1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of April 15, 1999, by and
between OPTEL, INC., a Delaware corporation (the "Company"), and STEPHEN R.
DUBE ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by the Company as Chief
Operating Officer of the Company; and
WHEREAS, the Company desires to continue to employ Executive and
Executive has agreed to such continuation, subject to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the Company and Executive (individually a "Party"
and together the "Parties") agree as follows:
1. Definitions.
As used in this Agreement, unless the context otherwise requires:
(a) "Affiliate" of a Person shall mean a Person that directly or
indirectly controls, is controlled by, or is under common control with the
Person specified.
(b) "Aggregate Life Insurance Benefits" shall have the meaning set
forth in Section 9(a)(ii).
(c) "Average Annual Bonus" shall mean the average of the two most
recent annual bonuses (not including any payments from long-term incentive
programs) received by or due to Executive for completed fiscal years
immediately prior to the termination of the Term of Employment.
(d) "Base Salary" shall mean the salary provided for in Section 4.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Cause" shall mean:
2
(i) Executive's conviction of a crime involving moral turpitude
(excluding offenses such as driving while intoxicated); or
(ii) Executive's (A) commission of a fraud upon the Company or
(B) material breach of this Agreement (including by wilfully failing or
neglecting to perform Executive's duties hereunder), which breach, if curable,
is not substantially cured within 10 days after written notice to Executive
specifying the nature of the breach.
(g) A "Change in Control" shall mean the occurrence of any one of
the following events:
(i) Any "person," as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934 (other than Executive, Le Groupe
Videotron Ltee, Sojecci Ltee, Sojecci (1995) Ltee, Andre Chagnon and his spouse
and descendants, Caisse de depot et placement du Quebec, and their respective
Affiliates (collectively, all or any of Le Groupe Videotron Ltee, Sojecci Ltee,
Sojecci (1995) Ltee, Andre Chagnon and his spouse and descendants, Caisse de
depot et placement du Quebec, and their respective Affiliates constitute the
"Existing Control Group")), is a "beneficial owner," as such term is used in
Rule 13d-3 promulgated under that act, of shares of the Voting Stock of the
Company having more total votes in an election for directors than shares of
Voting Stock of which the Existing Control Group is the beneficial owner and,
at the same time, the Existing Control Group does not have the power, by
contract or otherwise, to elect or designate a majority of the members of the
Board;
(ii) the majority of the members of the Board consists of
individuals other than Incumbent Directors, which term means the members of the
Board on the date of this Agreement; provided that any individual becoming a
director subsequent to such date whose election or nomination for election as a
director was supported by two-thirds of the directors who were Incumbent
Directors at the time of such election or nomination shall be an Incumbent
Director;
(iii) the Company adopts any plan of liquidation providing for
the distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or business of the
Company are disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Company immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting Stock
of the Company, the Voting Stock or other ownership interests of the Person or
Persons, if any, that succeed to the business of the Company) and at any time
thereafter the Existing Control Group does not have the power, by contract or
otherwise, to elect or designate a majority of the members of the Board; or
2
3
(v) the Company combines with another Person and is the
surviving corporation but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or
indirectly, not more than 50% of the Voting Stock of the surviving corporation
(there being excluded from the number of shares held by such shareholders, but
not from the Voting Stock of the surviving corporation, any shares received by
Affiliates of such other Person in exchange for stock of such other Person) and
at any time thereafter the Existing Control Group does not have the power, by
contract or otherwise, to elect or designate a majority of the members of the
Board.
(h) "Confidential Information" shall mean all information that is
not known or available to the public concerning the business of the Company or
any Subsidiary relating to its products, product development, trade secrets,
customers, suppliers, finances, and business plans and strategies. For this
purpose, information known or available generally within the trade or industry
of the Company or any Subsidiary shall be deemed to be known or available to
the public. Confidential Information shall include information that is, or
becomes, known to the public as a result of a breach by Executive of the
provisions of Section 13.
