**Exhibit 10.53**

 

DON CARREMPLOYMENT 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 Don Carr, whose mailing address is 1711 Greystone Ridge, San Antonio,Texas 78258 (the “Executive”) under the following terms and conditions:

 

RECITALS:

 

WHEREAS, the Executiveand the LP are currently operating under an at-will employment arrangement (the“Former 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 Ill, L.P. (the “Investor”), of that certain Loan Agreement, dated as of theEffective Date, by and among the Investor, ISI Detention Contracting Group, Inc.,a Delaware Corporation (“1ST Delaware”) the ultimate parent Corporation of theLP and all the shareholders of 1ST Delaware, which provides for the completionof a loan to 1ST Delaware and the delivery to the Investor of Warrants forcapital stock in 1ST 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 to employ the Executive as the President andTreasurer of the General Partner of the LP, and the Executive, in such capacities,agrees to provide services to the LP for the period beginning on the EffectiveDate and ending on the fifth anniversary of the Effective Date (the “EmploymentPeriod”). The Employment Period shall automatically renew until the sixthanniversary of the Effective Date, unless the LP or the Executive gives writtennotice to the contrary to the Executive or the LP, respectively, at least sixty(60) days prior to the fifth anniversary of the Effective Date.

 

2.               Performance ofDuties.

 

(a)          TheExecutive agrees that during the Employment Period, while he is employed by theLP, he shall devote his full time, energies and talents exclusively to servingin the capacities of President and Treasurer of the General Partner of the LPin the best interests of the LP, and to perform the duties assigned to him bythe Board of Directors of the General Partner of the LP (the “Board”)faithfully, efficiently and in a professional manner.

 

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(b)         Subjectto Section 2(c) below, he Executive shall not, without prior writtenconsent from the Board:

 

(i)            serve as,be a consultant to or employee, officer, manager, agent, or director of, anycorporation, partnership or other entity other than the LP (other than civic,charitable, or other public service organizations) if, as determined at thereasonable discretion of the Board, such service, employment, or position wouldhave a material adverse effect upon the ability of the Executive to perform hisduties hereunder; or

 

(ii)           have morethan a five percent (5%) ownership interest in any enterprise other than the LPif such ownership interest would have a material adverse effect upon theability of the Executive to perform his duties hereunder.

 

(c)          Duringand after the Employment Period, the Executive may own all or any part ofISI*MCS, Ltd., a Texas Limited Partnership, as a limited partner, and all orany part of ISI*MCS GP, Inc. or any other General Partner of ISI*MCS,Ltd., and may participate in, manage, oversee and conduct any and all businessaffairs of ISI*MCS, Ltd. as an officer, director and/or shareholder of ISI*MCSGP, Inc. or any other General Partner of ISI*MCS, Ltd., and none of suchactivities shall be deemed to violate any duty of trust, confidentiality ornon-usurpation of corporate opportunity, nor shall they violate any term of Section 2of this Agreement or any other term or Restrictive Covenant of this Agreement.

 

(d)         Notwithstandinganything to the contrary contained herein, any vote or consent of the Boardrequired or permitted hereunder shall exclude any vote by the Executive in hiscapacity as a member of the Board.

 

3.               CompensationSubject to the terms and conditions of this Employment Agreement, during theEmployment Period, while he is employed by the LP, the Executive shall becompensated by the LP for his services as follows:

 

(a)          TheExecutive shall receive, for each consecutive twelve (12) month periodbeginning on the Effective Date and on each anniversary thereof, a rate ofsalary that is not less than $235,000.00 per year, payable in substantiallyequal monthly or more frequent installments and subject to customary tax withholding.During the Employment Period the Executive’s annual salary rate shall beincreased by the Board, on or before each anniversary of the Effective Date, byan amount of at least the amount of change in the Consumer Price Index for therelevant region, during the immediately preceding year, when compared to thesame index for the same region for the calendar year two years prior.

 

(b)         TheExecutive shall be eligible to receive incentive compensation payments inaccordance with the [Bonus Plan] of the LP or any other entity owned orcontrolled in whole or in part by 1ST Delaware.

 

(c)          TheExecutive shall be eligible to participate in all executive benefit plans maintainedby the LP or any other entity owned or controlled in whole or in part by ISIDelaware on substantially the same terms and conditions as other seniorexecutives of the LP or any other entity owned or controlled in whole or in partby 1ST Delaware.

