EMPLOYMENT AGREEMENT EXECUTED IN MONTREAL, QUEBEC, ON JUNE 10, 2002
BETWEEN : TOUCHTUNES MUSIC CORPORATION, a corporation incorporated under
the Laws of Nevada.
(hereinafter referred to as the "CORPORATION")
AND : Xx. XXXX X. XXXXXXXXX
00 XXXXXX XXX.
XXXXXXXXX, XX
00000-0000
(hereinafter referred to as the "EXECUTIVE")
IT IS AGREED AS FOLLOWS:
WHEREAS the Corporation wishes to retain the services of Executive to
provide the services hereinafter described during the term hereinafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSSES that in consideration of the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the parties agree as follows;
1 TERM
1.1 The Corporation shall employ Executive effective June 10, 2002 for an
indefinite term. Executive understands and agrees that he must
relocate to the head office of its Canadian subsidiary in Xxxxxxxx,
Xxxxxx, Xxxxxx within six (6) months of the start of his employment
with the Corporation
2 DUTIES
2.1 The Corporation engages Executive as President and Chief Executive
Officer. In such capacity, Executive shall perform such duties and
exercise such powers pertaining to the management of the Corporation
as are customarily associated with such positions.
2.2 By his acceptance hereof, Executive agrees to devote substantially all
of his working time, attention and skill to the Corporation and to
make every effort
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necessary to promote the success of the Corporation's business and
perform adequately the duties that are assigned to him.
3 REPORTING PROCEDURES
3.1 Executive shall report directly to the Board of Directors of the
Corporation.
4 RENUMERATION
4.1 The annual base salary payable to Executive for his services hereunder
shall be $275,000.00 USD, exclusive of bonuses, benefits and other
incentive compensation. The annual base salary payable to Executive
pursuant to the provisions of the Section 4 shall be payable in
accordance with the Corporation's normal practices less any deductions
or withholdings required by law. The base salary shall be reviewed
annually on or about the Executive's anniversary date for the purpose
of considering an increase. Any such increase shall take into account
performance considerations and increases in the cost-of-living.
4.2 The Corporation shall provide Executive with employee benefits
comparable to those provided by the Corporation from time to time to
other senior executives of the Corporation.
5 STOCK OPTIONS
5.1 Executive shall be granted an option (the "Option") to purchase
1,500,000 shares of the common stock of TouchTunes Music Corporation
(hereinafter "TTMC") in conformity with the TouchTunes Music
Corporation 2000 Long-Term Incentive Plan. Said options will carry an
exercise price of $0.50 or less per share.
5.2 None of the Option shall vest during the first year of employment
(except in the case of sections 5.3 and 5.5). However on the first
anniversary date of employment, a portion of the Option representing
500,000 shares will vest immediately. Effective the first anniversary
date, the balance of the Option will begin vesting over a two-year
period in equal quarterly installments of 125,000 shares each.
5.3 As soon as the Executive relocates to Montreal, the Option will begin
vesting quarterly at the rate of 125,000 shares retroactively from the
effective date of the Agreement.
5.4 Should CDP Capital Communications and CDP Sofinov exercise their
option to convert the outstanding Unsecured Loan Facility into Common
Shares of the Corporation at $0.50 per share, the Corporation will
provide additional options to compensate for the dilutive effect of
such exercise so as to provide to Executive the same percentage of the
outstanding shares as of the date of this Agreement if he exercised
the entire Option.
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5.5 In the event of a Change of Control of the Corporation, the unvested
portion of the Option shall become immediately vested.
5.6 For the purpose of this Agreement, Change of Control shall occur when
the Corporation is amalgamated, merged or consolidated with another
corporation or when all or substantially all of the assets or more
than 50% of the outstanding voting shares of the Corporation is
acquired by any other corporation or person or group of persons, or Xx
Xxxxxx and Innovatech together cease to control more than 50% of the
outstanding voting shares of the Corporation. Xx Xxxxxx shall mean Xx
Xxxxxx de Depot et Placement du Quebec and its subsidiaries and
Innovatech shall mean Societe Innovatech du Grand Montreal.
6 BONUS
6.1 Executive is entitled to an annual bonus of up to 100% of his annual
base salary. Said bonus shall be payable on an annual basis at the
discretion of the compensation committee based on profitability
objectives recommended by the Executive and approved by the Board.
Said bonus shall be payable no later than thirty days after approval
by the Board.
7 VACATION
7.1 Executive shall be entitled to four weeks of paid vacation per fiscal
year of the Corporation. Should Executive decide not to take all the
vacation to which he is entitled in any fiscal year, Executive shall
be entitled to take up to one (1) of such vacation weeks during the
following fiscal year.
