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EXHIBIT 10.35
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 11th day of
May, 2000 by and between eSat, Inc., a Nevada corporation ("eSat"), and Leon
Shpilsky ("Executive"), to be effective as of May 8, 2000 (the "Effective
Date"), and is based in part on the existence of the following facts:
RECITALS
A. eSat has been formed to, among other things, provide technology
to internet businesses and satellite communications systems; and
B. The Executive has certain expertise in technology and management
issues concerning entities such as eSat; and
C. eSat desires to employ Executive in the capacity of Senior Vice
President - Managing Director of European Operations and
Executive desires to accept employment with eSat pursuant to the
provisions of this Agreement.
TERMS OF EMPLOYMENT
In consideration of the mutual promises, covenants, terms and conditions
set forth below, eSat and the Executive agree as follows:
1. Employment. eSat hereby employs Executive as a Senior Vice President
- - Managing Director of European Operations of eSat for and during the term
hereof subject to the reasonable discretion of eSat's Board of Directors and
Executive hereby accepts such employment. Beginning on or before July 15, 2000,
and continuing for a period of not less than twelve months thereafter, Executive
shall be based at eSat's office in Western Europe.
2. Duties of Executive. The Executive shall have the duties,
responsibilities and authorities set forth in the position description, attached
hereto as Exhibit "A," and as may be reasonably assigned to the Executive from
time to time by the Chief Executive Officer or the Board of Directors. The
Executive agrees to devote the Executive's full time, best efforts, abilities,
knowledge and experience to the faithful performance of the duties,
responsibilities and authorities which reasonably may be assigned to the
Executive and which are consistent with the Executive's position.
3. Term. This Agreement shall be effective as of the Effective Date and
shall continue in force and effect for a period of 36 months thereafter (the
"Term") unless terminated as provided in Section 6 hereof. At the end of the
Term, this Agreement will automatically renew for successive one year terms
(each a "Renewal Term"), unless either party provides written notice no less
than 120 days prior to the end of any subsequent Renewal Term of such party's
intention not to renew the Agreement.
4. Compensation. eSat shall pay the Executive, as full compensation for
services rendered by the Executive under this Agreement, as follows:
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(a) Base Salary. eSat initially shall pay the Executive a base salary
(the "Base Salary") at the rate of $125,000 per year. Such Base
Salary for each year shall be paid by eSat to the Executive in
equal semi-monthly installments. The Executive's salary shall be
reviewed for increase by the Board of Directors no less than
annually thereafter.
(b) Bonus Compensation. Each year during the Term (and any subsequent
Renewal Term) , Executive shall be eligible to earn an annual
bonus ("Bonus Compensation") based upon Executive's performance
as determined by eSat's Board of Directors. Such Bonus
Compensation, if any, shall be determined by eSat and paid to the
Executive within 30 days after completion of eSat's annual
audited financial statements.
(c) Salary Adjustment. The parties hereto intend that during the time
that Executive is based in Western Europe, Executive's monthly
net cash compensation (after payment of all U.S. and Austrian
taxes and reasonable living expenses) will not be lower than such
compensation would have been had Executive been employed by eSat
at the same gross compensation level in Los Angeles, California.
If Executive's net cash compensation during any month during the
Term or a Renewal Term is less than the monthly compensation that
would be received by Executive had he been based in Los Angeles,
California (as determined by Executive, subject to review and
approval by eSat), eSat shall pay Executive a cash salary
adjustment to compensate for such difference. Such salary
adjustment (if any) shall be paid within 30 days of the end of
each month for which such adjustment is due. The parties hereto
understand and agree that, at the end of each Term or Renewal
Term, the aggregate amount of such monthly adjustments shall be
subject to review and further adjustment consistent with the
intent of this paragraph.
5. Employment Benefits. In addition to the compensation payable to the
Executive hereunder, the Executive shall be entitled to the following benefits
commencing on the Effective Date:
(a) Employment Benefits. As an employee of eSat, the Executive shall
participate in and receive such fringe benefits as may be in
effect from time to time for regular, full-time employees in
similar positions with eSat, including, but not limited to, an
expense account to be used solely for business purposes. In
addition, effective upon execution of this Agreement, Executive
will be provided worldwide health/dental insurance coverage for
himself and his dependents.