 

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(d)         TheExecutive shall be reimbursed by the LP for all reasonable business, promotional,travel and entertainment expenses incurred or paid by the Executive during theEmployment Period in the performance of his services under this EmploymentAgreement: (i) provided that such expenses constitute business deductionsfrom taxable income for the LP and are excludable from taxable income to theExecutive under the governing laws and regulations of the Internal RevenueCode; and (ii) to the extent that such expenses do not exceed the amountsallocable for such expenses in budgets that are approved from time to time bythe Board. In order that the LP reimburse the Executive for such allowableexpenses, the Executive shall furnish to the LP, in a timely fashion, theappropriate documentation required by the Internal Revenue Code in connectionwith such expenses and shall furnish such other documentation and accounting asthe LP may from time to time reasonably request. As used herein the term “InternalRevenue Code” shall mean Internal Revenue Code of 1986, as now or hereafteramended, and the regulations and revenue rulings and procedures issued pursuantthereto from time to time.

 

4.               RestrictiveCovenants. The Executive acknowledges and agrees that:

 

(a)          theExecutive has a major responsibility for the operation, development, and growthof the LP’s business;

 

(b)         theExecutive’s work for the LP has brought him and will continue to bring him intoclose contact with confidential information of the LP and its customers; and

 

(c)          theagreements and covenants contained in this Paragraph 4 are essential to protectthe business interests of the LP and that the LP will not enter into thisAgreement but for such agreements and covenants. Accordingly, the Executivecovenants and agrees to the following:

 

(i)            ConfidentialInformation. Except as may be required by the lawful order of a court or agencyof competent jurisdiction, the Executive agrees to keep secret andconfidential, both during the Employment Period and indefinitely after theExecutive’s employment with the LP terminates for any reason or no reason, all non-publicinformation concerning the LP, ISI Delaware, and their respective subsidiariesand affiliates that was acquired by, or disclosed to, the Executive during thecourse of his employment by the LP or any of its subsidiaries or affiliates,including information relating to customers (including, without limitation,credit history, repayment history, financial information and financial statements),costs, and operations, financial data and plans, whether past, current orplanned and not to disclose the same, either directly or indirectly, to anyother person, firm or business entity, or to use it in any way; provided,however, that the provision of this Subparagraph 4(c)(i) shall not applyto information that: (A) was, is now, or becomes generally available tothe public (but not as a result of a breach of any duty of confidentiality bywhich the Executive is bound); (B) was disclosed to the Executive by athird party not subject to any duty of confidentiality to the LP prior to its disclosureto the Executive; or (C) is disclosed by the Executive in 

 

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the ordinarycourse of the LP’s business as a proper part of his employment in connectionwith communications with customers, vendors and other proper parties, providedthat it is for a proper business purpose solely for the benefit of the LP. TheExecutive further agrees that he shall not make any statement or disclosure that(1) would be prohibited by applicable Federal or state laws, or (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 periodcommencing on the Effective Date and ending on the second anniversary of thedate on which the Executive’s employment with the LP is terminated for anyreason or no reason (the “Non-Competition Period”), the Executive shall not directlyor indirectly, 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 LP is providingdesign, engineering, procurement, installation, maintenance and related goodsand services to: (x) the detention facilities construction and renovationindustry; (y) the industrial/commercial controls and fire and security alarmindustry; and (z) the access control and security observation industry,and other related businesses. The Executive further agrees that during theNon-Competition Period, he shall not in any capacity, either separately or in associationwith others: (1) employ or solicit for employment or endeavor in any wayto entice away from employment with the LP or its affiliates (a) anycurrent employee of the LP or its affiliates or (b) any Person who wasemployed by the LP or its affiliates in any preceding 12-month period; (2) solicit,induce or influence any supplier, customer, agent, consultant or other Personthat has a business relationship with the LP to discontinue, reduce or modifysuch relationship with the LP; nor (3) solicit or enter into negotiationswith any of the LP `S identified potential acquisition candidates.

 

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(B)   The Employeeunderstands that the foregoing restrictions may limit his ability to engage ina business similar to the LP’s Business for the duration of the Non-CompetitionPeriod, but acknowledges that he will receive sufficiently high remunerationand other benefits to justify such restriction as an employee of the LPpursuant to this Agreement.

 

(iii)          Remedies.If the Executive breaches, or threatens to commit a breach of any of theprovisions contained in Subparagraphs 4(c)(i) and 4(c)(ii) (the “RestrictiveCovenants”), the LP shall have the following rights and remedies, each of whichshall be enforceable, and each of which is in addition to, and not in lieu of,any other rights and remedies available to the LP at law or in equity.

 

(A)  The Executive shallaccount for and pay over to the LP all compensation, profits, and otherbenefits which inure to the Executive’s benefit which are derived or receivedby the Executive or any person or business entity controlled by the Executive,resulting from any action or transactions constituting a breach of any of theRestrictive Covenants.

