontraetDrs in accordance willi its contractual payment by Design-Builder, all claims, obligations to such parties. Design-Builder will impose except those claims previously made in similar requirements on Design Consultants and writing to Owner and remaining unsettled SubcontrllCtors to pay those parties with whom they have at the time of final payment; contracted. Design-Builder will indemnify ttnd defend Owner against any claims for payment and mechanic's .3 consMt ofDeslgn-Builder's surety, ifany, liens as set forth in Section 7 .3 hereof. to fin aI payment;

,4 al I operating manual~, warr11t1lies and other delivel'llbles required by the Contract Documents; and

oge

213 .5 ce1tificates of insurance confirming that relating solely to a particular process or product of a required coverages will remain in effect particular manufacturer specified by Owner and not consistent with the requiremenls of the offered or recommended by Design-Builder to Owner or Contract Documents. (ii) arising from modifications to the Work: by Owner or its agents after acceptance of the Work. If the suit, claim 6.7.2 Upon making final payn1ent, Owner waives all or proceeding is based upon events set forth in the claims against Design-Builder except claims relating to preceding sentence, Owner shall defend, indemnify and (i) Design-Builder's failure to satisfy i1.s paymenl hold harmless Design-Builder to the same extent Deslgn- obligations, if such failure affects Owner's interesL,, (ii) Buildcr is obligated tn defend, indemnify and hold Design-Ruilder's failure to complete the Wol'kconsistent harmless Owner in Section 7.1.l above. with the Contract Documents, including defects appearing after Substantial Complc:tion and (iii) the terms 7.1.4 The obligalions set forth in this Section 7.1 shall of any special warranties required by the Contr11et constitute the sole agreement between the plll1ies relating Documents, specifically excluding manufocturcrs' to liability for infringement of violation of any patent or wmanties. copyright.

Article 7 7.2 TllX Oaim Indemnification

Indemnification 7.2.1 If, in accordance with Owner's direction, an exemption for all or part of the Work is claimed for taxes, 7.1 Patent aa.d Copyright lnfrincement Owner sl\all indemnify, defend and hold harmless Uesign-Builder from and against any liability, penalty, 7.1.1 Design-Builder shall defend any action or interest, fine, tax assessment, attorneys' fees or other proceeding brought against Owner based on any claim expenses or costs incurred by Design-Builder as a result that the Worlc, or any part thereof, or the operation or use of any action W:en by Design-Builder in 11ec0rdance with of the Work or aJty part thereof, constitutes infringement owner's direclive. of any United States patent or copyright, now or hereafter issued. Owner shall give prompt wrilten notice to 7.3 P•yment Clsiim lodemnif'icatlon Design-Builder of any such action or proceeding and will reasonably provide authority, information and assistance 7.3.l Providing that Owner is not in breach of its in the defense of same. Desl&n-Builder shal! indemnify contractual obligation to make payments 10 OCSlitl- and hold harmless Owner from and against all damages Builder for the Work, Design-Builder shall indemnify, and costs, including but not limited to attorneys' fees and defend and hold hannless Owner from any claims or expenses awarded against Owner 01· Design-Builder in mechanic's liens brought against Owner or 11go.inst the any such action or proceeding. Design-Builder agrees to Project as 11 result of the failure of Design-Builder, or keep Owner informed ofaU developments in the defense those for whose acts it is responsible, to pay for any uf such actions. services, materials, labor, equipment, taxes or other items or obligations furnished 01· incurred for or in connection 7.1.2 If Owner is eflioined from the operation or use wltb the Work. Within three (3) days of receiving written of the Work, or any part thereof, as the result of any notice from Owner that such a claim or mecl\anic's lien pillc:nl or copyright suit, claim, or proceeding, Design· hlllf b~n filed, Design-Builder shall commence to take Builder shllll at its sole expense take reooonable steps to the steps necessary to discharge said claim or lien, procure tne tight to operate or use the Work. IfDesign- including, if necessary, the furnishing of a mechanic's Bullder cannot so procure such right within a reasonable lien bond. time, Design-Builder shall promptly, at Design-Builder's option and at nesign-Builder's expense, (i) modify the 7.4 Duign-B111lder'1 General Indemnlfkatton Work so 11S to nvoid infringement of any such patent or copyright or (ii) replace said Worlc with Work that does 7.4.1 Design-Builder, to the fullest extenl permill.tfil not infringe or violate any l;Uch patent or copyright. by law, 1hall indemnify, hold harmless and defend Owner, its officeni, director~. employees and 1111.ents from 7.1.3 Sections 7.1.1 and 7.1.2 above shall not be and against claims, losses, damt1&es, liabilities, including applicable to any suit, olaim or proceeding based on attorneys' fees and expenses, for bodily iaj11zy, sickness Infringement or violation of a patent or copyright (i) or death, and property damage or destruction (other than

214 to the Work ltself) to the extent resulting from the contractors), changes In the Work, unavailability of negligent acts or omissions of Design-Builder, Design materials/equipment at the prict: contemplated by Design- Consultants, Subconlractors, anyone employed directly or Builder when establishing the Contract Price, Differing Indirectly by any of them or anyone for whose acts any of Sit.e Conditions, Hazardous Conditions, wars, floods, them may be liable. labor disputes, unusual delay in transponation, epidemics abroad, earthquakes, adverse weather conditions not 7.4.2 If an employee of Design-Builder, Design reBSOnably anticipated, and other acts of God. Consultants, Subcontractors, anyone employed directly or indirectly by any of them or anyone for whose acts 1111y of 8.2.2 ln addition to Design-Builder's right to a time them may be liahlc has 11 claim againat Owner, its extension for those events set forth in Section 8.2.1 officers, directors, employees, or agents, Design- above, Design-Builder shall also be entitled lo an Bullder's indemnity obligation set forth in Section 7.4.I appropriate adjustment oftbe Contract Price. above shall llOt be limited by any limitation on the amount of damages, compensation or benefits payable by Article 9 or for Design-Builder, Design Consultants, Subcontractors, or other entity under any employee Changes to the Contract Price and benefit acts, including workers' compensation or Time di3ablllty acts. 9.1 Change Orders 7.5 Owner's Genual lndemnlftcatlon 9.1.1 A Change Order is a wrltten instrument issued 7.5.l Owner, to the fullest extent permitted by law, after execution ot' the Agl'eement signed by Owner and shall indemnify, hold harmless and defend Design. Design-Builder, stating their agreement upon all of the Builder and any of Design-Builder's officers, directors, following: employees, or agents from and against claims, losses, damages, liabilitie.,, including attorneys' fees 81ld .I The 11eope of the change in the Work; CXpcn3CS, for bodily injury, sickness or death, and property damage or destruction (other th1111 w the Work .2 The amount of the adjustment to the itself) to the extent resulting from the ne&ligent acts or Contract Price; and omissions of Owner, Owner's separate contractors or anyone for whose~ any of them may be liable. .3 The extent of the adjustment to the Contract Time(s). Article 8 9.1.2 All changes in the Work authorized by Time applicable Change Order shall be performed under the applicable conditions of the Contract Documents, 8.1 Obligation to Achieve the Contract 11mes provided that Owner covenants to Design-Builder that it has sufficient funds to pay for an)' changes in the Work. 8.1.1 Design-Builder agrees that it will 1.'Ummtmee Owner and Design-Builder shall negotiate in good faith performance of the Work and achieve the Contract and as expeditiously as possible the appropriate Time(s) in accordance with Article S of the Agreement adjustments for such changes.

8.2 Delays to the Work 9.1.3 ff Owner requests a proposal for a change in the Work from Design-Builder and subsequendy elects not to 8.2.1 If Design-Builder is delayed in the performance proceed with the change, a Change Order shall be issued ofthe Work due to acts, omissions, conditions, events, or to reimburse Design-Builder fof teasonable costs incurred circumstances beyond its control and due to no mutt ofits for estimating services, design services and services own or those for whom Design-Builder is responsible, the involved in the preparation of proposed r~islons to the Contract Thne(s) for perfonnance shall be reasonably Contract Documents. extended by Change Order. By way of example, events that will entiUe Design-Builder to an extension of the 9.2 (Intentionally left blank) Contract Tlme(s) include acts or omissions of Owner or anyone under Owner's control (including separate

Pn&c ll

215 9.3 Minor Changes b1 the Work 10.2 Dispute Avoidance and Resolution

9.3.t Minor changes In the Work do not involve an 10.2.1 The parties are fully con1mined to working with adjustment in the Con1ract Price and/or Contract Time(s) each other throughout the Project and agree to and do not materially and adversely affect the Work, communicate regularly with each other at all times so as including the design, quality, performance and tn avoid or minimize disputes or disagreements. If workmanship required by the Contract Documents. disputes or disagreements do arise, Design-Builder and Design-Builder may make minor changes in the Work Owner each commit to resolving such disputes or consistent with the intent of the Contract Documents, disagreements in an amicable, professional and provided, however that Design-Builder shall record such CJ

9.4 Contract Price Adjumaeots 10.2.2 Design-Builder and Owner will first attempt to resolve dispute., or disagreements at the field level 9.4.1 The increase or dec1·ea.se in Contract Price through discussions between Design-Builder's resulling from a change In the Work shall be detennined Representative and Owner's Representative. by the agreement between Owner and Design-Builder. 10.2.3 If a dispute or disa&reement cannot be resolved 9.5 Emergencies through Design-Builder's Representative and Owner's Representative, Design-Builder's Senior Representative 9.S.l In any emergency 11ffecling the safely urpersons and Owner's Senior Representative, upon the request of and/or property, Dcsign-BuildCT shall 11et, at its either party, shall meet a.• soon as conveniently possible, discretion, Lll prevent threatened damage, injury or loss. but in no case lat.er than thirty (30) days after such a Any change In the Contract Price and/or Contract Tlme(s) request ls made, to attempt to resolve such disput.e or on ac1:ount of emergency work shill be detennined as disagreemenL Prior to any meetings between the Senior provided in this Article 9. Representatives, the partle.<1 will exch11nge relevant information that will assist the parties in resolving their Article 10 dispute or disagreement.

