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EXHIBIT 10.17
SEPARATION AGREEMENT
THIS AGREEMENT (the "Agreement") made and entered into
effective as of July 11, 1997, by and between OpTel, Inc., a Delaware
corporation with its principal office at 1111 W. Mockingbird Lane, Dallas,
Texas 75247 (the "Company"), and Rory O. Cole, an individual residing in
Dallas, Texas ("Employee");
W I T N E S S E T H
WHEREAS, Employee has served as Chief Operating Officer of the
Company; and
WHEREAS, Employee has resigned from the office of Chief
Operating Officer and from any employment with the Company effective as of the
date of this Agreement; and
WHEREAS, the Company agrees to provide certain consideration
to Employee in exchange for a waiver and release of claims by Employee; and
WHEREAS, in consideration of such arrangements, the parties
hereto are willing to enter into this Agreement upon the terms and conditions
herein set forth.
NOW THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the parties hereto agree as follows:
1. Resignation by Employee: Effective as of July 11,
1997 (the "Effective Date"), Employee hereby resigns as Chief Operating Officer
of the Company. Employee further resigns, as of the Effective Date, from any
other position or office relating to the affairs of the Company.
2. Contractual Payment Upon Separation: The Company and
Employee agree that Employee is entitled to a lump-sum payment of $185,000
following his separation from employment under Employee's existing contractual
agreement with the Company. Employee further acknowledges that this is the sole
consideration to which he is entitled upon separation from employment under any
existing contractual agreement other than this Agreement.
3. Consideration for Execution of Agreement and Waiver
and Release: In consideration for Employee's execution of this Agreement and
the Waiver and Release attached hereto as Attachment A, Employee shall be
entitled to the consideration set forth in this Paragraph 3. This consideration
is provided subject to the binding execution by Employee of the attached Waiver
and Release, which must be executed by Employee on the date of execution of
this Agreement.
a. Lump Sum. The Company shall pay Employee a
one-time lump-sum payment of $34,194. Such amount shall be paid as
soon as practicable following the execution of the Waiver and Release
(the "Waiver Effective Date").
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b. Warrant Award. The Company shall issue to
Employee, pursuant to the arrant Agreement attached hereto, a warrant
(the "Warrant") to acquire 9,406.36 shares of Class A common stock of
the Company at an exercise price of $74.42 per share, which shall
become effective as of the Waiver Effective Date. The Warrant shall
not be treated as an incentive stock option, but shall be treated as a
nonqualified stock option under Section 83 of the Internal Revenue
Code of 1986, as amended. The Warrant shall be exercisable as of the
Waiver Effective Date, and shall terminate and expire on July 11,
2002, unless earlier terminated pursuant to its terms. The Warrant
shall be subject to all other terms and conditions set forth in the
Warrant Agreement. In exchange for the Warrant, the Option Agreement
dated November 12, 1996, shall terminate and be of no force and effect
from and after the Waiver Effective Date and the issuance of the
Warrant is conditioned upon no prior exercise of Employee's rights
under the Option Agreement.
c. Company Automobile. In addition to the payment due
under Paragraph 1.a. above, the Company shall pay Employee a lump-sum
payment of $22,007.91 as soon as practicable after the Waiver
Effective Date. This payment is equal to the book value of the Jeep
95 Grand Cherokee (the "Vehicle") currently provided to Employee by
the Company under a lease agreement with PHH Vehicle Management
Services. The Company agrees to assign to Employee its right to
acquire the Vehicle under the lease agreement; provided, however, that
Employee must exercise this right within seven days after the Waiver
Effective Date. From and after the Effective Date, Employee shall be
liable for all expenses relating to the Vehicle, including insurance,
maintenance, fuel, and lease payments.
d. Out-placement. The Company agrees to make available
to Employee out-placement services consisting of typical executive
out-placement support services including individual counseling,
instruction on resume writing, interviewing, networking, secretarial
support and the use of office facilities on the out-placement firm's
premises. The Company agrees to provide such out-placement services to
Employee through Reedie & Company until the earlier of (i) December
31, 1998, or (ii) such time as Employee accepts other employment or
engages in other business activities.