(i) "Constructive Termination Without Cause" shall mean a
termination of the Term of Employment by written notice given by Executive
within 60 days following the occurrence, without Executive's prior written
consent, of one or more of the following events (except in consequence of a
prior termination):
(i) a reduction in or elimination of (A) Executive's then
current Base Salary, or (B) Executive's opportunity for any long-term incentive
award for which he is eligible under Section 6 or the termination or material
reduction of any material employee benefit or perquisite enjoyed by him
including the annual bonus provided for under Section 5; provided, however,
that in the case of clause (B), only if the reduction or elimination is greater
than that applied to other executives of the Company of the same class or level
as Executive;
(ii) the failure to elect or reelect Executive to the position
specified in Section 3(a), or Executive's removal, without Cause, from such
position, or a material diminution in Executive's duties, authority or
responsibility as described in Section 3(a), or the assignment to Executive of
duties which are materially inconsistent with such duties or which materially
impair Executive's ability to function in such position, and, in the case of
any such assignment, the failure of the Company to cure such inconsistency or
impairment within 15 days after its receipt of notice thereof from Executive;
(iii) the failure to continue Executive's participation in any
incentive compensation plan for which Executive is eligible unless executives
of the same class or level as Executive also cease to participate in such plan
or a plan providing a substantially similar opportunity is substituted; or
3
4
(iv) the relocation of the Company's principal office outside
the area comprised by Dallas and Tarrant Counties, Texas, having dimensions of
approximately 58 miles by 29 miles and commonly referred to as the Dallas-Fort
Worth Metroplex.
(j) "Disability" shall mean Executive's inability, due to physical
or mental incapacity, to substantially perform Executive's duties and
responsibilities under this Agreement for a period of 180 consecutive days or
for 180 days in a 365-day period.
(k) "MDU Business" shall mean the delivery of video and
telecommunications services to residential multiple dwelling units.
(l) "Minimum Severance Period" shall have the meaning set forth in
Section 9(d)(vi)(A), subject to modification as provided in Section 9(e) in the
event of a Change in Control.
(m) "Non-Extension Event" shall mean any termination of the Term of
Employment resulting from an election by the Company not to renew the Term of
Employment.
(n) "Person" shall mean an individual, firm, corporation, trust,
joint venture, partnership, limited liability company, association,
unincorporated organization or other entity or any governmental body or
subdivision, agency, commission or authority thereof.
(o) "Stock" shall mean the Common Stock of the Company.
(p) "Subsidiary" shall mean any Person of which the Company owns,
directly or indirectly, more than 50% of the Voting Stock or, in the case of a
Person other than a corporation, more than 50% of the equity interest.
(q) "Term of Employment" shall mean the period or periods specified
in Section 2.
(r) "Voting Stock" shall mean capital stock of any class or classes
having general voting power under ordinary circumstances, in the absence of
contingencies, to elect a majority of the directors of a corporation.
2. Term of Employment.
The Company hereby employs Executive, and Executive hereby accepts
such employment, for the Term of Employment commencing April 15, 1999 and
ending at the close of business on April 15, 2001, subject to earlier
termination of the Term of Employment in accordance with the terms of this
Agreement. The Term of Employment shall be automatically renewed from year to
year unless either the Company or Executive provides the other with
4
5
written notice of non-renewal at least 30 days prior to the date on which the
Term of Employment would otherwise expire.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, Executive shall be employed as
Chief Operating Officer of the Company. In that capacity Executive shall have
the duties, authority and responsibilities normally associated with such
position and shall report to the Chief Executive Officer of the Company.
Executive shall, at the request of the Board or the Chief Executive Officer of
the Company, also serve as an officer and/or director of one or more
Subsidiaries without additional compensation.
(b) During the Term of Employment Executive shall devote his full
attention and expend his best efforts, energies and skills on a full-time basis
to the business of the Company and its Subsidiaries.
(c) Executive's services to the Company will be rendered primarily
at the Company's principal office. Executive acknowledges, however, that
Executive's services may require extensive travel.
(d) Nothing herein shall preclude Executive from (i) serving as a
director of one or more other corporations not engaged in competition with the
Company or of one or more trade associations and/or charitable organizations,
subject in each case to prior approval by the Chief Executive Officer of the
Company, (ii) engaging in charitable activities and community affairs, (iii)
managing Executive's personal investments and affairs and those of his family,
and (iv) engaging in other business transactions, provided that such activities
individually and in the aggregate do not reflect adversely on Executive's
personal or business reputation or the Company or its business and do not
interfere with the proper performance of Executive's duties and
responsibilities to the Company and its Subsidiaries.
4. Base Salary.
Executive shall receive Base Salary from the Company at the annual
rate of $245,000, payable in accordance with the regular payroll practices of
the Company, but in no event less frequently than monthly. Executive's Base
Salary shall be subject to review by the Company on an annual basis but shall
not be decreased.
5. Annual Bonus.
Executive shall be entitled to be considered for receipt of an
annual bonus, the calculation of which is to be determined in accordance with
an incentive plan established and
5
6
administered by the Board which includes a "target" bonus for Executive for
each bonus period, as such plan may be modified by the Board from time to time.
6
7
6. Long-Term Incentive Programs.
Executive shall be eligible to participate in any long-term
incentive programs of the Company on the same basis as other senior executives
of the Company.
