1
EXHIBIT 10.41
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 21st day of
July, 2000 by and between eSat, Inc., a Nevada corporation ("eSat"), and Bruce
Elbert ("Executive"), to be effective as of July 21, 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 (the
"Business"); 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 Executive
Vice President, eSat, and President, eSat Asia, 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 Executive Vice
President, eSat, and President, eSat Asia, for and during the term hereof
subject to the reasonable discretion of eSat's Board of Directors and Executive
hereby accepts such employment.
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.
2
4. Compensation. eSat shall pay the Executive, as full compensation for
services rendered by the Executive under this Agreement, as follows:
(a) Base Salary. eSat initially shall pay the Executive a base salary
(the "Base Salary") at the rate of $175,000 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") of up to 100% of Executive's
Base Salary based upon Executive's performance and contribution
to eSat's corporate mission, goals and objectives, particularly
in the Asian marketplace, as determined by and at the discretion
of 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.
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
be eligible to 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, company
retirement plans, deferred compensation plans, stock option
programs, and dental care and vision care but excluding other
medical/health coverage for the Executive and his spouse.
(b) Vacation Time. The Executive shall be entitled to ten paid
vacation business days during the first 12 months of the Term.
The Executive shall be entitled to 20 paid vacation business days
during each subsequent 12 months for the remainder of the Term.
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.
(d) Business Expenses. The Executive shall be entitled to
reimbursement by eSat for travel and entertainment expenses
solely related to the Business in accordance with eSat policies,
including, but not limited to, "business class" airline
accommodations for flights of more than 3 hours in length;
2.
3
provided, however, that such accommodations are available and
eSat may apply for the upgrade.
(e) Stock Options.
(1) Grant of Options. Executive shall receive 300,000
restricted shares of eSat common stock options (the
"Options") with an exercise price of the greater of $4.00
per share or the stock price at the time the Options are
exercised (the "Exercise Price"). All Options shall be
either qualified incentive stock options or non-qualified
stock options, as defined by and available pursuant to the
terms and conditions of the eSat executive stock option
plan in effect at the time the Options are issued at the
option of the Executive. All Options issued hereunder
shall be Unvested Options and will become Vested Options
only as provided in Section 5(e)(2) hereof. For purposes
hereof, "Vested Options" shall mean those Options that
vest pursuant to the terms of this Agreement. All other
Options shall be denoted "Unvested Options."
(2) Vesting. The Unvested Options shall vest 100,000 per each
year covered by this Agreement, commencing on the
Effective Date, and each one year anniversary of the
Effective Date thereafter, subject to Section 5(e)(3)
below.
(3) Accelerated Vesting.
(a) Termination Without Cause. If
Executive is terminated without cause, all Unvested
Options shall immediately vest. 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(a)
hereof.
(c) Dissolution Event. All Unvested
Options shall immediately vest upon the occurrence
of a Dissolution Event as defined in Section 7(b)
hereof.
(4) Exercise of Options. eSat shall loan Executive money
sufficient to exercise each Vested Option in exchange for
payment obligations evidenced by promissory notes (each a
"Note" and collectively, the "Notes") each in the initial
principal amount equal to the Exercise
3.
4
Price for 100,000 shares of eSat common stock. The Notes
shall bear interest at a rate of 7% and shall be secured
by the shares of eSat common stock then being exercised
(the "Exercised Shares"). Executive will sign each Note
upon exercising each Vested Option. Each Note will be due
and payable upon the sale of the Exercised Shares (the
"Date of Payment"). If, at the Date of Payment of a Note,
the sale price of the Exercised Shares is less than the
Exercise Price, a "Shortfall" shall be deemed to exist.
For purposes herein, the "Shortfall Amount" shall mean the
difference between the sale price and the Exercise Price
multiplied by the number of Exercised Shares. Upon the
occurrence of a Shortfall, the Note shall be reduced by
the Shortfall Amount. The Executive will be under no
obligation to pay the Shortfall Amount in the event the
first proceeds are insufficient to cover the original
payment obligation under a Note.
(5) Registration Rights. Executive shall have piggyback
registration rights, the grant and terms of which are
subject to approval of the eSat Board of Directors.
(f) Stock Appreciation Rights. eSat anticipates acquiring shares in a
to-be formed joint venture in Asia (the "eSat Asia JV"). In the event that such
shares are acquired by eSat, Executive shall receive 100% of the appreciation on
10% of such shares. For purposes hereof, the appreciation shall be equal to any
increase in value of the shares less the initial value of the shares when they
were acquired by eSat. The Board shall set the initial value and the increased
value of the shares in good faith based on a reasonable allocation of all costs
incurred in connection with the eSat Asia JV. Executive shall receive such
appreciation from eSat upon (i) termination of this Agreement, (ii) the end of
the Term as defined in Section 3 hereof, or (iii) transfer of eSat's interest in
the eSat Asia JV to another party or parties, whichever occurs first. Should the
eSat Asia JV fail to be formed, nothing herein shall be construed as giving
Executive any Stock Appreciation Rights (or similar rights) in eSat or any of
its affiliates.
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.
(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
4.
5
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
5.
6
(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/Dissolution Event.
(a) 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).
(b) In the event eSat winds up, distributes assets or enters into
any transaction or series of related transactions through which,
directly or indirectly, eSat will dissolve, a Dissolution Event
shall have occurred. In the event this Agreement is terminated
without cause upon the occurrence of a Dissolution Event,
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,
reimbursement for any business expenses incurred prior to
termination, 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 180-day period following such termination ("Severance
Pay"). Severance Pay shall be paid by eSat immediately upon
termination.
9. Confidentiality, Intellectual Property And Non-Competition.
6.
7
(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
include any information or data which (1) is available to the
public, (2) becomes public information or widely known through
no fault of Executive, (3) was obtained by Executive prior to
entering into that certain Confidentiality and Non-Disclosure
Agreement by and between Executive and eSat.
(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
7.
8
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 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.
8.
9
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.
(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
9.
10
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
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: Bruce Elbert
----------------------------------------
----------------------------------------
----------------------------------------
Fax:
------------------------------------
10.
11
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.
(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
11.
12
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:
---------------------------------
Name: Michael C. Palmer
Title: President and CEO
------------------------------------
BRUCE ELBERT
12.
13
EXHIBIT A
Position Description
Executive shall have the title of Executive Vice President, eSat, and President,
eSat Asia, and shall be a member on eSat's executive management team. Executive
shall be primarily responsible for overseeing the activities of eSat in Asia.
Executive shall also perform such duties as are directed by the Chief Executive
Officer or the Board of Directors of eSat, including, but not limited to:
(1) Establishing an eSat Asia business model and partnership;
(2) Contributing to the establishment of a similar business model
and partnership in Europe in cooperation with the Senior Vice
President, eSat Europe, with an emphasis on a major satellite
operator and/or telecommunications company;
(3) Contributing to the establishment of eSat service to Latin
America; and
(4) Contributing to the establishment of a strategic relationship at
the eSat corporate level that supersedes (1) - (3) above.
13.