e. Bonus. In the event a bonus, is declared and paid to
senior management generally under the Company's Annual Bonus Plan with
respect to the fiscal year of the Company ending August 31, 1997, the
Company agrees to pay Employee a pro rated bonus amount determined by
multiplying the bonus amount that would have been available to him
were he still employed as the Chief Executive Officer of the Company
by the ratio of the number of days in the fiscal year through the
Effective Date 365 days. Any such bonus amount payable to Employee
shall be payable as soon practicable after the amount of the bonus has
been determined and paid to officers of the Company. The Company will
notify Employee of his right
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to a bonus payment and will provide Employee with appropriate back-up
calculations.
f. Tax Service. The Company agrees to reimburse
Employee for expenses incurred by Employee in the preparation of his
1996 and 1997 tax returns, up to a maximum amount of $1,500 for each
year's return. The Company agrees to reimburse this amount promptly
upon receipt of documentation of the amount of expense incurred by
Employee for this purpose.
g. Life Insurance. The Company agrees to use its best
efforts to enable Employee to convert his existing group life
insurance coverage to a personal life insurance policy. Such
conversion option shall be subject to the terms and conditions imposed
by the insurer. Employee is responsible for all premiums due after the
Effective Date.
h. U.K. Pension. The Company agrees to provide
reasonable assistance through MDH Benefits to effectuate Employee's
intention to transfer Employee's U.K Pension to Employee. The charges
of MDH Benefits for these services will be paid by the Company. The
Company makes no representation to Employee regarding the feasibility
of such a transfer, and Employee acknowledges that the Company shall
have no liability to Employee in the event such a transfer cannot be
effected with the reasonable assistance of the Company through MDH
Benefits.
i. Computer. The Company agrees to transfer to Employee
ownership of the IBM Thinkpad used by Employee immediately prior to
his termination of employment.
j. Company Telephone Line. The Company agrees to
reimburse the Employee for the cost incurred by Employee to convert
the existing business telephone line at Employee's residence to a
personal line or to remove the business telephone line from his
residence. The Company agrees to reimburse this amount promptly upon
receipt of documentation of the amount of expense incurred by Employee
for this purpose.
4. Transition Assistance. Employee agrees that for a
period of eighteen months after the date of this Agreement, Employee will
furnish such information and proper assistance as may be reasonably necessary
to assist the Company in the transition of Employee's responsibilities as an
officer of the Company and to assist the Company in connection with any
litigation in which the Company is or may become involved. The Company agrees
that Employee shall not be required to devote an unreasonable amount of time to
such assistance, and Employee shall not be required to perform such services as
such time as would cause interference with his other employment. The Company
will reimburse Employee for all reasonable out-of-pocket expenses incurred by
him in connection with his performance of such services under this Agreement in
accordance with the Company's standard policies, practices and procedures. In
addition, in the event the Company
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requires Employee to devote more than one hour in any business day to such
assistance, the Company agrees to pay Employee a consulting fee of $185 per
hour for Employee's time in excess of one hour. Employee shall submit to the
Company claims for reimbursement and fees and documentation of expenses within
sixty days of the date on which such expenses are incurred or services
performed. Notwithstanding the foregoing, however, from and after the Effective
Date Employee will not be to eligible to participate in any employee benefit
plans, programs or arrangements maintained by the Company will indemnify and
hold Employee harmless for any losses or expenses, including reasonable
attorney's fees, incurred as a result of assistance provided under this
Paragraph 4.
