**EXHIBIT 10.8**
**EMPLOYMENT AGREEMENT**
     THIS AGREEMENT is made as of January 31, 2005, between DataWave Systems, Inc**.**, a DelawareCorporation (the “Corporation”), and Joshua Emanuel (the “Employee”).
Introduction
     The Corporation wishes to retain the services of the Employee and the Employee wishes to beemployed by the Corporation. The Employee has detailed knowledge of various aspects of theCorporation’s business and is in possession of proprietary and confidential information concerningthe business. The disclosure of such information or the engaging in competitive activities wouldcause substantial harm to the Corporation.
     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties agree as follows:
     1. Employment. The Employee currently is employed by the Corporation and the Employeehereby accepts his continued employment upon the terms and conditions hereinafter set forth.
     2. Term. Unless earlier terminated in accordance with the terms hereof, the term ofthis Agreement shall be for the period of five (5) years; provided, however, thaton the anniversary date of each year thereafter, this Agreement shall automatically be extended forsuccessive one-year periods unless the Corporation or the Employee shall have given the otherwritten notice of its intention to terminate this Agreement at least six (6) months prior to theanniversary date of any such year. Such notice by the Corporation to terminate this Agreement shallbe deemed a termination without cause under Section 12 hereof. Any failure by the Corporation orthe Employee to give timely notice of termination shall cause the term of employment of theEmployee to be automatically renewed hereunder for an additional one-year period.
     3. Duties. The Employee shall serve as President and Chief Executive Officer of theCorporation, in which capacities he shall be responsible for directing the day-to-day operations ofthe Corporation and its subsidiaries and such other duties consistent with such position as theBoard of Directors of the Corporation (the “Board”) shall determine from time to time. Inaddition, in the event Employee does not possess the right as a shareholder to appoint a Director,Employee shall serve as a Director of the Corporation. Without limiting the foregoing, theEmployee shall consult with the Board with respect to determining the Corporation’s businessstrategies. The Employee shall receive no additional compensation for any services rendered as aDirector in the event he is simultaneously employed by the Corporation and serving as a director ofthe Corporation or any of its subsidiaries.
     4. Compensation.
          (a) For all services rendered by the Employee pursuant to this Agreement, during the term ofthis Agreement the Corporation shall pay the Employee a salary at the annual rate of $240,000,which salary shall be cumulatively increased by no less than 5% upon each
 

 

anniversary date of employment. Said salary may be further increased from time to time by theBoard in its sole discretion. Payments hereunder shall be made at the same frequency as paymentsmade to other employees of the Corporation. In exercising such discretion, the Board of Directorsshall, not less than once each year, assess the Employee’s performance relative to performancecriteria discussed by the Board with the Employee and adopted by the Board at the beginning of suchyear.
          (b) At the sole discretion of the Board, the Corporation may grant to the Employee StockOptions as it is deemed appropriate up to maximum of 5% of outstanding shares of the Corporation.
          (c) At any time, at the sole discretion of the Board, the Corporation may grant to theEmployee a bonus in such amount and in such form as it is deemed appropriate, provided thatduring the term of the Agreement the Employee may earn a bonus of up to seventy-five percent (75%)or pro rata of his annual salary as follows:
 1. 75% of Base Salary by exceeding the approved operating BusinessPlan of the Company by 10%.  2. 60% of Base Salary by meeting the approved operating BusinessPlan of the Company.  3. 25% of Base Salary by meeting 75% of the approved operatingBusiness Plan of the Company.  4. 25% of Base Salary by meeting other objectives determined bythe Board of Directors annually.
     5. Full Time; Best Efforts. During the term of this Agreement, the Employee shall usehis best efforts to promote the interests of the Corporation and shall devote his full time andefforts to its business and affairs. The Employee shall not engage in any other activity thatcould reasonably be expected to interfere with the performance of his duties, responsibilities andservices hereunder.