(b) Vacation Time. The Executive shall be entitled to twenty paid
vacation business days per year. Such vacation may not be
cumulated from year to year.
(c) Sick Time. Executive will receive five paid sick days per year,
which will be available to Executive for actual days off for
illness. Unused sick days will not accrue from year to year.
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(d) Professional Meetings. The Executive also shall be entitled to
five paid days per year in which to attend conferences or
seminars. The costs of the Executive's attendance at such
conferences or seminars shall be borne by eSat. This provision
shall not be construed to limit Executive's ability to travel for
business purposes or eSat's reimbursement for pre-approved
expenses incurred in such business travel.
(e) Stock Options.
(1) Grant of Options. Executive shall be granted 300,000
eSat common stock options (the "Options") with an
exercise price of $3.00 per share.
(2) Vesting. The Options shall vest 100,000 per each year
covered by this Agreement, subject to subsection (c)
below.
(3) Accelerated Vesting.
(a) Termination Without Cause. If Executive is
terminated without cause, the Options shall vest
as follows: (i) if Executive has been employed
by eSat for at least one year and one day,
200,000 of the Options shall immediately vest
upon such termination; and (ii) if Executive has
been employed by eSat for at least two years and
one day all 300,000 of the Options shall
immediately vest upon such termination. If
Executive is terminated for cause (as defined in
Section 6(c) below), all unvested options shall
be forfeited.
(b) Change in Control. All unvested Options shall
immediately vest upon the occurrence of a change
in control as defined in Section 7 hereof.
(f) Automobile Allowance. eSat will provide Executive with a monthly
automobile expense allowance, which shall include an allowance
for monthly automobile lease or rental payments, automobile
insurance, repairs, tax, title and registration fees. In
addition, Executive shall be provided a gasoline expense
allowance sufficient to cover all business-related and reasonable
and normal personal commuting expenses.
(g) Moving Expenses. eSat shall pay all reasonable and pre-approved
moving/relocation expenses related to Executive and his family's
relocation to Western Europe.
6. Termination. This Agreement and the Executive's employment hereunder
may be terminated without any breach of this Agreement at any time only by
reason of and in accordance with the following provisions:
(a) Death. The Executive's death.
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(b) Total Disability. The Executive shall be prevented from
performing the Executive's duties hereunder by reason of becoming
totally disabled as hereinafter defined. For purposes of this
Agreement, the Executive shall be deemed to have become totally
disabled when (i) the Executive either receives "total disability
benefits" under (a) Social Security, or (b) eSat's disability
plan, if any (whether funded with insurance or self-funded by
eSat), or (ii) the Board of Directors of eSat, upon the written
report of a qualified physician designated by the Board of
Directors of eSat or its insurers, shall have determined that the
Executive has become physically and/or mentally incapable of
performing the Executive's duties under this Agreement on a
permanent basis. The foregoing notwithstanding, if Executive
suffers an illness or injury which prevents executive from
attending to Executive's duties hereunder for a period of six
consecutive months during any 12 month period during the Term, or
any subsequent Renewal Term, Executive will be considered
"totally disabled".
(c) Termination by eSat for Cause. eSat may discharge the Executive
for cause and terminate this Agreement immediately upon written
notice to the Executive. For purposes of this Agreement, a
"discharge for cause" shall mean termination of the Executive for
one or more of the following reasons:
(1) Mismanagement or neglect of the Executive's duties as
determined by eSat's Board of Directors after notice to
the Executive of the particular details thereof and a
period of thirty (30) days thereafter within which to
cure each such act or acts of mismanagement or neglect,
and the failure of the Executive to cure such act or
acts within such 30-day periods;
(2) Conviction of the Executive by a court of competent
jurisdiction of a felony or a crime involving moral
turpitude; or
(3) The Executive's failure to comply with any material
provision of this Agreement that has not been cured
within 10 days after notice of such noncompliance has
been given by eSat to the Executive.
