©©~~f(P
TWO RIVERS DETENTION CENTER
OPERATION
AND
,-----'-----_."
---,._---'"
-.-......-'----.,

MANAGEMJ<~N"LAGREEMENT

This l,'acility Operulion and Managemenl Ar,recmenl (hcrcinaner "Agreement") is entered
into hy and hetween lhe Two Rivr:rs I\uthorily, Inc. (hc.rcinaJier "TRA"), a lawfully eswhlisbed
lucal pOli authority created hy the Cily or I lard in, a municipal corporulion of the Slate uf Montana
("City"), and American Privalc Police Forcc Org., Inc., a California corp0raliorl whose principal
[1ddn:ss is 1202 E. 17''' Suite 200, Sanla I\na, Calif0rnin, 9270 I, (hereinaHer call(~d "Open,tor") to
bceome d]"t;ctive on lhe date of~ignature hy the partics ("Efkctive Datc").
WI IFREAS, TRA is thc owner or eqllitahlc owner of that eerwin detention beility known as
thc Two Rivers J ktention Center, located in llardin, Montana (hereinallcr "F'lcility"); and
WI l\·:RFAS, pursuaIl1 to its authority unekr Mont. Code I\nn ~ 7-14-1111 (3), the Two
l,ivers AUlhority hilS the authority to exccute' contr,let~ and other insln.lments and take ot1Jcr actions
th"t may he necessary to eany out the pnrpose of a local port ""thorit)'; and
Wl-Il·:REAS, the parties hereto desire to enter into ,m ur,rcemen( for lhe operation and
management of the Facility; and
Wl-lFI{EAS, entering into this Agreement i" (ound to he in the best inlclTSls or the partie,;,
the d'{ici"nt and Slife opennion of the Futility, and the puhlic as it will serve lhe puhlie pUIl)oSe or
providing space {i,l' incat'eewtion o!' law violators and will provide economic dcvdoplncnt uild
c<;onomic bendits to th,~ loe,1I eeononlY; and
WIIEREAS, TRA

hilS

cntered into a Trust lndentltl'e (lhe "Indcnture"), dated as or April 1,

200!;, with U.S. Bank Nationnl Association as Trustee in order (among other things) jo fir);)ncc thc
Fueility. Capitali:r.ed terms not othelwise ddined herein "haJJ have the meaning aseribed to
1elTns in the Indenture.

~ueh

NOW, TIIFRI':FORE, in considlT~ltion or the lnutual rights, benefits und ohligations herein
exchm1gc.(\, the' parties do coverHmt, ngrcc and bind themselves as rollows:

I. l'lJRPOSES
1.01

Operator agrees to open,te, man,lgc ,)I1d supervise the Facility 1;.>1' TRA, und [0 reecive,
detain ,md care Iilf all pmperly classified prisoners for which the J.'aeility is approved thm
may he assigned 10 the Fileilil)' li'om:
(a) The ChicfofPoliee of the Cily (the "Polin' Chief'');

(b) Thc Uniled States ()overnmcnt or any agency thereoL pursuanl to an agn:enll'nt between
TRA and lhe United Slaks or any ngcncy thcrcol~ ~;\1biec\ 10 the li!lliwtiol\~; hercinalier
set {;)Jih in this section;
Facility Operation and Managcmcnt
l'ag<: 1 of 13

2101

S99 901>

I\grcl~)11ent

(c) 'rhe MOlltana Department ofC'orreetions C'MDOC"), pursuaut to an agreement Ixlwecn
MIlOC and TRA; or
(d) Any other state, local, county, or federaljurisdict.iort
1,02

Operation and management of lhc Facility must hc in ,Kcordance' with the tlpplie;1hle
stamlards 01" lhe Al11cri(:au Correctional Asso(:ialion and the rL:C]uircment.~ set j()rth in
agrccmcnls with entities contracting with TRA to house: prisoners at the. Fileility ("Scndinj:
.1 urisd ictiol\s").

1.03

Operator is ;111 independent contractor engilf,ecl
the public purpose 01" operating a
detention center on hehall" ofTl{A, No property interest or right in the Facility or grounds is
granted to the Operator by this Agrecl1\ent.

1.04

Th(: Opcrutor shall opcrnte the Facility in compliance with the tenns of the Indentnre and
this sigm~d Af,I"Cl.nlcnt. The Operator sh;lll provide or cause to bc providcd all insurancc,
maintenancc, eCl1ilications and othcr mallcrs rcquired of or madc the obligation or TRA
under the lmlenture and this Agrcemcnt This includes, withoutlimitntion, pl'cpamtion or all
rcports or disclosures required under the Indenture and this Agrcement and under 1he
Continuing I )isc1o,;ure \ Indertaking made by 'IVA in connection with the issuance of the
Bonds.

