EMPLOYMENT AGREEMENT ENTERED INTO AT MONTREAL ON 18 OCTOBER, 2006
BETWEEN: MANARIS CORPORATION, having its head office at
▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
province of ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, represented by ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇, the Chairman of its Board of
Directors, duly authorized for the purposes hereof
as he so declares;
(Hereinafter referred to as "MANARIS")
AND: ▇▇▇▇ ▇. ▇▇▇▇▇▇, domiciled and residing at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
(Hereinafter referred to as the "Employee")
WHEREAS MANARIS and the Employee wish to enter into an employment agreement
according to the terms and conditions provided hereinafter;
WHEREAS MANARIS wishes to protect its legitimate business interest;
WHEREAS MANARIS operates businesses manufacturing and distributing fiber optic
components and modules; environmental monitoring instruments and systems; and
electronic devices providing wireless access, tracking and control of assets;
WHEREAS MANARIS operates particularly in Canada, United States and Europe;
WHEREAS as an essential condition of this Employment Agreement, the Parties wish
to agree on confidentiality, non-competition and non-solicitation covenants in
order to protect the legitimate business interest of MANARIS.
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THE PARTIES AGREE AS FOLLOWS:
The preamble forms part of the Agreement.
1. FUNCTIONS
1.1 The Employee shall act as President and Chief Executive Officer
(President et chef de la direction) of MANARIS. The Employee shall
report directly to the board of directors.
1.2 MANARIS shall retain the services of the Employee as of October 1,
2006.
2. TERM OF EMPLOYMENT
2.1 The Employee's employment shall begin on October 1, 2006 and
continue for a period of two (2) years and nine (9) months,
terminating on June 30, 2009.
3. EMPLOYEE RESPONSIBILITIES
3.1 The Employee shall be responsible for all operations and management
of MANARIS, including strategic planning & direction, mergers &
acquisitions and relations with the board of directors.
3.2 The Employee shall diligently, faithfully and honestly serve MANARIS
during the term of his employment, and shall use his best efforts to
promote the interests of MANARIS.
3.3 The Employee shall devote all his time and attention to carry out
his duties and shall not engage in conduct which would constitute a
conflict of interest with MANARIS. The Employee shall not act as a
Director or on the advisory committee of other corporations without
the prior written authorization of MANARIS. MANARIS shall not unduly
withhold such authorization.
4. SALARY
4.1 MANARIS shall pay the Employee the following salary:
- from October 1, 2006 to June 30, 2007: three hundred thousand
dollars ($300,000.00) on a yearly basis, less all applicable
deductions;
- from July 1, 2007 to June 30, 2008: three hundred fifteen
thousand dollars ($315,000) on a yearly basis, less all
applicable deductions;
- from July 1, 2008 to June 30, 2009: three hundred thirty
thousand dollars ($330,000) on a yearly basis, less all
applicable deductions;
to be paid out in accordance with the policies of MANARIS as to
payment of salaries to its employees.
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5. VACATIONS AND BENEFITS
5.1 Vacations: The Employee shall be entitled to six (6) weeks of paid
vacation on a yearly basis. Vacations will be taken at times
mutually agreed upon between the Employee and MANARIS.
5.2 Stock Option: The Employee shall benefit, as of the date of signing
of this Agreement, of an option agreement for one million five
hundred thousand (1,500,000) shares of Common stock in the share
capital of Manaris Corporation, a Nevada corporation, the whole in
accordance with the terms and conditions of the Option Agreement and
the Stock Option Plan attached hereto as schedule A.
The option will be vested as follows:
----------------------- --------------------------
Date of vesting Options to acquire
----------------------- --------------------------
June 30, 2007 500 000 shares
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June 30, 2008 500 000 shares
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June 30, 2009 500 000 shares
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In case of termination without Serious Reason, as Serious Reason is
defined in paragraph 9.2, the Employee will be entitled to exercise
the options that are vested at the date of termination and the
options that would have vested within twelve (12) months of the said
termination, within ninety (90) days of said date of termination. In
no event may the vested options be exercised later than the
expiration of the term of the options as set forth in the Option
Agreement.
5.3 Bonus: The Employee shall benefit from a yearly bonus as set forth
in Schedule B.
