**Exhibit10.52**

** **

SAM YOUNGBLOODEMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT(the “Agreement”) is entered into on October 19, 2004 (“the Effective Date”),by and between Detention Contracting Group, Ltd., a Texas limited partnership(the “LP”), and Mr. Sam Youngblood, an individual residing at 115 TuttleRoad, San Antonio, Texas 78212, (the “Executive”) under the following terms andconditions:

 

RECITALS:

 

WHEREAS, the Executiveand the LP are currently operating under an at-will employment arrangement (“theFormer Arrangement”) pursuant to which the Executive was entitled to certaincompensation and benefits;

 

WHEREAS, the executionand delivery of this Agreement, as a new contract to completely supersede theFormer Arrangement, is an inducement and a condition to the consummation byWilliam Blair Mezzanine Capital Fund HI, L.P. (the “Investor”), of that certainLoan Agreement, dated as of the Effective Date, by and among the Investor, 1ST DetentionContracting Group, Inc., a Delaware Corporation (“ISI Delaware”) theultimate parent Corporation of the LP and all the shareholders of ISI Delaware,which provides for the completion of a loan to ISI Delaware and the delivery tothe Investor of Warrants for capital stock in ISI Delaware; and

 

WHEREAS, the LP desiresto continue to employ the Executive in the capacity hereinafter stated, and theExecutive desires to continue in the employ of the LP in such capacity for theperiod and on the terms and conditions set forth herein;

 

NOW, THEREFORE, inconsideration of the mutual covenants and agreements set forth below, it ishereby covenanted and agreed by the LP and the Executive as follows:

 

1.     Employment Period. The LP hereby agrees to continue toemploy the Executive as its Chief Executive Officer, Vice President, andSecretary, and the Executive, in such capacities, agrees to provide services tothe LP for the period beginning on the Effective Date and ending on the fifthanniversary of the Effective Date (the “Employment Period”). The EmploymentPeriod shall automatically renew until the sixth anniversary of the EffectiveDate, unless the LP or the Executive gives written notice to the contrary tothe Executive or the LP, respectively, at least sixty (60) days prior to thefifth anniversary of the Effective Date.

 

2.     Performance of Duties.

 

(a)           The Executive agrees that during the EmploymentPeriod, while he is employed by the LP, he shall devote his full time, energiesand talents exclusively to serving in the capacities of Chief ExecutiveOfficer, Vice President and Secretary of the General Partner of the LP in thebest interests of the LP, and to perform the duties assigned to him by theBoard

 

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of Directors of theGeneral Partner of the LP (the `Board”) faithfully, efficiently and in aprofessional manner.

 

(b)           Subject to Section 2(c) below, he Executiveshall not, without prior written consent from the Board:

 

(i)    serve as, be a consultant to or employee, officer,manager, agent, or director of, any corporation, partnership or other entityother than the LP (other than civic, charitable, or other public service organizations)if, as determined at the reasonable discretion of the Board, such service,employment, or position would have a material adverse effect upon the abilityof the Executive to perform his duties hereunder; or

 

(ii)   have more than a five percent (5%) ownership interestin any enterprise other than the LP if such ownership interest would have amaterial adverse effect upon the ability of the Executive to perform his dutieshereunder.

 

(c)           During and after the Employment Period, the Executivemay own all or any part of ISI*MCS, Ltd., a Texas Limited Partnership, as alimited partner, and all or any part of ISI*MCS GP, Inc. or any otherGeneral Partner of ISI*MCS, Ltd., and may participate in, manage, oversee and conductany and all business affairs of ISI*MCS, Ltd. as an officer, director and/orshareholder of ISI*MCS GP, Inc. or any other General Partner of ISI*MCS,Ltd., and none of such activities shall be deemed to violate any duty of trust,confidentiality or non-usurpation of corporate opportunity, nor shall theyviolate any term of Section 2 of this Agreement or any other term orRestrictive Covenant of this Agreement.

 

(d)           Notwithstanding anything to the contrary containedherein, any vote or consent of the Board required or permitted hereunder shallexclude any vote by the Executive in his capacity as a member of the Board.