1.05

Pursnant to thc MCll\nl'audum of Understanding signed helwe(,n thc parties On Anr,u'it I X,
200') ("'MOl J"), all:lched hereto :md incorporatcd herein by rell,renee, Opewtor shall havc
the option to cntcr into a separate agreement with TEA lor the purpose of constructing ~\ 1:1W
enforcernent training center on the premises of the Two Rivers Ddcntion Ce.ntcr and/or to
provide' additional law enforcement services to the TRA ;md/or the City or Hardin,

I,"

II. n:RM
2,ot

The Initial Tam or this Agreement 'ihall be tcn (10) years, heginning on the dale or
ex"eutioll or this Agr,,,;ment, and terminating at midnight Oil S"ptember :>, 2019,

7..02

Operator is limher grtmte.d an option if)r
and condition.

2.03

lJpon expiration of the Terms of this Agreem"nt and nny option that may have been
excreised, the parties may 1l1l1tunlly U.p·l'C to r"new this Agreeme1l1 in writing.

'll)

additional ten (10) year under the same ten1\';

III. IHITIES OF OPERATOR
3.01

Operator shall manage, oper,lte and provide nt its sole cost and expense:
(:1) Installation and/or repbcement or all neecssary fUl11iture, fixtures and equipment
requircd at the. Facility, including, but not limited to, co1T1pute.rs,
and c.opy
equipmcnt, wdios, televisions, unif(,rms and linens and basic office furniture amI
udmindrative phone systems, which arc neccs,mry or prudent {(H' operation Hnd

rux

Facility Operation lind Manngement Agreement
Page 2 of n

2101

S99 901>

manar,cmcnt of the Facility aIld the housinr, of priwnns.
(h) Intake facilities and prisoner accouoting which shall enc\)mpa;;;; hooking, record"
keeping, hilling, system oC controls, idcntilkation systems anc! records, eomputerii',cd
con1nnmication interlace with law enforcement agencies, nnd "UGh ;;tatistical rec()l'(h <I,';
rnay he reqllired hy law, Scnding .1Lll'isdidions, or as f~enerally nceepted prisc.)J1e!'-locator
pradices;
(c) Attcndnnts to control ingress and eeres~; at the hleility, in "ddition to nttcndants
neces"ary {"r the requisite level of security internally within the Facility anc:\ those
required to !I1onitor the nctivities oC prisoners confined within the P,"eility. The Operator
shall provide to TRA n complete stafIing plan, This plan wiIl incll,de a suit;lhle relief
Ltctor which takes into ac(;(,unt training, vaNltion and other matters rcquir(,d to staff a
e(lITectional facility of this sizc and mission. The Operator will make cvery Cntlrt to
maintain staning nt a .Ievcl eqnallo nol less than ninety perccnt (90'1.,) of lhe staninr,
plnn;
(d) Food and bcveragc services;
(c) Clothing and uniforms;

(1) l.·;nginccring and
(f~)

nwintcnancc~

Pmcurcmcnt and purchasing:

(h) !kcre1'tional, vocational, counseling, <:duenlion and cxercisc prognnIls, lind othcr
progrum requiremcnts required by lnw or prisoner housing conlract~;;
(i) Bookkecping and lin:mcial oeC0unting;

(i) Bosie mcdical c,lre, over-the-counter medications, and misccllancous medical supplie,.;
liS required by Sending Jurisdictions;
(k) Training ofjailers to be employed al the Facility and all st:u1up costs ol" opel'ations;

(I) Repair, upkeep and maintenance for the I'acility, This will include (without limitation)
estHhlishrncnt oj' a periodi~ rn:linlenanee prOgrll111 with applicable e'juiplnent
main1enancc records;
(m)Necessary utilitics and rel"use serviccs; and
(n) All othcr services necessary or proper for the el1icicn\ and sufe operation of the F"cility,
and secure custody, wre and housing of inlllHlcs, in compliance with all applicllbk
{cdewl, state and local Inws and regulations and in compliance with all signed housing
[lgrcel11e,nls.

