Document:

Exhibit
10.52

 

SAM YOUNGBLOOD
EMPLOYMENT 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 Tuttle
Road, San Antonio, Texas 78212, (the “Executive”) under the following terms and
conditions:

 

RECITALS:

 

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

 

WHEREAS, the execution
and delivery of this Agreement, as a new contract to completely supersede the
Former Arrangement, is an inducement and a condition to the consummation by
William Blair Mezzanine Capital Fund HI, L.P. (the “Investor”), of that certain
Loan Agreement, dated as of the Effective Date, by and among the Investor, 1ST Detention
Contracting Group, Inc., a Delaware Corporation (“ISI Delaware”) the
ultimate 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 to
the Investor of Warrants for capital stock in ISI Delaware; and

 

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

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth below, it is
hereby 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 its Chief Executive Officer, Vice President, and
Secretary, and the Executive, in such capacities, agrees to provide services to
the LP for the period beginning on the Effective Date and ending on the fifth
anniversary of the Effective Date (the “Employment Period”). The Employment
Period shall automatically renew until the sixth anniversary of the Effective
Date, unless the LP or the Executive gives written notice 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 of Duties.

 

(a)           The Executive agrees that during the Employment
Period, while he is employed by the LP, he shall devote his full time, energies
and talents exclusively to serving in the capacities of Chief Executive
Officer, Vice President and Secretary of the General Partner of the LP in the
best interests of the LP, and to perform the duties assigned to him by the
Board

 

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of Directors of the
General Partner of the LP (the `Board”) faithfully, efficiently and in a
professional manner.

 

(b)           Subject to Section 2(c) below, he Executive
shall 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 entity
other 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 ability
of the Executive to perform his duties hereunder; or

 

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

 

(c)           During and after the Employment Period, the Executive
may own all or any part of ISI*MCS, Ltd., a Texas Limited Partnership, as a
limited partner, and all or any 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 business affairs of ISI*MCS, Ltd. as an officer, director and/or
shareholder 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 they
violate any term of Section 2 of this Agreement or any other term or
Restrictive Covenant of this Agreement.

 

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

 

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

 

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

 

2

 

during the immediately
preceding year, when compared to the same index for the same region for the
calendar year two years prior.

 

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

 

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

 

(d)           The Executive shall be reimbursed by the LP for all
reasonable business, promotional, travel and entertainment expenses incurred or
paid by the Executive during the Employment Period in the performance of his services
under this Employment Agreement: (i) provided that such expenses
constitute business deductions from taxable income for the LP and are
excludable from taxable income to the Executive under the governing laws and
regulations of the Internal Revenue Code; and (ii) to the extent that such
expenses do not exceed the amounts allocable for such expenses in budgets that
are approved from time to time by the Board. In order that the LP reimburse the
Executive for such allowable expenses, the Executive shall furnish to the LP,
in a timely fashion, the appropriate documentation required by the Internal
Revenue Code in connection with such expenses and shall furnish such other
documentation and accounting as the LP may from time to time reasonably
request. As used herein the term “Internal Revenue Code” shall mean Internal
Revenue Code of 1986, as now or hereafter amended, and the regulations and
revenue rulings and procedures issued pursuant thereto from time to time.

 

(e)           The LP shall pay all membership dues, fees, and
assessments (up to $3,000.00 annually) for the membership of the Executive at
the 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 LP
shall pay the full price for, and purchase, tickets and all passes and related
items to: (i) the San Antonio Stock Show and Rodeo; (ii) the San
Antonio Spurs; and (iii) the Majestic Theatre after the Effective Date, in
the same volume and upon the same basis as the Company historically purchased
said tickets, passes, and related items prior to the Effective Date. All said
tickets, passes, and related items shall be delivered to the Executive to be
utilized and distributed as directed by the Board or the Executive.