     6. Expenses. The Employee is authorized to incur reasonable expenses for promotingthe business of the Corporation, including expenses for entertainment, travel and similar items.The Corporation will reimburse the Employee for appropriate expenses upon the Employee’spresentation of an itemized account of such expenditures. The Corporation shall at all timesretain access to the records maintained by Employee relative to reimbursable expenses. Inrecognition of Employee’s need for an automobile for business purposes, the Corporation willprovide Employee with an automobile allowance equal to $1,000.00 per month and a cell phoneallowance of $200.00 per month.
     7. Restrictive Covenants. During the term of this Agreement and for a period of one(1) year after the termination of Employee’s employment with the Corporation pursuant to the termsof this Agreement, regardless of the reason for such termination, the Employee will not,
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directly or indirectly, individually or as a consultant to, or as an officer, director,employee, equity owner or agent of, or otherwise participate in the ownership or operation of anybusiness providing similar products and services as the Corporation in the geographical areasserved by the Corporation and its subsidiaries at the time of such termination, but nothingcontained herein shall be deemed to prohibit the Employee from investing in any company engaged insuch business, the stock of which is available in a public securities market; provided,however, that the Employee shall not own in excess of 5% of the total issued andoutstanding stock of such company.
          During the term of this Agreement and for a period of one (1) year after the termination ofsuch employment, regardless of the reason for such termination, the Employee will not, directly orindirectly, solicit or endeavor to entice away from the Corporation or any of its subsidiaries, orotherwise materially interfere with the business relationship of the Corporation or any subsidiarywith, (i) any person who is, or was within the one (1) year period immediately prior to thetermination of the Employee’s employment with the Corporation, employed by or associated with theCorporation or any subsidiary or (ii) any person or entity who is, or was within such one(1) year period, a customer or client of, supplier to or other party having material businessrelations with the Corporation or any subsidiary.
          The Employee acknowledges that a breach of any of the covenants contained in this paragraph 7would result in irreparable injury to the Corporation for which there may be no adequate remedy atlaw and that, in the event of an actual or threatened breach by the Employee of the provisions ofthis paragraph 7, the Corporation shall be entitled to pursue and obtain injunctive reliefrestraining the Employee from doing any act prohibited hereunder. Nothing contained herein shallbe construed as prohibiting the Corporation from pursuing any other remedies available to it forsuch breach or threatened breach, including the recovery of any monetary damages to which it wouldbe entitled under the law. In the event that any provision of this paragraph 7 is held to beunenforceable as a result of it being too broad, either in terms of time or geographical extent,the Employee agrees that the court can adapt and limit this paragraph 7 so as to make theprovisions hereof enforceable to the fullest extent permissible.
     8. Disclosure of Information. The Employee recognizes and acknowledges that theCorporation’s trade secrets and all other confidential and proprietary information of a business,financial or other nature, including without limitation, lists of the Corporation’s actual andprospective customers, as they exist from time to time (collectively, the “ConfidentialInformation”), are a valuable and unique asset of the Corporation and therefore agrees that hewill not, either during or after the term of his employment, disclose any Confidential Informationconcerning the Corporation and/or its subsidiaries, to any person, firm, corporation, associationor other entity, for any reason whatsoever, unless previously authorized to do so by theCorporation’s Board. It is understood that the term “Confidential Information” shall not includeany information that has entered or enters the public domain through no fault of the Employee. TheEmployee shall not make any use whatsoever, directly or indirectly, of the ConfidentialInformation, except as required in connection with the performance of his duties for theCorporation. For the purpose of enforcing this provision, the Corporation may resort to any remedyavailable to it under the law.
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     9. Medical and Vacation Benefits; Equity. The Employee shall be entitled to receivemedical (including disability) and vacation benefits at the expense of the Corporation, consistentwith those generally available to any other officer or employee of the Corporation.
     10. Disability and Death.
          (a) In the event that Employee is absent from employment by reason of illness or otherincapacity by which Employee is unable to perform the essential functions of his position for morethan six (6) consecutive months during the term of this Agreement, the Corporation may at itsoption terminate this Agreement. If the Corporation elects not to terminate, the Corporation shallbe obligated to continue to pay the Employee compensation hereunder.