7. Employee Benefit Programs and Vacation.
(a) During the Term of Employment Executive shall be entitled to
participate in all employee pension and welfare benefit plans and programs made
available to the Company's senior executives generally, as such plans or
programs may be in effect from time to time.
(b) Executive shall be entitled to four weeks of vacation per year.
8. Reimbursement of Business and Other Expenses and Perquisites.
(a) Executive is authorized to incur reasonable business expenses
in carrying out his duties and responsibilities under this Agreement, and the
Company shall promptly reimburse Executive for all such expenses, all subject
to and in accordance with the Company's policies and procedures as adopted and
in effect from time to time and applicable to its senior executives of
comparable status.
(b) To assist Executive in the performance of his duties and
responsibilities under this Agreement, the Company shall provide to Executive
an allowance for the use of an automobile in accordance with the Company's
policies applicable generally to the Company's senior executives of comparable
class or status; provided, however, that, if Executive currently uses a leased
automobile provided by the Company, then in lieu of such allowance the Company
shall continue to provide Executive with the use of such leased automobile for
the remaining initial term of the applicable lease.
(c) Executive shall be eligible to receive all perquisites made
generally available by the Company to its senior executives of comparable class
or status.
(d) Executive shall be reimbursed for the cost of air travel
(economy class) for up to four round trip tickets between Dallas and Canada for
Executive and his immediate family during each calendar year covered by this
Agreement.
(e) Executive shall be reimbursed for 50% of all reasonable costs
associated with his spouse's attendance at a university program of her choice
in the greater Dallas area.
7
8
(f) Executive shall be reimbursed for all reasonable expenses
associated with the preparation of his and his spouse's U.S. and Canadian
income tax returns for tax years ending during the Term of Employment.
9. Termination of Term of Employment.
(a) Termination Due to Death. The Term of Employment shall
terminate upon Executive's death. In the event of such termination due to
Executive's death, Executive's estate or Executive's beneficiaries, as the case
may be, shall be entitled to:
(i) the proceeds payable in the event of Executive's death
under the group life insurance policy maintained by the Company for the benefit
of its senior executive employees and others;
(ii) an amount, payable promptly in a lump sum, equal to the
excess, if any, of (A) Base Salary for the unexpired portion of the Term of
Employment remaining as of the time immediately prior to Executive's death,
over (B) the aggregate amount of life insurance proceeds payable to Executive's
estate or beneficiaries pursuant to clause (i) of this Section 9(a) or pursuant
to any other policy on Executive's life for which premiums are paid by the
Company or any of its Affiliates (the "Aggregate Life Insurance Benefits");
(iii) if the date of Executive's death coincides with the last
day of a bonus period, a bonus for such bonus period in accordance with the
terms of the applicable incentive plan; otherwise, a bonus for the bonus period
in which Executive's death occurs, determined pro rata with respect to
Executive's target bonus for such bonus period based on the number of completed
months of Executive's employment by the Company during such bonus period;
(iv) the balance of any bonus earned (but not yet paid) for any
bonus period prior to the bonus period in which Executive's death occurs;
(v) any amounts earned, accrued or owing but not yet paid under
Section 6, 7 or 8; and
(vi) any other or additional benefits provided for in
accordance with applicable plans and programs of the Company.
(b) Termination Due to Disability. The Term of Employment may be
terminated by the Company by written notice to Executive in the case of
Executive's Disability. In the event of such termination due to Disability,
Executive shall be entitled to:
8
9
(i) an amount, payable promptly in a lump sum, equal to the
excess, if any, of (A) Base Salary for the unexpired portion of the Term of
Employment remaining as of the time immediately prior to such termination, over
(B) the amount of any disability benefits provided to Executive by the Company
or under any disability insurance paid for, or for which premiums paid by
Executive were reimbursed, by the Company;
(ii) if such termination coincides with the last day of a bonus
period, a bonus for such bonus period in accordance with the terms of the
applicable incentive plan; otherwise, a bonus for the bonus period in which
such termination occurs, determined pro rata with respect to Executive's target
bonus for such bonus period based on the number of completed months of
Executive's employment by the Company during such bonus period,
(iii) the balance of any bonus earned (but not yet paid) for
any bonus period prior to the bonus period in which such termination occurs;
(iv) any amounts earned, accrued or owing but not yet paid
under Section 6, 7 or 8; and
(v) any other or additional benefits provided for in accordance
with applicable plans and programs of the Company.