8 EXPENSES
8.1 Executive shall be reimbursed for all reasonable travel and other
out-of-pocket expenses incurred by Executive from time to time in
connection with carrying out his duties hereunder. Executive shall
furnish to the Corporation supporting evidence for expenses in respect
of which Executive seeks reimbursement.
8.2 During the initial six-month employment period, prior to Executive
relocating to Montreal, Executive shall be reimbursed for all travel
and lodging costs associated with time spent in Montreal. Executive
shall furnish to the Corporation supporting evidence for expenses in
respect of which Executive seeks reimbursement.
8.3 The Corporation agrees to provide the Executive with a monthly
automobile allowance of $600 CDN upon his relocation to Montreal.
8.4 The Corporation agrees to reimburse the Executive for all reasonable
and customary out-of-pocket moving costs incurred in respect of his
relocation to Montreal.
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9 TERMINATION
9.1 This Agreement may be terminated, except for continuing obligations
hereunder as at any such termination, in any of the following
eventualities and with the following consequences:
9.1.1 at any time, for Cause, on simple notice from the Corporation to
Executive the whole without any other notice or any pay in lieu of
notice or any indemnity whatsoever (except to the extent provided for
in article 24) from the Corporation to Executive, and any further
claims or recourse by Executive against the Corporation or its
affiliates in respect of such termination; or
"CAUSE" shall mean cause for dismissal without either notice or payment
in lieu of notice for reasons of conviction of fraud or embezzlement,
gross negligence, willful breach or reckless disregard or gross
dereliction of duty, incapacity that in the Corporation's reasonable
judgment is materially detrimental to the Corporation or refusal to
perform employment functions in either case due to drug use or alcohol
addiction, conviction of a felony, any of such, not corrected within
thirty (30) days of notice to that effect and discriminatory practices
governed by statute.
9.1.2 Upon three (3) month notice in writing from Executive to the
Corporation, specifying his intention to resign, in which event the
Corporation shall be obliged to pay Executive his base salary
hereunder earned before the date of termination and keep all his
benefits the same to the date of termination and the Corporation shall
have no further obligations hereunder in the event of such
resignation; or
9.1.3 Upon written notice from the Corporation to Executive during the
period prior to Executive's relocation to Montreal, in the event of
termination of his employment without Cause, in which event the
Corporation shall pay Executive an indemnity in lieu of notice in a
lump sum equal to six (6) months of Executive's base salary at the
time of termination, and the Corporation shall have no further
obligations hereunder in the event of such termination. Executive
shall have no further claims or recourse against the Corporation or
any of its affiliates in respect of such termination (Except for
Section 9.1.5 and Section 24).
9.1.4 Upon written notice from the Corporation to Executive during the
period subsequent to Executive's relocation to Montreal, in the event
of termination of his employment without Cause, in which event the
Corporation shall pay Executive an indemnity in lieu of notice in a
lump sum equal to twelve (12) months of Executive's base salary at the
time of termination, and the Corporation shall have no further
obligations hereunder in the event of such termination. Executive
shall have no further claims or recourse against the Corporation or
any of its affiliates in respect of such termination (Except for
Section 9.1.5 and Section 24).
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9.1.5 If the Executive is terminated for reasons other than Cause the
unvested portion of the Option shall be deemed to have vested at the
rate of 125,000 shares per quarter commencing with the effective date
of the Agreement, viz : after Q1- 125,000, after Q2- 250,000, after
Q3- 375,000 and after Q4- 500,000.
9.2 For Disability/Death
9.2.1 The Corporation may immediately terminate this Agreement by
notice to Executive if Executive becomes permanently
disabled. Executive shall be deemed to have become
permanently disabled in the event of any mental incapacity
or physical disability of such severity that Executive shall
have been unable to attend to any normal duties with the
Corporation for more than nine (9) consecutive months in any
year or for twelve (12) months out of any period of
twenty-four (24) consecutive months during the employment
period.
9.2.2 This Agreement shall terminate without notice upon the death
of Executive.
9.2.3 In the case of disability or death of the Executive, the
unvested portion of the Option shall become immediately
vested.
10 SEVERANCE PAYMENTS
10.2 Upon termination of Executive's employment for Cause or by the
voluntary termination of employment of Executive as set forth in
Sections 9.1.1 and 9.1.2, Executive shall not be entitled to any
severance payment or any other payments at law or otherwise other than
base salary earned by Executive before the date of termination. If
Executive's employment is terminated for any reason other than the
reasons set forth in Section 9.1.1 or 9.1.2, Executive shall be
entitled to receive an indemnity in lieu of notice, severance payment
or any other amount at law or otherwise, in a lump sum amount equal to
six (6) months of Executive's base salary at the time of termination
if Executive has not relocated to Montreal or twelve (12) months of
Executive's base salary at the time of termination if Executive has
relocated to Montreal. The Corporation shall have no further
obligations hereunder in the event of such termination. Executive
shall have no further claims or recourse against the Corporation or
any of its affiliates in respect of such termination other than
pursuant to Article 24.