          (b) If the Employee dies during the term of this Agreement, the Corporation shall pay to theEmployee’s estate in a lump sum within 30 days after the date of death an amount equal to 25% ofthe Employee’s annual salary rate then payable to the Employee pursuant to paragraph 4 of thisAgreement.
     11. Insurance. For so long as the Employee remains employed by the Corporation, theCorporation shall either (a) at its cost and expense maintain term life insurance on the Employee’slife in the amount of $500,000 so long as such amount is obtainable, or (b) upon Employee’spresentation of proof of such expenditure, reimburse Employee for the cost and expense of such lifeinsurance obtained by Employee. Employee shall have the right to designate the beneficiary of suchinsurance. The Employee shall cooperate with the Corporation in maintaining such insurance policyand obtaining any key man life insurance that the Corporation may elect to obtain for its ownbenefit.
     12. Termination. The Corporation shall have the right, on written notice to theEmployee, by action of its Board to terminate the Employee’s employment immediately at any time forcause or without cause. For purposes of this Agreement, “cause” shall mean (i)conviction of a crime involving dishonesty or (ii) willfully engaging in conduct materiallyinjurious to the Corporation or (iii) the material breach of this Agreement or any otheragreement between the Employee and the Corporation, which material breach has not been cured byEmployee within thirty days after Employee’s receipt of written notice from the Corporation of suchmaterial breach. In the event of termination of employment by the Corporation pursuant to thisparagraph 12 without cause, the Corporation shall continue for a period equal to the greater of (i)the balance of the original term of this Agreement or (ii) one year (a) pay to Employee hissalary at the then annual rate and (b) provide to Employee the benefits under paragraphs 4,9 and 11 of this Agreement and within 3 months of termination pay to the Employee an amount equalto the bonus paid to the Employee in the preceding year under this Agreement. Employee shall notbe required to mitigate the amount of any payment provided for in this paragraph 12 by seekingother employment or otherwise, nor shall the amount of any payment or benefit provided for in thisparagraph 12 be reduced by any compensation earned by Employee as the result of employment byanother employer, by retirement benefits, by offset against any amount claimed to be owed byEmployee to the Corporation or otherwise. In the event of termination of this Agreement for anyother reason (including death or disability), the Corporation shall have no
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further obligation to make any payments or provide any benefits hereunder (except, whereapplicable, the payments required under paragraph 10) or under paragraph 13A below.
     13. Change in Control.
          (a) In the event that (i) the duties and responsibilities of Employee are at any timesignificantly changed (by diminution, increase or other significant alteration) from the duties andresponsibilities presently exercised by him or (ii) there is a “Change in Control” (ashereinafter defined) of the Corporation, Employee may at his election, at any time within one yearafter either of such events, terminate this Agreement with 60 days prior written notice andEmployee shall be entitled to the following compensation, in lieu of the other compensation andbonuses provided herein:
 (A) In lieu of any further salary and bonuspayments to Employee for periods subsequent to the termination, theCorporation shall pay as severance pay to Employee, no later than thethirtieth day following the effective date of termination, (x) alump-sum severance payment equal to 150% of Employee’s annual salaryrate in effect as of the termination, or if greater, such rate ineffect immediately prior to the Change in Control of the Corporationand (y) an amount equal to 150% of any bonus received by him for theprevious year.  (B) For a twelve (12) month period after suchtermination, the Corporation shall arrange to provide Employee withlife, disability, and accident and group health insurance benefitssubstantially similar to those that Employee was receiving immediatelyprior to the termination.
          (b) Employee shall not be required to mitigate the amount of any payment provided for in thisparagraph 13 by seeking other employment or otherwise.