(d) Termination with Notice. Either party may terminate this
Agreement, for a reason other than as set forth herein or without
reason at any time upon 90 days written notice to the other
party.
(e) Termination by the Executive for Cause. The Executive may
terminate this Agreement at any time for Cause. For purposes of
this Agreement, the term "Cause" shall mean, without the
Executive's express written consent, the occurrence of any of the
following circumstances:
(1) The assignment to the Executive of duties that are
materially inconsistent with the Executive's position
with eSat immediately prior to such change or a material
adverse alteration or diminution in the nature or status
of the Executive's authority, duties or responsibilities
from those in effect immediately prior thereto; or
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(2) Any failure by eSat to comply with any material
provision of this Agreement (including the failure by
eSat to materially comply with any of the provisions of
Sections 4 or 5) that has not been cured within 30 days
after notice of such noncompliance has been given by the
Executive to eSat.
7. Change of Control. In the event eSat merges into, combines or
consolidates with, is acquired by, sells its assets to, or engages in any other
transaction or series of related transactions with one or more third parties
(the "Acquirer") through which, directly or indirectly, the Acquirer and its
Affiliates (as defined in the Rules promulgated under the Securities Act of
1933, as amended) obtain beneficial ownership of more than 50% of eSat's
outstanding voting equity securities (including pre-transaction shares or
interests owned by the Acquirer and its Affiliates), a Change in Control shall
have occurred. In the event this Agreement is terminated without cause following
a Change in Control, Executive will receive the compensation set forth in
Section 8(b).
8. Compensation on Termination.
(a) In the event this Agreement is terminated pursuant to Section 6,
sub-sections (a), (b) or (c), the Executive shall be entitled
only to that compensation which is accrued through the effective
date of termination. Such compensation includes Base Salary,
accrued vacation and accrued earned bonus, if any.
(b) In the event this Agreement is terminated pursuant to Section 6,
sub-sections (d) or (e) or Section 7 (in the event the
Executive's employment is not continued by the successor entity)
the Executive shall be entitled to all compensation and benefits
for a 90-day period following such termination. Such compensation
and benefits shall be paid in three monthly installments;
provided, however, that if this Agreement is terminated pursuant
to Section 6, -------- ------- subsections (d) or (e) or Section
7, during the first 12 months of this Agreement, Executive shall
be entitled to all compensation and benefits for the entire
initial 12-month period, including vested Options. Such
compensation and benefits will be paid monthly.
9. Confidentiality, Intellectual Property And Non-Competition.
(a) As used herein "Confidential Information" shall mean all
information concerning eSat and its subsidiaries, and their
business of providing various forms of technology to internet and
communications companies (collectively the "eSat Business") which
information is not generally available to the public and is
valuable to the eSat Business, as the eSat Business may evolve in
the future, including, but not limited to, customer lists,
customer information, business relationships, trade secrets,
technical know-how, processes, methods, techniques, procedures,
expertise, software programs, data bases, documentation,
financial data, personnel information, marketing strategies and
programs, and pricing information, and all other data and
information treated by eSat and its subsidiaries, as Confidential
Information. Confidential Information shall not
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include any information or data which (1) is available to the
public, (2) becomes public information or widely known through
no fault of Executive.
(b) Executive acknowledges that during the course of Executive's
employment with eSat, Executive will have learned or developed in
trust and confidence Confidential Information owned by eSat or
its subsidiaries. At all times during Executive's employment with
eSat and after the termination thereof, Executive shall maintain
the Confidential Information in strict confidence and shall not
divulge the Confidential Information to any person, corporation
or other entity, or use in any manner, or knowingly allow another
to have access to the Confidential Information.
(c) Executive agrees that, except as required in the performance of
Executive's duties, Executive will not, at any time during
Executive's employment or any time after the termination of
Executive's employment, use, publish, or otherwise disclose in
any way to any person, firm or corporation any Confidential
Information of eSat or its subsidiaries, or of any other party to
which eSat or its subsidiaries, owes an obligation of confidence,
and which has not become a part of the public domain through no
fault of Executive.