 

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

 

4.     Restrictive Covenants. The Executive acknowledges and
agrees that:

 

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

 

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

 

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

 

(i)    Confidential Information. Except as may be required by
the lawful order of a court or agency of competent jurisdiction, the Executive agrees
to keep secret and confidential, both during the Employment Period and indefinitely
after 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 respective
subsidiaries and affiliates that was acquired by, or disclosed to, the
Executive during the course 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 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 apply to information that: (A) was, is now, or
becomes generally available to the public (but not as a result of a breach of
any duty of confidentiality by which the Executive is bound); (B) was
disclosed to the Executive by a third party not subject to any duty of
confidentiality to the LP prior to its disclosure to the Executive; or (C) is
disclosed by the Executive in the ordinary course of the LP’s business as a
proper part of his employment in connection with communications with customers,
vendors and other proper parties, provided that it is for a proper business
purpose solely for the benefit of the LP. The Executive further agrees that he
shall not make any statement or disclosure that (1) would be prohibited by
applicable Federal or state laws, or

 

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(2) is
intended 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 on
the Effective Date and ending on the second anniversary of the date on which
the Executive’s employment with the LP is terminated for any reason or no
reason (the “Non-Competition Period”), the Executive shall not directly or
indirectly, alone or as a partner, officer, director, manager, employee,
consultant, agent, independent contractor, member or stockholder of any person
or entity (“Person”), engage in any business activity in North America that is
directly or indirectly in competition with the Business of the LP or which is
directly or indirectly detrimental to the Business or business plans of the LP
or its subsidiaries or affiliates; provided, however, that the record or
beneficial ownership by the Executive of five percent (5%) or less of the
outstanding publicly traded capital stock of any company for investment
purposes shall not be deemed to be in violation of this Subparagraph 4(c)(ii) so
long as the Executive is not an officer, director, manager, employee or
consultant of such Person. The “Business” of the LP shall mean the actual or
intended business of the LP and its subsidiaries and affiliates during the
Employment Period and as of the date the Executive leaves the employment of the
LP for any reason or no reason. As of the date hereof, the Business of the LP
is providing design, engineering, procurement, installation, maintenance and
related goods and services to: (x) the detention facilities construction
and renovation industry; (y) the industrial/commercial controls and fire
and security alarm industry; and (z) the access control and security observation
industry, and other related businesses. The Executive further agrees that
during the Non-Competition Period, he shall not in any capacity, either
separately or in association with others: (1) employ or solicit for employment
or endeavor in any way to entice away from employment with the LP or its
affiliates (a) any current employee of the LP or its affiliates or (b) any
Person who was employed by the LP or its affiliates in any preceding 12-month
period; (2) solicit, induce or influence any supplier, customer, agent,
consultant or other Person that has a business relationship with the LP to
discontinue, reduce or modify such relationship with the LP; nor 

 

5

 

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

 

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

 

(iii)  Remedies. If the Executive breaches, or threatens to
commit a breach of any of the provisions contained in Subparagraphs 4(c)(i) and
4(c)(ii) (the “Restrictive Covenants”), the LP shall have the following
rights and remedies, each of which shall 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 shall account for and pay over to the LP
all compensation, profits, and other benefits which inure to the Executive’s
benefit which are derived or received by the Executive or any person or
business entity controlled by the Executive, resulting from any action or
transactions 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 or
threatened violation of any of the Restrictive Covenants, the LP shall have no adequate
remedy at law and shall therefore be entitled to enforce each such provision by
temporary or permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages, posting any bond or
other security, and without prejudice to any other rights and remedies that may
be available at law or in equity, and the LP shall also be entitled to recover
its attorneys’ fees and costs incurred to enforce any of the Restrictive
Covenants from the Executive.

 

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

 

6

 

Delaware to enforce the
Restrictive Covenants set forth herein.

 

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

 

(v)   Proprietary Rights. The Executive acknowledges and
agrees that all know-how, documents, reports, plans, proposals, marketing and sales
plans, client lists, client files, and any materials made by the Executive or
by the LP are the property of the LP and shall not be used by the Executive in
any 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 used
by any third party without specific direction or consent of the Board. The
Executive hereby assigns to the LP any rights that he may have in any such trade
secret or proprietary information.

 

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

 

(a)           Termination Without Cause. In the event the LP
terminates the Executive’s employment under this Agreement without Cause, the
LP shall pay the Executive any compensation and benefits the LP owes to the Executive
through 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 payments
that otherwise would have been payable to the Executive under Subparagraph 3(b) through
the effective date of termination.

 

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(iii)  without further action of the LP, be conclusively
deemed to have received an automatic, complete and final release, from any duty
or 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 to
Subparagraph 5(a)(i); provided, however, the LP may elect to continue such
Restrictive Covenants and shall have the right to enforce same upon payment to
the Company of additional severance payments including salary prorated over the
extension period.