l!acility Opl,ration lind Managcnwnt Agl"l'emenl
Pagc 3 oj" 1:1

2101

S99 901>
e82:S0 SO 82 das

In rcgnrd \0 4,01(1) ahove, the 'j'RA agrecs to assign to Operator, when necessary and
approprinte, allY w;lrrantil'~; or guarantees it lnight have or hl~ entitled to with regard to the
Facility, FwnitLl\'e, J.'ixtLlres, nnd Equipment (1'1'&1.') in order to ~rre~t rcpairs on the Facility,
and I:F&F, or to give ()p~rator the right to pursuc thc: manulirclurn, hnillkr, or other
suppli<,;r who gavL' such warranties or [;uaranties, to s~d, reimbl1r~;('lnent j(lr rnonies
expended hy Openllor to meet its repair, upkeep and maintenance ohligations under this
Ap,reement to the extent that those expenditures rebtc specifically t(l work covGred hy the
suhjeel wal'r:mty or guar:l11ty, \/v'ith rc~;peGt to :I11Y warr;l11ties, TRA agrees to eoopente and
usc it" be,t enr)rts to assist Opewtor to recover under such warrantics, Extraol'l:\inary rcpairs
sh;lll (',enerally hc paid or reimhursed out of the ()pef:ltint~ Reserve Repair Contingency
hllld c~stablishc:d under t1w Trust Indc,ntuTe where funds arc av,tilubk in that aee:ount
therdor, unkss such is due to t he negligenc~ or intentional ;lels of Operator's employees, or
hy inrnalc~ or is e:overed by insurance or walTtll1ty,
Opcr;ltor's responsibility ror
e:xtraordinary repairs, whcre fund.s m'e not avaibhk in a sulfie:ient aIllount in the Operatine
Rescrvc/Rep:rir/ContingCl1ey hllld to pay Ir)!' the Slime, is limited to the proceed,; 01'
appliwbk insu,.,lIlce, unkss th(~ need for such \'epairs was erellted hy the: negligence 01'
intentional act 01' its e:mployees, or by inmates.
1,02

Operator shall prep:lre (lnd fumish sne:h reports as may he required by lilW to be ~;\lhllli1ted to
the City or I·Jardin and the Police Chic!' with respeet to tIl<' operation of the J.'aeility 01' the
prisoners detained therein and, in addition, such other reports as nlay be require:cl hy ;In
MOI\tana state age",:y or any agl:ney 01" the Iinite:d Stale:.,; (,,,venll11ent, or hy any sUIte ()J'
pOlitical "ulxlivision therc"f I"wm which prisonCl's have. been assigned to the Facility.

1.01

Oper;rtor shall obtain, and thereafter maintain, the proper eelli fieation(s) necess;lry for the
Facility to incarcerate f(~dn(ll, stale and local prisoners, and shall maintain such
certification(s) at all times, f\fter such ccrtilieati<l\1s have been obtained, if required by the
laws oj'thc, State of Montana, the Operator shall provide copies to TRA.

:1.04

Operalllr will properly incarcerate nil prisoners assigned to the Facility I()r whom there i~;
spae:e avnilable ilt the F:reility within the ';latutory and regulatory limits 01" the Sending
Jurisdiction and in neeordane.e with all federal, state, and local Inws, ordimme:es, re:gulations,
and other legal requirements,

lOS

Notwithstanding anything eontHined hnein to the' e:ontrury, TRf\ and/or the Trustee shil.ll
have no liability whatsoevl,r I(Jr any cmployees oj' Operator. Operator hc:reby agrees to
indcrnnily, defcnd and hold TRA and/or the Trustee hal1nlcss fhnn all co,;ts, claillls,
expenses, alld liDhilities (including attornEYS' Ices) whats(Jc,ver which may he incul1'l,d by
TRf\ and/or the Trustee ari,;ing from any and ;Ill ads done or omitted to be done: by
Operator, or the employc,es, agents ,md assigns o!" OpL,rato\', in eonne:ction with service:"
perlimTlcd ar to he perl(Jrmed under thi~; AgI'CL'nlcnt.

1.O(J

The: intervicwing, hiring, tmining, assienrnent, e:ontral, manngenlcnt, compe:n~;ation,
promotion and te:nnil'wtion of all I11l,mhcl's of the I:aei lily's admil\istrat ion and stall shall he
the rcsponsibility and obligation of Operator. Operator will usc its bcst efl(nts to hire and
train local personnel and willl'epOJi on the statns of!oull hirinr. on a qU;lnerly hasis.
Facility Operation and M;magement Agrc"'ll'lent
Page 4 o!" 13

