**Exhibit 10.55**

 

MARK MCDONALD EMPLOYMENTAGREEMENT

 

This EMPLOYMENT AGREEMENT(the “Agreement”) is entered into on October 19, 2004 (“the Effective Date”),by and between Metroplex Control Systems, Inc., a Texas corporation (the “Corporation~”),and Mr. Mark McDonald, an individual residing at 24410 Middle Fork, SanAntonio, Texas 78258 (the “Executive”) under the following terms and conditions:

 

RECITALS:

 

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

 

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 III, 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 (“ISI Delaware”) the ultimate parent corporation of theCorporation and all the shareholders of ISI Delaware, which provides for the completionof a loan to ISI Delaware and the delivery to the Investor of Warrants forcapital stock in ISI Delaware; and

 

WHEREAS, the Corporationdesires to continue to employ the Executive in the capacity hereinafter stated,and the Executive desires to continue in the employ of the Corporation in such capacityfor the period 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 Corporation and the Executive as follows:

 

1.               Employment Period.The Corporation hereby agrees to continue to employ the Executive as itsPresident, and in such capacity, the Executive agrees to provide services tothe Corporation for the period beginning on the Effective Date and ending onthe fifth anniversary of the Effective Date (the “Employment Period”).  The Employment Period shill automatically renewuntil the sixth anniversary of the Effective Date, unless the Corporation orthe Executive gives written notice to the contrary to the Executive or theCorporation, respectively, at least sixty (60) days prior to the fifthanniversary of the Effective Date.

 

2.               Performance ofDuties.

 

(a)           TheExecutive agrees that during the Employment Period, while he is employed by theCorporation, he shall devote his full time, energies and talents exclusively toserving in the capacity of President of the Corporation in the best interestsof the Corporation, and to perform the duties assigned to him by the Board ofDirectors of the Corporation (the “Board”) faithfully, efficiently and in aprofessional manner.

 

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

 

(i)    serveas, be a consultant to or employee, officer, manager, agent, or director of,any corporation, partnership or other entity other than the Corporation (otherthan civic, charitable, or other public service organizations) if, asdetermined at the reasonable discretion

 

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of the Board, suchservice, employment, or position would have a material adverse effect upon theability of the Executive to perform his duties hereunder; or

 

(ii)          have more than a fivepercent (5%) ownership interest in any enterprise other than the Corporation ifsuch ownership interest would have a material adverse effect upon the abilityof the Executive to perform his duties hereunder.

 

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

 

(a)                                  TheExecutive shall receive, for each consecutive twelve (12) month periodbeginning on the Effective Date and each anniversary thereof, a rate of salarythat is not less than $125,000.00 per year (“Annual Salary”).

 

(b)                                 TheExecutive shall be eligible to receive incentive compensation payments asfollows:

 

As an Annual Bonus, inaddition to the Annual Salary described above, the Executive shall be paid, onor before March 15 of each year the sum of Five Percent (5%) of the TotalGross Margin of Metroplex Control Systems Detention, that exceeds$1,500,000.00, for the period of January through December of thepreceding year (less any advances paid to Executive upon said Annual Bonus).

 

(c)                                  Inaddition to other amounts set forth herein, the Corporation shall pay to Executivea gross advance on his Annual Bonus of $19,000.00, to be paid in approximatelyequal amounts in each pay period subject to normal tax withholding.

 

(d)                                 Duringthe Employment Period the Executive’s rate of Annual Salary and amount ofAnnual Bonus shall be reviewed by the Board on or before each anniversary ofthe Commencement Date to determine whether an increase in the Executive’scompensation is appropriate. In addition to the annual review by the Board setforth herein, the Executive’s rate of Annual Salary shall be annually adjustedto be with equivalent executive positions within the Corporation.

 

(e)                                  TheExecutive shall be a participant in executive benefit plans maintained by theCorporation on substantially the same terms and conditions as other seniorexecutives of the Corporation.  Saidbenefit plan shall, at a minimum, include full payment by the Corporation ofall health/medical care insurance coverage for the Executive and all ofExecutive’s dependents, including his wife and children. The Corporation, shall,to the extent permitted by law, create a medical savings plan, permitting the Executiveto deduct from income up to the maximum amount permitted annually, all of whichsum is to be applied to the payment of medical expenses, and any unused portionshall annually be rolled forward for use the following year.