Contract Adjustments and Disputes 10.2.4 1f after meeting the Senior Representatives determine that the dispute or disagreement cannot be 10.1 Requests for Contract Adjustments and resolved on terms satisfactory to both plll1ie.s, the parties Relief shall submit the dispute or disagreement to non-binding mediation. The mediation shall be conducted by a 10.1.t If either Design-Builder or Owner believes that mutually agroeable impartial mediator, or If the parties it is entitled to relief against the other for any event cannot so agree, a mediator designated by the American arising oui of or related to the Work or Project, such party Arbitration Association ("AAA") pursuant to ils shall provide written notice to the other party of the basis Construction Industry Mediation Rules. The mediation for its claim for relief. Such notice shat~ if possible, be will be governed by end conducted pursuant to a made prior to Incurring any cost or expense and in mediation agreement negotiated by the parlies or, if !he accordance with any speciflc notice requirements pllrties c1111nol ~u 11grt:t:, by procedures established by tbe contained in applicable sections of these General mediator. The local of the mediation shall be conducted Condition~ of Contract. In the absence of any specific In Houston, Texas. notice requirement, written notice shall be given within a reasonable time, not to exceed twenty-one (21) days, after 10.3 Arbitration the occurrence giving rise to the claim for relil!f or after the claiming party reasonably should have recognized the 10.3. l Any claims, disputes or controversies between event or condition giving rise to the request, whichever is the parties arising out of or relating to the Agreement, or later. Such notice shall include sufficient information to the breach thereof, the Project or any transaction or advise the other party of the circumstances giving rise to occurrence arising out of or relating to the Agreement the claim for relief, the specific contractual adjustment or and/or the Project which have not been resolved in relief requested and the basis ofsuch request. accordt111ce with the procedures set forth In Section I 0.2 above shall be decided by arbitration in accordance with

Pa~~ 12

216 the Construction Industry Arbitration Rules of the AAA 10.5.2 The consequential dllll\nges limitation set forth then in effect, unless the parties mutually agree in Section l O.S.1 above Is not intended to affect the otherwise.. The hearing locale shall be in Houston, payment ofliquldated damages, if any, set forth in Article Texas. 5 of the Agreement, which both parties recognize has been established, in part, to reimburse Owner for some 10.3.2 The award of the arbitrator(s) shall be final and damages that might olherwise be deemed to be binding upon the parties without the right of appeal to the consequenlial. couns. Judgment may be entered upon it in 11ccortlance with applicable law by any oourt hflVing jurisdict.ion Article 11 thcreor. The rarties ~tipulate and agree that the Project involves interstate commerce and this Agreement shall be Stop Work and Termination for Cause governed by the Federal Arbitration Acl. 11.1 Own11r's Right to Stop Work 10.3.J Design-Builder and Owner expressly agree that any arbitration pursuant to this Section 10.J may be 11.1.1 Owner m11y, without cause and for it~ joined or consolidated with any arbitration involving ~Y convenience, order Design· Builder in writing to stop ood other person or entity (i) necessary to resolve the claim, suspend the Work. Such suspension shall not exceed dispute or controversy, or (ii) substantially involved in or sixty (60) consecutive days or aggregate more than ninety affected by such claim, dispute or controversy. Both (90) days during the duration of the Project. Design-Builder and Owner will include appropr~te pn.ivi~ions in all contracts they ex.ecut~ with o~e~ parties 11.l.2 Design-Builder ls entltled to seek an adjustment in connection with the Project to require such JOmder or of the Contract Price and/or Con1r11ct Tlme(s) if its cost or consolidation. time to perform the Work has been adversely impacted by any suspension of stoppage of work by Owner. 10.3.4 The prevailing rnrty In any arbitration, or any other final, binding dispute proceeding upon which Che 11.l Owner's Rlcht tu Perform a11d Termiuate for parties may llgl'ee, shall be entitled to recover from the Cause other party reasonable attorneys' fees and ex.pl::llS~ incurred by the prevailing party. J 1.2.1 IfDe:iign-Bullder persistently fails to (I) provide a sufficient number of skllled workel'll, (ii) supply the L0.4 Duty to Continue Performance material& required by the Contract Documents, (iii) comply with applicable Legal Requirements, {iv) timely 10.4.1 Unless provided to the contrary in the Contract pay, without cause, Design Consultants or Documents, Design-Builder shall continue to perfom1 the Subcontractors, (v)prosecute the Worlc with promptness work and Owner shall continue to satisfy its pllyment and diligence to ensure that the Work is completed by the obligations to Design-Builder, pending the final Contract Time(s), as such times may be adjusted, or (vi) resolution of any dispute or disagreement between perform material obligations under the Contract Design.Builder and Owner. Documents during the performance of the Work, then Owner, in addition to any other rights and rem~dies 10.5 CONSEQUENTIAL DAMAGES provided In the Contract Documents, shall have the r1gh1S set forth in Sections 11.2.2 and 11.2.3 below. 10.5.l NOTWilliSTANDl'NG ANYTillNG HEREIN TO THE CONTRARY (EXCEPT AS SET FORTH IN 11.l.1 Upon Lhe occurrence of an event set forth In SECTION 10.5.2 BELOW}, NEITHER DESJGN- Section 11.2.1 above, Owner may provide written notice BUILDERNOR.OWNERSHALLBEUAF.ILETOnrE to Design-Builder that IL intends Lo terminate lhe OTHER FOR ANY CONSEQUENTIAL LOSSES OR Agreement unless th1: probl~m cited is cured, or DAMAOUS, WHETHER ARISING IN CONTRACT, commenced to be cured, within seven (7) days of Design. WARRANTY, TORT (fNCLUDING NEGLIGENCE), Builder's receirt of such notice. If Design-Builder fails STRICT LIABILITY OR OTHERWISE, INCLUDING to cure, or reasonably commence 10 cure, such problem, BUT NOT LIMITED TO LOSSES OF USE, PROFITS, then Owner may give a second written nolice to De.~lgn· BUSINESS, REPUT Ano-r-; OR FINANCING. Builder of its intent to terminate within an additional seven (7) day reriod. If Dcsign·Builder, within such second seven (7) day period, falls to cure, or reasonably

Ill• I

217 commence to cure, such problem, then Owner mtiy provide Ow1\er witl1 written notice that Design-Duilder declare the Agreement tc::rminated for default by will stop work and terminate the Agreemenl unless said providing written notice to De~ign·Buildcr of such event is cured within seven (7) days from Owner's receipt declaration and after obtain in, written approval from the of Design-Builder's notice. Jf Owner does not cure the Trustee of the same, which shall be an express condition problem within such seven (7) day period, Design· precedent to tenninatlng this agreement for default. Builder may mop work and/or terminate the Agreemenl for cause pursuant to 11.4 below. lf Design-Builder only 11.2.3 Upon declaring the Agreement tenninated stops work, Design-Builder shall be 1:ntille

.1 Owner's fallure to provide financial .3 Owner's failure to cure the problems act aS911rances as required under Section 3.3 forth in Section 11.3.1 aboveafu:r J1c~ign­ hereof; ur Duilder has stopped the Work.

.2 Failure to pay Design-Builder's 11.4.2 Upon the occurrence of an event set forth In Application(e) for Payment. Section 11.4.1 above, Design-Builder may provide w1·itten notice to Owner that it intends to terminate lhc 11.3.2 Should any of the events set forth in Section Agreement unless the problem cited is cured, or 11.3. I above occur, Design-Builder has the right to commenced to be cured, within seven (?) days of

218 Owner' 5 receipt of such notice, or notice hll.S elrea

11.5.1 If either Owner or DtlSign-Bullder institutes or 12,2 Successorship has instituted against it a case under the United States Bankruptcy Code (such party being referred to as the 12.2.t Design-Builder 11nd Owner Intend that the "Bankrupt Party"), such event may impair or :frustrate the provisions oflhe Contract Documents arc binding upon Bankrupt Party's ability to perform its obligations under the parties, their employees, agents, hei~. successors 1111d the Contract Documents. Accordingly, should such event assigns. occur: 12.J Governing Law .J The Bankrupt Party, its trustee or other successor, shall furnish, upon request of 12.3.1 °The Agreement and all Contract Documents the non-Bankrupt Party, adequate shall be governed by the laws of the place of the Project, assurWJce of the ability of the Rankrupt without giving effect to its conflict of law principles. Porty to pcrfonn all furure material obligations under the Contract Docummts, 11.4 Severability which assurances shllll be provided within ten (l 0) days after receiving notice of the 12.4.1 Ifnny provision or any part ofaprovision of the request; and Contract Documents shall be finally det.erm ined to be superseded, invalid, illegal, or otherwise unenforceable .l The Bankrupl Pariy shall file an pursu1111t to any applicable 1.egal Requirements, such appropriate action within the bankruptcy detennination shall not impair or otherwise affect the court to seek assumption or rejection of the validity, legality, or enforceability of the remaining Agreement within sixty (60) days of the provision or parts of the provision of lhc Contract imrtitutlon of the b1mkruplcy liling and Documents, which shal I remain in full force nnd effect o.s shall diligently prosecute such action. if the unenforceable provision or part were deleted.

