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                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is entered into effective as of
the 3rd day of March 2000 (the "Effective Date") by and between T-NETIX, Inc., a
Colorado corporation ("T-NETIX") , and Thomas E. Larkin ("Employee").

         WHEREAS, T-NETIX desires to continue to have the benefits of Employee's
knowledge and experience as a full time senior executive without distraction by
employment-related uncertainties and considers such employment a vital element
to protecting and enhancing the best interests of T-NETIX, and its subsidiaries
and shareholders, and Employee desires to continue to be employed full time with
T-NETIX; and

         WHEREAS, T-NETIX and Employee desire to enter into an agreement under
which Employee will be employed by T-NETIX for a two year term commencing on the
Effective Date,

         NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the parties agree as follows:

         1. TERM. T-NETIX hereby agrees to employ Employee for a two year term
commencing on the Effective Date and ending on the second anniversary date of
the Effective Date, unless earlier terminated as provided in this Agreement. The
term of this Agreement may only be extended by the mutual agreement of the
parties hereto.

         2. DUTIES. Employee shall serve as the President of T-NETIX and shall
report to the Chief Executive Officer of T-NETIX, and shall assume such other
duties as the Chief Executive Officer or Board of Directors of T-NETIX (the
"Board") may from time to time prescribe consistent with duties of an executive
officer of a technology company of such size as T-NETIX, including such
positions with and duties for T-NETIX's subsidiaries as may be assigned from
time to time. Employee agrees to devote substantially all his time, attention
and best efforts to the performance of his duties.

         3. COMPENSATION. T-NETIX shall compensate Employee for the services
rendered under this Agreement as follows:

            (a) An annual base salary ("Base Salary") determined by the Board in
its discretion and consistent with its practices for executive officers of
T-NETIX, but not less than $180,000 per year, payable in equal monthly
installments (less applicable withholding) in accordance with the customary
payroll practices of T-NETIX for the payment of executive officers. (2) Employee
shall be entitled to an annual bonus of 30% or more of his annual salary based
upon achieving performance objectives established by the Board or a committee
thereof.

            (b) If Employee's Base Salary is increased at any time, it shall not
thereafter be decreased during the term of this Agreement, unless such decrease
is the result of a general reduction affecting the base salaries of
substantially all other executive officers of T-NETIX.

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            (c) On the Effective Date, T-NETIX shall grant to Employee options
for 185,000 shares of T-NETIX's common stock with an exercise price equal to the
then fair market value of such common stock. Options for 46,250 shares shall
vest and be exercisable on each of the first four anniversaries of the date of
grant if Employee is continuously employed by T-NETIX to such date. The number
of options granted pursuant to this Section 3(c) will be adjusted to take
account of any recapitalization of T-NETIX that affects the number of shares of
common stock of T-NETIX outstanding, such as a stock split.

            (d) Employee shall receive such additional options as may be granted
from time to time to him by the Board or a committee thereof consistent with
terms of the applicable option plans and the compensation policies of the Board
or its Compensation Committee.

            (e) Employee shall not be entitled to director's fees for his
service on any board of Directors of any T-NETIX subsidiary.

         4. EMPLOYEE BENEFITS.

            (a) Employee shall be entitled to full participation, on a basis
commensurate with his position with T-NETIX, in all plans of life, accident,
medical payment, health and disability insurance, bonuses, retirement, pension,
perquisites and other employee benefit and pension plans which generally are
made available to executive officers of T-NETIX or its subsidiaries ("T-NETIX
Benefits Plans"), except for such plans which the Board, in its sole discretion,
shall adopt for select employees to compensate them for special or extenuating
circumstances.

            (b) Employee shall be entitled to an annual vacation leave at full
pay as may be provided for by T-NETIX's vacation policies applicable to
executive officers, but in any event such paid vacation shall not be less than
three weeks in the aggregate.

         5. TERMINATION AND RIGHTS UPON TERMINATION.

            (a) Death, Total Disability, or Retirement. (i) This Agreement shall
automatically terminate upon the death, total disability, or retirement of
Employee.