 

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

 

However, for purposes of
this Paragraph 5, if the Executive resigns following the occurrence of one of
the following events, the Executive shall be deemed to be terminated without
Cause in accordance with Subparagraph 5(a) above:

 

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

 

(ii)   the relocation of the Executive’s office outside Bexar
County, 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 obligation
to make payments to the Executive in accordance with the provisions of
Paragraph 3 or otherwise for periods after the Executive’s employment with the
LP is terminated on account of the Executive’s discharge for Cause. For purposes
of 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 of
the following events:

 

(i)    the Executive becomes habitually addicted to drugs or
alcohol;

 

8

 

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

 

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

 

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

 

8.     Waiver of Breach The waiver by either the LP or the
Executive 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 the
Executive.

 

9.     Notice. Any notice to be given hereunder by a party
hereto shall be in writing and shall be deemed 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 the address set forth in the
preamble hereto immediately following the Executive’s name.

 

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

 

Detention Contracting
Group, Ltd.

Attention: Don Can and
the Board of Directors

12903 Delivery Drive

San Antonio, Texas 78297

Tel: 512.495.5245

 

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

 

11.   Entire Agreement. 
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all prior agreements
and understandings, oral and written, with respect thereto, including, but not
limited to, the Former Arrangement.

 

12.   Applicable Law.  The provisions of this Agreement shall be
construed 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 HAVE
TO A JURY TRIAL CONCERNING ANY CIVIL ACTION THAT MAY ARISE FROM THIS
AGREEMENT, OR THE RELATIONSHIP OF THE PARTIES HERETO.

 

 

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

 

IN WITNESS WHEREOF, the
Executive and the LP have executed this Employment Agreement as of the day and
year 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:

  	
   PresidentExhibit 10.53

 

DON CARR
EMPLOYMENT 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 Executive
and the LP are currently operating under an at-will employment arrangement (the
“Former Arrangement”) pursuant to which the Executive was entitled to certain
compensation and benefits;

 

WHEREAS, the execution
and delivery of this Agreement, as a new contract to completely supersede the
Former Arrangement, is an inducement and a condition to the consummation by
William Blair Mezzanine Capital Fund Ill, L.P. 
(the “Investor”), of that certain Loan Agreement, dated as of the
Effective Date, by and among the Investor, ISI Detention Contracting Group, Inc.,
a Delaware Corporation (“1ST Delaware”) the ultimate parent Corporation of the
LP and all the shareholders of 1ST Delaware, which provides for the completion
of a loan to 1ST Delaware and the delivery to the Investor of Warrants for
capital stock in 1ST Delaware; and

 

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

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth below, it is
hereby 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 and
Treasurer 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 Effective
Date and ending on the fifth anniversary of the Effective Date (the “Employment
Period”). The Employment Period shall automatically renew until the sixth
anniversary of the Effective Date, unless the LP or the Executive gives written
notice 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 of
Duties.

 

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

 

 

(b)         Subject
to Section 2(c) below, he Executive shall 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 entity other 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 ability of the Executive to perform his
duties hereunder; or

 

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

 

(c)          During
and after the Employment Period, the Executive may own all or any part of
ISI*MCS, Ltd., a Texas Limited Partnership, as a limited partner, and all or
any 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 business
affairs of ISI*MCS, Ltd. as an officer, director and/or shareholder 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 they violate any term of Section 2
of this Agreement or any other term or Restrictive Covenant of this Agreement.

 

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

 

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

 

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

 

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

 

(c)          The
Executive shall be eligible to participate in all executive benefit plans maintained
by the LP or any other entity owned or controlled in whole or in part by ISI
Delaware on substantially the same terms and conditions as other senior
executives of the LP or any other entity owned or controlled in whole or in part
by 1ST Delaware.

 

 

(d)         The
Executive shall be reimbursed by the LP for all reasonable business, promotional,
travel and entertainment expenses incurred or paid by the Executive during the
Employment Period in the performance of his services under this Employment
Agreement: (i) provided that such expenses constitute business deductions
from taxable income for the LP and are excludable from taxable income to the
Executive under the governing laws and regulations of the Internal Revenue
Code; and (ii) to the extent that such expenses do not exceed the amounts
allocable for such expenses in budgets that are approved from time to time by
the Board. In order that the LP reimburse the Executive for such allowable
expenses, the Executive shall furnish to the LP, in a timely fashion, the
appropriate documentation required by the Internal Revenue Code in connection
with such expenses and shall furnish such other documentation and accounting as
the LP may from time to time reasonably request. As used herein the term “Internal
Revenue Code” shall mean Internal Revenue Code of 1986, as now or hereafter
amended, and the regulations and revenue rulings and procedures issued pursuant
thereto from time to time.