 

(B)  Notwithstandingthe provisions of Subparagraph 4(c)(iii)(A) above, the Executiveacknowledges and agrees that in the event of a violation or threatenedviolation 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 anyother provisions hereof, Executive irrevocably acknowledges the standing andright of 151 Delaware to enforce the Restrictive Covenants, and Executiveintentionally and knowingly waives and relinquishes any and all right to objectto any action by 1ST Delaware to enforce the Restrictive Covenants set forth herein.

 

(iv)          Severability.If any of the Restrictive Covenants, or any part thereof, are held to beinvalid or unenforceable, the same shall not affect the remainder of thecovenant or covenants, which shall be given full effect, without regard to theinvalid or unenforceable portions. Without limiting the generality of theforegoing, if any of the Restrictive Covenants, or any part thereof, are heldto be unenforceable because of the duration of such provision or the area coveredthereby, the parties hereto agree that the court making such determinationshall have the power to reduce the duration and/or area of such provision and,in its reduced form, such 

 

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provision shall then be enforceable.

 

(v)           ProprietaryRights. The Executive acknowledges and agrees that all know-how, documents,reports, plans, proposals, marketing and sales plans, client lists, clientfiles, and any materials made by the Executive or by the LP are the property ofthe LP and shall not be used by the Executive in any way adverse to the LP’sinterests. The Executive shall not deliver, reproduce, or in any way allow suchdocuments or things to be delivered or used by any third party without specificdirection or consent of the Board. The Executive hereby assigns to the LP anyrights that he may have in any such trade secret or proprietary information.

 

5.                    Terminationand Compensation Due upon Termination Except as otherwise provided under theexecutive benefit plans (as in effect on the date hereof) maintained by the LP inwhich the Executive participates in accordance with Subparagraph 3(c), theExecutive’s right to compensation for periods after the date the Executive’semployment with the LP terminates shall be determined in accordance with thefollowing:

 

(a)          TerminationWithout Cause. In the event the LP terminates the Executive’s employment underthis Agreement without Cause, the LP shall pay the Executive any compensationand benefits the LP owes to the Executive through the effective date oftermination. Additionally, the Executive shall:

 

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

 

(ii)           receivepayment of any incentive compensation payments that otherwise would have beenpayable to the Executive under Subparagraph 3(b) through the effectivedate of termination.

 

(iii)          withoutfurther action of the LP, be conclusively deemed to have received an automatic,complete and final release, from any duty or obligation to comply with theRestrictive Covenants in Subparagraph 4(c)(ii) above, immediately afterthe due date of the final payment of salary pursuant to Subparagraph 5(a)(i);provided, however, the LP may elect to continue such Restrictive Covenants andshall have the right to enforce same upon payment to the Company of additionalseverance payments including salary prorated over the extension period.

 

(b)   Voluntary Resignation. TheExecutive may terminate his employment with the LP, and any other entity ownedor controlled in whole or in part by 1ST Delaware, for any reason (or no reasonat all) at any time by giving the LP ninety (90) days prior written notice ofvoluntary resignation; provided, however, that the LP may decide that theExecutive’s voluntary resignation be effective immediately upon notice of suchresignation. The LP shall have no obligation to make payments to the Executivein accordance with the provisions of Paragraph 3 for periods after the date on whichthe Executive’s employment with the LP terminates due to the Executive’svoluntary resignation.     TheRestrictive Covenants shall continue in effect after such voluntaryresignation.

 

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However, forpurposes of this Paragraph 5, if the Executive resigns following the occurrenceof one of the following events, the Executive shall be deemed to be terminatedwithout Cause in accordance with Subparagraph 5(a) above:

 

(i)            theExecutive’s duties are materially reduced from those described in Paragraph 2above;

 

(ii)           therelocation of the Executive’s office outside Bexar County, Texas without theExecutive’s consent; or

 

(iii)          amaterial breach of any of the provisions of Paragraph 3.