                (ii) Total disability shall be deemed to occur if, as a result
of his incapacity resulting from physical or mental illness or disease
(including alcohol or other substance addiction) which is likely to be
permanent, Employee shall have been unable to perform his duties hereunder for a
period of more than 120 consecutive days during any twelve-month


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period. The Board will determine if Employee's termination is due to total and
permanent disability according to any long-term disability plan then in effect
for senior executives of T-NETIX, and otherwise in good faith consistent with
generally prevailing practices of employers.

                (iii) Upon termination for Employee's death, T-NETIX shall
continue to pay Employee's salary to a legal representative previously
designated in writing by Employee (the "Legal Representative"), or if no such
designation has been made, to Employee's estate, for a period of the greater of
twelve months or the remaining term of this Agreement in monthly increments.

                (iv) Upon termination for Employee's total disability, T-NETIX
shall continue to pay Employee's salary to the Legal Representative (or if no
designation has been made, to Employee or Employee's other legal representative)
and shall continue Employee's participation in all T-NETIX Benefits Plans, for a
period of the greater of twelve months or the remaining term of this Agreement
in monthly increments.

                (v) Upon termination for Employee's retirement at any time after
Employee reaches the age of 65, Employee's right to compensation shall end and
Employee shall not be entitled to continuation of salary.

                (vi) Following any termination pursuant to this Section 5(a),
the Legal Representative or Employee, Employee's heirs, administrator, or
executor, as applicable, shall have a period of one year from the date this
Agreement is terminated to exercise any options previously granted to Employee.
All Options shall continue to vest during such one year period in accordance
with the vesting scheduled included as part of the grant of the applicable
Options.

            (b) Termination For Cause. (i) T-NETIX may terminate this Agreement
at any time For Cause (as defined in the following sentence). A Termination tor
Cause means any of (A) the willful failure by Employee to follow the reasonable
instructions of the Board after written notice of such failure has been given to
Employee by the Board, (B) the willful commission by Employee of acts that are
dishonest, unethical, or inconsistent with local normal business standards, (C)
the commission by Employee of a felonious act, (D) intentional wrongful
disclosure of confidential information of T-NETIX, (E) Employee's engagement in
any competitive activity in violation of Section 12, or (F) Employee's gross
neglect of his duties.

                (ii) Employee's right to compensation and participation in
T-NETIX Benefits Plans shall end and Employee shall not be entitled to a
severance payment if T-NETIX terminates this Agreement For Cause.

            (c) Termination Without Cause. (i) T-NETIX may terminate this
Agreement at any time Without Cause, upon thirty days notice to Employee. The
termination of Employee's


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employment by T-NETIX for any reasons other than those specified in Section
5(b)(i) shall be deemed a Termination Without Cause.

                (ii) Upon Termination Without Cause other than following a
Change of Control, Employee will be entitled to a severance payment equal to the
amount of salary that would be payable to Employee through the term of this
Agreement at his then effective salary had he not been so terminated in equal
monthly installments for the longer of one year from the date of the notice of
termination or the second anniversary date of the Effective Date.

            (d) Resignation. Employee may terminate this Agreement at any time
upon thirty days written notice to T-NETIX. Employee's termination pursuant to
this Section 5(d) shall be deemed a Voluntary Resignation. In the event of
Employee's Voluntary Resignation other than following a Change of Control,
Employee's right to compensation and participation in T-NETIX Benefits Plans
shall end, and Employee shall not be entitled to a severance payment.

            (e) Termination Following a Chance of Control. Employee's
termination rights following a Change of Control are governed by the provisions
of Section 7.

            (f) The severance payments provided in parts (c)(ii) and (d)(iii) of
this Section 5 are intended to be in lieu of and not in addition to any payment
to Employee on account of salary for the unexpired term of this Agreement.

         6. DEFINITION OF CHANGE OF CONTROL. For the purposes of this Agreement,
a Change of Control of T-NETIX shall be deemed to have taken place if one or
more of the following occurs:

            (a) Any person or entity, as that term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 as amended (the "Exchange Act"),
other than (i) a qualified benefit plan of T-NETIX or of an affiliate of
T-NETIX; (ii) any person who is a stockholder or beneficial owner of stock of
the Effective Date (a "Current Stockholder"); (iii) any successor of a Current
Stockholder who acquires his shares by inheritance, devise, trust, or operation
of law directly from such Current Stockholder (a "Successor"); or (D) any person
or group of which Current Stockholders or Successors hold stock representing an
interest of one-third or more of the person's or group's total stock, becomes a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act as in effect
on the date hereof) directly or indirectly of securities of T-NETIX representing
fifty per cent (50%) or more of the combined voting power of T-NETIX's then
outstanding securities.