If the B11nkrupt Party fails to comply with its foregoing 12.S ~o Waiver obligations, the non-Bankrupt Party shall be entitled to request the bankruptcy court to reject the Agreement, 1l.S.1 The failure of either Design-Builder or Owner to declare the Agreement terminated and puT11Ue MY other Insist, In any one or more instances, on the performance recourse available to the non-Bankrupt Party under this of any of the obligations required by the other under the Article 11. Contract Documents shall not be construed as a waiver or relinquishment of such obligation or right with respect to 11.5.2 The rights and remedies under Section 11.S. I future performance. above shall not be deemed to limit the ability of the non- Bankrupt Party lo seek any other rights and remedies ll.6 H eadi"1'5 providec.I by Lhe Contract Documents or by law, Including its ability to seek relief from any automatic stays under 12.6.1 The headings used in these General Conditions the United States Bankruptcy Code or the right of of Contract, or any other Contract Document, arc for ease Design-Builder to stop Work under any applicable ofreference only and shall not in any way be con~trued to provision of these General Co11ditions ufConlracl. limit or alter the meaning of any provision.

12.7 Notice

219 was received at the facsimile number of the Intended )l.7.1 Whenever the Contract Documents require that recipient. Mtlce be provided to the other party, notice will be deemed to have been validly given (I) If delivered in 11.8 Amendments person to the individual lnten®d to receive such notice, (ii) four (4) days after being sent by registered or certified U.8.1 The Contract Documents may not be changed, mai I, postage prepaid to the address indicated in the altered, or amended in any way except In writing signed Agreement or (ill) If transmitted by facsimile, by the time by u duly Uui.horized represeittatlve of each party. stated in a machine generated con1lnnation that notice

ngo

220 EXHIBIT A PROJECT DESCRIPTION

The original 2006 Project consists of a 2000-bed, low security adult detention facility, constructed in two phases, including ten housing structures and a support building. The work under this Agreement consists of an addition to and remodel of the existing Administration Building, a new 1,086 Detainee Housing Building, a new Administration/Maintenance Building and a new enclosed Recreation Building. The expansion of the existing facility is located on the original 54 acres. The entire facility is surrounded by a double security fence and perimeter patrol road. Additional vehicle parking has been provided to accommodate the additional staff. The facility is designed to comply with applicable local, state and national codes. Public utilities are available and of the appropriate capacities to accommodate the detainees and facility staff.

The existing Administration Building is approximately 41,000 square feet and will be expanded by 21,286 square feet. The Facility Operator's offices will be relocated from the existing Administration Building to the new Administration/Maintenance Building. This building will be extensively remodeled to accommodate expanded general office space needs that will initially be utilized by the ICE Office of Detention and Removal (DRO), the Office of Principle Legal Advisor (OPLA), the Executive Office for Immigration Review (EOIR), which is the judicial portion of the facility, and Public Health Services (PHS), which is the health care portion of the facility. Each of these areas contains offices, office cubicles, storage, support spaces, conference rooms, multi-purpose rooms, courtrooms, restrooms, etc. Detainee intake and processing, detainee visitation and the vehicular sally port are part of the original Administration Building. The ceiling in the Administration Building is acoustical ceiling tile or gypsum board; the partitions are either gypsum board or concrete masonry units. The floors in the Administration Building are carpet, vinyl composition tile or sealed concrete. Plumbing fixtures, hardware, doors, windows and finishes are commercial grade. The Administration Building is an engineered steel structure with a pre-engineered metal roof. The new Detainee Housing Building is approximately 130,960 square feet and contains (43) 2-bed separation cells, and (20) 50-person donnitories. The kitchen and laundry are also located in this building. The kitchen and laundry are fully equipped with the appropriate equipment and food storage areas to accommodate food preparation and laundry processing for 3 ,300 detainees/staff. Inmate dining, law library, urgent care, tele-health, tele-medicine, exam room, ICE offices, operator offices, multipurpose rooms, staff restrooms, mechanical, electrical, unit storage and exterior inmate recreation are all included in the Detainee Housing Building. The control room located in this building controls all the electro/mechanical security hardware, CCTV and monitors in this building. The ceilings in the separation cells are concrete, the Dormitories are exposed to structure and the corridors and support areas are acoustical ceiling tile. The floors are either vinyl composition tile or sealed concrete. The walls in the detainee areas are structurally grouted, reinforced concrete masonry units with gypsum wall board from 12' AFF to underside of structure or concrete panels. The plumbing fixtures in the separation cells arc security stainless steel fixtures. The plumbing :fixtures in the donnitories and support areas are vitreous china. The doors in the secure area are security hollow metal and the door hardware is detention grade hardware. The doors in the support areas are commercial hollow

171620 2068.1

221 metal with commercial hardware. The Detainee Housing Building exterior walls are concrete tilt up panels and the roof is standing seam metal.

The new Administration/Maintenance Building is approximately 27,350 square feet. The Administration portion contains the necessary offices, office cubicles, storage, support spaces, conference rooms, multi-purpose rooms, workout room, property storage, locker rooms, restrooms, etc. for the Facility Operator. The ceiling in the Administration portion is acoustical ceiling tile, gypsum board or exposed to structure, the partitions are either gypsum board or concrete masonry units. The floors in the Administration portion are carpet, vinyl composition tile or sealed concrete. Plumbing fixtures, hardware, doors, windows and finishes are commercial grade. The Maintenance portion of the Administration/Maintenance Building contains an office, tool storage, property storage, restrooms, and armories. The ceiling in the Maintenance portion is either exposed to structure, acoustical ceiling tile or security gypsum board, the partitions are either gypsum wall board or concrete masonry units. The floors are carpet, vinyl composition tile or sealed concrete. Plumbing fixtures, hardware and finishes are typical commercial grade in the office areas and security type in the armories. The Administration/Maintenance Building is an engineered steel structure with a pre-engineered metal roof. The new enclosed Recreation Building is approximately 18,750 square feet. It contains (2) recreation areas, restrooms, library, offices and supply storage. The ceiling is exposed to structure in the recreation area and acoustical ceiling tile in the other areas. The partitions are either metal panel or gypsum board. The floors are either vinyl composition tile or sealed concrete. The enclosed Recreation Building is an engineered steel structure with pre-engineered metal roof.

222 EXHIBIT B PAY APPLICATIONS AND REQUISITIONS

1716202068.1

223 EXHIBITC CERTIFICATES OF LIABILITY INSURANCE

224 --------------------------------------------------------------

CERTIFJCATE OF LIABILITY INSURANCE 0/-'~lw j ~Ar~~';;:;;; ._P_,,~-OC-IJC!!__,_n________ THIS C!RTIFICATE IS ISSUl!D AS A MATTER OF INFORMATION ONLY AtlD CONFERS NO RIGHTS UPON THE Cl!RTll'ICATE The !ll%ansportation ~roup, Ltd. HOLDER. THIS CERTIFICATE DOES NOT AMENO, EXTEND OR 11111 WilcreBt Groen, #325 Al TER THE COVERAGE AFFOROl!O BY THE POLIC1£.S BELOW HouGton 'IX 77042 Phone:713-785-6785 rax:713-?BS-8785 I ! INSURl!RS AFFORDING COVERAGE I NAIC# ' . I _:_.,._ ·- - - ------·-·-----------· .._,~_,,,_.__...;;..!o.terstate E'ire L~alty ___ ··-···-·-1 --·- I HMC contracting South Tcxa.s, L.~.c. . .::!'E.~::;__ ,_~·a_'ll~"!t:,.:_::~,~~ Ll.~.~_:.r~ ! Attn: rh~l racke~ 2900 Weslayan Suite 375 HOUlil ton -rx- 77 62? r:~;~~~ -= ~-~~<:: ~·!~~~~:-~"'·~~· ---:==~·=.=~--·=-~~-·Ii ; -.s ..:;cuf ; COVERAGES lME ~: .. 1::ES u :f":f~'·E,_ ! r: "-1 1 '""!,CH , .. ;5 Cl.:H! ,;;lC>,!E l/ll'f S:£ !SS_.:,".) Ci< Ml<..'r" ~r.:.i:~. fkE ..\$l..~.t.l\CE: A.FF"Oh':-2(.ISY ThE P-.;\..l(:l~S :.t-R""'.R!Rf 1H1fHl ..'l IS SLU.i:U ;I.) -"-..l.. H!! '!!f.:MS, E.:- :..Lus,1:"~ ,.,.Q : 1.:~""''il':..t"•j ':.'•; ~ .. .:H P:,C·_1.:e:.s /.

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B IBUildors• Risk ! l'SD3S!H414A004 QJ/30/07 l 03/30/08 I l'er Occr. $50,000,000 ~oe.::-::::<:::;;-::~~;~a.""'an=-~~A;:;:;:;::.,7 toc"""•~'t10flS==~1~vet<;:;;:;;~C1.~e~sT1;;c::c~Lu""".:::s•AOOSli::;::.,....~v~e1>°""'"""~ff~.r~1~sn;;;::C1M.::-=-~.A~mr,:::::;,!llll=:,,,.~,-~-~..--~~~~-··~~-----~--1 certificate Hol.der is inc.l.uded as an Additional rnsured as .x·espects aeueral Liability and Waiver 0£ Subrogation appl.ies as required by contxact. Certificate Holder is included as Mortqaqee on tbe Buil.ders Risk Pol.icy as re•peats Willacy County ~ocal Government Corporation.