 

3.     Compensation Subject to the terms and conditions ofthis Employment Agreement, during the Employment Period, while he is employedby the LP, the Executive shall be compensated by the LP for his services asfollows:

 

(a)           The Executive shall receive, for each consecutivetwelve (12) month period beginning on the Effective Date and on eachanniversary thereof, a rate of salary tint is not less than $350,000.00 peryear, payable in substantially equal monthly or more frequent installments andsubject to customary tax withholding. During the Employment Period the Executive’sannual salary rate shall be increased by the Board, on or before eachanniversary of the Effective Date, by an amount of at least the amount ofchange in the Consumer Price Index for the relevant region,

 

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during the immediatelypreceding year, when compared to the same index for the same region for thecalendar year two years prior.

 

(b)           The Executive shall be eligible to receive incentivecompensation payments in accordance with the [Bonus Plan] of the LP or anyother entity owned or controlled in whole or in part by 1ST Delaware.

 

(c)           The Executive shall be eligible to participate in allexecutive benefit plans maintained by the LP or any other entity owned orcontrolled in whole or in part by ISI Delaware on substantially the same termsand conditions as other senior executives of the LP or any other entity ownedor controlled in whole or in part by ISI Delaware.

 

(d)           The Executive shall be reimbursed by the LP for allreasonable business, promotional, travel and entertainment expenses incurred orpaid by the Executive during the Employment Period in the performance of his servicesunder this Employment Agreement: (i) provided that such expensesconstitute business deductions from taxable income for the LP and areexcludable from taxable income to the Executive under the governing laws andregulations of the Internal Revenue Code; and (ii) to the extent that suchexpenses do not exceed the amounts allocable for such expenses in budgets thatare approved from time to time by the Board. In order that the LP reimburse theExecutive for such allowable expenses, the Executive shall furnish to the LP,in a timely fashion, the appropriate documentation required by the InternalRevenue Code in connection with such expenses and shall furnish such otherdocumentation and accounting as the LP may from time to time reasonablyrequest. As used herein the term “Internal Revenue Code” shall mean InternalRevenue Code of 1986, as now or hereafter amended, and the regulations andrevenue rulings and procedures issued pursuant thereto from time to time.

 

(e)           The LP shall pay all membership dues, fees, andassessments (up to $3,000.00 annually) for the membership of the Executive atthe Plaza Club of San Antonio, located at 2100 Frost Bank Tower, San Antonio,Texas.

 

(f)            To the extent provided for the LP’s budget, the LPshall pay the full price for, and purchase, tickets and all passes and relateditems to: (i) the San Antonio Stock Show and Rodeo; (ii) the SanAntonio Spurs; and (iii) the Majestic Theatre after the Effective Date, inthe same volume and upon the same basis as the Company historically purchasedsaid tickets, passes, and related items prior to the Effective Date. All saidtickets, passes, and related items shall be delivered to the Executive to beutilized and distributed as directed by the Board or the Executive.

 

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(g)           The Company shall pay the Executive an automobileallowance of $900.00 per month, which amount shall include all insurance,maintenance, repairs, and gasoline for such automobile.

 

4.     Restrictive Covenants. The Executive acknowledges andagrees that:

 

(a)           the Executive has a major responsibility for theoperation, development, and growth of the LP’s business;

 

(b)           the Executive’s work for the LP has brought him andwill continue to bring him into close contact with confidential information ofthe LP and its customers; and

 

(c)           the agreements and covenants contained in thisParagraph 4 are essential to protect the business interests of the LP and thatthe LP will not enter into this Agreement but for such agreements andcovenants. Accordingly, the Executive covenants and agrees to the following:

 