s·d

2101

S99 901>
e82:S0 SO 82 das

J07

The point or sak I,)r nil pureha~es made hy the Operator in connection with this agl'eell1cnt
shilll be (kcmcel made at the raeilily. Operator shall use its hest efj{)l'ts to purehas<: goods
and s<:rviees locally when economically Icasihle. Prior to the initial pLlrdli\~e of ~\llY goods
(inc]uding, without limitntion, FF&E), Operator will (;onduct a local vendor fair. The. intent
or thi;; I~\ir is to provide local vendors with a listing o!' filcility purchase needs. Spccial
emphasi~; shall be given to {,)od, ofliee supplies and maintemmce products.
Operator shall provide all bilbnee sheels, incomc statements, inmate rolls, accounting
record,s or reports, audits and other such milttcrs required or TR!\ andlor \h<: Tnl~tec
under thc lnelenture and this Agre<:m(;\ll ror the Facility, and all Project opcnttio!"l
inl,)rmation neccssary to <:arry out TR/\ ,mel/or the Trustee's continuing dis(;)osure
obliga(ious undcr thc lnelenture anelthis Agreement aud undcr the Continuing Disclosure
l)nelertaking, 1'r(\viel~e1 further that said Iloeal inf<.mnation not be disseminated beyonel
those partic,~ identified in thi>; seetion without the prior written (,Ont"~llt orthe Operator.

].0')

The Open1tor will provide to th" Trustee, the \ Imkrwritn,s, Dnd c,lch holder of at least
$1,(lOO,(lOO in principal amoullt 01 !loods Out~,;ta1\din~, who has ~.iven notice to TRi\ 'lI1d
the Tru~lee or its interest in IT.,,eiving the ~;ame, within ~'i days after the end of each
liscal yuan"r of eaeh Fiscal Year 01 TRi\, an unauditcd statcment or income and
expenditure~ with respect to the operation 01 thL' Project I()r SllCh fiscal quarter, anel
average prisoner census inlomwtion l()r each (,aknelnr month in ead) such liscal qUlll1er,
Provided I"urthcr that said li>;cal inl"ornwtion not he disseminated lx,yond tho>;c parties
identified in this section Witll0ut the prior written consent orthe Opefator.

3.10

Pursuant
law.

3.11

Pur>;uant to thc MOt J, Op<:rator agrees to pay TRA a sponsor's ree of$5.00 per day lor eileh
inmate th<lt is houoeel in the Facility.

1,12

Pursuant to the MO\!, Operator agrees to house a ~1 of . ty (60) inmates frOm the
City or "Jardin, the Town of \ ,odge eirass, an~g Hom CO\ln at nO cost to the sending
jurisdiction. Operator f\lnher agrees to house imnate5 rom said sending j uriselictions
separatdy lrOln inmates from other state andlor federal agencies.

(0

the MO\!, Operutor agrees to operate the beility in accorclance with MOllt:lI1a

Pursuant to the MOll, Operator agrees to allow the TRA ~md/or City ofl-larelin to occupy the
courtroom and ueljoining oftice sp~c.e i,)r operation orth<: City Court.

] 14

Op~nt(or agrees

to acquire all necessmy lCderal certifications to per!ill'1n the duti<:s speeilil;e1
under this Agreement anel (0 proviele ;1 copy or said <:crlilication to the TRA hy Deeemh(~r ],

20()9.
3.15

Operator agrees tn pny any dcllciency in deht service paYI11ents under the Trust 111e1enture to
the TRi\ Ix,ginning on Febnl;1ry 1, 2010, ilnd to (;ontinue to make si>iel payments 1()1' the
entire Tenn orthis /\['.reel11enl.
Facility Openltiol1 lind Managemc·.nl Agreement
Page 5 of \ ~

2101

S99 901>
e82:S0 SO 82 das

IV. MI<:DlCAL CARl<:
4,01

The Operator shall provide access to rrwdical, optical, and cmcrg,'ne.y hCllth Care in
accord;mee wilh thosc standards of Sendinl', Jurisdictions, Operat(\!' shall !,mvide on-site
nursc,~ <md medical technicians to handl,~ sick call and medical assessment and can: that do
nolrequire a physician or specialist The Operator shall also eontn\C1 with a medical doctor
to serve as medie;ll consult,1nt 101' thc Facility.

4.02

It is thc understanding of TRA that all hcaJtheare nceds in excess of hasie tri<lge arC 10 hc
per!"rmed ofl~site of the Facility. In addition, it is the undcrstanding ofTRA that all costs
associated with care in a(,eess of hasic triagc will be borne by thc agency having jurisdiction
over the inmates. TRA shall havc no ohligation jill' such costs.
V. COMPLIANCE WITn STANllARI>S

5.0 I

Operator shall prepare and adopt a Procedures Mnnllll1 for thc operation of the Facility so as
to assure that the I'aeilit.y is opcraled fully in necordance with acceptable correctional
practices and in aceord;mec with the requirements of the eontrm:t.ingjurisdictions.