            (b) T-NETIX's shares are publicly traded, and individuals who, as of
the date immediately following the date T-NETIX shares are first publicly
traded, constitute the Board cease for any reason to constitute at least a
majority of the Board, unless any such change is approved by a unanimous vote of
the directors in office immediately prior to such cessation.


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            (c) T-NETIX shall (in a single transaction or a series of related
transactions) issue shares, sell or purchase assets, engage in a merger or
engage in any other transaction immediately after which securities of the merged
company representing fifty per cent (50%) or more of the combined voting powers
of the then outstanding securities of the merged company shall be ultimately
owned by persons who shall not have owned voting securities of T-NETIX prior to
such transaction or who shall be a party to such transaction.

            (d) T-NETIX and its affiliates shall sell or dispose of (in a single
transaction or series of related transactions) business operations which
generated a majority of the consolidated revenues (determined on the basis of
T-NETIX's four most recently completed fiscal quarters) of T-NETIX and its
subsidiaries immediately prior thereto.

            (e) The Board shall approve the distribution to T-NETIX's
shareholders of all or substantially all of T-NETIX's net assets or shall
approve the dissolution of T-NETIX.

            (f) Any other transaction or series of related transactions occur
which have substantially the effect of the transactions specified in any of the
preceding clauses in this Section 6.

         7. RIGHTS UPON CHANGE OF CONTROL.

            (a) If a Change of Control shall occur, Employee shall be entitled
to a severance payment, in an amount equal to the amount of salary at his then
current rate Employee equal monthly installments through the second anniversary
of the Effective Date upon Employee's Voluntary Resignation during the term of
this Agreement and following the Change of Control..

            (b) The severance payment payable to Employee under part (a) above
shall not exceed the maximum payment which, after taking into account all other
compensation and benefits which may be payable to Employee, is permitted to be
deducted as compensation expense by T-NETIX and to be received by the Employee
without liability for the assessment of an excise tax on such payment under the
applicable provisions of the Internal Revenue Code. In the event of any
disagreement between the parties regarding the determination of the amount under
clause (i) or (ii) above (a "Section 7(b) Dispute"), the matter shall be
resolved by arbitration as provided in Section 14.

            (c) If a Change of Control shall occur and Employee's employment is
terminated for any reason other than For Cause, death, permanent disability, or
retirement, Employee shall have immediate vesting of all options granted to
Employee and full vesting in all other employee benefit plans and compensation
plans.

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         8. OTHER SEVERANCE BENEFITS. If at any time during the term of this
Agreement, Employee is Terminated Without Cause, or the Agreement is terminated
by Employee's Voluntary Resignation following a Change of Control as provided in
Section 7, then Employee shall be entitled to of T-NETIX Benefits Plans until
one year after termination.

         9. TIMING OF PAYMENT. The parties agree that, in the event this
Agreement is terminated following a Change of Control, damages for delay in
T-NETIX's paying Employee any amounts due hereunder on the date required under
Section 7 may be difficult to ascertain precisely. T-NETIX and Employee
therefore agree that in such event, if the aggregate amount not paid on any
required date exceeds five per cent (5%) of the total amount due to Employee
pursuant to parts (a) and (c) of Section 7, Employee shall be entitled to an
additional payment, as liquidated damages and not as a penalty, an amount equal
to (i) the sum of the amounts due Employee under parts (a) and (c) of Section 7,
assuming that Employee had "put" all vested Options to T-NETIX within the
required time period, (ii) divided by 365 (such calculation is the "Daily Pay"),
for each day fill payment is delayed. Employee's entitlement to Daily Pay
pursuant to this Section 9(b) shall not affect Employee's right to prejudgment
interest in any arbitration, if such interest is awarded by the arbitrator

         10. OTHER BENEFITS. The provisions of Sections 5, 7 and 8 shall not
affect Employee's participation in, or termination of distributions and vested
rights under, any T-NETIX Benefits Plan to which Employee is entitled pursuant
to the terms of such plan, except as otherwise expressly provided in Sections 5,
7 and 8.