5.4 Benefits: The Employee shall benefit of the group insurance plan
offered to MANARIS employees. MANARIS reserves the right to modify
the group insurance plan at any time, at its absolute discretion.
5.5 Car Allowance: MANARIS shall pay up to one thousand five hundred
dollars ($1,500) per month for the use of a car. This amount shall
include all costs in relation to the use of a care notably,
insurance, licensing, maintenance and normal usage of the car.
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5.6 Health Club: MANARIS shall pay up to two thousand two hundred
dollars ($2,200) per year for the Employee's membership in a health
club.
5.7 Golf Club: MANARIS shall pay up to five thousand dollars ($5,000)
per year for the Employee's membership in a golf club.
5.8 Housing: MANARIS shall pay up to two thousand eight hundred dollars
($2,800) per month for the use of an apartment in Montreal. This
amount shall include all housing costs notably, insurance,
maintenance and furniture.
5.9 Travelling: MANARIS shall reimburse the Employee for the costs of a
weekly round-trip air plane ticket (Toronto-Montreal) in economy
class.
5.10 Expenses: MANARIS agrees to reimburse the Employee for the eligible
expenses incurred in the execution of his functions, upon
presentation of an expense report, in accordance with MANARIS
policies, which may be modified from time to time by MANARIS at its
absolute discretion.
6. CONFIDENTIAL INFORMATION
6.1 Access to information: As part of his functions with MANARIS or any
current or future subsidiary or affiliated company of MANARIS
(individually a "Subsidiary" or collectively the "Subsidiaries"),
the Employee shall have access to information concerning the
business of MANARIS, its clients or its supplier and its
subsidiaries.
6.2 Confidential information: Information that can reasonably be
considered confidential or whose disclosure would have an impact on
the interests of MANARIS, its clients or its subsidiaries and
namely, without limiting the general scope of the foregoing, any
information concerning the affairs of MANARIS, its clients or its
subsidiaries, including bids, financial information, methods,
processes, software, names, clients' skills and requirements,
suppliers, list of employees and distributors, ideas, concepts,
projects, discoveries, inventions (patentable or not), know-how as
well as other technical and business knowledge, regardless of their
form or the media (if applicable) on which they may be presented,
including all sketches, lists, reports, models, prototypes, disks,
diskettes, tapes or other documents or similar objects, constitutes
confidential information under the present agreement and is the
property of MANARIS, its clients and its subsidiaries, whether or
not such information has been declared confidential.
6.3 Confidentiality: The Employee agrees, for the entire duration of the
present agreement and after the termination of it, to maintain the
confidentiality of the confidential information as defined in
paragraph 6.2 and not to disclose, directly or indirectly, any part
of it to anyone or to use it in any manner.
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6.4 Photocopies or other reproductions: At the request of MANARIS, the
Employee shall immediately hand over any documents in his possession
or under his control that contain confidential information, as well
as reproductions thereof.
6.5 Policies: The Employee agrees to respect all policies that may be
implemented by MANARIS or its subsidiaries from time to time
regarding confidential information, the confidential information of
any MANARIS client, as well as any commitments to which they are
privy and that bind MANARIS with any of its clients.
6.6 Use of information: The Employee agrees not to take or keep, at the
end of his employment, any document or any reproduction of
confidential information or any other physical property belonging to
MANARIS, its clients or the companies associated with it.
6.7 Exceptions: MANARIS recognizes that the Employee shall not be in
default of his commitments under this agreement if the Employee
discloses information:
6.7.1 That, not being the fault of the Employee or any other person
under the terms of their commitments to MANARIS or MANARIS
clients, is in the public domain or becomes so;
6.7.2 That, in accordance with the law, must be disclosed; or
6.7.3 That the Employee must necessarily disclose in exercising his
functions with MANARIS, MANARIS clients or the companies
associated with it.
7. LOYALTY AND NON-COMPETITION
7.1 Loyalty: The Employee agrees during his employment and after the
termination of it, not to act in a manner that is disloyal to
MANARIS, its subsidiaries, or their clients, including, without
limiting the general scope of the foregoing, not negatively
impacting or attempting to negatively impact the relations of
MANARIS, its subsidiaries with their employees, distributors,
suppliers, representatives, clients or other parties with which
MANARIS, or its subsidiaries, do business; furthermore, the Employee
shall not accept any gifts, commissions or earnings from persons
doing business with MANARIS, its subsidiaries, their clients or
companies related thereto.