CERTIFICATE! HOLDER CANC:1!;LLATION --· -·------ ~ou1 n ANY or TH! ~o~ oP.scP-seo Pouc.es ei::: Cl'N:::t:LLEo ~vr.:ccF. w1: EX?'P.t.-r.c•j J us. Bank Nationa1 Association DATE nr.;REOF, "-HE. IS~U.!te 1'-lSlJR€R. w·._l (\o:J~.P.-'('~. TO t,IA·_ 30 ;).-'..OS 't\111irnJ. As Truatee N'J71Cii TO THF. CERTIF':.\~ 1-t:jl D~R 11..1.•,!~0 TO TH;; L<:;:FT, BUT i:' ,.. rLURi: TO 00 SV ~t- ~ :..!. 950 17th Streot, Suite 650 ll!tf"OS! NO OBUGATIO~. OR UA81~JTY OF :..~f Kl~;::i U?ON ThE .·.s ... ~E.R, IT!. .l..Gb'flS Lt-" Mail. Stop CNDT 0665 DGDV

J\CORD 25 (7001/08) @ ,O.CORD CORPORATION 1988

225 IMPORTANT

If lhe certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s)

If SUBROGAT!ON IS WAIVED, subject to the terms and conditions of the policy, certain policies ma;' require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s).

DISCLAIMER

The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certifi:;ate holder, nor does it affirmatively or negatively amend, extend or alter the coverage alforded by the policies listed thereon.

226 CERTIFICATE OF LIABIUTY INSURANCE OP 3-KALEM ID CH I O~rE (rdhl/ODM'VVi 08/24/07 PRCZ~CER THIS CERTIJllCATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE C&RTIFlCAT! The ~ranaportation Group, Ltd. HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR 11111 Wilcrest Green, #325 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. Kouston 'l'X 77042

-::~;··:~ii~· ~ ·::":~---··1 Phone:713-785-6785 rax:713-7BS-8785 t-:~= .. ,.,,nir.,,.,--------------- HMC Contractinq south !l'exaa, L.:{. c. 1 ··iS..J;;c=;~ i ... ..,., .. !~t.ci:~· ~*~ .i.~!!:.'-~.1-:..,~-!..~~.· •i Attn: Ph1 1 Packer aw-Leth Al'4'd•ian ir.a ...t Co,

- .- --------- ·- -r-- -·- . · 1 ' 1:

2900 Weslayan Suite 375 Houston '.rlr77 027 I'::~ COVERAGES er Th~ r><::...1C 1ES lf/S~,:~ l.lSTED bEi.ON I ~vr occr..: iSSL€0 TO rn.e: t.~Sl..PfO '""'ACC Al!()':f FCR rrtE" PO 'C'f PF.RIC".l) ,!.CICATE'., UOTV•1n."')TJ.J-01r.~ M'r' f'!ECi..I GEMEl"ii', TE:~l/101? c~.:;111Ctl(.~ A"i'"' :.::;~1r;v..cr o~ ::m·tR OGCU/!:·)t1 'l'(!H J::'ESPE.Cr TO "'1HtCtl 1~~.?; CtRi,FICAlti M,",'( BE ISSl..F-0 ~ f,AL.,V ~Efl7t.l"c T'-€ 'i$..f<.At-f~E ·-*rCA:ie:.o a'f r~ P'),_ C!ES OESCr«Sf:O Hl!l":':IN it St-s..::e:c- T~ n~ 'Tl-€ ;"E~f:i. E:>.Cli.ISIO·.;; ~·CJ cc...o-r::.~.-s .'~ G~.Lil ;-:LIC'CS AGCR"..:t .\T'E l1•1rrs S• r.:'1\lf-ol L-111,,'.' H.~V'E f:!CEN i:tEC'..~06-t PA j CtAH,•S

POLICY NUMllE1R

I :eRS'2-">'~ ~PW: ;t,JFY fl,000,000, 1

,_ _______ ,j:t£RM ACi.lN:EO.r\lE ls2,ooo,ooo. . I,__2.;ooo. ......,. .. . - -·-·-· ooo :-

c , sc:roo2Jsons1 06/01./0'7 II Oli/01/08 ~~~·;::,;;J,°'11~ ..«tr' ,, 1 111,000,~~~ 'Wt,,_r,1,·-.1,.k1

E n.J~,. \" ) •I

.. CC .Y "t,JV11

F~~- I ; ; .~OP£ .. rv ~:,,.,,;..1~1 !i1-'l)r1,;:t.i!1·:1 ' l~LWhllY ·~~~~,,•.'..•~; <-:'.'·'· , '<°•,r ~..!. I u.,,.. ...,c; I .VI .JIHCR ;_.-. ..(".,, i'

_i_I ---------- ~ ~CESS/UMHR&LLA LIAS!i.IT'J . ---- - __ . _ -__ J, _-----·--',•_:_?)·~·:~-..-.... •- r~~+-1:;..__ _ _ _ _ _ ...j

"-~~·~~ii_··- .J.'25,000,000_ B !~ IY.<:• Jl C~'J ,.,_...,.,,,.-1;>(' ! G2204!lg0?.0012 08/01/0'7 I 08/01/08 •.CC~EC.

WORl-E...:U~;'"'.: '.'ir 1c:::PJ'h.4.::1tt?ER El'.Ct.L:'1(0,

f ~~:~~j;,'1:Je:.l~~~~·;; b•~f OTHl!ft

B Builder&' RisK I ll'SD3594414A004 03/30/07 03/30/0B Per occr. $50,000,000 I Certificate an Additional as respects General Liability and Waive~ 0£ SW:>roqation applies.

,_C_E_R_T-ll'l_C_A_T_E_H_O_l_D_E_R_ .. ----·------------C~AHC--""E_L_LA_Tl_O_N _____ ffYLC:RAY SHOU'.D ANY OF TI1~ QIO\IE OESCRISEO POLICl~S ~E CM:~ELLEO 8Ef0Rf ™" E>Pl'IAT'ON OATE THEREOF. THE 133~i:io l/ISURER "c.L ENOEAY1E LEFT, ~1;HNl~f TO oc •O 3HAl.L GoverlllDSnt corporation 11.tPOSI! ~O OSl.IOA110M OR LIABILITY OF AHY KltlO llP0'1 l>1S INSUP.

\CORD 25 (2001/08) 0 ACORD CORPORATION 1988

.....----------------------------------------------~~~~~~~~~~-~-- 227 IMPORTANT

If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer nghts to the certificate holder in lieu of such endorsement(s)

If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement A statement on this certificate does not confer rights to the certificate holder In lieu or such endorsement(s)

OISCL.AIMER

The Certificate of Insurance on the reverse side of this rorrn does not constitute a oontract between the issuing tnsurer(s), authorized representative or producer, and the certificate holder, nor does it alfirrnatlvety or negatively amend, extend or alter the coverage afforded by the pollcles listed thereon.

ACORD 25 (2001Jllt)

228 EXHIBITD PAYMENT AND PERFORMANCE BONDS

1716202068.1 TEXAS STATUTORY PAYMENT BOND

ST ATE OF TEXAS § § COUNTY OF WILLACY §

KNOW ALL MEN BY THESE PRESENTS that HMC Contracting South Texas, L.L.C. (hereinafter caJled the ..Principal") as Principal, and Hartford Fire Insurance Company (hereinafter called the "Surety") as Surety, are held and firmly bound unto the Willacy County Local Government Corporation, the Owner of the subject property (hereinafter called the "Obligee") in the amount of Forty-three Million One Hundred Seventy-two Thousand Tbree Hundred Twenty Seven Dollars ($43, 172,327), said amount being a sum at least equal to the total of the original contract amount, for the payment whereof the said Prine ipal and Surety bind themselves and their respective heirs, administrators, executors, successors and assigns, jointly and severally, firmly by these presents.

WHEREAS, the Principal has entered into a certain written contract with the Obligee on the 1911! day of July, 2006, (the "Contract") for the construction of a I000 bed addition to the ICE Detention Facility located in Willacy County, Texas, which Contract is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein.

NOW, THEREFORE. THE CONDITION OF THIS OBLIGATION IS SUCH. that if the Principal shall promptly pay Claimants for all labor, subcontracts, materials, equipment and specially fabricated materials performed or furnished under or by virtue of said Contract and duly authorized normal and usual extras thereto not exceeding fifteen p~rcenl ( 15%) of the contract price, then this obligation shall be void, otherwise to remain in full force and eftect. "Labor, subcontracts, materials, equipment and specially fabricated materials" shall he construed in accordance with Chapter 53 of the Texas Property Code and Chapter 2253 of the Texas Government Code.

This Bond has been furnished to comply with Subchapter I of Chapter 53 of the TeKas Property Code and Subchapter B of the Texas Government Code. Any provisions in this Bond conflicting with Subchapter I of Chapter 53 of the Texas Property Code or Subchapter B of the Texas Government Code shall be disregarded, and provisions conforming to such statutory or legal requirements of Subchapter I of Chapter 53 of the Texas Property Code or Subchapter B of the Texas Government Code shall be deemed incorporated herein. The intent is that this Bond shall be construed as a Statutory Bond in compliance with both Subchapter I of the Texas Property Code and Subchapter B of the Texas Government Code.

The address of Surety to which any notice of claim should be sent may be obtained from the Texas Department of Insurance by calling its toll·free number: 1-800-252-3439 (Consumer Information) or 1-800-578-4677 {1\'Iain).