5.02

Op,'rator shall assun: that nIl employees at. the hlcility are adequately trained to perlol'll1 at
standards required by law.

5.0l

Operator shal1 comply with all slandards and requirements of the prisoner h()l]sinG contracts
entered into with each Sending Jurisdiction by TRA and providc nil scrvices to he providecl
by TRA uncleT such contwel'i and pursuant to the kmlS of such contl'(-lcts.

5.04

The Opcrat.or shall confoml to nil regulations and requirements, as well (lS seck any
necessary 'lee.redita1ions sct forth in speeilic housing agreements j(,r the Facility.

5.0S

The 0pcHllor slwll s;ltisfy the requirements ofthc Americnn Correctional Associatiol1.

Vl. I>lJTIES RELATING TO THE CITY
(Ll)]

The Operator and TRA will attempt to secure. t.he eooperatiOl1 of the City and local law
enforcement agencies in 011 maUers of law enforcement, security and communie.ation~. To
that end, Operator will immediatc]y inform Cit.y as to thc possibility of any escnpc, or
missing i11lmlle.
In nddition, the Operator will infom1 the City as to any
unusual/extraordinary cvent/oceurrence within the Facility, which might create a public
concem or be ofpot.CnliaJ embarrnssment to the Cit.y.

(,-02

!,oc;lllnw enforcement agencies may assist Operator in the training, a1 Operator's expense,
orOpcrator employees to operate the, Facility.

6.01

The Opt-'rator wil1 at.tempt to obtain rron\ the City in!illlnation needed by Operator in thc
screening of candidates Iilr employment.
Fncility Operation and Manage)1lCI1tl\greell1en1
Page 6 or 13

L'd

2101

S99 901>
e82:S0 SO 82 das

(,.04

1\11 .iailcr~ mld be e'~t1ijJed by nppropriate State of Monwna Sumdtmls
Jurisdiction ',; requiret11L1)t~ prior to l1nd,,'1ajdng p"rmallcntjailer duties.

()t"

the S,mdin[',

VB. lHJTlF,S OF TRA

7.01

'I'RI\ llnd t\K Operatnr agree it shall he to their m111ual hencJit and intere,;t that the Facility
he I"ully utilj~,ed loy maintaining the mnxirnnm prisoner population within stlltut",·y 01'
regulatolY limits. To this C[\II, lind throughout lh" term of this I\greement, TR/\ ,md the
Operator agree to c,;OopI'fClte ill erforts to obtain maxirllum prisoner populatinn horn the
sources set filrth in Sec,;jion 1.01 of this Agre(,ment (e.g., TRA will enter inl0 reasonable and
advisable pri,ioner hot1sing contracts 01' rebted agreements; Operator wiil llctivcly seck to
idetltify potential prisoner sonrces, de.). 11 Shilll be the !'(espon,ihilily of Openttor to assist
TRA in seeking OUI S()\lrees of prisoners f"r incarceration at the hl<,;ility, and to assist in
negotiation and presentation for aceeptilnee by TRA contracts iilr the inearccration or
prisoners from sources listed in Section 1.01 orthis Agreement.

VJII. LIABILITY I\ND INDEMNITY
fUll

Opcr;ltor hneby agrees t(l ddcnd, hold harmless and indenmify TR /\, the City and/or the
Trllst"c, their or!ieers, directors, en1ployees, aeel\ts, ,md repres(,ntativcs, li'Oln and agaimt
any and ul1 claims, damages, demands, losses, costs und expenses, including ,tHOmey's kes,
incurred or sulT"wd by TRA, the City amI/or the Trustee, their ortieers, direetor:i,
employees, agCllts, or rcpn~setllatives, arising Ollt of or resulting from any acts done or
omitled to he done by Operator or the employees, ,Igeots or assigns oj" ()pc.rator pursuant to
the pl'(wi,sions of this I\greCnKJl1.
X, INSIIRANCE

(l,(1 I

Operator shal1 obtaitl and maintain in {"ree, at its sole cost, risk and expense during the term
of this Agrl,cment, a policy or policies of liability insurance in an amount of no less than
Five MiJlion Dolbrs ($'i,OOO,OOO.OO) in coverage per oeeUtTence, and Five Million l)ollars
($'i,OOO,OOo) ilggl'egate. Sllch insurance shall itlsurc against al1 claims, Iineluding claims
b;lSed on vio]utions oj" civil l'ights up to a lTluxirl1lnn of One Milliotl Dol1ars
($I,OOO,OOO.OO)"!, arising from services perf(mned by Operator pursuunt to this Agreement.