7.2 Non-competition: The Employee agrees, for the entire duration of the
present agreement and for a period of twelve (12) months following
the end of the agreement, not to do the following, either directly
or indirectly:
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7.2.1 The Employee will not enter into the employment of any other
person, partnership, or corporation or provide services to any
such person which is in direct competition with the Products
(as hereinafter defined) of MANARIS and its subsidiaries and
Employee shall not engage directly or indirectly in such
competitive business or enterprise, financially, or as an
advisor, consultant, owner or agent or in any other relation
or capacity whatsoever in Canada;
For the purpose of this agreement, "Products" shall mean fiber
optic components and modules; environmental monitoring
instruments and systems; and electronic devices providing
wireless access, tracking and control of assets."
7.2.2 Solicit clients of MANARIS and its subsidiaries in order to
sell them products or services that are in competition with
the Products of MANARIS and its subsidiaries;
7.2.3 Employ or solicit to employ or poach any employee or
consultant of MANARIS or its subsidiaries.
In the event that the employment of the Employee is unilaterally
terminated by MANARIS without Serious Reason and the compensation
mentioned in sub-section 9.3 is not paid by MANARIS in accordance
with the said section 9.3, the provisions of the section 7.2.1 shall
not apply.
7.3 Reasonableness: The Employee expressly declares and recognizes that
the restrictions stipulated in paragraphs 7.1 and 7.2 are reasonable
and valid in terms of their duration, the activities and persons
targeted, that they are essential in order to allow MANARIS and its
subsidiaries to adequately protect their position in the market in
which they do business, operate and pursue activities, that they
represent the agreement concluded between MANARIS and the Employee
and, consequently, dispense MANARIS and its subsidiaries from having
to establish their validity. In the event that a court were to rule
that the above-mentioned non-competition commitment is too broad in
scope of activities or territory or too long in duration, the
Parties undertake to negotiate new covenants respecting the maximum
level deemed reasonable.
8. PENALTIES AND EXTENT OF RESTRICTIONS
8.1 Failure to respect commitments: The Employee recognizes that his
failure to respect his commitments and obligations mentioned in
sections 6 or 7 would cause irreparable damage to MANARIS and that
MANARIS and its subsidiaries shall have the right to resort to legal
action to obtain an injunction or damages or any other recourse in
response to such a violation or threat of violation.
8.2 Extent of restrictions: The parties recognize that if the extent of
any restriction contained in sections 6 or 7 is deemed unreasonable
to allow for full applicability, such restriction shall then be
applicable to the maximum extent permitted by the laws of Quebec.
The Employee hereby agrees and accepts that the extent of this
restriction may, if necessary, be modified accordingly as part of
any legal action taken in order to give effect to this restriction
and ensure it is respected.
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9. TERMINATION
9.1 This agreement shall be renewed automatically for succeeding terms
of one (1) year unless MANARIS gives notice to Employee, at least
one hundred and eighty (180) days prior to the expiration of this
agreement or of any term of renewal, of its intention not to renew.
In the event that MANARIS provides the Employee with the 180 day
notice hereinabove mentioned, the agreement will automatically
terminate at the expiration of the Agreement, without further notice
or indemnity in lieu of notice.
9.2 MANARIS may terminate this Agreement for Serious Reason in writing
at any time and without notice period or compensation of any kind
whatsoever. The employment of the Employee under the present
agreement may be terminated or end earlier, and shall in fact be
automatically terminated without notice in the following cases,
which shall constitute Serious Reason:
9.2.1 At the expiration of the Agreement given that MANARIS has
provided the notice set forth in sub-section 9.1;
9.2.2 The Parties agree in writing to terminate this Agreement;
9.2.3 The Employee seriously neglects his obligations under the
present agreement; or
9.2.4 The Employee commits an act of theft, fraud or embezzlement
against MANARIS or any other material acts of dishonesty; or
9.2.5 Any serious reasons within the meaning of section 2094 of the
Civil Code of Quebec.