230 IN WITNESS WHEREOF, the said Principal and Surety have signed and sealed this instrument this_ day of , 2007.

Principal, HMC Contracting South Texas, L.L.C. Surety, Hartford Fire Insurance Company By: _ _ _ _ _ __ By: _ _ _ _ _ _ __ Title:----------- Title: Address: _ _ _ _ _ _ _ _ __ Address: Telephone: (713) 665-1100 Telephone: ( ) _ _ _ _ _ __ Fax: (713) 665-4944 Fax: ( )_ _ _ _ _ _ _ __

THE FOREGOING BOND JS HEREBY APPROVED BY OWNER:

Willacy County Local Government Corporation

By:-----------~ Its: _ _ _ _ _ _ _ _ _ _ _ __

Address: _ _ _ - - - - - - - - Date:.______________

231 PERFORMANCE BOND

KNOWN ALL MEN BY THESE PRESENTS: That HMC Contracting South Texas, L.L.C., as principal, and Hartford Fire lnsurance Company authorized under the laws of the State of Tex.as to act as surety on bonds for principals, are held and finnly bound unto The Willacy County Local Government Corporation as Obligee (Owner), in the penal sum ofForty·three Million One Hundred Seventy-two Thousand Three Hundred Twenty Seven Dollars {$43, l 72,327) for the payment whereof, the said Principal and Surety bind themselves, and their heirs, administrators, executors, successors and assigns., jointly and severally, by these presents:

WHEREAS, the Principal has entered into a certain written contract with the Owner, effective as of the _ _ day of 2007, (the ''Contract") to commence and complete the construction of certain improvements described as follows;

A 1000 bed expansion of ICE Facility Willacy County, Texas

which Contract, including the Contract Documents as defined therein, is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein.

NOW THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the said Principal shall faithfully perform said Conrract Work, then this obligation shall be void; otherwise to remain in full force and effect;

Whenever, Contractor shall be, and be declared by Owner in a written notice to Surety, to be in default under the Contract, the Owner having performed Owner's obligations thereunder, the Surety may promptly remedy the default, or shall promptly:

1. Complete the Contract in accordance with its terms and conditions, or

2. Obtain a bid or bids for completing the Contract in accordance with its teTITJs and conditions, and upon detennination by Surety of the lowest responsible bidder, or. if the Owner elects, upon determinatiO!l by the Owner and the Surety jointly of the lowest responsible bidder, arrange for a contract between such bidder and Owner, and make available as Work progresses (even though there should be a default or succession of defaults under the contract or contracts of completion arranged under this paragraph) sufficient funds to pay the cost of completion less the balance of the Contract Price; but not exceeding, including other costs and damages for which the Surety may be liable hereunder, the amount set forth in this first paragraph hereof. The term "balance of the Contract Price," as used in this paragraph, shall mean the total amount payable by Owner to Contractor under the Contract and any amendments thereto, Jess the amount properly paid by Owner to Contractor.

232 Surety shalJ have no further or other obligations other than those set forth above.

As a condition precedent to coverage under this Bond, Owner must give Surety its written notice of Contractor's default no later than ninety one (91) days from the earliest to occur of the following: (i) the date of any abandonment or termination of the Contract; (ii) the date final payment is made lo the Contractor under the Contract; or (iii) the date Contractor last performed Work under the Contract, excluding any warranty work. Any default declared by Owner or demand made against the Surety by Owner outside of this time frame is not covered by this Bond and Surety shall have no liability therefore.

Any suit under this bond must be instituted before the expiration of twenty-five (25) months from the date on which the right of action accrues, but if this provision is prohibited by law or if any law provides for a lesser period of time then it shall be deemed to be amended as so to be equal to the minimum period oflimitation allowed by such law.

No right of action shall accrue on this Bond to or for the use of any person or entity other than the Owner and its successors or assigns. The terms and conditions of this Bond shall be binding upon Contractor, Surety, Owner and their respective successors or assigns. Surety, for value received, stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Contract, or to the Work performed thereunder. or the plans, specifications, or drawings accompanying the same, shall in any way affect its obligation on this Bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Contract, or to the Work to be perfonned thereunder.

fN WITNESS WHEREOF, the said Principal and Surety have signed and sealed this instrument this _ _ day of _ _._ _,2007.

Principal, HMC Contracting South Texas, L.L.C. Surety, Hartford Fire Insurance Company By: _ _ _ _ _ _ _ _ __ By: __~-·--------- Title:------------ Title:------------ Address;---------- Address:------ Telephone: (713) 665-1100 Telephone: ( ) - - - - - - - - Fax: (713) 665-4944 Fax: ( )_ _ _ _ _ _ _ __

171620 2068 1

233 EXHIBITE LIST OF ORA WINGS

171620 2068.1 EXHIBn"E" UST OF DRAWINGS

WHlar;y County Processing Facility Expansion

Revl Cl -~~ --~ l'lan a ·io 01 (2 -n ·-----f--'!?;.;B1"!0':'0!!7>-+--·--~

CS Wa.._ ii. -~Sewer Plan 8 10 07

Sl.J '"""" a 10 07 .1 .,._., ""' ""'•ndation Plan .I 10 U7

.4 _.....,. •• nn ""' "'"" Plan 8 10 01

Sl.11. ,.. • -~ -·n • la DJ'

~SJ::':!,1'-----IH"""~~;,i, 53.2 .... ... ~~~i::::.:··~~~·~n'---------+-··~·~u~u•--ir-~ Piii' • 10 07 - SJ.] • • n n7

...~.4 "'" "" Bu!Jdm .., rv """" a ''-D 07

58.1 Panel ~~ - · v.... I "' 07 I .2 p...,Jaint - - ••. »» > I 1• 07 ..j.-_1,:::1...,.!'---1------.i .3 p....., 814107 .4 - --· 8:iD07 .'i P11111I - """ a 10 n7 Ll: ~- -~ 8 •u 07

AZ.1A nnr """'-Area A ··-------1--!!'~'-~'0':'u~·-+------1 A2.IB """Plan···-• a 19 07

ll". Housina Roar"""' • ""'a C • 10 'D>' 8 S4 07 .20 --~Fluor Plan •Ania D 8 • 0 '" 7 8 ri4 07

AB.J ..,.,..,_ . - J__.._.. ~-- I l

M•"t "Hedlanll:ll Plan 8 tftJ07 M-4 ° Ml!Clutnlral PIE a ID/17 M·S -., _ _,Plan l/1GJ07 M-6 a o n • - - Madll....,,, Plan a/1M07 1+7 I - Mmln llldn - - Plan 8/10107

OE3. I Olierd - ..,,_, ""'" 8/10107 t'Ofl...,..~.1.A___ , _ ....,.0 .._Area A 8fln 1 n7 --~ OE3.•B ....__,.__PlanAn>•8 8/10107 u."'"'1.,,,__2_ _-1'Sle-'-'Tl.5lc.f'l-""bl!!LI!&._P_,,,,, Conduit Run< 111n1n7

235 EXHIBIT"E" UST OF DRAWINGS

Wiiiacy county Proc:esstng Facility Exp!lnSion

236 EXHIBIT•e• UST OF DRAWINGS

Wiiiacy County ProcMSing Facility Expansion

Slleet Title Date ltev1 Cl Olmension Control Plan • 10 07 C2 '~dlna/Pavtnn Plan • 10 07 0 Draln:ine Area Man • 10 07 Of [)r.ljnanePlan • 10 07 C5 Water&. Sarur- Sawer Plan • 10 07 51.1 ,........ Notes 8 10 07 s2.1 """"""'Bu ~ -·ndation Plan • 10 07 52.2 HQuclnn Bui • 10 07 ""Fo1""""""' Plan 52.3 Houann .... IVI nundatlon Plan • 10 07 52.4 52.5 Houslnn Admln ~ -· T~ ~ ~ -·~•non Plan ""•ndatlon Plan 10 07 10 07 52.6 Admln ~ • 10 07 52.7 Mlll~nn•n~ """"' "" - "'"'nation Plan -·~·t1on Plan 10 07 52.8 53.1 ....... ............. ..., 111111"'.., Foundatlon Plan ~ rv Plan 10 07 10 07 53.2 53.3 :Mn

"'Plan 10 07 10 07 MnllC ..,, Bulldlna 10 07 53.4 ""'url ill Plan 54.l ..........., "'"''"nn rtvV Framina Plan 10 07 "4,2 Houslna BulcRna Rad Framfnn Plan 10 07 54.3 Houslnn Bulldlnn Roof Framlna Plan 10 07 54.4 Houslnn BuHdlna Root l'rlmlna Plan 10 07 55.1 Main ""'""INfounnannn Sections '1.0 07 SS.2 Main Facilllv Founmmon """""""' 10 07 55.3 Malnt Buldlnn Foundation Plan - "10 07 ~Sections 561 • '10 07

56.2 se'""""" Details • 8 10 07 •n 07 57.l 57.2 Panel atlans Mid Details • '10 07

58.t Panel Joint Elewltlons • 10 07 58.2 - lalnl EleYatlolls • 10 07 58.3 Panel Joint Elev"°""" • 10 07 58.4 Panel Joint Elev- • 10 07 58.5 p - lnln< Elevations • 10 07 58.6 Panel Joint EleYallons • 10 07 SS.7 Pana1 Joint a- • 11 07 AJ.1 A7.0 A2.t A2.1A A2.1B A2.2 --Plan Floor Plans namo ~•nnr Plln-Atu A Floor Plan-Area B Hnuclnn Plan Plan•~

