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Exhibit 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into as of the 12th day of
February, 1997 by and between Golden Sky Systems, Inc., a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxx (the "Executive");
WHEREAS, the Executive is currently serving as President and Chief
Executive Officer of the Company and the Company desires to secure the continued
employment of the Executive in accordance herewith;
WHEREAS, the Executive is willing to commit himself to be employed by
the Company on the terms and conditions herein set forth and forego
opportunities elsewhere; and
WHEREAS, the parties desire to enter into this Agreement as of the
Effective Date (as hereinafter defined), setting forth the terms and conditions
for the employment relationship of the Executive with the Company during the
Employment Period (as hereinafter defined).
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. Employment and Term.
(a) Employment. The Company agrees to employ the Executive, and
the Executive agrees to be employed by the Company, in accordance with the terms
and provisions of this Agreement during the Employment Period.
(b) Term and Extension. The term of this Agreement shall commence
as of the closing date (the "Effective Date") of the sale of stock by the
Company contemplated by the Stock Purchase Agreement dated of even date herewith
between the Company and the various investors referred to therein (the "Purchase
Agreement") and shall continue until the third anniversary of the Effective Date
(such term being referred to hereinafter as the "Employment Period"). The
Employment Period shall automatically be extended for one year on the second
anniversary of the Effective Date, and each anniversary thereafter, unless
either party gives the other written notice of its intention not to extend the
Employment Period at least 30 days prior to such automatic extension, in which
case no further extensions will occur.
(c) Other Agreements. This Agreement supersedes the Employment
Agreement previously entered into by the Executive and the Company, which is
hereby terminated and of no further force and effect, and as a condition
precedent to the execution of this Agreement by the Company, the Executive shall
simultaneously enter into a Non-Competition Agreement in form and substance
satisfactory to the Company.
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2. Duties and Powers of Executive.
(a) Position; Location. During the Employment Period, the
Executive shall serve as Chief Executive Officer and President of the Company,
with such authority, duties and responsibilities as are set forth on Annex A to
this Agreement and as are appropriate for such position, and shall report to and
be supervised by the Board of Directors. The titles, authority, duties, and
responsibilities of the Executive may be increased from time to time, but only
with the mutual written agreement of the Executive and the Company. The
Executive's services shall be performed primarily at the Company's headquarters
in the Kansas City metropolitan area.
(b) Board Membership. The Executive shall be a member of the
Board on the first day of the Employment Period, and the Board shall propose the
Executive for re-election to the Board throughout the Employment Period.
(c) Attention. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote in full business time, best efforts and business judgment
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
use the Executive's best efforts to carry out such responsibilities faithfully
and efficiently. The Executive shall not engage in any other business activity,
except as may be approved by the Board of Directors; provided, however, that
nothing herein shall prevent the Executive from:
(i) investing his assets in a manner not prohibited by the
Non-Competition Agreement, and in such form or manner as shall
not require the Executive to render any material services with
respect to the operations or affairs of any company or other
entity in which such investments are made;
(ii) engaging in religious, charitable or other community or
non-profit activities, which do not impair his ability to fulfill
his duties and responsibilities under this Agreement;
(iii) serving on the board of directors of any company,
other than the Company, in a manner not prohibited by the
Non-Competition Agreement; or
(iv) engaging in any trade and/or industry organizations or
activities, or in the activities set forth on Schedule A attached
hereto provided that such activities do not impair his ability to
fulfill his duties and responsibilities under this Agreement.
3. Compensation. The Executive shall receive the following
compensation for his services hereunder to the Company:
(a) Salary. During the Employment Period, the Executive's annual
base salary (the "Annual Base Salary"), payable in accordance with the Company's
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general payroll practices and subject to withholding for federal, state and
local taxes, in effect from time to time, shall be at the annual rate
established by the Board, but in no event less than $200,000. The Board may from
time to time direct such upward adjustments in Annual Base Salary as the Board
deems to be necessary or desirable, including, without limitation, adjustments
in order to reflect increases in the cost of living. The Annual Base Salary
shall not be reduced after any increase thereof. Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation of the Company
under this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that the number of active, paying subscribers of the
Company as of December 31, 1997 is less than the amounts indicated below, the
Annual Base Salary shall thereafter be reduced to the corresponding amounts
indicated below:
Subscribers Annual Base Salary
40,000 $100,000
20,000 $50,000
(b) Incentive Compensation. During the Employment Period, the
Executive shall be entitled to participate in short-term incentive compensation
plans and long-term incentive compensation plans (the latter to consist of plans
offering stock options and other long-term incentive compensation) providing him
with the opportunity to earn, on a year-by-year basis, short-term and long-term
incentive compensation (the "Incentive Compensation"). Specifically, the
Executive shall be entitled to participate in the Company's 1996 Stock Option
and Restricted Stock Purchase Plan at least to the extent agreed to by the
Company and the Executive and reflected in the Notice of Grant issued by the
Company pursuant to such plan.