11 CONFIDENTIALITY
11.1 Executive shall not, directly or indirectly, without the specific
prior written consent of the Corporation, at any time after the date
hereof, divulge to any business, enterprise, person, firm,
corporation, partnership, association or other entity, or use
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for Executive's own benefit, (i) any confidential information
concerning the businesses, affairs, customers, suppliers or clients of
the Corporation or its affiliates, including, without limitation, any
trade secret (process, plan, form, marketing strategy, etc.), all
computer programs in any form (diskette, hard disk, tape, printed
circuit, etc.), all access codes to computer programs together with
any plan, sketch, diagram, card, contract, bid, price list and client
list relative to the Corporation's business, or (ii) any non-public
data or statistical information of the Corporation or its affiliates,
whether created or developed by the Corporation or its affiliates or
on their behalf or with respect to which Executive may have knowledge
or access (including, without limitation, any of the foregoing created
or developed by Executive), it being the intent of the Corporation and
Executive to restrict Executive from disseminating or using any data
or information that is at the time of such use or dissemination
unpublished and not readily available or generally known to persons
involved or engaged in businesses of the type engaged in from time to
time by the Corporation (the "Confidential Information"). For purposes
of this Employment Agreement, Confidential Information shall not be
deemed to include:
11.1.1 Information that, at the time of disclosure under
this Employment Agreement or during Executive's
employment, is in the public domain or that, after
disclosure under this Employment Agreement or in
connection with Executive's employment, becomes part
of the public domain by publication or otherwise
through no action or fault of Executive or any other
party subject to an obligation of confidentiality;
11.1.2 Information that the Corporation authorizes Executive to
disclose in writing; or
11.1.3 Information that Executive is required to disclose pursuant
to a final court order that the Corporation has had an
opportunity (if possible) to contest prior to any such
disclosure.
11.2 This undertaking to respect the confidentiality of the Confidential
Information and to not make use of or disclose or discuss it to or
with any person shall continue to have full effect notwithstanding the
termination of Executive's employment with the Corporation for a
period of three (3) years following the date of such termination.
12 NON-SOLICITATION
12.1 Executive agrees that he shall not, during his employment and for a
period of twelve (12) months following the termination of his
employment, on his own behalf or on behalf of any person, whether
directly or indirectly, in any capacity whatsoever, alone, through
or in connection with any person, employ, offer employment to or
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solicit the employment or the engagement of or otherwise entice away
from the employment of the Corporation or its subsidiaries, any
individual who is employed by the Corporation or its subsidiaries at
the time of the termination of Executive's employment or who was
employed by the Corporation or its subsidiaries in the six (6) month
period preceding the termination of Executive's employment.
13 NON-COMPETITION
13.1 Provided that such termination does not result from a breach and so
long as the severance payments reported in this Agreement are being
paid, Executive agrees that during his employment and for a period of
twelve (12) months after Executive ceases to be employed by the
Corporation, Executive shall not, directly or indirectly, for
Executive's own account or as an employee, officer, director, partner,
joint venture, shareholder, investor, consultant or otherwise (except
as an investor in a corporation whose stock is publicly traded and in
which Executive holds less than 5% of the outstanding shares) engage
in any business or enterprise, in the United States of America, that
directly or indirectly competes with the business of the Corporation,
as it exists now or in the future during his employment.
14 INTELLECTUAL PROPERTY
14.1 For the purposes of this Agreement, the term "Inventions" means
ideas, designs, concepts, techniques, inventions and discoveries,
whether or not patentable or protectable by copyright and whether or
not reduced to practice, including but not limited to devices,
processes, drawings, works of authorship, computer programs, methods
and formulas together with any improvement thereon or thereto,
derivative works therefrom and know-how related thereto made,
developed or conceived by Executive while at the employment of the
Corporation during working hours using the Corporation's data or
facilities and which relates to the Corporation's areas of business.
14.2 Executive shall assign and hereby does assign all Inventions to the
Corporation. Executive shall disclose all Inventions in writing to the
Corporation, shall assist the Corporation in preparing patent or
copyright applications for Inventions, and execute said applications
and all other documents required to obtain patents or copyrights for
those Inventions and/or to vest title thereto in the Corporation, at
the Corporation's expense, but for no additional consideration to
Executive. In the event that the Corporation requires assistance under
this Section after termination of employment, Executive shall provide
such assistance at the cost and expense of the Corporation.
14.3 During the term of this Agreement or after termination, on request of
the Corporation and at the cost and expense of the Corporation,
Executive shall execute specific assignments in favor of the
Corporation or nominees of any of the
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Inventions covered by this Section, as well as execute all papers and
perform all lawful acts that the Corporation considers reasonably
necessary or advisable for the preparation, prosecution, issuance,
procurement and maintenance of patent or copyright applications and
patents and copyrights for the Inventions, and for transfer of any
interest Executive may have, and shall execute any and all papers and
lawful documents required or necessary to vest title in the
Corporation or its nominee in the Inventions.