 

4.               Restrictive
Covenants. The Executive acknowledges and agrees that:

 

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

 

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

 

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

 

(i)            Confidential
Information. Except as may be required by the lawful order of a court or agency
of competent jurisdiction, the Executive agrees to keep secret and
confidential, both during the Employment Period and indefinitely after 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 respective subsidiaries
and affiliates that was acquired by, or disclosed to, the Executive during the
course 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 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 provision of this Subparagraph 4(c)(i) shall not apply
to information that: (A) was, is now, or becomes generally available to
the public (but not as a result of a breach of any duty of confidentiality by
which the Executive is bound); (B) was disclosed to the Executive by a
third party not subject to any duty of confidentiality to the LP prior to its disclosure
to the Executive; or (C) is disclosed by the Executive in 

 

 

the ordinary
course of the LP’s business as a proper part of his employment in connection
with communications with customers, vendors and other proper parties, provided
that it is for a proper business purpose solely for the benefit of the LP. The
Executive further agrees that he shall not make any statement or disclosure that
(1) would be prohibited by applicable Federal or state laws, or (2) is
intended 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 on the Effective Date and ending on the second anniversary of the
date on which the Executive’s employment with the LP is terminated for any
reason or no reason (the “Non-Competition Period”), the Executive shall not directly
or indirectly, alone or as a partner, officer, director, manager, employee,
consultant, agent, independent contractor, member or stockholder of any person
or entity (“Person”), engage in any business activity in North America that is
directly or indirectly in competition with the Business of the LP or which is
directly or indirectly detrimental to the Business or business plans of the LP
or its subsidiaries or affiliates; provided, however, that the record or
beneficial ownership by the Executive of five percent (5%) or less of the
outstanding publicly traded capital stock of any company for investment
purposes shall not be deemed to be in violation of this Subparagraph 4(c)(ii) so
long as the Executive is not an officer, director, manager, employee or
consultant of such Person. The “Business” of the LP shall mean the actual or
intended business of the LP and its subsidiaries and affiliates during the
Employment Period and as of the date the Executive leaves the employment of the
LP for any reason or no reason As of the date hereof the Business of the LP is providing
design, engineering, procurement, installation, maintenance and related goods
and services to: (x) the detention facilities construction and renovation
industry; (y) the industrial/commercial controls and fire and security alarm
industry; and (z) the access control and security observation industry,
and other related businesses. The Executive further agrees that during the
Non-Competition Period, he shall not in any capacity, either separately or in association
with others: (1) employ or solicit for employment or endeavor in any way
to entice away from employment with the LP or its affiliates (a) any
current employee of the LP or its affiliates or (b) any Person who was
employed by the LP or its affiliates in any preceding 12-month period; (2) solicit,
induce or influence any supplier, customer, agent, consultant or other Person
that has a business relationship with the LP to discontinue, reduce or modify
such relationship with the LP; nor (3) solicit or enter into negotiations
with any of the LP `S identified potential acquisition candidates.

 

 

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

 

(iii)          Remedies.
If the Executive breaches, or threatens to commit a breach of any of the
provisions contained in Subparagraphs 4(c)(i) and 4(c)(ii) (the “Restrictive
Covenants”), the LP shall have the following rights and remedies, each of which
shall 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 shall
account for and pay over to the LP all compensation, profits, and other
benefits which inure to the Executive’s benefit which are derived or received
by the Executive or any person or business entity controlled by the Executive,
resulting from any action or transactions 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 or threatened
violation of any of the Restrictive Covenants, the LP shall have no adequate
remedy at law and shall therefore be entitled to enforce each such provision by
temporary or permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages, posting any bond or
other security, and without prejudice to any other rights and remedies that may
be available at law or in equity, and the LP shall also be entitled to recover
its attorneys’ fees and costs incurred to enforce any of the Restrictive
Covenants from the Executive.