         11. NON-DISCLOSURE AGREEMENT.

             (a) In connection with his employment with T-NETIX, Employee will
have access to and become acquainted with various trade secrets and other
proprietary and confidential information of T-NETIX. "Trade secrets and other
proprietary and confidential information" include but are not limited to the
following: (1) business, pricing, marketing and cost data; (2) technical
information regarding T-NETIX's products; (3) confidential customer information;
(4) customer and supplier lists; (5) contents of contracts and agreements with
customers; and (6) customer requirements and specifications. Employee
acknowledges that T-NETIX has taken steps to keep trade secrets and other
proprietary and confidential information secret, including disclosing the
information only on a need-to-know basis, labeling documents as "confidential,"
and keeping confidential information in secure areas. Employee further
acknowledges that the trade secrets and other proprietary and confidential
information have been developed or acquired by T-NETIX through expenditure of
substantial time, effort and money and provide T-NETIX with an advantage over
competitors who do not know or use such trade secrets and other proprietary and
confidential information.

             (b) In consideration for access to trade secrets and other
proprietary and confidential information, Employee agrees that during the
Noncompetition Period (as defined in


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Section 12) he will not directly or indirectly disclose or use for any reason
whatsoever any trade secrets and other proprietary and confidential information
obtained by him by reason of his employment with T-NETIX, except as required to
conduct the business of T-NETIX or as authorized by express written permission
of the Board or as otherwise required by law.

             (c) Employee confirms that all trade secrets and other proprietary
and confidential information, and all documents reflecting such information,
remain the exclusive property of T-NETIX. All business records, papers and
documents kept or made by Employee relating to the business of T-NETIX shall be
and remain the property of T-NETIX and shall remain in the possession of T-NETIX
during the term of Employee's employment and at all times thereafter. Upon the
termination of his employment with T-NETIX or upon the request of T-NETIX at any
time, Employee shall promptly deliver to T-NETIX, and shall retain no copies of,
any materials, records and documents (in whatever form or medium) made by
Employee or coming into his possession concerning the business or affairs of
T-NETIX.

             (d) Employee acknowledges and agrees that the nature of the trade
secrets and other proprietary and confidential information to which he will be
given access would make it impossible for him to perform in the capacity of
officer, director, employee, agent, consultant, or representative of any
Competitor (as defined in Section 12) without disclosing or utilizing the trade
secrets and other proprietary and confidential information to which he will be
given access during the course of his employment. Employee further acknowledges
and agrees that T-NETIX's products are marketed in a highly competitive market.

         12. NON-COMPETITION AGREEMENT. In consideration for access to trade
secrets and other proprietary information of T-NETIX, for so long as Employee is
employed by T-NETIX and for a period of two years thereafter (the
"Noncompetition Period"), Employee will not:

             (a) accept a position as an officer, director, employee, agent,
consultant, representative of (i) any other proprietary call processing systems
company or (ii) any other entity that, as of the date of Employee's termination,
competes directly with T-NETIX or any of its subsidiaries (an entity described
in either part (i) or (ii) is referred to in this Agreement as a "Competitor");

             (b) acquire or fail to dispose of any stock or other ownership
interest in any Competitor, other than investments equal to less than one per
cent of the outstanding stock of any class issued by any publicly traded
company;

             (c) solicit or seek business from any of T-NETIX customers,
prospective customers, suppliers, or prospective suppliers; or

             (d) hire or engage any T-NETIX employee or induce any T-NETIX
employee to leave his or her employment with T-NETIX on behalf of any
Competitor.


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         13. REMEDIES.