(c) Retirement, Incentive and Welfare Benefit Plans. During the
Employment Period and so long as the Executive is employed by the Company, he
shall be eligible to participate in all other incentive, stock option,
restricted stock, performance unit, savings, retirement and welfare plans,
practices, policies, and programs applicable generally to employees or executive
officers of the Company and its subsidiaries, except with respect to any
benefits under any plan, practice, policy, or program to which the Executive has
waived his rights in writing.
(d) Expenses. The Company shall reimburse the Executive for all
expenses, including those for travel and entertainment, properly incurred by him
in the performance of his duties hereunder in accordance with policies
established from time to time by the Board.
(e) Fringe Benefits. During the Employment Period and so long as
the Executive is employed by the Company, he shall be entitled to receive fringe
benefits in accordance with the plans, practices, programs and policies of the
Company from time to time in effect, commensurate with his position and at least
the same as those received by any executive officer of the Company.
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4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically during the Employment Period upon the Executive's death
or a determination by a majority of the Board of Directors that, due to physical
or mental disability or illness, the Executive has been, or will be, unable to
perform substantially all of his duties and responsibilities under this
Agreement for a period in excess of 90 days.
(b) By the Company for Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause without further
liability on the part of the Company effective immediately by a vote of a
majority of the Board of Directors of the Company after written notice to the
Executive setting forth in reasonable detail the nature of such Cause. For
purposes of this Agreement, "Cause" shall mean: (i) willfully dishonest and
material statements or acts of the Executive with respect to the Company or any
subsidiary thereof; (ii) conviction of the Executive of a crime involving moral
turpitude, deceit, dishonesty or fraud; (iii) willful and substantial failure to
perform his duties and obligations under this Agreement, which failure continues
after the Executive is given written notice and a reasonable opportunity to
cure; or (iv) material breach by the Executive of any obligations hereunder or
under the Non-Competition Agreement, provided, however, that other than with
respect to a material breach of the Non-Competition Agreement, the Executive
shall first be given written notice from the Board of Directors of the breach
and a reasonable opportunity to cure such breach.
(c) By the Company without Cause. Notwithstanding any other
provision of this Agreement, the Company may terminate the Executive's
employment other than by a termination for Cause during the Employment Period.
(d) By the Executive for Good Reason. The Executive may terminate
his employment during the Employment Period for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the Company's failure to pay the Executive's Annual Base
Salary as specified in Section 3(a) of this Agreement or to
fulfill any other material obligations under this Agreement;
(ii) a material adverse change in the Executive's title,
authority, duties, or responsibilities as specified in Section
2(a) of this Agreement, which such change constitutes a demotion;
or
(iii) the Company's requiring the Executive, without his
consent, to be based at any office or location which is beyond a
reasonable commuting distance from the Kansas City metropolitan
area.
(e) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
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Termination to the other party hereto given in accordance with Section 9(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice indicating the specific termination provision in this Agreement
relied upon, to the extent applicable, setting forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and if the Date of
Termination (as defined in Section 4(f)) is other than the date of receipt of
such notice, specifying the termination date (which date shall not be more than
30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance that
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(f) Date of Termination. "Date of Termination" means, if the
Executive's employment is terminated by the Company for Cause or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be. If the Executive's
employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination. If the Executive's employment is terminated by reason of death
or disability, the Date of Termination shall be the date of death or the date
the determination of disability is first made.
5. Obligations of the Company Upon Termination.
(a) Termination by Company other than for Cause or by the
Executive for Good Reason. If the Executive's employment with the Company is
terminated (A) by the Company for any reason other than for Cause or the
Executive's death or disability, or (B) by the Executive for Good Reason
following a Change of Control, the Executive shall be entitled to the following
benefits:
(i) Continued payment of the Executive's Annual Salary at
the rate in effect on the Date of Termination, said payments to
be made through the remainder of the Employment Period and on the
same periodic dates as salary payments would have been made to
the Executive had the Executive not been terminated;
(ii) Continuation of group health plan benefits to the
extent authorized by the consistent with 29 U.S.C. Section 1161
et seq. (commonly known as "COBRA"), with the cost of such
benefits shared in the same relative proportion by the Company
and the Executive as in effect on the Date of Termination; and
(iii) A lump sum payment equal to such portion of the
Executive's cash Incentive Compensation for the then current
fiscal year as shall be prorated for a partial year based on the
period worked for the Company during such year and the
satisfaction of any applicable milestones or objectives prior to
the Date of Termination.
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Except as otherwise specifically provided above or otherwise required
by law, all compensation and benefits to the Executive under this Agreement
shall terminate on the date of the termination.