(d) All notes, reports, studies, data, computer printouts, financial
information, business plans, analysis, or other documents created
by or given to Executive during employment concerning or related
to the eSat Business in all media forms, and whether or not
containing or relating to Confidential Information, are the
property of eSat and will be promptly delivered to eSat upon the
termination of Executive's employment.
(e) Executive agrees that, at all times during Executive's employment
with eSat and for a period of two years thereafter, Executive
shall not hire any employee of eSat or its subsidiaries or to
induce any employee of eSat or its subsidiaries to terminate his
or her employment with eSat or its subsidiaries.
(f) Executive recognizes and affirms that in the event of breach by
Executive of any of the provisions of this Section 9, money
damages would be inadequate and eSat would have no adequate
remedy at law. Accordingly, Executive agrees that eSat shall have
the right, in addition to any other rights and remedies existing
in its favor, to enforce its rights and Executive's obligations
under this Section 9 not only by an action or actions for
damages, but also by an action or actions for specific
performance, injunction and/or other equitable relief to enforce
or prevent any violations, whether anticipatory, continuing or
future, of the provisions of this Section 9.
(g) If any of the provisions of this Section 9 are determined by
arbitration or adjudicated to be excessively broad as to: (1)
geographic area, (2) the nature of the business activity
involved, (3) duration in time, or (4) any other attribute, the
parties authorize the court construing the same to modify the
excessively broad provisions to such limited extent as is
reasonable, given the original express of
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intent of the parties, and to enforce the restriction as
modified or to eliminate the restriction if it cannot be
reasonably modified. Any provisions of this Agreement not so
modified or eliminated shall remain in full force and effect.
(h) Executive agrees that, except as otherwise required by law and
excluding proceedings under Section 10 hereof in which eSat and
the Executive are adverse to one another, Executive will not at
any time without the prior consent of eSat discuss or otherwise
divulge to any person or entity other than Executive's legal
counsel any opinion, information, evidence or testimony which
Executive is to offer in any litigation, arbitration, or other
adversarial proceeding in which eSat, its interests or the
interests of its subsidiaries or shareholders are directly or
indirectly involved. If Executive is contacted by or approached
by any person or entity to discuss or disclose any such matters,
Executive will immediately report the occurrence to eSat. If
Executive is served with legal process of any kind which requires
Executive to disclose any such matters, Executive will
immediately report such service to eSat, provide eSat with copies
of the process, and decline to respond to the process until: (1)
the last date permitted for response to the process, or (2)
eSat's counsel shall have determined how to proceed in eSat's
best interest, whichever event shall first occur. The covenants
given by Executive under this Section 9 will survive the
termination of Executive's employment.
10. Arbitration of Disputes.
(a) Arbitration. All Arbitration Claims (defined below) between the
parties shall be resolved by submission to final and binding
arbitration under the rules of the American Arbitration
Association ("AAA"). The parties may agree on a retired judge
from the AAA panel. If they are unable to agree, AAA will provide
a list of three available judges and each party shall strike one.
The remaining judge shall serve as the arbitrator for purposes of
resolving such dispute. The parties agree that arbitration must
be initiated within 60 days after a party delivers a notice of
intention to arbitrate pursuant this Section 10.
(b) Initiation of Arbitration; Submission Agreement. Any party to
this Agreement may initiate arbitration of a dispute subject to
this Paragraph, by sending written notice of an intention to
arbitrate by registered or certified mail to all other parties
and to AAA. The notice shall contain a description of the
Arbitration Claim(s) asserted by the party, the amount involved
and the remedy sought. In the event a demand for arbitration is
made by any party to this Agreement, the parties agree to execute
a Submission Agreement provided by AAA, in a form customarily
used by AAA, setting forth (i) the rights of the parties if the
matter is arbitrated and (ii) the rules and procedures to be
followed at the arbitration hearing. Notwithstanding anything to
the contrary contained in this Agreement, each party shall bear
its own legal, consulting and expert witness fees in connection
with any arbitration proceeding under this Section 10.