Ffaor Plan . • 10 07 I JO 07 • lill .... U7 • 10 U7 • 10 07 810 07 117

• 14 • 14 07 ,., A2.2A HOU51na Hnnr Plan • """" A A2.2B HOUSIM Flonr Plan • Area 8 • '10 17 114 07 A2.2C HaU"'"" Flnnr Plan - Al'N C • '10 07 I 14 07 A2.20 Hou...,........,..Plan • .....,.D 810 07 • 14 07 .~.3 MTC Admln Flaor Plan • '1.0 07 A2.4 Admln ReflectlVI Cdlna - 8'10 01 ,.,,5 Houslnn Relledlve Celllno l'tiNI • 10 07 A3.1 &tl!rlor FIMIJUll\ftC • 10 07 A3.2 Exterior ElevlltlOns I 10 07 AB.t PartltlOn T""""nntertor E-~ • 10 '11'7 A8.2 Ml""""" EleYatlons •'1.0 07 m-5.00 "JVt>r.Oll innr ..,..,....,ule • 10 07 0F5.01 Overall ~r~ute 8 10 07 DEl>.00 Daor""' · ............, f"""" Elevatlons • 10 07 M-1 M-2 ""'' - lnri oor ,_ ~~nlcal Plan _,n Mechanical Plan • 10 07 • 10 07 M-3 M-4 M-5 .... Bu ....., _,.,,anlcal Plan '""'Kkhen """' Mechanical Plan Bunks/Kltdlen Sirin Mechanical Plan 8 10 07 R 1n , l/10/fr1 .... ~ Bunksl!Clkhen Blda Mechanical Plan 1/10/07 M-7 Exlstlnll Ad!nln Blda Mechanical Plan a11n11r7 M-8 fxlsttna Admln 8111<1 Medlantcal Plan 1110/07 M-9 Eldsti110 Admln Rlrln Mechanlcal Plan 8110/07 M-10 Exlstin" Admln Blda Mechanlcal Plan 8110/07 M·ll Mechan1r111 ~ulgs 1/10107 DE2.1 Overall LJnh~nn ........,, Plan 8110107 DE2.1A Uohtlna Demo Plan Area A 1/10107 OEZ.18 UnhUnn De~ Plan Area 8 1110/07 DE3.1 Overall Pnwer Demo Plan 1110107 DE3.1A Power Demo Plan Area A l/1ft/ft7 DE3.18 Power Demo Plan Area B 1110/07 El.2 Sit!! Tel Data &. Prtmarv Conduit R•""' 1110/07

237 EXHIBIT"E" UST OF DRAWINGS

Wiiiacy County Processing F•dllty Expansion

Sheet Tiiie o.m "9¥1 E2.1 Overall Lklhtlna Plan 1/10/07 E2.1A Uahtfna Plan Area A 1/11)/07 E2.1B Llahttna Plan Area B 1/10107 E2.2 l~n Housirui Uahtlna Plan 1/10/07 E2.2A Housinn I ltlhttno Plan Area A 1/10/07 IF7.JA Ho11<:1n11 L111htrno Plan A"'a B 1/10/07 E2.2r Houslno llllhtlno Plan Area c 1111)/07 E2.20 HoUSlno L"'hH"" Plan Area D 1110/07 E2.3 New A.rtmln Uohttno Plan 1/10/tn E2.4 Indoor Recreation Uohllna Plan 1110/07 E3.1 Overall Power Plan 1110/87 E3.1A Power Plan Area A 1/1fllfl7 IF1.18 Power Plan Area B 1/10/07 EJ.2 Overall Housfna Power Plan 1110/07 E3.2A Houslnn Power Plan Area A 1110/07 E3.2B Housino Power Plan Area B 1110/07 E3.2C Houslno - Plan Area C 1110/07 E3.2D Houslna Power Plan Area D 1/10107 El.3 New Admln Power Plan 1/10107 E3.4 Indoor R"'"""1Hnn HVAC • Power Plan 1110101 E4.1 Overall HVAC Power Plan 1110/07 E4.1A HVAC Power Plan Area A 1110/07 E4.1B HVAC Power Plan Area B l/IO/D7 E4.2 Overall HOUSlno HVAC Power Plan 8/10107 E4.2A IMnusfno HVAC Power Plan"""' A 1/10/07 E4.2B Houslno HVAC Power Plan Area B l/10107 E4.2C Houslna HVAC Power Plan Area C 8110/07 BUD 1"""'"'nn HVAC Pow..,. Plan•- D 1/10107 E4.3 New Admln HVAC Power Plan 8110/17 ES.1 Schedules Ill RISer 1/10/07 ES.2 Schedules lit Dt...r <flltn P.1.1 Demo!,.._ Plan Sewer """"nslon Plan 8/10/D7 IP.2.1 Houston Sewer Plan Area A 1/10/07 P.2.2 Houslna Sewer Plan .t.noa B 1/11187 P.2.3 Houslna Sewer Plan Area C 1111107 P.2.4 Houslnn 5ewer Plan Area D 1/10/07 P.2.5 Recreation Bulldlno Plumbina Plan 8110/97 P.3.1 Houslno Water Plan Area A l/10/07 P.3.2 HoUSIM Water Plan Area B 1/10107 P.3.1 Houslnn WatPr Plan Area C 8/10/07 P.3.4 Houslno Water Plan Area D 1110/07 P.4.1 PlumblNl Kitch..., """I 1110/07 P.4.2 Sewer Plan Allmln llulldlna 8/10107 p_.. , Water Plan Admin Bulldinn 8/10/07 p ~.1 ISO Riser n..tlllls 1/10/"7 1c:..n.oo General - and svmoo11 """"d 1/10/07 Sel.00 Securlv Electronics Ovenill Site Plan l/U/07 le..~ nn 5ea.1r1v Electronlc:s overall Floor Plan 1/10/07 Se2.01 Securtv Electronics Partial Floor Plan 1110/07 5e2.02 Securllv Electronics Partial Floor Plan 8/10/07 Se3.00 ,c-........ Elearonlc:s Partial Floor Plan l/10/07 5e4.00 Securllv Electronics Overall Floor Plan 1/10/07 Se 4.01 Secu""' Electronlc:s Partial Aaar Plan 1/10/07 <:..4.02 '"-''""" F1o..+nv>1C5 Partlal Floor Plan 8/18/07 S..4.03 Seal""' Electronics Partial Floor Plan 8/10/07 Se4.04 I""'°',....,, Ela..mnJcs Partial Floor Plan 8110/07 Se5.00 1.............. Efectronlcs Overall Floor Plan 1110/07 199-FS01 IOtch""'l.aunci-v Plan View l/1fllfl7 199-FS02 ICltdlen/Laundrv Plan View 8/10107 199-F503 Kitchen/Laundrv Plan lllAw l/10/07 199.fS04 IEaulament Schedule 8/10/07

238 DI I A

~ DESIGN·IUllD INSTJTUT£ OF AMEllCA

Certificate of Substantial Completion

Date of Substantial January 31, 2008 Comoletion:

Project: 1,086 Bed Addition to the Willacy County ICE Desian-Builder's Proiect No: 07-06 Detention Facility Willacy County, Texas Date Of Agreement August 30, 2007

Owner: The Willacy County Local Government Corporation Design-Builder: HMC Contracting South Texas, LLC 190 North 3111 Street 2900 Weslayan, Suite 375 Courthouse Annex Houston, Texas n021 Raymondville, Texas 78580

This Certificate of Substantial Completion applies to all Work as defined in DBIA Contract Dated August 30, 2007, General Conditions of Contract, or to the following portion of the Work only;

itantial Completion for: 1,086 Bed Housing Building Expansion, Administratton Expansion and Remodel, kiw..reation Building, and MTC Administration Building.

Owner and Design-Builder have jointly inspected the Work and have verified that the Work identified above was substantially complete in accordance with the requirements of the Contract Documents on the above-stated Date of Substantial Completion. The following items of Work remain to be completed prior to final payment (if necessary, attach list):

Attached Punch List

Except as noted below, warranties related to the Work identified above to which this Certificate of Substantial Completion applies, commence to run on the date of Substantial ComP,I · ·

,.. DESIGN-BUILDER: By:

Printed Name and Tltle: Emilio Vera, Commissioner Printed Name and TiOe: Kenda I Phin President

Date: Date:

OPERATOR: DESIGNER: By: ~~ By:

p 1 Name and Title: ;5/Jz.pk'I\ l'.'>OIMS - Qtt

Date: ( ~ 31 - 200 8 Date:

DBIA Documents No. 525.4 and 530.4 - Certificate of Substantial Completion © 2001 Design-Build Institute of America EXHIBIT E CAUSE NO. 2014-CV-0103A

WILLACY COUNTY, § IN THE TEXAS DISTRICT COURT Plaintiff § § vs. § § HALE-MILLS CONSTRUCTION, LTD.; § 197rn JUDICIAL DISTRICT HALE-MILLS CONSTRUCTION, INC.; § HMC CONTRACTING SOUTH TEXAS, LLC; § and MANAGEMENT & TRAINING § CORPORATION d/b/a MTC/GSA-TEXAS, § Defendants § WILLACY COUNTY, TEXAS

ORDER

THE COURT, after reviewing Defendants' Motion to Abate and Compel Arbitration, and

Plaintiffs Response, and after hearing held on January 21, 2015, finds that Defendant's Motion

should be DENIED.

Plaintiff, Willacy County, retains sovereign immunity against any attempt to enforce the

contractual terms-including those allowing for arbitration. See Highland Park v. Iron Crow

Constr., Inc., 168 S.W.3d 313, 319 (Tex. App. Dallas 2005). Moreover, Willacy County was not

even a signatory to the agreements, and as such, has not consented to arbitration. The fact that the

parties to the Agreements designated Willacy as a third party beneficiary does not rise to the level

of making it a signatory or giving its assent to waive its right to a judicial forum. None of the cases

cited by the Defendants hold otherwise. The Court further agrees with the reasons set forth in

Plaintiffs' Response to Defendants' Motion as to why arbitration cannot be compelled under these

circumstances.