(i)    Confidential Information. Except as may be required bythe lawful order of a court or agency of competent jurisdiction, the Executive agreesto keep secret and confidential, both during the Employment Period and indefinitelyafter the Executive’s employment with the LP terminates for any reason or no reason,all non-public information concerning the LP, ISI Delaware, and their respectivesubsidiaries and affiliates that was acquired by, or disclosed to, theExecutive during the course of his employment by the LP or any of itssubsidiaries or affiliates, including information relating to customers(including, without limitation, credit history, repayment history, financialinformation and financial statements), costs, and operations, financial dataand plans, whether past, current or planned and not to disclose the same,either directly or indirectly, to any other person, firm or business entity, orto use it in any way; provided, however, that the provisions of this Subparagraph4(c)(i) shall not apply to information that: (A) was, is now, orbecomes generally available to the public (but not as a result of a breach ofany duty of confidentiality by which the Executive is bound); (B) wasdisclosed to the Executive by a third party not subject to any duty ofconfidentiality to the LP prior to its disclosure to the Executive; or (C) isdisclosed by the Executive in the ordinary course of the LP’s business as aproper part of his employment in connection with communications with customers,vendors and other proper parties, provided that it is for a proper businesspurpose solely for the benefit of the LP. The Executive further agrees that heshall not make any statement or disclosure that (1) would be prohibited byapplicable Federal or state laws, or

 

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(2) isintended to be detrimental to the LP or any of its subsidiaries or affiliates.

 

(ii)   Non-Competition.

 

(A)  The Executive agrees that for the period commencing onthe Effective Date and ending on the second anniversary of the date on whichthe Executive’s employment with the LP is terminated for any reason or noreason (the “Non-Competition Period”), the Executive shall not directly orindirectly, alone or as a partner, officer, director, manager, employee,consultant, agent, independent contractor, member or stockholder of any personor entity (“Person”), engage in any business activity in North America that isdirectly or indirectly in competition with the Business of the LP or which isdirectly or indirectly detrimental to the Business or business plans of the LPor its subsidiaries or affiliates; provided, however, that the record orbeneficial ownership by the Executive of five percent (5%) or less of theoutstanding publicly traded capital stock of any company for investmentpurposes shall not be deemed to be in violation of this Subparagraph 4(c)(ii) solong as the Executive is not an officer, director, manager, employee orconsultant of such Person. The “Business” of the LP shall mean the actual orintended business of the LP and its subsidiaries and affiliates during theEmployment Period and as of the date the Executive leaves the employment of theLP for any reason or no reason. As of the date hereof, the Business of the LPis providing design, engineering, procurement, installation, maintenance andrelated goods and services to: (x) the detention facilities constructionand renovation industry; (y) the industrial/commercial controls and fireand security alarm industry; and (z) the access control and security observationindustry, and other related businesses. The Executive further agrees thatduring the Non-Competition Period, he shall not in any capacity, eitherseparately or in association with others: (1) employ or solicit for employmentor endeavor in any way to entice away from employment with the LP or itsaffiliates (a) any current employee of the LP or its affiliates or (b) anyPerson who was employed by the LP or its affiliates in any preceding 12-monthperiod; (2) solicit, induce or influence any supplier, customer, agent,consultant or other Person that has a business relationship with the LP todiscontinue, reduce or modify such relationship with the LP; nor 

 

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(3) solicit or enterinto negotiations with any of the LP’s identified potential acquisition candidates.

 

(B)   The Employee understands that the foregoingrestrictions may limit his ability to engage in a business similar to the LP’sBusiness for the duration of the Non-Competition Period, but acknowledges thathe will receive sufficiently high remuneration and other benefits to justifysuch restriction as an employee of the LP pursuant to this Agreement.

 

(iii)  Remedies. If the Executive breaches, or threatens tocommit a breach of any of the provisions contained in Subparagraphs 4(c)(i) and4(c)(ii) (the “Restrictive Covenants”), the LP shall have the followingrights and remedies, each of which shall be enforceable, and each of which isin addition to, and not in lieu of, any other rights and remedies available tothe LP at law or in equity.

 

(A)  The Executive shall account for and pay over to the LPall compensation, profits, and other benefits which inure to the Executive’sbenefit which are derived or received by the Executive or any person orbusiness entity controlled by the Executive, resulting from any action ortransactions constituting a breach of any of the Restrictive Covenants.

 

(B)   Notwithstanding the provisions of Subparagraph 4(c)(iii)(A) above,the Executive acknowledges and agrees that in the event of a violation orthreatened violation of any of the Restrictive Covenants, the LP shall have no adequateremedy at law and shall therefore be entitled to enforce each such provision bytemporary or permanent injunction or mandatory relief obtained in any court of competentjurisdiction without the necessity of proving damages, posting any bond orother security, and without prejudice to any other rights and remedies that maybe available at law or in equity, and the LP shall also be entitled to recoverits attorneys’ fees and costs incurred to enforce any of the RestrictiveCovenants from the Executive.