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(c) One-Year To Initiate Arbitration Claim. The parties agree that
arbitration must be initiated within one year after the
occurrence of the events on which any Arbitration Claim is based,
and a party's failure to initiate arbitration within such
one-year period constitutes an absolute bar to the institution of
any new proceedings.
(d) "Arbitration Claim" Defined. For purposes of this Agreement,
"Arbitration Claims" shall mean any contract, tort, statutory or
other claim, demand, cause of action or dispute asserted by any
party to this Agreement against any other party to this
Agreement, arising out of or related to (i) this Agreement or any
modification, amendment or supplement thereof, or (ii) the
employment relationship between the parties.
(e) Intent of the Parties - Adequate Consideration. By this
provision, it is the intent of the parties to establish
procedures to accomplish the informal and inexpensive resolution
of any Arbitration Claim between the parties without resort to
litigation. The parties agree that their mutual, binding promises
to arbitrate any Arbitration Claim between them represent
valuable and adequate consideration for the enforceability of
this provision.
(f) Attorneys Fees. The prevailing party in any such arbitration
shall be entitled to recover all costs incurred and reasonable
attorneys fees from the other party in addition to any other
relief granted or awarded.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED OR PROVIDED
FOR IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER CALIFORNIA LAW. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THIS "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.
eSat's Initials Executive's Initials
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11. General Provisions.
(a) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall
be deemed to have been delivered on the date personally delivered
or via telecopier or on the date deposited in a receptacle
maintained by the United States Postal Service (or the equivalent
foreign postal service) for such purpose, postage prepaid, by
certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive: Leon Shpilsky
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Fax:
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If to eSat: eSat, Inc.
10 Universal City Plaza, Suite 1125
Universal City, California 91608
Attention; Michael C. Palmer
Fax: (818) 464-2799
Either party hereto may designate a different address by providing
written notice of such new address to the other party hereto.
(b) Severability. If any provision contained in this Agreement is
determined by a court of competent jurisdiction to be void,
illegal or, subject to Section 9(g) hereof, unenforceable, in
whole or in part, then the other provisions contained herein
shall remain in full force and effect as if the provision which
was determined to be void, illegal, or unenforceable had not been
contained herein.
(c) Waiver, Modification, and Integration. The waiver by any party
hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach by
any party. This instrument contains the entire agreement of the
parties concerning employment and supersedes all prior and
contemporaneous representations, understandings and agreements,
either oral or in writing, between the parties hereto with
respect to the employment of the Executive by eSat and all such
prior or contemporaneous representations, understandings and
agreements, both oral and written, are hereby terminated. This
Agreement may not be modified, altered or amended except by
written agreement of all the parties hereto.
(d) Binding Effect. This Agreement shall be binding and effective
upon eSat and its successors and permitted assigns, and upon the
Executive and the Executive's heirs and representatives;
provided, however, that eSat shall not assign this Agreement
without the written consent of the Executive.
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(e) Governing Law. The parties intend that the laws of the State of
California should govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights
and duties of the parties hereto.
(f) Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute but one and the same
instrument.
(g) Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes any prior written or
oral expressions of the subject matter hereof.
(h) Assignment. This Agreement is not assignable by either party and
neither party may delegate its duties hereunder without securing
the prior written consent of the other party; provided, however,
that eSat may assign this Agreement to a successor entity in the
course of any transaction or series of related transactions in
which eSat sells or disposes of its assets or is not a surviving
entity and a Change in Control occurs, if and only if, the
successor entity upon consummation of the Change in Control
transactions assumes eSat's obligations hereunder in writing.
The parties have executed this Agreement as of the Effective Date.
ESAT, INC.
By:
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Name: Michael C. Palmer
Title: President and CEO
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LEON SHPILSKY
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EXHIBIT A
Position Description
Executive shall have the title of Senior Vice President - Managing Director of
European Operations with eSat, and shall be primarily responsible for overseeing
the day-to-day European operations of eSat. Executive shall also perform such
duties as are directed by, and shall report directly to, the Board of Directors
of eSat.
11.