 

(C)  Notwithstanding any
other provisions hereof, Executive irrevocably acknowledges the standing and
right of 151 Delaware to enforce the Restrictive Covenants, and Executive
intentionally and knowingly waives and relinquishes any and all right to object
to 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 be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, are held
to be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and,
in its reduced form, such 

 

 

provision shall then be enforceable.

 

(v)           Proprietary
Rights. The Executive acknowledges and agrees that all know-how, documents,
reports, plans, proposals, marketing and sales plans, client lists, client
files, and any materials made by the Executive or by the LP are the property of
the LP and shall not be used by the Executive in any 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 used by any third party without specific
direction or consent of the Board. The Executive hereby assigns to the LP any
rights that he may have in any such trade secret or proprietary information.

 

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

 

(a)          Termination
Without Cause. In the event the LP terminates the Executive’s employment under
this Agreement without Cause, the LP shall pay the Executive any compensation
and benefits the LP owes to the Executive through 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 payments that otherwise would have been
payable to the Executive under Subparagraph 3(b) through the effective
date of termination.

 

(iii)          without
further action of the LP, be conclusively deemed to have received an automatic,
complete and final release, from any duty or 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 to Subparagraph 5(a)(i);
provided, however, the LP may elect to continue such Restrictive Covenants and
shall have the right to enforce same upon payment to the Company of additional
severance payments including salary prorated over the extension period.

 

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

 

 

However, for
purposes of this Paragraph 5, if the Executive resigns following the occurrence
of one of the following events, the Executive shall be deemed to be terminated
without Cause in accordance with Subparagraph 5(a) above:

 

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

 

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

 

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

 

(c)   Termination
for Cause. The LP shall have no obligation to make payments to the Executive in
accordance with the provisions of Paragraph 3 or otherwise for periods after
the Executive’s employment with the LP is terminated on account of the
Executive’s discharge for Cause.  For purposes
of 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 of
the following events:

 

(i)            the
Executive becomes habitually addicted to drugs or alcohol;

 

(ii)           the
Executive discloses confidential information in violation of Subparagraph 4(c)(i) or
engages in any action in violation of Subparagraph 4(c)(ii);

 

(iii)          the
LP is directed by regulatory or governmental authorities to terminate the
employment of the Executive or the Executive engages in activities that cause
actions to be taken by regulatory or governmental authorities that have a
material adverse effect on the LP;

 

(iv)          the
Executive is indicted of a felony crime (other than a felony resulting from a
minor traffic violation);

 

(v)           the
Executive flagrantly disregards his duties under this Employment Agreement
after (A) written notice has been given to the Executive by the Board that
it views the Executive to be flagrantly disregarding his duties under this
Agreement and (B) the Executive has been given a period of ten (10) days
after such notice to cure such misconduct. However, no notice or cure period shall
be required if Executive’s disregard of his duties has materially and adversely
affected the LP, or is illegal

 

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

 

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

 

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

 

 

account of
disability, except payments due and owing through the effective date of
termination.   For purposes of this
Subparagraph 5(d), determination of whether the Executive is disabled shall be
determined in accordance with the LP’s long term disability plan (if any) and
applicable law.

 

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

 

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

 

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

 

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

 

8.                    Waiver of
Breach The waiver by either the LP or the Executive 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 the Executive.

 

9.                    Notice. Any
notice to be given hereunder by a party hereto shall be in writing and shall be
deemed 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 the
address set forth in the preamble hereto immediately following the Executive’s
name.

 

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

 

Detention
Contracting Group, Ltd.

Attention: Don Carr
and the Board of Directors

12903 Delivery
Drive

San Antonio, Texas
78247

Tel: (210)
495-5245

 

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

 

 

11.              Entire Agreement.
This Agreement contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersedes all prior agreements
and understandings, oral and written, with respect thereto, including, but not
limited to, the Former Arrangement.

 

12.              Applicable Law. The
provisions of this Agreement shall be construed 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 HAVE TO A
JURY TRIAL CONCERNING ANY CIVIL ACTION THAT MAY ARISE FROM THIS AGREEMENT,
OR THE RELATIONSHIP OF THE PARTIES HERETO.

 

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

 

IN WITNESS WHEREOF, the
Executive and the LP have executed this Employment Agreement as of the day and
year 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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