          (c) For purposes of this Agreement, a “Change in Control” shall be deemed to haveoccurred if (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d)and 14(d) of the Securities Exchange Act of 1934) (other than persons (A) holding equity interestsor (B) with whom the Corporation has entered into definitive agreements regarding the purchase ofequity interests, as of the first day of the term date of this Agreement and their affiliates, andother than the Employee) becomes the beneficial owner, directly or indirectly, of securities of theCorporation representing 50% or more of the combined voting power of the then outstandingsecurities of the Corporation; (ii) during any period of two consecutive years, individuals who atthe beginning of such period constitute the Board of Directors, and any new director whose electionor nomination was approved by the directors in office who either were directors at the beginning ofthe period or whose election or nomination was previously so approved, cease for any reason toconstitute at least a majority thereof; or (iii) the stockholders of the Corporation approve amerger or consolidation of the Corporation with any other entity, otherthan amerger or consolidation which would result in the voting securities of the
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Corporation outstanding immediately prior thereto continuing to represent (either by remainingoutstanding or by being converted into voting securities of the surviving entity) more than 50% ofthe combined voting power of the voting securities of the Corporation or such surviving entityoutstanding immediately after such merger or consolidation.
     14. EffectiveDate. This Agreement shall become effective as of the date of this Agreement.
     15. Enforceability, etc. This Agreement shall be interpreted in such a manner as tobe effective and valid under applicable law, but if any provision hereof shall be prohibited orinvalid under any such law, such provision shall be ineffective to the extent of such prohibitionor invalidity, without invalidating or nullifying the remainder of such provision or any otherprovisions of this Agreement. If any one or more of the provisions contained in this Agreementshall for any reason be held to be excessively broad as to duration, geographical scope, activityor subject, such provisions shall be construed by limiting and reducing it so as to be enforceableto the maximum extent permitted by applicable law.
     16. Arbitration. Any and all claims arising from, or relating to, this Agreement, itsinterpretation, or its alleged breach or enforcement, shall be resolved by binding arbitrationaccording to the rules of the American Arbitration Association (“AAA”) for commercialdisputes then in effect, and with submission to the AAA. The arbitration shall occur in New York,New York and the parties waive any objection to this choice of alternative dispute resolution,procedures or venue. The parties shall agree upon the arbitrator or, if no agreement can bereached within ten (10) days after either party requests in writing the appointment of anarbitrator, the arbitrator shall be appointed upon petition by either party to the presiding civiljudge of the applicable jurisdiction. Any arbitration hereunder shall be completed within onehundred and twenty (120) days after appointment of an arbitrator. The arbitrator selected toresolve the dispute shall be authorized to award reasonable attorneys’ fees and costs to theprevailing party in the arbitration, and to include such sum in the final arbitration award. Thearbitration award may be confirmed as a judgment in any court having jurisdiction of the subjectmatter and parties.
     17. Notices. Any notice or other communication given pursuant to this Agreement shallbe in writing and shall be personally delivered, sent by overnight courier or express mail, ormailed by first class certified or registered mail, postage prepaid, return receipt requested tothe parties at their respective addresses set forth on the signature page hereof, or to such otheraddress as the parties shall have designated by notice to the other parties.
     18. Waiver. The waiver by either party of a breach of any provision of this Agreementby the other shall not operate or be construed as a waiver of any subsequent breach.
     19. Successors and Assigns. This Agreement shall inure to the benefit of and bebinding upon the Corporation, its successors and assigns, and the Employee, his heirs and legalrepresentatives.
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     20. Entire Agreement. This Agreement constitutes the entire agreement between theparties with respect to the subject matter hereof. It may be changed only by an agreement inwriting signed by the party against whom enforcement of any waiver, change, modification, extensionor discharge is sought. This Agreement shall be construed in accordance with and governed by thelaws of the State of New Jersey without giving effect to principles of conflicts of laws. ThisAgreement may be executed in multiple counterparts, each of which shall be deemed an original, butall of which together shall constitute one and the same agreement.
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first abovewritten.         /s/ Vijay Fozdar    Chairman of Compensation Committee         /s/ Joshua Emanuel    Joshua Emanuel    35 Horizon Drive    Wayne, NJ 07470    USA
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