IT IS SO ORDERED.

418 EXHIBIT F CAUSE NO.: 2014-CV-0103A

WILLACY COUNTY, § IN THE TEXAS DISTRICT COURT Plaintiff § § vs. § § HALE-MILLS CONSTRUCTION, LTD.; § 197TH JUDICIAL DISTRICT HALE-MILLS CONSTRUCTION, INC.; § HMC CONTRACTING SOUTH TEXAS, § LLC; § and MANAGEMENT & TRAINING § CORPORATION d/b/a MTC/GSA-TEXAS, § Defendants § WILLACY COUNTY, TEXAS

WILLACY COUNTY'S PLEA TO THE JURISDICTION AND RESPONSE TO PLEA IN ABATEMENT AND OPPOSITION TO ARBITRATION BEFORE AAA

TO THE HONORABLE JUDGE OF THIS COURT: COME NOW, the Plaintiff County of Willacy, Texas, by and through their respective attorneys of record, and files this its Response To Plea In Abatement And Opposition To Arbitration Before AAA, and as grounds therefore would show unto the Court as follows: I. INTRODUCTION

Plaintiff County of Willacy, Texas, respectfully submits this Response to Defendants'

Plea in Abatement and Motion to Compel Arbitration, set for hearing in this Court on January

21, 2015, and by undersigned counsel would respectfully show the Court:

Defendants make much hay out of the fact that they claim to have four different

agreements, with four different arbitration clauses, covering (at least) four different transactions

that are alleged by Defendants to be implicated in this case. But Defendants' miss the point and

cannot prevail because: irBlb~© g·31--p ·K· 'JAN 2 0 2015 GllbArt Lozano Dist CleJk, Willacy Co. 84 By ~Rt.:;j st"' Deputy • Under the case Town of Highland Park, Defendant's Motion to Compel is tantamount to an action to enforce the contract against Willacy County, an action against which Willacy County has unwaivable sovereign immunity-this Court thus lacks jurisdiction to enforce such a contractual right against the County;

• Willacy County is not a party to the Arbitration agreements, and cannot be made a party by implication or supposition;

• Defendants have not attached the alleged contracts, nor authenticated them- therefore, there is no evidence for this Court to conduct a "trial" as is required under the statute;

• Even if sovereign rights had not been waived, Willacy County's claims are incident to the contract and Willacy is not attempting to enforce the contract- therefore, there is no basis to enforce the agreement on estoppel grounds; and

• The arbitration clauses are unconscionable and therefore, unenforceable under the Texas Arbitration Act.

Any of one of these reasons is sufficient to deny the motion. Together, they are a bulwark

against Defendants' impotent attempt to enforce an unenforceable and unconscionable agreement

that the County never signed and never agreed to be bound by.

Accordingly, this Court should deny the Plea in Abatement and Motion to Compel

Arbitration.

II.

A. WILLACY COUNTY'S PLEA TO THE JURISDICTION: The Agreement to Arbitrate is Invalid and Unenforceable Against Willacy County Because there Was Lack of Capacity to Bind Willacy County to an Arbitration Agreement None of the agreements purports to bind Willacy County. Nor do any of the Signatories

have the authority to bind Willacy County to waive its sovereign rights. It is well-established

now that forcing a County into arbitration implicates the county's sovereign rights. See Town of

Highland Park v. Iron Crow Constr., Inc., 168 S.W.3d 313, 319 (Tex. App. Dallas 2005)

("Because its contract with Highland Park provided for binding arbitration in the event of a

85 dispute between the parties, Iron Crow was seeking to enforce Highland Park's performance

under that contract. Therefore, sovereign immunity was indeed implicated here.").

In Town of Highland Park, the town was a signatory to the contract and the Court still

refused to allow it to compel arbitration. 168 S.W.3d at 319. The Court held that a motion or

action to enforce an Arbitration clause is essentially a suit to enforce the terms of a contract, a

suit against which the County has sovereign immunity. Id. The Court noted that only the

legislature can waive immunity which it did not in this case. Id. The court of appeals also held

that the Federal Arbitration Act did not apply because both the plaintiff and the defendant were

Texas residents (as is the case here: Willacy and Hale-Mills are Texas residents); and even if the

FAA did apply, it could not preempt the sovereign rights of the County. Id. at 317-318.

Therefore, this Court lacks jurisdiction to enforce the Arbitration Agreement against Willacy

The Agreements' arbitration clauses are completely unenforceable against Willacy

County absent an express and unambiguous agreement by Willacy County to waive its right to be

a party in a court of law. In another case analogous to this one, in Texas Natural Resource

Conservation Commission v. IT-Davy, 74 S.W.3d 849 (Tex. 2002), the Texas Supreme Court

rejected the argument that a contractual provision providing that disputes could be decided by

arbitration could be enforced against the County. Id. at 857-58. The court held that since only the

Legislature could waive sovereign immunity, "administrative agents," even those with authority

to enter into contracts such as the County Judge, had no authority to bind the County. Id.

Likewise, in Fluor Daniel, Inc. v. Travis County, 2003 U.S. App. LEXIS 8138, *4 (5th

Cir. Tex. Apr. 30, 2003), the Fifth Circuit held that Travis County had not waived its rights as a

sovereign in a contract with Fluor, despite the fact that the County Judge had signed the contract.

86 The Court held that only "the legislative body of the county-the commissioner's court--can

waive sovereign immunity." Id at *5. And moreover, even then it must be "clear and

unambiguous." Id In that case, the Court held that Travis County-even though it arguably

invoked the jurisdiction of the court by filing counterclaims-had not waived any of its

sovereign rights not to be brought into court without its express consent. It is also well-

established that these rights cannot be waived through the conduct of the county. See Webb

County v. Khaledi Props., 2013 Tex. App. LEXIS 9063, 3 (Tex. App. San Antonio July 24,

2013).

Here, the contractual provision hailing Willacy County into arbitration is a violation of

the above case law and rules. The various corporate entities lacked capacity to bind the County

to those agreements in any way, fashion or form. And Defendants cannot prove otherwise.

Therefore, the Motion must fail.

B. There is No Valid Agreement to Arbitrate Between Defendants and Willacy County- In Fact the Agreements Preclude Arbitration in this Instance To compel arbitration, a party must show that there is a valid arbitration agreement and

that the claims raised fall within the agreement's scope. In re Kellogg Brown & Root, Inc., 166

S.W.3d 732, 737 (Tex. 2005) (orig. proceeding); see also Tex. Civ. Prac. Rem. Code §

171.00l(a). Without an agreement to arbitrate, arbitration cannot be compelled. J.M Davidson,

128 S.W.3d at 227 (citing Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (orig.

proceeding)).

A court determines the validity of an arbitration agreement by applying state contract law

principles. See J.M Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). Any

presumption in favor of arbitration only arises after a valid agreement to arbitrate is established

87 to exist-the presumption does not apply to construing the existence of the agreement itself. See

In re Kellogg Brown & Root, Inc., 166 S.W.3d at 737.

1. The Arbitration Agreements Are Not With the County of Willacy And Therefore Cannot be Enforced Against the County

The four putative arbitration agreements are between Hale Mills et al. and Willacy

County Public Facility Corporation (Exhibit A), between Hale-Mills Construction Ltd. and

County Jail Public Facility Corporation of Willacy County (Exhibit B), HMC Contracting South

Texas LLC and the Willacy County Local Government Corporation (Exhibit C), and HMC

Contracting South Texas LLC and Willacy County Local Government Corporation (Exhibit D).

Willacy County is not a signatory to any of the agreements. Moreover, none of the above-

identified corporate signatories is a plaintiff in this lawsuit. Therefore, there is no contractual

basis to enforce the agreements against Willacy County.

Willacy County's claims for breach of implied warranty, negligence/unjust enrichment

and for fraud in the inducement "relate" to the contracts, but do not actually depend upon them.

As one Court of Appeals explained, "a non-signatory cannot be compelled to arbitrate when

claims merely 'touch matters' covered by a contract or 'are dependent upon' a contract; instead,

the claims must rely on the terms of the contract." Carr v. Main Carr Dev., LLC, 337 S.W.3d

489, 498 (Tex. App. Dallas 2011) (citing Hill v. G.E. Power Sys., Inc., 282 F.3d 343, 348-49 (5th

Cir. 2002). "Where the obligations arise under general law"-e.g., here, the law of negligence,

anti-fraud and implied warranty-then a non-signatory to the agreement cannot be compelled to

arbitrate. Id. As the Weekley court observed, "claims must be brought on the contract (and

arbitrated) if liability arises solely from the contract or must be determined by reference to it."

Weekley, 180 S.W.3d at 132 (emphasis added). Conversely, " ... claims can be brought in tort

(and in court) if liability arises from obligations imposed by law." Id.

88 Here, Defendants' motion is completely silent as to what of the contractual language

themselves Willacy's claims would rely upon. Willacy's claim for breach of contract/warranty, is

not an attempt to enforce any of the specific terms of the agreements. It is well-established that a

warranty and defect claims can be brought by third parties to the contract without enforcing any

specific terms of the contract. See Landmark Org., L.P. v. Tremco Inc., 2010 Tex. App. LEXIS

5052, *29 (Tex. App. Austin 2010). Likewise, seeking restitution for negligence or unjust

enrichment and fraud in the inducement does not invoke any terms of the agreement.