5. Confidentiality: Noncompetition: Nonsolicitation:
A. Confidentiality: Employee recognizes and
acknowledges that in the course of his duties with the Company and as a result
of the position of trust he has held with the Company he has obtained private
or confidential information and proprietary data relating to the Company and
its affiliates. Employee agrees that for a period of five years from the
Effective Date, he will not, either directly or indirectly, disclose or use
confidential information acquired during his relationship with the Company
except in connection with his assistance under this Agreement or with the prior
written consent of the Chairman of the Board of Directors or unless compelled
to do so by process of law. Furthermore, Employee agrees that, if compelled by
process of law to violate the provisions of this Paragraph 5, Employee will
provide prior written notice to the Company in accordance with the notice
provisions of Paragraph 12 of this Agreement so as to permit the Company to
seek a protective order or other protective measure; and Employee agrees to
provide such notice as soon as reasonably practicable and with all due
diligence recognizing that disclosure of confidential information could be
harmful to the Company. Finally, Employee agrees that the provisions of this
Agreement shall constitute "confidential information" as described in this
Paragraph 5.
B. Noncompetition: Unless and to the extent that the
Company gives Employee a written waiver, Employee agrees that during the
"Non-compete Period" (as defined in Paragraph 5.F. below) he will not (whether
acting alone or in concert with others, including actions as a member of a
partnership or a joint venture or an investor in or a holder of securities of
or an employee of, any corporation or other entity, or otherwise), (i) perform
any services that relate in any way to the conduct of the "Business" (as
defined in Paragraph 5.E. below) in the "Restricted Area" (as set forth on
Exhibit __) on behalf of any person, firm or corporation which is principally
and predominantly engaged in the Business, (ii) perform services in, or with
respect to, the Restricted Area that principally and predominantly are part of
or make up the Business, for any person, firm or corporation, or (iii) have any
interest in any person, firm, or corporation (except the Company) that is
principally and predominantly engaged in the Business and which has operations
in the Restricted Area. For purposes of this Paragraph 5.B., the determination
of whether services principally and predominantly relate to the Business shall
be made on the basis of the function performed, rather than on the basis of the
amount of time allocated to the function or any other measure. A person, firm
or corporation shall be determined to be principally and predominantly engaged
in the Business if a majority of the revenues or net income of the person, firm
or corporation are attributable to the Business. Solely by way of illustrating
the foregoing provisions of this Paragraph 5.B., Employee shall be free to
serve as the general manager of a traditional franchise
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cable enterprise in the Restricted Area, even if the operations of the
enterprise include the Business, as long as the services of Employee are not
principally and predominantly related to the Business. Also, by way of
illustration, Employee shall be free to conduct or invest in any enterprise
that operates the Business exclusively outside of the Restricted Area. Employee
shall be free, without restriction, to provide consulting, evaluation, or other
services to any entity that is considering becoming engaged in the Business,
whether or not the entity is considering engaging in the Business within the
Restricted Area, but Employee shall no longer provide services to such entity
after the entity becomes actively engaged in the Business if such services
would violate the foregoing provisions of this Paragraph 5.B. Notwithstanding
the provisions of clause (iii) of the first sentence of this Paragraph 5.B.,
however, Employee is not prohibited from holding as a passive investment up to
5% of the outstanding securities of any class of a company whose securities are
publicly traded, so long as Employee does not serve as a member of the board of
directors or an executive officer of or otherwise provide advice or services to
such company. Any request for a written waiver of any part of this covenant
shall be submitted in writing to the Company in accordance with the provisions
of Paragraph 12. The Company agrees to consider any such request within 10
business days of its receipt. The failure affirmatively to consent to any such
request shall be deemed disapproval of the request. The Company agrees to act
reasonably in considering any such request.
C. Nonsolicitation: Employee agrees that he shall not,
directly or indirectly, during the period commencing on the Effective Date and
ending on July 11, 1998, (a) take any action to solicit or divert any business
or customers away from the Company or its affiliates, (b) induce customers,
suppliers, agents or other persons under contract or otherwise associated or
doing business with the Company or its affiliates to terminate, reduce or alter
any such association or business with or from the Company or its affiliates
and/or (c) induce any person in the employment of the Company or its affiliates
or any Employee to the Company or its affiliates to terminate such employment
or consulting arrangement or accept employment or enter into any consulting
arrangement with anyone other than the Company or its affiliates.