 

(f)                                    TheExecutive shall be reimbursed by the Corporation for all reasonable business,promotional, travel and entertainment expenses incurred or paid by theExecutive during the Employment Period in the performance of his services underthis Employment Agreement: (i) provided that such

 

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expenses constitutebusiness deductions from taxable income for the Corporation and are excludablefrom taxable income to the Executive under the governing laws and regu1atiot~of the Internal Revenue Code; and (ii) to the extent that such expenses donot exceed the amounts allocable for such expenses in budgets that are approvedfrom time to time by the Corporation In order that the Corporation reimbursesthe Executive for such allowable expenses, the Executive shall furnish to the Corporation,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 Corporation may from time to timereasonably request. As used herein the term “Internal Revenue Code” shall meanInternal Revenue Code of 1986, as now or hereafter amended, and the regulationsand revenue rulings and procedures issued pursuant thereto from time to time.

 

(g)                                 TheCorporation shall, at its sole cost and expense for both hardware and usage,provide the Executive and his spouse with cell phones.

 

(h)                                 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.

 

4.               RestrictiveCovenants. The Executive acknowledges and agrees that:

 

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

 

(b)                                 theExecutive’s work for the Corporation has brought him and will continue to bringhim into close contact with confidential information of the Corporation and itscustomers; and

 

(c)                                  theagreements and covenants contained in this Paragraph 4 are essential to protectthe business interests of the Corporation and that the Corporation will notenter into this Agreement but for such agreements and covenants. Accordingly,the Executive covenants and agrees to the following:

 

(1)   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 Corporation terminates for any reason or no reason,all nonpublic information concerning the Corporation and its affiliates thatwas acquired by, or disclosed to, the Executive during the course of hisemployment by fir Corporation or any of its subsidiaries or affiliates,including information relating to customers (including, without limitation,credit history, repayment history, financial information and financialstatements), costs, and operations, financial data aid plans, whether past,current or planned and not to disclose the same, either directly or indirectly,to any other person, firm or business entity, or to use it in any way; provided,however, that the provisions 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);

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(B) was disclosed to theExecutive by a third party not subject to any duty of confidentiality to theCorporation prior to its disclosure to the Executive; or (C) is disclosedby the Executive in the ordinary course of the Corporations 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 Corporation The Executive farther agreesthat he shall not make any statement or disclosure that (1) would beprohibited by applicable Federal or state laws, or (2) is intended to bedetrimental to the Corporation or any of its subsidiaries or affiliates.

 

(ii)          Non-Competition.

 

(A)      The Executive agrees thatfor the period commencing on the Effective Date and ending on the second anniversaryof the date on which the Executive’s employment with the Corporation isterminated for any reason or no reason (the “Non-Competition Period”), theExecutive shall not directly or indirectly, alone or as a partner, officer,director, manager, employee, consultant, agent, independent contractor, memberor stockholder of any person or entity (“Person”), engage in any businessactivity in North America that is directly or indirectly in competition with theBusiness of the Corporation or which is directly or indirectly detrimental tothe Business or business plans of the Corporation or its subsidiaries oraffiliates; provided, however, that the record or beneficial ownership by the Executiveof Five Percent (5%) or less of the outstanding publicly traded capital stockof any company for investment purposes shall not be deemed to be in violation ofthis Subparagraph4(c)(ii) so long as the Executive is not an officer,director, manager, employee or consultant of such Person. The “Business” of theCorporation shall mean the actual or intended business of the Corporation andits subsidiaries and affiliates during the Employment Period and as of the datethe Executive leaves the employment of the Corporation for any reason or noreason As of the date hereof~ the Business of the Corporation 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 securityalarm industry; 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 inassociation with others: (1) employ or solicit for employment or endeavorin any way to entice away from employment with the Corporation or itsaffiliates (a) any current employee of the Corporation or its affiliatesor (b) any Person who was employed by the Corporation or its affiliates inany preceding twelve (12) month period; (2) solicit, induce or influenceany supplier, customer, agent, consultant or other Person that has a businessrelationship with the Corporation to discontinue, reduce or modify suchrelationship with the

 

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Corporation nor (3) solicitor enter into negotiations with any of the Corporation’s identified potentialacquisition candidates.

 

(B)        The Employee understandsthat the foregoing restrictions may limit his ability to engage in a businesssimilar to the Corporation’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 theCorporation pursuant to this Agreement.

