EMPLOYMENT AGREEMENT EXECUTED IN MONTREAL, QUEBEC, ON NOVEMBER 15, 2000.
AMENDED ON FEBRUARY 2, 2001
BETWEEN: TOUCHTUNES DIGITAL JUKEBOX INC.,
a corporation incorporated under
the CANADA BUSINESS CORPORATIONS
ACT, having its head office at
Three Commerce Place, 4th floor,
Nuns' Island, Verdun, Province of
▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
(hereinafter referred to as the
"CORPORATION")
ET : MR. CHAFYE ▇▇▇▇▇, 61 ▇▇▇▇▇▇▇▇,
Dollars des ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(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 WITNESS that in consideration of the
mutual covenants and agreements here contained and for other good and valuable
consideration, the parties agree as follows;
1 TERM
1.1 The Corporation shall employ Executive for an indefinite term, such
employment having commenced on January 7, 2000 on a consulting basis
and Executive having assumed the full scope of his responsibilities on
March 15, 2000.
2 DUTIES
2.1 The Corporation hereby confirms having agreed to engage Executive as
Chief Technology Officer and Vice-President Products, effective March
16, 2000. In such capacity, Executive shall perform such duties and
exercise such powers pertaining to the management of Research and
Development and the determination of the future direction of
technology for the Corporation and its affiliates.
2
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 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 Chief Operating Officer of the
Corporation or such other person as may be designated by the
Corporation from time to time.
4 REMUNERATION
4.1 The annual base salary payable to Executive for his services hereunder
shall be $150,000.00 CAD, exclusive of bonuses, benefits and other
compensation. The annual base salary payable to Executive pursuant to
the provisions of this Section 4 shall be payable in equal weekly
installments in accordance with the Corporation's normal practices
less, in any case, any deductions or withholdings required by law.
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. Notwithstanding, the
benefits provided to Executive shall include at a minimum disability
and dental coverage, annual complete physical evaluation and medical
examination, indoors parking (when available and offered to
Executives). The annual base salary shall be reviewed on an annual
basis starting January 1st, 2001.
4.3 Remuneration under this Employment Agreement shall commence November
15, 2000. Payments made to Executive prior to November 15, 2000, were
made in accordance with the consulting agreement signed between the
Corporation and the Executive. Accordingly, no employment deductions
were applied against these consulting payments.
5 STOCK OPTIONS
5.1 By TouchTunes Music Corporation's (herein after "TTMC") intervention
to this agreement, it is confirmed that Executive has been granted, on
April 19,2000, an option to purchase 300,000 shares of the common
stock of TTMC at a price per share of $2.0625 USD, in conformity with
the TouchTunes Music Corporation 2000 Long-Term Incentive Plan.
5.2 Options shall vest over a three-year period in equal quarterly
installments beginning April 1, 2000.
5.3 In the event of a Change of Control of TTMC or of the Corporation or
upon the disability or the death of Executive, all options to purchase
common shares in the share capital of TTMC granted to Executive shall
become immediately vested. In the
3
event that the Change of Control results from an amalgamation, a
merger or the consolidation of TTMC or the Corporation with another
corporation, then Executive shall receive in substitution for all of
his outstanding options to purchase common shares of TTMC, whether
vested or not, securities (excluding options) of TTMC or of any
amalgamated, merged, consolidated or otherwise reorganized
corporation, all of which securities shall be of equivalent value and
liquidity.
For the purpose of this agreement, Change of Control shall mean that
TTMC or the Corporation is amalgamated, merged or consolidated with
another corporation, or that all or substantially all of the assets or
more than 50% of the outstanding voting shares of TTMC or the
Corporation is acquired by any other corporation or person or group of
person, or ▇▇ ▇▇▇▇▇▇ and Innovatech together cease to control more
than 50% of the outstanding voting shares of TTMC or the Corporation.
▇▇ ▇▇▇▇▇▇ shall mean ▇▇ ▇▇▇▇▇▇ 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 up to 50% of his annual base
salary. Said bonus shall be payable on an annual basis at the
discretion of the compensation committee on the achievement of the
Management Objectives set forth by the Chief Operating Officer, or the
officer you directly report to, and subject to the approval of the
Board of Directors of the Corporation.
7 VACATION
7.1 Executive shall be entitled to four (4) 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 two (2) of such vacation in the next
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. For all such
expenses Executive shall furnish to the Corporation supporting
evidence for expenses in respect of which Executive seeks
reimbursement.
8.2 The Corporation shall also reimburse Executive for reasonable cost of
training and professional development.
8.3 The Corporation shall provide Executive with adequate support and
equipment to perform his duties.
4
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 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 fraud, embezzlement, gross
negligence, willful and careless disregard or gross dereliction of
duty, incapacity or refusal to perform employment functions due to
drug use or alcohol addiction, conviction of a felony, serious breach
of duty not corrected within thirty (30) days of notice to that effect
and discriminatory practices governed by statute.
9.1.2 upon two (2) months notice in writing from Executive to the
Corporation, specifying his intention to resign, in which event the
Corporation shall only be obliged to pay Executive its remuneration
hereunder for such remaining part of the period specified in the
notice from Executive, including bonuses, and the Corporation shall
have no further obligations hereunder in the event of such resignation
other than the fact that options that would have vested during this
two (2) month notice period shall continue vesting up to and including
the last day of the notice period; or
9.1.3 Upon written notice from the Corporation to Executive 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 the
acceleration of the vesting on certain options as set forth in
paragraph 10.2; or
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
5
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.
10 SEVERANCE PAYMENTS
10.1 Upon termination of Executive's employment for cause or by the
voluntary termination of employment of Executive as set forth in
Section 9.1.1 and 9.1.2, Executive shall not be entitled to any
severance payment other than compensation, including bonuses, earned
by Executive before the date of termination calculated pro rata up to
and including the date of termination.
10.2 If Executive's employment is terminated for any reason other than the
reasons set forth in Section 9.1.1 and 9.1.2, Executive shall be
entitled to receive, as a lump sum payment, an amount equivalent to 12
months' of his salary at the then applicable base salary rate and, all
unvested options that would have vested during the twelve (12) month
period following the date of such termination shall become vested at
the date of such termination.
10.3 Upon termination of Executive's employment for disability or death as
set forth in Section 9.2, all options to purchase common shares in the
share capital of TTMC granted to Executive shall become vested
immediately.
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 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:
6
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 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 two (2) 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 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 Executive agrees that during the Employment Term 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
7
the business of the Corporation, as it exists now or in the future
during the Employment Term.
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 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 TouchTunes Music Corporation and that the remedies
provided for in this Section 15 also apply to TouchTunes Music
Corporation.
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.
8
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.
17 GOVERNING LAW
17.1 This agreement shall be governed by and construed in accordance
with 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 Executive may not assign, pledge or encumber Executive's interest in
this agreement nor assign any of the rights or duties of Executive
under this agreement without the prior written consent of the
Corporation.
9
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 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 LANGUAGE
24.1 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 10.)
10.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of the
date first above written.
TOUCHTUNES DIGITAL JUKEBOX INC.
-------------------------------
per: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, COO
EXECUTIVE
-------------------------------
Chafye ▇▇▇▇▇
INTERVENTION
By its intervention to this agreement, TouchTunes Music Corporation hereby
agrees, after having read this agreement, to be bound by the provisions of
section 5 hereof.
Signed this 2 day of February, 2001.
TOUCHTUNES MUSIC CORPORATION
PER: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, COO _________________________________