             (a) Without intending to limit the remedies available to T-NETIX,
Employee acknowledges that a breach or threatened breach of any of the covenants
contained in Sections 11 and 12 may result in material irreparable injury to
T-NETIX or one of its subsidiaries for which there is no adequate remedy at law,
that it may not be possible to measure damages for such injuries precisely, and
that in the event of such a breach or threat thereof, T-NETIX shall be entitled
to obtain a temporary restraining order, a preliminary or permanent injunction,
or other comparable provisional or equitable relief restraining Employee from
engaging in activities prohibited by Sections 11 or 12, and such other relief as
may be required to enforce specifically any of the covenants in such Sections.
Employee agrees to personal jurisdiction of any state or federal court in the
State of Texas in any proceeding brought by T-NETIX to enforce Employee's
covenants under Sections 11 and 12.

             (b) Without limiting the relief specified in part (a) above, and in
addition to any other remedies available hereunder, at law, or in equity, upon
proof of Employee's deliberate violation of his obligations under Section 11 or
12, T-NETIX shall be entitled to recover from Employee (i) any severance paid
pursuant to Section 5 or 7.

         14. ARBITRATION.

             (a) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration before a single
arbitrator in Arapahoe County, Colorado, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrator shall be
selected by the American Arbitration Association, except that in a Section 7(b)
Dispute the arbitrator shall be selected in the manner provided in part (b)
below. Each parry shall bear his or its own costs of arbitration, except that if
Employee is the prevailing party in such arbitration, he shall be entitled to
recover from T-NETIX as part of any award entered his reasonable expenses for
attorneys and experts fees and disbursements. In any arbitration related to the
calculation of the amount of the severance pay due to employee, each party shall
submit a figure and supporting documentation and the arbitrator shall select the
figure submitted by one of the parties, but no other figure. The arbitrator
shall have no power to award consequential or punitive damages, even if such
damages are permitted under applicable law.

             (b) In a Section 7(b) Dispute T-NETIX shall nominate a proposed
arbitrator, who may be the lawyer who represented T-NETIX in the transaction
that caused the Change in Control. Within five days after T-NETIX's nomination,
Employee may accept T-NETIX's nominee as arbitrator, or may propose another
lawyer. If T-NETIX accepts Employee's counter-nominee, that lawyer shall serve
as arbitrator. If T-NETIX does not accept Employee's counter-nominee, Employee's
counter-nominee and T-NETIX's nominee shall select a third lawyer, who shall
serve as arbitrator. (1)



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             (c) Nothing in this Section 14 shall prevent T-NETIX from seeking
equitable relief pursuant to Section 13.

         15. NOTICES. All notices, requests, demands and other communication
called for or contemplated hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or when mailed by United States
certified or registered mail, postage prepaid, addressed to the parties, their
successors in interest or assignees at the following addresses or such other
addresses as the parties may designate by notice in the manner aforesaid:

                  If to T-NETIX:    T-NETIX, Inc.
                                    67 Inverness Drive East, Suite 100
                                    Englewood, Colorado  80112
                                    Attention:  Alvyn A. Schopp

                  If to Employee:   Thomas E. Larkin

         16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado without giving effect to any
principle of conflict-of-laws chat would require the application of the law of
any other jurisdiction.

         17. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, remain in full force and effect.

         18. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and preliminary agreements, and
further superseding any and all employment arrangements between Employee and
T-NETIX or any of T-NETIX's subsidiaries, affiliates or other related entities.
This Agreement may not be amended except in a writing executed by the parties
hereto.

         19. EFFECT ON SUCCESSORS IN INTEREST. This Agreement shall inure to the
benefit of and be binding upon the heirs, administrators, executors and
successors of each of the parties hereto. T-NETIX shall be in material breach of
this Agreement if any of its successors or assigns (including but not limited to
any Corporate Successor) fails expressly to assume T-NETIX's obligations
hereunder

         20. ASSIGNMENT. This Agreement is personal to Employee and Employee may
not assign this Agreement to any other person.

         21. EFFECTIVENESS. This Agreement shall be effective upon the Effective
Date. 1.



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         22. SURVIVAL OF SECTION. The provisions of Sections 11 and 12 of this
Agreement shall survive the termination of this Agreement for the period
provided for therein, and Sections 13 and 14 shall survive for resolution of any
dispute arising out of or relating to this Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.


T-NETIX, INC.                                   EMPLOYEE

BY: /s/ Alvyn A. Schopp                         /s/ Thomas E. Larkin
   ------------------------------               --------------------------------
   Alvyn A. Schopp                              Thomas E. Larkin


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