9.02

Said policy or policies of insmance shaJl
"additional named insureds".

9.01

Operator ,hall provide and continul: in I"rce property insurance coverage in thc namc of the:
TRI\, and the Trustec as loss payees in Wl10unts equal to 1he ud 0I'rvp!nee1l1ent, and shall
maintain and c(lntinue lire, boiler and mae.hincry covcrap,e on the Facility. Operator agrees
thilt its negotialcd per diem, per prisoncr fee with l\leh ~knJing Jurisdiction 11,lS Wken this
opel'alional expensv into account.

9.04

Opcrator shall jlmvide to TRA insur,l11ec n:rlifiealc" as prool' of the ill.';uranee policies
obtaincd in accord.mce with thi,; /\11ielc. 1\11 jlohcie.s 'ihall provide that coverage ,;hall not be

IMlTlC

the TRA, the City and the Trustee a,;

Faeil ity ()peratioll and Management Agreement
Pngl' 7 of 13

2101

S99 901>
e82:S0 SO 82 das

cUllcclled withollt thirty nO) days prio)' writtcn not icc to the (\:rtificate Ilo\(ler and all
"ddijional nwned insureds and loss pnyccs. OPCTll!or shall obtain, n~; soon "s possible (and
hdi.m' cancc1lati(m) [lnd at its sole <:osl, replaecment insurl1l1eL' policies,
9.0')

Operator shall provide workers compemmtion insurance lin its <.;mployees at the J;aeility,
which provides the s\;ltutorily required e(lwrage, except that employer's liability
cover:lge shal1 oo! he in an amount of less than $ \ ,flOO,OOO.

')_Of,

Operator shal1 carry auto liahility insurance coverage in the amOlln! of at least $1,000,000
per single limit ji,r bodily injuty and pruper\y damage, with umbrella coverage in nn amount
not less thlll1 $3,000,000, covering any vehicles used in its operntiolls.

9.07

Notwitbstanding anythillf, to the contrary in thc jilregning sections, Operator shal1 provide
all insurance required of the Operator under the lnctentllrc or this Ag"coement in the Corm and
naming tbe insureds and loss payees a,; required in the I nden1\.lrl' , ()pcnllor nf',t'ees tlwt the:
neg<)tiated per diem, per prisoner ICc with ea~h Sending Jurisdiction ha:; taken this
This includes husin<.;ss intclTuption inwnmce in
operationu\ cxpense into account.
aeeordnn~e with Section 6_02(f) of the Indenture_ Section 6,02(l) or the Indenture provides
:IS

{<)Ilow,;:
It will procure anct m,lintnin, or enuse to he procured :md rnaill1aincct,
~ontinuously in dTed with respcctto the I'roje<.;t all-I'd, insurnnce, including
eove:wge for rio\.';, suhjcct (mly to the s\llndard exclusions C<Hlt:lined in the
policy. It will apply the Net I'roce:cds of such insunmee to th(: prompt rcpair,
restoration or replacement or the Project or to the redemption of thc Bonds,
It will also obtain husiness intcrruption in~uranee protecting tIll' Issuer
ngain';t tlw 10"; or Project i{eve:oucs sul'fleicnt to pay Operiltion and
Milintenanee Costs :md principal and interest on the B(md~ due hereunder li,r
II period of one year. The: proceeds or such husines~ inkrruption insuran<.;e
~;hull he paid to the I't'O.iL~et Fund nnd app\i(~d as provided tlll~re.in iLlild to the
extent that other moneys (other than moneys held in the Rcserve hmd) CUT
not :Ivllilable to pay Opcration and Maintcnllncl' C\ds and principal and
intetTst on the Bonds. All policies (or endorsements 01' rickrs) evidencing
t his insurance sh:llJ be carried in the narT1l~S of the Issuer unci the TrlIs\cc (lS
t1K:ir respective intet-ests mny nppear and shall llame TrusteL~ as lnortgiw.ee
and hlSS paYl~e_ It will also p1'OelirC and maintain, or cau,;e to he proeurc:d
and lllilinwined, continuously in elIi;;cl with respect to the Pr<~ject,
(i) insurance ogainst any liahility for in.iuric'i to 01' death or any person or
injury to or loss or property ari~;ing out 01" or in ;lt1y woy relating to the
m~lintenance. lise or operation or the Pro.iect or any pllt1. thereof in a
lllinilllum amount or:ti5,OOO,OOO, and (ii) workers' COl11p~nsation insuranec,
or lawrnl allenntivc, covering all cmployee:; on, in, ocar or abOLlt the Project.
All insnranec will be taken out and nlailltaim,d with rcsponsibll: insul'iltlee
companies organiz.ed under the laws or one of the sWlc; of' the United States,
qunlilied to do business in the State and hovilll', n rating lrom A M. Best or
A· or higher; shnll contain n provision that the insurer shall 11(1t eliDed or
Facility Operntion and M;\l\ilgenwnt Ag]'(,crnent
bee ~ or 13