(b) Termination by Reason of Death or Disability. During the
Employment Period, if the Executive's employment shall terminate by reason of
death or disability, the Company shall pay to the Executive or the Executive's
estate, as appropriate, a lump sum amount in cash equal to the sum of (i) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid, (ii) such position of the Executive's cash Incentive
Compensation for the then current fiscal year as shall be pro rated for a
partial year based on the period worked for the Company during such year and the
satisfaction of any applicable milestones or objectives prior to the Date of
Termination, and (iii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid.
(c) Termination by the Company for Cause or by the Executive
other than for Good Reason. If the Executive's employment shall be terminated
for Cause during the Employment Period, or if the Executive terminates
employment during the Employment Period other than for Good Reason, the Company
shall have no further obligations to the Executive under this Agreement other
than the obligation to pay to the Executive the Annual Base Salary through the
Date of Termination plus the amount of any compensation previously deferred by
the Executive (together with any accrued interest or earnings thereon), in each
case to the extent theretofore unpaid.
6. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit plan,
program, policy or practice provided by the Company and for which the Executive
may qualify (except with respect to any benefit to which the Executive has
waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the Effective Date with the Company. Amounts that
are vested benefits or that the Executive is otherwise entitled to receive under
any benefit plan, policy, practice or program of, or any agreement entered into
with, the Company shall be payable in accordance with such benefit plan, policy,
practice or program or agreement except as explicitly modified by this
Agreement.
7. Mitigation; Miscellaneous. The termination benefits set forth in
Section 5(a)(i) shall be reduced by one-half of the amount of any cash
compensation received by the Executive from other employment during the period
that termination benefits are payable hereunder. The Executive shall inform the
Company of any such amounts of cash compensation from other employment and shall
refund to the Company any amounts which the Company has paid which exceed the
amounts due from the Company after application of the set-off provided for in
this paragraph. Notwithstanding the foregoing and any other provision of this
Agreement, nothing in this Section 7 shall be construed to (i) impose any
obligation on the Executive to seek or accept any employment after termination
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of employment with the Company for any reason, or (ii) affect the Executive's
right to receive COBRA benefits at his cost after the expiration of the benefits
provided for herein. Notwithstanding anything in this Agreement to the contrary,
if any portion of any payments to the Executive by the Company under this
Agreement and any other present or future benefit plan of the Company or other
present or future agreement between the Executive and the Company would not be
deductible by the Company for federal income tax purposes by reason of
application of section 162(m) of the Code, then payment of that portion to the
Executive may be deferred by the Company until the earliest date upon which
payment thereof can be made to the Executive without being non-deductible
pursuant to section 162(m) of the Code. In the event of such deferral, the
Company shall pay interest to the Executive on the deferred amount at 120% of
the applicable federal rate provided for in Section 1274(d)(2) of the Code.
8. Successors.
(a) Assignment by Executive. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) Successors and Assigns of Company. This Agreement shall inure
to the benefit of and be binding upon the Company, its successors and assigns.
(c) Assumption. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company, as
previously defined, and any successor to its businesses and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law,
or otherwise.
9. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended, modified, repealed, waived, extended, or
discharged except by an agreement in writing signed by the party against whom
enforcement of such amendment, modification, repeal, waiver, extension or
discharge is sought. No person, other than pursuant to a resolution of the Board
or the appropriate committee thereof, shall have authority on behalf of the
Company to agree to amend, modify, repeal, waive, extend, or discharge any
provision of this Agreement or anything in reference thereto.
(b) Notices. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return-receipt requested, postage prepaid,
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addressed, in either case, to the Company's headquarters or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually
received by the addressee.
(c) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Taxes. The Company may withhold from any amounts payable
under this Agreement such federal, state, or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) No Waiver. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(d) of this Agreement,
or the right of the Company to terminate the Executive's employment for Cause
pursuant to Section 4(b) of this Agreement shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.
(f) Entire Agreement. This instrument, together with the
Non-Competition Agreement, contains the entire agreement of the Executive and
the Company with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements are merged
herein and superseded hereby.
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IN WITNESS WHEREOF, the Executive and, pursuant to due authorization
from its Board of Directors, the Company, have caused this Agreement to be
executed as of the day and year first above written.
GOLDEN SKY SYSTEMS, INC.
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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ANNEX A
TO EMPLOYMENT
AGREEMENT
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer shall be responsible for (a) the strategic
direction, development and oversight of the company, (b) the growth of the
Company and (c) the deployment of strategic assets of the Company. The Chief
Executive Officer shall have responsibility for external relations with the
financial community and corporate governance. The Chief Financial Officer will
report directly to the Chief Executive Officer. The Chief Executive Officer
shall submit a report of the operations of the Company for the fiscal year to
the shareholders at their annual meeting and from time-to-time shall report to
the Board of Directors all matters within his knowledge that the interests of
the Company may require to be brought to their notice. So long as the Chief
Executive Officer is a member of the Board of Directors, he shall be the
Chairman of the Board of Directors.