 

(iii)  Remedies. If the Executive breaches, or threatensto commit a breach of any of the provisions contained in Subparagraphs 4(c)(i) and4(c)(ii) (the “Restrictive Covenants”), the Corporation shall have thefollowing rights and remedies, each of which shall be enforceable, and each ofwhich is in addition to, and not in lieu of, any other rights and remediesavailable to the Corporation at law or in equity.

 

(A)            TheExecutive shall account for and pay over to the Corporation all compensation,profits, and other benefits which inure to the Executive’s benefit which arederived or received by the Executive or any person or business entity controlledby the Executive, resulting from any action or transactions constituting abreach of any of the Restrictive 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 Corporation shall have noadequate remedy at law and shall therefore be entitled to enforce each suchprovision by temporary or permanent injunction or mandatory relief obtained inany court of competent jurisdiction without the necessity of proving damages,posting any bond or other security, and without prejudice to any other rightsand remedies that may be available at law or in equity, and the Corporationshall also be entitled to recover its attorneys’ fees and costs incurred toenforce any of the Restrictive Covenants from the Executive.

 

(C)            Notwithstandingany other provisions hereof, Executive irrevocably acknowledges the standingand right of 1Sf Delaware to enforce the Restrictive Covenants, and Executiveintentionally and knowingly waives and relinquishes any and all right to objectto any action by ISI Delaware to enforce the Restrictive Covenants set forth herein.

 

(iv)  Severability.  If any of the Restrictive Covenants, or anypart 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

 

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of the RestrictiveCovenants, or any part thereof, are held to be unenforceable because of theduration of such provision or the area covered thereby, the parties heretoagree that the court making such determination shall have the power to reducethe duration and/or area of such provision and, in its reduced form, such provisionshall then be enforceable.

 

(v)   Proprietary Rights.  The Executive acknowledges and agrees that allknow-how, documents, reports, plans, proposals, marketing and sales plans,client lists, client files, and any materials made by the Executive or by theCorporation are the property of the Corporation and shall not be used by theExecutive in any way adverse to the Corporation’s interests. The Executiveshall not deliver, reproduce, or in any way allow such documents or things tobe delivered or used by any third party without specific direction or consentof the Board.  The Executive herebyassigns to the Corporation any rights that he may have in any such trade secretor proprietary information.

 

5.     Termination and Compensation Due Upon Termination.  Except as otherwise provided under theexecutive benefit plans (as in effect on the date hereof) maintained by the Corporationin which the Executive participates in accordance with Subparagraph 3(c), the Executive’sright to compensation for periods after the date the Executive’s employmentwith the Corporation terminates shall be determined in accordance with thefollowing:

 

(a)   Termination Without Cause. In the event theCorporation terminates the Executive’s employment under this Agreement withoutCause, the Corporation shall pay the Executive any compensation and benefitsthe Corporation owes to the Executive through the effective date of termination.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 Corporation, be conclusively deemed to have received anautomatic, complete and final release, from any duty or obligation to complywith the Restrictive Covenants in Subparagraph 4(c)(ii) above, immediatelyafter the due date of the final payment of salary pursuant to Subparagraph5(a)(i); provided, however, the Corporation 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)   VoluntaryResignation.  The Executive may terminatehis employment with the Corporation, and any other entity owned or controlledin whole or in part by ISI Delaware, for any reason (or no reason at all) atany time by giving the Corporation ninety (90) days prior written notice ofvoluntary resignation; provided, however, that the Corporation may decide thatthe Executive’s voluntary resignation be effective immediately upon notice of suchresignation. The Corporation shall have no obligation to make

 

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payments to the Executivein accordance with the provisions of Paragraph 3 for periods after the date onwhich the Executive’s employment with the Corporation terminates due to theExecutive’s voluntary resignation. The Restrictive Covenants shall continue ineffect after such voluntary resignation.

 

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 materiallyreduced from those described in Paragraph 2 above;

 

(ii)   the relocation of the Executive’s officeoutside Bexar County, Texas without the Executive’s consent; or

 

(iii)  a material breach of any of the provisions ofParagraph 3.