Defendant cite the case In re NEXT Fin. Group Inc., 271 S.W.3d 263, 267 (Tex. 2008)

for the proposition that "[a] third-party beneficiary to a contract can be compelled to arbitrate

under an arbitration provision in the contract." But this is not what the court in In re NEXT held

at all. There, the Court held that a non-signatory third-party beneficiary could enforce an

arbitration clause against one of the signatories. The case here is the opposite-a signatory (Hale

Mills or HMC) is trying to force a non-signatory (Willacy County) into arbitration. Defendant

cites no other case or statute that specifically allows for arbitration clauses to be enforced against

a non-signatory, even if that non-signatory is a putative third-party beneficiary.

Furthermore, Defendants admit that Willacy County is not a party to any of the

agreements, and is only designated as a third-party beneficiary in three of the four agreements.

Thus, that agreement and its claims fall outside of Hale-Mills' own contractual argument that a

third-party beneficiary may be compelled to arbitration under all the agreements.

However, because Willacy is named as a Third-Party beneficiary is not enough to compel

it to arbitration if it is not invoking the contract specifically-its claims are merely incident to the

contract.

2. Defendants Cannot Establish That the Non-Parties Can be Bound to the Arbitration Clause

89 Defendants are attempting to bring parties to the arbitration table that cannot be seated

there under Defendants' own arbitration clauses. For instance, the Arbitration agreements

expressly exclude arbitration with non-signatories to the Agreement. Specifically, the agreements

provide, for example, that:

No other arbitration arising out of or relating to this Part 2 Agreement shall include by consolidation, joinder, or in any other manner, an additional person or entity not a party to this Part 2 Agreement or not a party to an Agreement with [Hale-Mills], except by written consent[.] 1

Thus, by the plain language, Willacy County cannot be compelled to arbitration under this

provision since Willacy County is not a signatory to any of the arbitration agreements either, nor

are four two of the three co-defendant entities. Thus, this lawsuit brought by Willacy as against

the non-signatory defendants must continue.

3. Defendants Cannot Established That a Valid Arbitration Agreement Exists, Therefore, This Court Need Not Try the Matter

The Texas Civil Practice & Remedies Code states that "If there is a substantial bona fide

dispute as to whether an agreement to arbitrate exists, the court shall try the issue promptly and

summarily."). See Tex. Civ. Prac. Rem. Code § 171.023(b) (emphasis added). Here, there is a

substantial dispute as to whether an agreement to arbitrate exists between the County and the

Defendants. Thus, this Court is to try the issue summarily-but how can the Court try this issue

when there is not proper evidence before the Court? It cannot.

Defendants only attach snippets of what they claim to be agreements to arbitrate.

However, it is prima facie accepted law that to be valid, an arbitration clause must be part of an

otherwise enforceable written agreement. See Bennett v. Leas, 2008 Tex. App. LEXIS 4817, *8-

9 (Tex. App. Corpus Christi June 26, 2008); Tex. Civ. Prac. Rem. Code§ 171.021(b).

1 See Exhibit A to Amended Motion.

90 Defendants ask this court to assume without evidence-not even an affidavit-that their

snippets are part of enforceable contracts. Yet, the contracts have not been presented in full to the

Court with signatures, dates or other matters governing the scope of the claims or issues covered

by the Agreements. They have not been properly authenticated or otherwise presented properly

to the Court as certified copies or genuine facsimiles. This is grounds for striking the evidence

and not considering it-it constitutes hearsay. Wortham v. Otis Elevator Co., 2000 Tex. App.

LEXIS 3443, *8 (Tex. App. Dallas May 25, 2000) (sustaining trial court striking of summary

evidence where "documents constituted hearsay and were not properly authenticated").

Therefore, before this court is no evidence of an enforceable agreement containing an

enforceable arbitration clause. Defendants' say-so is not enough. Defendants mere attachment of

pieces of paper constitute hearsay and is plenary grounds for striking the evidence. Wortham,

2000 Tex. App. LEXIS 3443, *8. Because there is no evidence in favor of the Defendants, there

need be no summary trial. And for that reason alone, the Motion fails on its face.

C. The Claims Do Not Fall Within the Scope of Any of the Submitted Agreements

Defendants have not presented the agreements, and therefore, there is no basis for this

Court to say that the claims fall within the scope of the agreements or their arbitration clauses. It

is fundamental law that a court cannot compel arbitration of claims that are not covered by the

arbitration clause. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005)

(orig. proceeding); see also Tex. Civ. Prac. Rem. Code§ 171.00l(a).

Therefore, because Defendants have not made even the most fundamental showing of

how the allegations or the claims actually arise under the Agreements bearing the arbitration

clauses, they cannot hope to establish that arbitration is necessary.

D. The Purported Arbitration Agreements are Unconscionable

91 Section 171.022 of the Texas Civil Practices and Remedies Code states that "[a] court

may not enforce an agreement to arbitrate if the court finds the agreement was unconscionable at

the time the agreement was made." "An unconscionable contract provision is defined as one that

'is grossly unreasonable or unconscionable in light of the mores and business practices of the

time and place as to be unenforceable according to its literal terms.'" BDO Seidman, LLP v. JA.

Green Dev. Corp., 327 S.W.3d 852, 859 (Tex. App. Dallas 2010) (quoting Gillman v. Chase

Manhattan Bank, N.A., 73 N.Y.2d 1 (N.Y. 1988)). Unconscionability has a procedural dimension

as well as a substantive one. Id

Here, the Agreements were procedurally unconscionable. They were standard form

agreements that were compelled on the County. Moreover, they were procedure through a

process that included two officials who accepted bribes and ultimately pled guilty to criminal

charges of bribery. 2 The agreements are substantively unconscionable because they select the

American Arbitration Association, which requires high up-front fees and arbitrator costs-all of

which the Willacy County taxpayers would have to bare. The taxpayers should not be the victims

of a bribery scandal and shoddy workmanship on a prison that is at the root of this issue.

For these reasons, the arbitration clause should not be enforced.

III.

CONCLUSION

For the foregoing reason, this Court should deny Defendants' Plea in Abatement and

Motion to Compel Arbitration, and set this matter for trial on the merits.

2 See www.myplainview.com/article 439ed742-bbc0-5lde-8368-26btu30b4c35.html (last visited January 20, 2015).

92 Respectfully submitted,

LAW OFFICE OF RAMON GARCIA, P.C. 222 West University Drive Edinburg, Texas 78539 (956) 383-7441I(956)381-0825-Facsimile e-mail address(s): EArellano@ramongarcia-law.com or rsalinas@ramongarcia-law.com

By: ~ HON. RAMON GARCIA State Bar No.: 07641800 HON. EMERSON E. ARELLANO State Bar No.: 24067490 & Hon. BRUCE STECKLER State Bar No.: 00785039 THE STECKLER LAW GROUP, LLP 12720 Hillcrest Road, Suite 1045 Dallas, Texas 75230 (972) 387-4040 (972) 387-4041 & HON. MANUEL SOLIS State Bar No.: 18826790 6657 Navigation Houston. TX 77011 (713) 844-2700 (281) 754-4681 & HON. DAN RIOS State Bar No.: 00784844 323 Nolana Loop McAllen, TX 78504 (956) 630-9401 (956) 682-0566 Counselor(s) for Willacy County

93 CERTIFICATE OF SERVICE

I, EMERSON E. ARELLANO, do hereby certify that on the 20th day of January, 2015, a true and correct copy of the foregoing WILLACY COUNTY'S PLEA TO THE JURISDICTION AND RESPONSE TO PLEA IN ABATEMENT AND OPPOSITION TO ARBITRATION BEFORE AAA filed and a true and a correct copy of the foregoing was issued via e-mail addresses and facsimile transmission to:

William B. Westcott Kristi Belt ANDREWS MYERS, P .C. 3900 Essex Lane, suite #800 Houston, TX 77027 (713) 850-4200 I (713)850-4211 - Facsimile e-mail address(s): Ben.ewestcott@µndrewsmyers.com or kblet@1indrewsmyers.com Counsel/or Defendants Hale-Mills Construction, LTD, Hale-Mills Construction, Inc. and HMC Contracting South Texas, LLC

EMERSON E. ARELLANO

94 LAw OFFICE OF

RAMON GARCIA A PROFESSIONAL CORPORATION -222 -- - - •!• - - - - - W. UNIVERSITY DRIVE EDINBURG, TEXAS 78539 rgarcia@ramongarcia-law.com RAMON GARCIA TELEPHONE: (956) 383-7441 FACSIMILE: (956) 381-0825

January 20, 2015

Hon. Gilbert Lozano ISSUED VIA: Hand-Delivery (only) WILLACY COUNTY DISTRICT CLERK Willacy County Courthouse 546 West Hidalgo Avenue Raymondville, Texas 78580

Re: Cause No. 2014-cv-0103-A; Willacy County vs. Hale-Mills Construction, Ltd.; Hale-Mills Construction, Inc.; HMC Contracting South Texas, LLC; and Management & Training Corporation d/h/a MTC/GSA-TEXAS; situated before the 19'J'h Judicial District Court, the Honorable Judge Migdalia Lopez, presiding.

Dear Mr. Lozano:

Regarding the above referenced cause and style, please for filing an original & five copies of the following:

1) Willacy County's Plea To The Jurisdiction And Response To Plea In Abatement And Opposition To Arbitration Before AAA;

Please stamp file our copy and return said stamped copy for our files in the enclosed metered envelope.

Should you have any questions, please do not hesitate to contact me, Rosie Salinas at (956) 383- 7441. Lastly, thank you for your assistance and cooperation in this matter.

Respectfully submitted,

E OF RAMON GARCIA, P.C.

//L/~·~~ ...__-'-""osie Salinas, Assistant to Judge Ramon Garcia & Attorney Emerson E. Arellano