15 ENFORCEABILITY
15.1 Executive agrees that, for the purposes of Sections 11 to 15, all
covenants and restrictions in favor of the Corporation are also made
in favor of its subsidiaries and that the remedies provided for in
this Section 15 also apply to its subsidiaries.
15.2 Executive hereby confirms and agrees that the covenants and
restrictions pertaining to Executive contained in this Agreement,
including, without limitation those contained in Sections 11 to 15
hereof, are reasonable and valid.
15.3 Without limiting the remedies available to the Corporation, Executive
hereby expressly acknowledges and agrees that a breach of the
covenants contained in Sections 11 to 15 may result in materially
irreparable harm to the Corporation for which there is no adequate
remedy at law; that it will not be possible to measure damages for
such injuries precisely, and that, in the event of such a breach, the
Corporation shall be entitled to obtain any or all of a temporary
restraining order and a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited by the
provisions of Sections 11 to 15 or such other relief as may be
required to enforce specifically any of the covenants of Sections 11
to 15. Such proceedings shall not preclude the Corporation from
claiming for damages that it has suffered.
16 RETURN OF MATERIALS
16.1 All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and
lists (including lists of customers, suppliers, products and prices)
pertaining to the business of the Corporation or any of its affiliates
and associates that may come into the possession or control of
Executive shall at all times remain the property of the Corporation or
such subsidiary or associate, as the case may be. On termination of
Executive's employment for any reason, Executive agrees to deliver
promptly to the Corporation all such property of the Corporation in
the possession of Executive or directly or indirectly under the
control of Executive. Executive agrees not to make for his personal or
business use or that of any other party, reproductions or copies of
any such property or other property of the Corporation.
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17 GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Province of Quebec.
18 SEVERABILITY
18.1 If any provision of this Agreement, including the breadth or scope of
such provision, shall be held by any court of competent jurisdiction
to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and
binding.
19 NO ASSIGNMENT
19.1 Neither party may assign, pledge or encumber its interest in this
Agreement nor assign any of the rights or duties of such party under
this Agreement without the prior written consent of the other party.
20 SUCCESSORS
20.1 This Agreement shall be binding on and inure to the benefit of the
successors and assigns of the Corporation and the heirs, executors,
personal legal representatives and permitted assigns of Executive.
21 SURVIVAL OF COVENANTS
21.1 Insofar as any of the obligations contained in this Agreement are
capable of surviving termination of this Agreement they shall so
survive and continue to bind Executive notwithstanding the termination
of the Agreement for whatsoever reason.
22 COMPLETE UNDERSTANDING
22.1 Once signed, this Agreement replaces all prior written and/or oral
agreements between Executive and the Corporation with regard to
Executive's terms of employment with the Corporation. This Agreement
may not be changed orally, but only in an agreement in writing signed
by both parties.
23 LEGAL ADVICE
23.1 Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was
not prevented nor discouraged by the Corporation from seeking
independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily
without any
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undue pressure and agrees that his failure to obtain independent legal
advice shall not be used by him as a defense to the enforcement of his
obligations under this Agreement.
24 INDEMNITY
24.1 The Corporation hereby agrees to indemnify and hold the Executive
harmless to the maximum extent permitted under the law from and
against any liability, claims and expenses arising out of or in any
way related to the fulfillment by the Executive of his duties
hereunder including reasonable attorneys fees and costs associated
therewith provided, that the foregoing indemnification shall not apply
to claims, liabilities and expenses arising from the gross negligence
or willful malfeasance of the Executive.
25 BREACH
25.1 If the Corporation is in breach or default of any material provision
of this Agreement and fails to cure such breach within 30 days after
having received a written notice thereof from the Executive, the
Executive shall have the right to terminate immediately this Agreement
in which case the Executive shall be entitled to the rights he would
have hereunder if he were terminated pursuant to section 9.1.4 hereof.
26 ENFORCEMENT EXPENSES
26.1 If either party hereto shall commence any legal proceedings against
the other party with respect to any of the terms or conditions of this
Agreement, the prevailing party shall also be awarded its costs and
expenses of the litigation, including reasonable attorney's fees.
27 LANGUAGE
27.1 The parties hereto specifically requested that the present Agreement
be drawn up in English. Les parties aux presentes ont specifiquement
requis que cette convention soit redigee en anglais.
(SIGNATURES ON PAGE 11.)
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
TOUCHTUNES MUSIC CORPORATION
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxxx Xxxxxxxxxx
Chairman of the Board
EXECUTIVE
/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