 

(c)   Terminationfor Cause. The LP shall have no obligation to make payments to the Executive inaccordance with the provisions of Paragraph 3 or otherwise for periods afterthe Executive’s employment with the LP is terminated on account of theExecutive’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)            theExecutive becomes habitually addicted to drugs or alcohol;

 

(ii)           theExecutive discloses confidential information in violation of Subparagraph 4(c)(i) orengages in any action in violation of Subparagraph 4(c)(ii);

 

(iii)          theLP is directed by regulatory or governmental authorities to terminate theemployment of the Executive or the Executive engages in activities that causeactions to be taken by regulatory or governmental authorities that have amaterial adverse effect on the LP;

 

(iv)          theExecutive is indicted of a felony crime (other than a felony resulting from aminor traffic violation);

 

(v)           theExecutive flagrantly disregards his duties under this Employment Agreementafter (A) written notice has been given to the Executive by the Board thatit views the Executive to be flagrantly disregarding his duties under thisAgreement and (B) the Executive has been given a period of ten (10) daysafter such notice to cure such misconduct. However, no notice or cure period shallbe required if Executive’s disregard of his duties has materially and adverselyaffected the LP, or is illegal

 

(vi)          any eventof egregious misconduct involving serious moral turpitude to the extent that,in the reasonable judgment of the Board, the Executive’s credibility andreputation no longer conform to the standard of the LP’s executives; or

 

(vii)         theExecutive commits an act of fraud against the LP, violates a duty of loyalty tothe LP, or violates Subparagraph 2(a).

 

(d)   Disability. The LPshall have no obligation to make payments to the Executive in accordance withthe provisions of Paragraph 3 for periods after the date of the Executive’semployment with the LP terminates on 

 

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account ofdisability, except payments due and owing through the effective date oftermination.   For purposes of thisSubparagraph 5(d), determination of whether the Executive is disabled shall bedetermined in accordance with the LP’s long term disability plan (if any) andapplicable law.

 

(e)   Death. The LP shall have noobligation to make payments to the Executive n accordance with the provisionsof Paragraph 3 for periods after the date of the Executive’s death, exceptpayments due and owing as of such date.

 

(f)   Termination. A majority of theBoard, including the Investor Designee (as deemed in the Purchase Agreement),shall vote or consent with respect to any decision to terminate the Executivefor any reason or no reason.

 

6.                    Successors.This Agreement shall be binding on, and inure to the benefit of, the LP and itssuccessors and assigns and any Person acquiring, whether by merger,consolidation, purchase of all or substantially all of the LP’s assets andbusiness, or otherwise without further action by the Executive; providedhowever, that Executive hereby agrees to execute an acknowledgement of assignmentif requested to do so by the successor, assign or acquiring person.

 

7.                    NonalienationThe interests of the Executive under this Agreement are not subject to theclaims of his creditors, other than the LP, and may not otherwise bevoluntarily or involuntarily assigned, alienated or encumbered except for anybenefits hereunder that inure to the Executive’s estate upon his death.

 

8.                    Waiver ofBreach The waiver by either the LP or the Executive of a breach of anyprovision of this Agreement shall not operate as, or be deemed a waiver of, anysubsequent breach by either the LP or the Executive.

 

9.                    Notice. Anynotice to be given hereunder by a party hereto shall be in writing and shall bedeemed to have been given when received or, when deposited in the U.S. mail,certified or registered mail, postage prepaid:

 

(a)   If to the Executive, at theaddress set forth in the preamble hereto immediately following the Executive’sname.

 

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

 

DetentionContracting Group, Ltd.

Attention: Don Carrand the Board of Directors

12903 DeliveryDrive

San Antonio, Texas78247

Tel: (210)495-5245

 

10.              Amendment. ThisAgreement may be amended or canceled by mutual agreement of the parties inwriting without the consent of any other Person and no Person, other than the partieshereto (and the Executive’s estate upon his death), shall have any rights underor interest in this Agreement or the subject matter hereof. The parties herebyagree that no oral conversations shall be deemed to be a modification of thisAgreement and neither party shall assert the same.

 

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11.              Entire Agreement.This Agreement contains the entire understanding of the parties hereto withrespect 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. Theprovisions of this Agreement shall be construed in accordance with the laws ofthe State of Texas.

 

13.              WAIVER OF JURY TRIALTHE EXECUTIVE AND THE LP EXPRESSLY WAIVE ANY RIGHT EITHER MAY HAVE TO AJURY TRIAL CONCERNING ANY CIVIL ACTION THAT MAY ARISE FROM THIS AGREEMENT,OR THE RELATIONSHIP OF THE PARTIES HERETO.

 

14.              Termination All ofthe 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”                 |
|--------|---------------------------------------------|
|   |                                        |
|   | DON CARR                                    |
|   |                                        |
|   |                                        |
|   | /Don Carr/                                  |
|   |                                        |
|   |                                        |
|   | “LP”                              |
|   |                                        |
|   | Detention Contracting  Group, Ltd.          |
|   | By its General Partner                      |
|   | ISI Detention  Contracting Group, Inc. |
|   | A Texas Corporation                         |
|   |                                        |
|   |                                        |
|   | By:                                         | /Sam Youngblood/ |
|   | Title: Vice President                       |

 

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