 

(C)   Notwithstanding any other provisions hereof, Executiveirrevocably acknowledges the standing and right of ISI Delaware to enforce theRestrictive Covenants, and Executive intentionally and knowingly waives and relinquishesany and all right to object to any action by ISI

 

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Delaware to enforce theRestrictive Covenants set forth herein.

 

(iv)  Severability. If any of the Restrictive Covenants, orany part thereof, are held to be invalid or unenforceable, the same shall not affectthe remainder of the covenant or covenants, which shall be given full effect,without regard to the invalid or unenforceable portions. Without limiting thegenerality of the foregoing, if any of the Restrictive Covenants, or any partthereof, are held to be unenforceable because of the duration of such provisionor the area covered thereby, the parties hereto agree that the court making suchdetermination shall have the power to reduce the duration and/or area of suchprovision and, in its reduced form, such provision shall then be enforceable.

 

(v)   Proprietary Rights. The Executive acknowledges andagrees that all know-how, documents, reports, plans, proposals, marketing and salesplans, client lists, client files, and any materials made by the Executive orby the LP are the property of the LP and shall not be used by the Executive inany way adverse to the LP’s interests. The Executive shall not deliver,reproduce, or in any way allow such documents or things to be delivered or usedby any third party without specific direction or consent of the Board. TheExecutive hereby assigns to the LP any rights that he may have in any such tradesecret or proprietary information.

 

5.     Termination and Compensation Due upon TerminationExcept as otherwise provided under the executive benefit plans (as in effect onthe date hereof) maintained by the LP in which the Executive participates inaccordance with Subparagraph 3(c), the Executive’s right to compensation forperiods after the date the Executive’s employment with the LP terminates shallbe determined in accordance with the following:

 

(a)           Termination Without Cause. In the event the LPterminates the Executive’s employment under this Agreement without Cause, theLP shall pay the Executive any compensation and benefits the LP owes to the Executivethrough the effective date of termination. Additionally, the Executive shall:

 

(i)    receive payment of his salary (as of the date of termination)in accordance with the provisions of Subparagraph 3(a) for twelve (12)months; and

 

(ii)   receive payment of any incentive compensation paymentsthat otherwise would have been payable to the Executive under Subparagraph 3(b) throughthe effective date of termination.

 

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(iii)  without further action of the LP, be conclusivelydeemed to have received an automatic, complete and final release, from any dutyor obligation to comply with the Restrictive Covenants in Subparagraph 4(c)(ii) above,immediately after the due date of the final payment of salary pursuant toSubparagraph 5(a)(i); provided, however, the LP may elect to continue suchRestrictive Covenants and shall have the right to enforce same upon payment tothe Company of additional severance payments including salary prorated over theextension period.

 

(b)           Voluntary Resignation. The Executive may terminate hisemployment with the LP, and any other entity owned or controlled in whole or inpart by ISI Delaware, for any reason (or no reason at all) at any time bygiving the LP ninety (90) days prior written notice of voluntary resignation; provided,however, that the LP may decide that the Executive’s voluntary resignation beeffective immediately upon notice of such resignation. The LP shall have noobligation to make payments to the Executive in accordance with the provisionsof Paragraph 3 for periods after the date on which the Executive’s employmentwith the LP terminates due to the Executive’s voluntary resignation. TheRestrictive Covenants shall continue in effect after such voluntaryresignation.

 

However, for purposes ofthis Paragraph 5, if the Executive resigns following the occurrence of one ofthe following events, the Executive shall be deemed to be terminated withoutCause in accordance with Subparagraph 5(a) above:

 

(i)    the Executive’s duties are materially reduced fromthose described in Paragraph 2 above;

 

(ii)   the relocation of the Executive’s office outside BexarCounty, Texas without the Executive’s consent; or

 

(iii)  a material breach of any of the provisions of Paragraph3.

