FIRST AMENDMENT TO NOTE AND EQUITY PURCHASE AGREEMENT
This First Amendment to Note and Equity Purchase Agreement (this "AMENDMENT"), dated as of August 9,
2001, is entered into by and among CORNELL COMPANIES, INC., a Delaware corporation (the
"COMPANY"), its Subsidiaries signatories hereto (the "SUBSIDIARIES", and together with the Company, the
"LOAN PARTIES") AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation ("ACS"), ACAS
BUSINESS LOAN TRUST 2000-1 ("ACAS 2001"), ACAS FUNDING TRUST I ("ACAS I") and
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation
("TIAA"). ACS, ACAS 2001, ACAS I and TIAA are referred to collectively as the "PURCHASERS" and
individually as "PURCHASER". Capitalized terms used and not defined elsewhere in this Agreement are defined
in Article 1, below.
A. The Company, ACS and TIAA have entered into that certain Note and Equity Purchase Agreement, dated as
of July 21, 2000 (as amended from time to time, the "NOTE AGREEMENT").
B. The Company has entered into that certain (i) Indenture issued by Municipal Corrections Finance, L.P. (the
"LANDLORD"), dated as of August 1, 2001 with The Chase Manhattan Bank, as Trustee and Securities
Intermediary (the "TRUSTEE"); (ii) First Series Supplement to Indenture, dated as of August 1, 2001 for
$197,400,000 of 8.47% Taxable Revenue Bonds, due August 1, 2016; (iii) Master Lease Agreement by and
between Landlord and the Company, dated as of August 14, 2001; and (iv) Reserve Fund Agreement by and
among the Landlord, Trustee and Lehman Brothers Special Financing, Inc., (collectively, the "2001
MUNICIPAL TRANSACTION DOCUMENTS") pursuant to which the Loan Parties agreed to participate in
the transactions contemplated therein (collectively, the "2001 MUNICIPAL TRANSACTION").
C. The Company has requested that the Purchasers make certain amendments to the Note Agreement, and the
Purchasers are willing to do so subject to the terms and conditions set forth herein.