9.3 Termination of the Employee without Serious Reason: Due to the
nature of MANARIS's competitive business environment, the fact that
its business is highly knowledge driven and because of the
Employee's executive position, MANARIS may, in its sole and absolute
discretion, at any time, without being obliged to demonstrate cause
or Serious Reason, terminate the Employee's employment upon the
payment of an indemnity in lieu of notice equal to the Employee's
salary and benefits that would have been payable by MANARIS under
sub-sections 4.1 and 5.4 of this agreement for the fifteen (15)
months following termination, as well as the bonus payment under
Schedule "B" prorated to the period during which the Employee was in
the employ of MANARIS for the then current bonus period. Such
indemnity and bonus payment shall be paid, at the sole discretion of
MANARIS, in a lump sum or in fifteen (15) equal instalments, less
applicable deductions.
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9.4 Termination by the Employee: The employment of the Employee under
this Agreement shall terminate upon receipt by MANARIS of a two (2)
months prior written notice of resignation signed by the Employee.
In such event, the Employee shall receive no further payment after
the expiry of this resignation notice.
10. CHANGE IN CONTROL
10.1 In the event that during the term of this Agreement, a Change in
Control occurs and the Employee's employment is terminated:
10.1.1 by MANARIS without Serious Reason within a period of twelve
(12) months of the Change in Control; or
10.1.2 by the Employee, for Good Reason, and other than for
voluntary resignation or voluntary retirement, within a
period of twelve (12) months of the Change in Control;
the Employee shall be entitled to compensation set forth in
Section 9.3 and the vesting as described in paragraph 5.2
shall apply as of the date of termination caused by the
Change in Control.
10.2 For the purpose of this Agreement:
10.2.1 Change in Control: shall mean the acquisition of issued and
outstanding shares carrying more than 50% of the vote
attaching to shares of MANARIS, or acquisition of more than
fifty percent (50%) of the assets of MANARIS by any
corporation, partnership, joint venture, person or group of
persons acting together,
10.2.2 Good Reason: shall mean, without the Employee's express
consent, written or otherwise, any of the following:
a) Assignment to the Employee of any duties inconsistent
with status as President and Chief Executive Officer of
MANARIS or removal of the Employee from the position of
President and Chief Executive Officer of MANARIS, or a
substantial alteration in the nature or status of the
Employee's responsibilities from those in effect as of
the date hereof;
b) Reduction by MANARIS in the Employee's annual salary
(section 4) or benefits (set forth in section 5.4) or
bonus (set forth in section 5.3) as in effect on the
date hereof or as same may be increased from time to
time;
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c) Requirement by MANARIS that the Employee relocate from
Toronto, or such requirement that de facto forces the
Employee to relocate from Toronto;
d) Change in the Employee's reporting relationship such
that the Employee does not report directly to the board
of directors.
11. RECOURSE AND ENFORCEABILITY
11.1 Recourse: The Employee recognizes that the beneficiaries of their
obligations under the terms of the present agreement could suffer
serious and irreparable damage due to the breach of the commitments
stipulated in the present agreement, harm that damages would be
unable to compensate. The Employee expressly agrees that in the
event that the above-mentioned commitments are breached, MANARIS and
any other beneficiary of the present commitments may resort to
injunctions or other remedial action permitted by a competent court
to have the provisions of the present agreement executed without
harming the exercising of all other available recourse, including
but without limiting the general scope of the foregoing, recourse to
damages.
12. NOTICES
12.1 Any notice, request or other communication required pursuant to this
Agreement shall be in writing and shall be delivered in person, or
sent by mail, registered mail, if the postal service is in operation
throughout Canada, or by fax to the following addresses:
12.1.1 to ▇▇▇▇ ▇. ▇▇▇▇▇▇:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇) ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.1.2 to MANARIS:
▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇. - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇), ▇▇▇ ▇▇▇
To the attention of the Chairman of the Board of Directors
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Such notice shall be deemed as having been received the business day
immediately following the delivery or transmission by fax or in person. If
it is sent by mail, it shall be deemed as having been received the third
(3rd) business day after the date it was mailed. However, if after having
mailed the notice, the postal service is stopped for whatever reason, it
shall be delivered in person or faxed. A Party may, from time to time,
change his mailing address by notifying the other Parties.