 

(c)   Terminationfor Cause. The Corporation shall have no obligation to make payments to theExecutive in accordance with the provisions of Paragraph 3 or otherwise forperiods after the Executive’s employment with the Corporation is terminated onaccount of the Executive’s discharge for Cause. For purposes of this Paragraph5, the Executive shall be considered terminated for “Cause” if he is dischargedby the Corporation on account of the occurrence of one or more of the followingevents:

 

(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)  theCorporation is directed by regulatory or governmental authorities to terminatethe employment of the Executive or the Executive engages in activities thatcause actions to be taken by regulatory or governmental authorities that have amaterial adverse effect on the Corporation;

 

(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 Corporation, or is illegal

 

(vi)      anyevent of egregious misconduct involving serious moral turpitude to the extentthat, in the reasonable judgment of the Board, the Executive’s credibility andreputation no longer conform to the standard of the Corporation’s executives;or

 

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(vii) the Executive commits an act of fraud againstthe Corporation~ violates a duty of loyalty to the Corporation, or violates Subparagraph2(a).

 

(d)   Disability.The Corporation shall have no obligation to make payments to the Executive inaccordance with the provisions of Paragraph 3 for periods after the date of theExecutive’s employment with the Corporation terminates on account ofdisability, except payments due and owing through the effective date oftermination. For purposes of this Subparagraph 5(d), determination of whetherthe Executive is disabled shall be determined in accordance with theCorporation’s long term disability plan (if any) and applicable law.

 

(e)   Death.The Corporation shall have no obligation to make payments to the Executive inaccordance with the provisions of Paragraph 3 for periods after the date of theExecutive’s death, except payments due and owing as of such date.

 

(f)    Termination.A majority of the Board, including the Investor Designee (as defined in thePurchase Agreement), shall vote or consent with respect to any decision toterminate the Executive for any reason or no reason.

 

6.     Successors. This Agreement shall be binding on, and inure to thebenefit of, the Corporation and its successors and assigns and any Personacquiring, whether by merger, consolidation, purchase of all or substantiallyall of the Corporation’s assets and business, or otherwise without furtheraction by the Executive; provided however, that Executive hereby agrees toexecute an acknowledgement of assignment if requested to do so by thesuccessor, assign or acquiring person.

 

7.     Nonalienation. The interests of the Executive under thisAgreement are not subject to the claims of his creditors, other than theCorporation, and may not otherwise be voluntarily or involuntarily assigned,alienated or encumbered except for any benefits hereunder that inure to theExecutive’s estate upon his death.

 

8.     Waiver of Breach The waiver by either the Corporation 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 Corporation orthe Executive.

 

9.     Notice. Any notice to be given hereunder by a party hereto shallbe in writing and shall be deemed to have been given when received or, whendeposited in the U.S. mail, certified or registered mail, postage prepaid:

 

(a)   If to the Executive, at the address set forthin the preamble. hereto immediately following the Executive’s name.

 

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

 

Metroplex Control Systems, Inc.Attention: Sam Youngblood12903 Delivery DriveSan Antonio, Texas 78247Tel: (210) 495-5245

 

10.   Amendment. This Agreement may be amended orcanceled by mutual agreement of the parties in writing without the consent ofany other Person and no Person, other than the parties hereto (and theExecutive’s estate upon his death), shall have any rights under or interest

 

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in this Agreement or thesubject matter hereof The parties hereby agree that no oral conversations shallbe deemed to be a modification of this Agreement and neither party shall assertthe same.

 

11.   Entire Agreement.  This Agreement contains the entireunderstanding of the parties hereto with respect to the subject mattercontained herein and supersedes all prior agreements and understandings, oraland written, with respect thereto, including, but not limited to, the FormerArrangement.

 

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 THECORPORATION EXPRESSLY WAIVE ANY RIGHT EITHER MAY HAVE TO A JURY TRIAL CONCERNINGANY CIVIL ACTION THAT MAY ARISE FROM THIS AGREEMENT, OR THE RELATIONSHIPOF THE PARTIES HERETO.

 

14.   Termination. All of the provisions of thisAgreement shall terminate after the expiration of the Employment Period, exceptthat Subparagraph 4(c)(i) shall survive indefinitely and Subparagraph 4(c)(ii) shallterminate upon the expiration of the Non-Competition Period.

 

IN WITNESS WHEREOF, theExecutive and the Corporation have executed this Employment Agreement as of theday and year first above written.

 
|   | “Executive”           |
|--------|---------------------------------|
|   |                            |
|   | MARK MCDONALD                   |
|   |                            |
|   | /Mark McDonald/                 |
|   | Mark  McDonald                  |
|   |                            |
|   | Metroplex Control  Systems, Inc |
|   |                            |
|   |                            |
|   | By:                             | /Sam Youngblood/ |
|   | Name:  Sam Youngblood      |   |
|   | Title: CEO                      |
|        |                                 |  |  |  |

 

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