D. Enforcement: Employee hereby agrees that a violation
of the provisions of Paragraph 5 or 6 would cause irreparable injury to the
Company and its affiliates, for which they would have no adequate remedy at
law. Any controversy or claim arising out of or relating to the provisions of
this Paragraph 5 or 6, or any alleged breach of Paragraph 5 or 6, shall be
settled by binding arbitration in accordance with Paragraph 10B.
Notwithstanding the foregoing, however, the Company specifically retains the
right before, during or after the pendency of any arbitration to seek
injunctive relief from a court having jurisdiction for any actual or threatened
breach of Paragraph 5 or 6 without necessity if complying with any requirement
as to the posting of a bond or other security (it being understood that
Employee hereby waives any such requirement). Any such injunctive relief shall
be in addition to any other remedies to which the Company may be entitled at
law or in equity or otherwise, and the institution and maintenance of an action
or judicial proceeding for, or pursuit of, such injunctive relief shall not
constitute a waiver of the right of the Company to submit the dispute to
arbitration.
If any provision of Paragraph 5 or 6 is found by either a
court of competent jurisdiction or the arbitrators to be unreasonably broad,
oppressive or unenforceable, such court or arbitrators (i) shall narrow the
scope of the Agreement in order to ensure that the application thereof
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is not unreasonably broad, oppressive or unenforceable, and (ii) to the fullest
extent permitted by law, shall enforce such Agreement as though reformed,
E. Business: For purposes of this Paragraph 5, the term
"Business" means the acquisition, development and operation of systems
employing 18 Ghz spectrum and/or any other media (including, without
limitation, SMATV and coaxial or fiber-optic cable) for or in connection with
the delivery of cable television, telephone services, paging services, Internet
and data services, cellular or other wireless communication services, security
services and utility management services to (i) residents of MDUs, and (ii)
Institutions. "Institutions" means hotels, motels and prisons and educational
and hospital facilities, each having 100 or more first outlets. "MDUs" means,
collectively multiple dwelling units (comprising high-rise and low-rise
apartment, condominium and cooperative complexes, town-house developments,
mobile home parks and congregate care and other similar facilities), each
containing 100 more dwelling units.
F. Non-compete Period: For purposes of this Paragraph 5,
the term "Noncompete Period" means the period commencing on the Effective Date
of this Agreement and, ending on the earlier of (i) the third anniversary of
the Effective Date or (ii) the date the Warrant is no longer outstanding and
exercisable, as a result of its exercise or cancellation, or (iii) the date a
"Change in Control" of the Company occurs as such term is defined in Paragraph
6(c) of the Option Agreement dated November 12, 1996.
6. Nondisparagement: As a material inducement to the
parties to enter into this Agreement, each of the parties to this Agreement
agrees not to (i) publicly criticize or disparage the other party (or any
affiliate with respect to the Company), or privately criticize or disparage the
other party (or any affiliate with respect to the Company) in a manner intended
or reasonably calculated to result in public embarrassment to, or injury to the
reputation of, the other party (or any affiliate with respect to the Company)
in any community in which the other party or affiliate is engaged in business;
or (ii) otherwise engage in any misconduct which is injurious to the business
or reputation of the other party (or any affiliate with respect to the
Company); provided, however, that neither party will be in breach of the
covenant contained above solely by reason of testimony which is compelled by
process of law. Employee agrees not to directly or indirectly take any action
inconsistent with the Waiver and Release or commit damage to the property of
the Company or any affiliate. The parties further agree not to make any public
or private oral or written statement to any person, or take any action or
position inconsistent with, the agreed statement of facts set forth on Exhibit
A. As used in Paragraphs 5 and 6 of this Agreement, the term "affiliate" means
the Company; Le Groupe Videotron Ltee ("Videotron"); any direct or indirect
subsidiary of the Company, any direct or in direct subsidiary of Videotron; any
other entity in which the Company, Videotron or any of their direct or indirect
subsidiaries owns more than 50% of the outstanding equity interests; any
officer director or employee of the Company or of any of the foregoing
entities; and any former officer, director or employee of the Company or of any
of the foregoing entities.