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13. FURTHER DOCUMENTATION
13.1 The parties hereto and each of them hereby consents and agrees to do
such things, attend such meetings, and to execute such further
documents and assurances as may be deemed necessary or advisable
from time to time in order to carry out the terms and conditions of
this Agreement in accordance with its true intent.
14. WAIVERS
14.1 No waiver of any of the provisions of this Agreement shall be deemed
to constitute a waiver of any other provision (whether or not
similar); nor shall such waiver be binding unless executed in
writing by the party to be bound by the waiver.
14.2 No waiver shall be deemed a continuing waiver or waiver in respect
of any subsequent breach or default, either of a similar or
different nature, unless expressly so stated in writing.
15. HEADINGS
15.1 The insertion of headings and the division of this Agreement into
sections and subsections is for convenience of reference only and
shall not affect the interpretation hereof.
16. MISCELLANEOUS
16.1 Currency: Amounts to be advanced, paid or calculated under this
Agreement are to be advanced, paid or calculated in Canadian
dollars.
16.2 Enforceability: Any decision by a court to the effect that one of
the provisions in the present agreement is null or non enforceable
shall in no way affect the validity or the enforceability of the
other provisions in the present agreement.
16.3 Applicable laws: The present agreement is interpreted under and
governed by the applicable laws of Quebec and the applicable laws of
Canada. The Superior court of the province of Quebec, district of
Montreal shall have jurisdiction.
16.4 Legal advice: The Employee declares that he has had the opportunity
to seek independent legal advice with respect to the present
agreement and fully understands it.
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17. FRENCH LANGUAGE
17.1 The parties have expressly agreed that this agreement as well as any
related documents be drafted in English. Les parties reconnaissent
avoir expressement exige la redaction en anglais de la presente
convention, ainsi que tout document execute a la suite ou
relativement a la presente convention.
IN WITNESS WHEREOF, the parties signed the present service agreement on the date
and at the place mentioned above.
MANARIS INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman ▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE B
BONUS
The yearly Reference Period and Salary for the calculation of the Bonus shall be
as per section 4.1, except for the period October 1, 2006 to June 30, 2007,
which shall be interpreted as a full 12 months Reference Period corresponding to
the fiscal year of MANARIS.
The Employee shall be eligible for an annual bonus in cash, targeted at 50% of
the Salary of the Employee payable for the Reference Period. The bonus is
payable at the latest ninety (90) days following the end of the Reference
Period.
For the first Reference Period, namely October 1, 2006 to June 30, 2007, the
target of 50% shall be distributed as outlined below. For subsequent Reference
Periods, new target distributions shall be determined by the Board of Directors.
A target of 12.5% shall be based on the doubling of revenue of MANARIS as
evidenced by the audited financial statements for the fiscal year ended June 30,
2007 compared to the revenue in the audited financial statements for the fiscal
year ended June 30, 2006. The 12.5% shall be earned if the revenue doubles from
2006 to 2007, and the amount earned shall vary linearly from 0% if revenue stays
the same year to year, to 25% if revenue triples.
A target of 12.5% shall be based on the reduction in net cash used in operating
activities from continuing operations by MANARIS (Net Cash Used) in the fourth
quarter of fiscal 2007 compared to the same measure in the fourth quarter of
fiscal 2006 as evidenced by the audited financial statements. The 12.5% shall be
earned if Net Cash Used is zero in the fourth quarter of fiscal 2007, and the
amount earned shall vary linearly from 0% if the Net Cash Used stays the same
from year to year, to 25% if Net Cash Used in the fourth quarter of fiscal 2007
is positive (▇.▇.▇▇▇ Cash Provided) and is equal in magnitude to the Net Cash
Used in the fourth quarter of fiscal 2006.
A target of 5% shall be based on the implementation of robust business
arrangements with C-Chip's partner, iMetrik.
A target of 5% shall be based on the successful completion of the $3.6 million
financing by MANARIS.
A target of 5% shall be based on the adoption of a streamlined system of
financial reporting for MANARIS and its operating subsidiaries.
A target of 5% shall be based on the simplification of the holding
company/subsidiary structure of MANARIS.
A target of 5% shall be based on progress being made towards a new acquisition
for MANARIS.
The five preceding 5% factors, being based on qualitative measures, shall be
assessed by the Board of Directors, which at its sole discretion shall be
empowered to weight the factors by a multiplier varying from 0 to 2 times.