2101

S99 901>e82:S0 SO 82 das

revise coverage llwrcundcr without giving written notice to th~, ls~ucr and the
Trustee at least thirty (3D) days hcl<m' the eanedlation or revision heeomes
eri(;etive; and (except for worker's eompens;ltion insurance) ~hal1 name the
1s~\Ier ;111d thc, Trustee as in~ured purt.ie~ and name. Trustee<.' as murtgagee and
loss payee.

X.

MAINTENANCl.~,

lll'KEEP AN\) REPAIR

10.0 I 1\11 ordinary m,lintenanec, upkeep and repail' costs for the hleility shnll be; paid hy
Opewtor pursuant to suhsection 3.0 I (I) 01 thi~ Agrcement except as otherwise provided
therein. Operator agree:i that the negotiatc,d per diem, PCI' pri:;oner I"ce with each Sending
Jurisdiction l1(1s token this operational expense into account.

XI. TAXES AN\) GOVERNMENTAL CHARGES
11.01

Opcrator ~;hal1 he responsible for any taxes or governmenwl charges of any kind ossessed
or incurred nlkr the effeetive date l)f this Agreement whieh are levied or impllsed on the
J:aeility and related property. To the extent that ~lJeh t,rxes arc "hargeahk ag;linst the
Fa"ility ,md found by il f~nal non-appl,aluhk judgment. of a court 01 compC\.enl
jurisdidion to k due and owing" they shull be paid out of the Operating A"count or any
reserve accounts llvailllbk ['or pnyment thercof as al11O\1nts due or pnyabk under the,
Indenture or this Ag,reement. Such DI11(\\mts arc not a re,;p(lnsibility or deht or TRA. This
Facility i~ intended to ),e, and under curreut bw, should be exempt li'Ol1l prope:tty
taxation. TRA is thc, owner oftaxabk title to the Facility based pn eUITcnt inlcrpretations
and decisions.

XII. ADIlITIONAL PROVISIONS
12,0]

Notwithstanding nnythine, to tile eomr,lry contained herein, in the event any bankruptcy,
rcorganil.Ution debt arran2,l'1l1ent, !l1orntoril1ll1, procee,ding, uncleI' any bankruptcy or
insolvency law or dissolution or llquid,ltion pnlc"eding is instituted by Operlltor, or if
instituted against Operator, is wnsented to or nequiese"d ill by Operator and is not dismisscd
within sixty (60) dnys, this Agreement shall be iIllmediolcly terminated and cancekd, and
the. TRA shnll immediately "ssllme respol)sihility Ii,r the operation, m;maeement and
S\lpeIVi,;on ortlle Facility,

12,02 If either pmiy is ll\und in m,ltcrial breach (If this Agreement, .~aid pm-ty shall have ninety
(l)O) days, frOin notille,ltio!l of said hreaeh, to eorrect or redify said motteI'. ln the~ even!
bre\Hohing party makes a good bith efl(1I1 to c.orrect or rectify said maHer, however, more
tillle is required due to "nforeseen or unc.oIl1.rollahle eirc.lIl11stanc.es, hoth parties shall
m~t'.otinte~ in good f;litb a~; to ,\11 oppropriate time fral11e to eorrect or I'ec.tify said matter. If
Inatcri,,1 brcae.h is nut C:OIT(,etc,d or rectificd in ;lc.cordallce with ahove, said eontnrct shall
Icrminate. in thil1y nO) (bys.

l'aeility

01 . d

2101

Opcr~lti(Jn and

M,rnage.ment Agrl,emen(
""ge,90fl)