 

(c)           Termination for Cause. The LP shall have no obligationto make payments to the Executive in accordance with the provisions ofParagraph 3 or otherwise for periods after the Executive’s employment with theLP is terminated on account of the Executive’s discharge for Cause. For purposesof this Paragraph 5, the Executive shall be considered terminated for “Cause”if he is discharged by the LP on account of the occurrence of one or more ofthe following events:

 

(i)    the Executive becomes habitually addicted to drugs oralcohol;

 

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(f)            Termination. A majority of the Board, including theInvestor Designee (as defined in the Purchase Agreement), shall vote or consentwith respect to any decision to terminate the Executive for any reason or noreason.

 

6.     Successors. This Agreement shall be binding on, andinure to the benefit of, the LP and its successors and assigns and any Personacquiring, whether by merger, consolidation, purchase of all or substantiallyall of the LP’s assets and business, or otherwise without further action by theExecutive; provided however, that Executive hereby agrees to execute an acknowledgementof assignment if requested to do so by the successor, assign or acquiring person.

 

7.     Nonalienation.  Theinterests of the Executive under this Agreement are not subject to the claimsof his creditors, other than the LP, and may not otherwise be voluntarily or involuntarilyassigned, alienated or encumbered except for any benefits hereunder that inureto the Executive’s estate upon his death.

 

8.     Waiver of Breach The waiver by either the LP or theExecutive of a breach of any provision of this Agreement shall not operate as,or be deemed a waiver of, any subsequent breach by either the LP or theExecutive.

 

9.     Notice. Any notice to be given hereunder by a partyhereto shall be in writing and shall be deemed to have been given when receivedor, when deposited in the U.S. mail, certified or registered mail, postageprepaid:

 

(a)           If to the Executive, at the address set forth in thepreamble hereto immediately following the Executive’s name.

 

(b)           If to the LP, to it at:

 

Detention ContractingGroup, Ltd.

Attention: Don Can andthe Board of Directors

12903 Delivery Drive

San Antonio, Texas 78297

Tel: 512.495.5245

 

10.   Amendment. This Agreement may be amended or canceledby mutual agreement of the parties in writing without the consent of any otherPerson and no Person, other than the parties hereto (and the Executive’s estateupon his death), shall have any rights under or interest in this Agreement orthe subject matter hereof. The parties hereby agree that no oral conversationsshall be deemed to be a modification of this Agreement and neither party shall assertthe same.

 

11.   Entire Agreement. This Agreement contains the entire understanding of the parties heretowith respect to the subject matter contained herein and supersedes all prior agreementsand understandings, oral and written, with respect thereto, including, but notlimited to, the Former Arrangement.

 

12.   Applicable Law.  The provisions of this Agreement shall beconstrued in accordance with the laws of the State of Texas.

 

13.   WAIVER OF JURY TRIAL. THE EXECUTIVE AND THE LP EXPRESSLY WAIVE ANY RIGHT EITHER MAY HAVETO A JURY TRIAL CONCERNING ANY CIVIL ACTION THAT MAY ARISE FROM THISAGREEMENT, OR THE RELATIONSHIP OF THE PARTIES HERETO.

 

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14.   Termination.   Allof the provisions of this Agreement shall terminate after the expiration of theEmployment Period, except that Subparagraph 4(c)(i) shall surviveindefinitely and Subparagraph 4(c)(ii) shall terminate upon the expirationof the Non-Competition Period.

 

IN WITNESS WHEREOF, theExecutive and the LP have executed this Employment Agreement as of the day andyear first above written.

 
|   | “EXECUTIVE”                                          |
|--------|----------------------------------------------------------------|
|   |                                                           |
|   | SAM YOUNGBLOOD                                                 |
|   |                                                           |
|   | /Sam Youngblood/                                               |
|   |                                                           |
|   |         “LP” |
|   |                                                           |
|   | Detention Contracting  Group, Ltd.                             |
|   | By its General Partner                                         |
|   | ISI Detention Contracting  Group, Inc.                    |
|   | A Texas Corporation                                            |
|   |                                                           |
|   |                                                           |
|   | By:                                                            | /Don Carr/ |
|   | Name:                                                          |  Don Carr |
|   | Title:                                                         |  President |
|        |                                                                |  |  |  |

 

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