7. Covenants Regarding Transmission Holdings, Inc.
Employee agrees that, upon execution of this Amendment, he hereby resigns as an
officer and director and from any other position or office held with respect to
Transmission Holdings, Inc. ("THI"). Employee further agrees that, upon receipt
of written notice from the Company, which will be given within ten business
days
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after execution of this Agreement, he will sell the shares of common stock of
TIE (the "THI Shares") which he owns as of the Effective Date to the Company or
any person or entity designated by the Company for a payment in cash of $100
per share. Employee agrees that the provisions of this Paragraph 7 shall be
binding upon any transferee of THI Shares, including a transferee by reason of
death. Employee agrees that immediately upon the execution of this Agreement,
he will furnish to the Company his certificate or certificates for the THI
Shares in order to permit the Company to inscribe a legend on such certificate
or certificates evidencing the provisions of this Paragraph 7. Employee further
agrees at the provisions of Paragraphs 5 and 6 of this Agreement shall apply to
THI and all covenants by Employee therein in favor of the Company shall apply
to THI and THI shall be deemed to be a third-party beneficiary of this
Agreement.
8. Return of Company Property: Employee acknowledges
and agrees that all business and financial information, customer lists and
financial information on customers and other information relating to the
business, products, services, customers, methods or tactics of the Company are
the exclusive property of the Company. Employee confirms that prior to the
execution of this Agreement Employee has returned to the Company all such
information in the Employee's possession, whether in writing or on computer
discs or other media without retaining any copies, extracts or other
reproductions thereof.
9. Effect of Prior Agreements: This Agreement contains
the entire understanding between the parties hereto relating to the subject
matter hereof and supersedes any other prior agreement between the Company and
Employee.
10. General Provisions:
A. Nonassignability. Except as may expressly be provided
herein, neither this Agreement nor any right or interest hereunder shall be
subject, in any manner, to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, whether voluntary or involuntary, by
operation of law or otherwise, any attempt at such shall be void; and further
provided, that any such benefit shall not in any way be subject to the debts,
contract, liabilities, engagements or torts of Employee nor shall it be subject
to attachment or legal process for or against Employee.
B. Submission to Arbitration. Subject to the right of
the Company to seek injunctive relief under the provisions of Paragraph 5D
above (relating to the obligations of Employee under Paragraphs 5 and 6) and to
the right of the Executive to seek injunctive relief for a violation by the
Company of Paragraph 6, any controversy or claim arising out of or relating to
this contract or its alleged breach shall be settled by binding arbitration in
Dallas, Texas before three arbitrators in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), and any
judgment it on the award rendered by the arbitrators may be entered by any
court having jurisdiction thereof The arbitrators shall be selected by mutual
agreement of the parties, if possible; provided, however, that persons eligible
to be selected as arbitrators shall be limited to attorneys-at-law who (a) are
on the AAA's Large, Complex Case Panel or a Center for Public Resources ("CPR")
Panel of Distinguished Neutrals, or who have professional credentials similar
to the attorneys listed on such AAA and CPR Panels, and (b) who practiced law
for at least 15 years
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as an attorney in Texas specializing in either general commercial litigation or
general corporate and commercial matters. If the parties fail to reach
agreement upon appointment of an arbitrator within thirty days following
receipt by one party of the other party's notice of desire to arbitrate, the
arbitrator shall be selected from a panel or panels of persons submitted by the
AAA who qualify as described above. The selection process shall be that which
is set forth in the AAA Commercial Arbitration Rules then prevailing, except
that, if the parties fail to select an arbitrator from one or more panels, AAA
shall not have the power to make an appointment but shall continue to submit
additional panels until an arbitrator has been selected.