S99 901>
eS2:S0 SO 82 das

12.m Medintion. If a dispute nri,;cs out or or relatcs to thi.~ A[;reement, or the breacb thercoC and
il'the dispute cannot be sl:l1kd througb n~[;otintion. the pnrties a~~ree fIrst to try to ,sellk the
dispute through rnedilltion bcl()re resorting to arhitrntion. litip,tion or some other dispute
resolution procedure, In tbe event thnl the pilrtic~; ennnot a~,rec Upon the selection of a
mcdiator within .seven (7) days, either party may request the presiding jUdge of the Supcrior
Court 01 Big 110m County to assign a nlediator I"rom n list of mediators maintllined by thl:
Montana Cons@sus Counei I.
12.04 Inmate tclephonc r,'venUl:' arl: not Projcct Rcvenue:;, and shall bl: payable to, llnd belong
to, the Operator.
12,05 Commissary servi"e,s procurement shall bc made utilizing sound ;md acceptable bll~inc~s
and accounting praeticcs. lmd shall bc pay;lblc to, and belong to, the Operator.

XlIJ. APPLICABLE LAW AND

VI~NlJE;

LEGAL CONSTRtlCTION

I :1.0 I This Agrcl:ml:nt sball be eordrucd under and in ael:Ordance with th" laws of the Statc or
Monwna, and all ob.ligat.ions of thc rartie~ created hereunder arc. per{imnahk in Hardin,
Mont.ana, and venue of ,my action or dispute shall be in a coun or competent. jurisdiction in
Big Horn County, Montana,
13,02 In G\:;C any onc or lTlore o['the provisions contailwd in this Agreen,,:nt shall, for any rea:;on,
be held t.o be invalid, illc.gal, or unmforceablc, such inva.lidity, illegality, ()runenforeeahilily
shallllOt ;,j'{Cet any other provisio[) hereof, ,md this Agrcement shall be construed a~; if ~\.leh
invalid, illegal or uncnj(lrceablc provision lwd never been cont.ained here.in.
1~,03

If lor any rl::l.~on this Af,r,:ement shall be lwld void or voic1<tbk, or otherwise bc hcld
unlawful, this Agreement. shall imnwdiately terlllinut.e, ami Operator shall have no claim or
right of action agninst TRA, its onicials, its c:mployees, it, agent; or ib a\lorncys J(ll" any
such terrllinntion or alkged ael or omission rclat(~d to the same,

XIV. NOTICES
14,01 Notices required to be given hereunder by any party t.o t.he other shall he in writin~, and
shall be valid j{ actually received by t.he party to whom wch noticl: is given or il'
deposit,~d in the Unitcd St.ates Mail, postagc prcpaid ,md addressed to the party as herein
below specified, 'rhc effective date: llw noticing slwll be thc date ,IC\\lally recl:ived by the
p~lrty to whom )1olil:l: is be:ing given. Notices to t.hc 'lYA sh<lll be delivered or sent as
{()lIows:

Facility Opcrnt.ion and Man;lgcmenl Agrecn1ent
1',lge J 0 of I ~

1 1 •d

2101

S99 901>
eS2:S0 SO 82 das

Notices to Operator' ,;h,,11 he
delivered or sent as Illllows:
Notices 10 the Trus!Cc sh'lll be
delivered or ~;el1t as Ji,!Iows:

I "lwrU1ce J, Bell
Vice I'resideill
I l,S, Bank "Nation;11 IIssoeintion
Corpor;lle Trust S"rvices
S55 SW O,lk Street, PIA)
Portland, OR 97204

XV. EXH:lITION AUTHORITY
IS.OJ

By his or her sign"tur" below, eaeh signatory indivjd~ll" certifies tha1 h~ or she is t1w
rrop"r1y autl10rized agent or ofJiec.:r of the arr1i"abk party blO[l;to, (111(1 h"s the nece:;~;ary
authority to cxelOute ihis Agreement on ht:half of such pm't)', and each party herd)y Certil,lOS
[0 the other thilt any resolutions nCCl'.s:;ary tl> cre"le such authority h(lve hcen duly rasscd
and arc now in full forec and enGel.
XV). AMENDM/(NT

16.01

This Ar,rl'emenl may he amenckd only by a written in~;l"ument specifically purportinp. 10
"mend this IIgr(;cm(;l1t and (;xc(;\l(ed by ,111 p,\nies her(;\o,

17,01

This IIgt'(;erl1(;nl con:;titule:; the sole and only Operati"n and Mnnag(;I11e111 Agreement of' the
pnrtit;s hereto and slIp(;rse.dcs ilny prior \lIKlerstandinr;s or written or oml ugrlOcmcnls
h(;(wccn thc pnrtic" respecting tk within SUbjlOct n-,alkr.

Facility Opel"(ltioll nnd ManagclJ1ull /\grCl\n1Cnl
Page] 2 of I :l

2101

SSS SOl-