In any such arbitration proceeding, the arbitrators shall not
have the power or authority to award punitive damages to any party. Judgment
upon the award rendered may be entered in any court having jurisdiction. Each
of Employee and the Company shall, subject to the award of the arbitrators, pay
an equal share of the arbitrators' fees. The arbitrators shall have the power
to award recovery of all costs and fees (including attorneys' fees,
administrative fees, arbitrators' fees, and court costs) to the prevailing
party.
C. Taxes. Employee acknowledges that he has sought the
advice of his own tax advisor regarding the tax treatment of income under this
Agreement. The Company shall withhold from the amounts payable to Employee
under Paragraphs 2 and 3 of this Agreement all federal, state and local taxes
that shall be required pursuant to any law or governmental regulation or
ruling.
D. Source of Payments. All payments provided in this
Agreement shall be paid in cash from the general funds of the Company, and no
special or separate funds shall be established and no other segregation of
assets shall be made to assure payments. Employee shall have no right, title,
or interest whatever in or to any investments which the Company may make to aid
the Company in meeting its obligations hereunder. Nothing contained in this
Agreement, and no action taken pursuant to this provision, shall create or be
construed to create a trust of any kind, or a fiduciary relationship, between
the Company and Employee or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company.
E. Survival. This Agreement shall survive a merger,
consolidation, reorganization, sale of assets or any other business combination
of the Company.
F. Headings. The paragraph headings set forth herein are
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement whatsoever.
11. Modification and Waiver:
A. Amendment of Agreement. This Agreement may not be
modified or amended except by an instrument in writing signed by the parties
hereto.
B. Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be an estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel.
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12. Notices: All notices or communications hereunder
shall be in writing, addressed as follows:
To the Company:
OpTel, Inc.
1111 W. Mockingbird Lane
Dallas, Texas 75247
Attn: President
Copy: General Counsel
To Employee:
Rory O. Cole
4339 Beverly Drive
Dallas, Texas 75205
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy
or facsimile transmission, upon confirmation of receipt by the sender of such
transmission or (iii) if sent by registered or certified mail, on the fifth day
after the day on which such notice is mailed.
13. Governing Law: This Agreement has been executed and
delivered in the State of Texas, and its validity interpretation, performance,
and enforcement shall be governed by the laws of said State.
14. No Modification of Indemnification Rights. Nothing in
this Agreement shall modify or affect Employee's rights available to
indemnification from the Company or THI under Delaware corporate law or the
Bylaws or Certificate of Incorporation of the Company or THI or under the
relevant director's and officer's liability policy of the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and its seal to be affixed hereunto by its officers thereunto duty
authorized, and Employee has signed this Agreement, all as of the day first
above written.
OpTel, Inc.
By:
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Rory O. Cole ("Employee")
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EXHIBIT A
Rory O. Cole has elected to resign from the office of Chief
Operating Officer of OpTel, Inc., in order to pursue other opportunities. All
inquiries should be directed to the Vice President of Human Resources or the
Chief Executive Officer of OpTel, Inc.
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EXHIBIT B
COUNTIES
SAN LOS SAN BRYAN/
FLORIDA ILLINOIS DALLAS AUSTIN HOUSTON FRANCISCO ANGELES DIEGO PHOENIX DENVER LAS VEGAS COLLEGE STATION
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Hernando Cook Dallas Travis Harris Alameda Los San Maricopa Boulder Henderson Brazos
Angeles Diego
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Pinellas DuPage Denton Williams Galveston Contra San Pinal Arapahoe Clark
Costa Bernadino
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Dade Will Tarrant San Mateo Graze Adams
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Broward McHenry Collin San Riverside Jefferson
Francisco
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Palm Beach Lake Santa Denver
County Clara
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Hillsborough El Paso
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Pasco Frisco
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