(c) Termination by the Company for Cause. In the event the Company
terminates the Term of Employment for Cause, Executive shall be entitled to:
(i) Base Salary through the date of such termination;
(ii) any bonus earned (but not yet paid) for any bonus period
prior to the bonus period in which such termination occurs;
(iii) any amounts earned, accrued or owing but not yet paid
under Section 6, 7 or 8; and
(iv) any other or additional benefits provided for in
accordance with applicable plans or programs of the Company.
(d) Termination Without Cause or Constructive Termination Without
Cause. In the event the Term of Employment is terminated by the Company without
Cause, other than due to Executive's Disability or death, or in the event the
Term of Employment is terminated due to a Constructive Termination Without
Cause, Executive shall be entitled to:
(i) Base Salary through the date of such termination;
9
10
(ii) if the date of such termination coincides with the last
day of a bonus period, a bonus for such bonus period in accordance with the
terms of the applicable incentive plan; otherwise, a bonus for the bonus period
in which such termination occurs, determined pro rata with respect to
Executive's target bonus for such bonus period based on the number of completed
months of Executive's employment by the Company during such bonus period;
(iii) the balance of any bonus earned (but not yet paid) for
any bonus period prior to the bonus period in which such termination occurs;
(iv) any amounts earned, accrued or owing but not yet paid
under Section 6, 7 or 8;
(v) any other or additional benefits provided for in accordance
with applicable plans and programs of the Company; and
(vi) to elect, within 30 days after such termination, either
(x) to cease being an employee of the Company and receive the lump-sum payment
described in section 9(d)(vi)(A) or (y) to remain an employee of the Company
for the period described in Section 9(d)(vi)(B). After Executive makes such
election, the following provisions shall apply:
(A) In the event Executive makes the election provided in
clause (x) of Section 9(d)(vi), then, subject to the requirements of
Section 9(j), the Company shall pay to Executive in a lump sum: (1) an
amount equal to Base Salary for the period (the "Minimum Severance
Period") that is the longer of 12 months or the unexpired portion of
the Term of Employment remaining as of the time immediately prior to
such termination, plus (2) an amount equal to Average Annual Bonus
pro-rata for the Minimum Severance Period.
(B) In the event Executive makes the election provided in
clause (y) of Section 9(d)(vi), then, subject to the requirements of
Section 9(j), Executive will remain an employee of the Company (but
without any title) until the end of the Minimum Severance Period, and
the Company shall pay to Executive Base Salary for such period plus
Average Annual Bonus pro-rata for such period; provided, however, that
(1) if Executive dies during such period, Executive's
payments pursuant to this Section 9(d)(vi)(B) shall cease, and
Executive's estate or beneficiaries, as the case may be, will be
entitled to receive the Aggregate Life Insurance Benefits, plus a
lump sum amount (which shall be paid by the Company promptly after
Executive's death) equal to the excess, if any, of (x) the balance
of the payments of Base Salary and Average Annual
10
11
Bonus that Executive would have been entitled to receive pursuant
to this Section 9(d)(vi)(B) had Executive remained on the Company's
payroll until the end of such period over (y) the amount of the
Aggregate Life Insurance Benefits; and
(2) if Executive accepts substantially full-time
employment with any other Person during such period or notifies the
Company in writing of Executive's intention to terminate his
employment during such period, Executive will cease to be an
employee of the Company effective upon the earlier of the effective
date of such termination as specified by Executive in such notice
or the commencement of such employment, and the Company shall
promptly pay to Executive a lump sum equal to the balance of the
payments of Base Salary and Average Annual Bonus that Executive
would have been entitled to receive pursuant to this Section
9(d)(vi)(B) had Executive remained on the Company's payroll until
the end of such period.
(C) In the event Executive makes the election provided in
clause (y) of Section 9(d)(vi), then during the period Executive
remains on the payroll of the Company, Executive will continue to be
eligible to receive the medical and life insurance benefits which all
other employees of the Company are then entitled to receive, as such
benefits may be amended, changed or eliminated from time to time.
Executive shall not be entitled to any other perquisite or benefit
provided by the Company to its senior executives or employees
generally or otherwise specifically provided for in this Agreement and
shall not be entitled to any additional awards or grants under any
long-term incentive plan. In the event Executive makes the election
provided in clause (y) of Section 9(d)(vi), Executive will continue to
be an employee of the Company for purposes of any stock option and
restricted shares agreements until such time as Executive leaves the
payroll of the Company.
(e) Acceleration of Entitlements in Connection with a Change in
Control or Termination. Upon a Change in Control (regardless of whether
Executive continues in employment by the Company or the termination of the Term
of Employment for any reason whatsoever) Executive shall become immediately
entitled to exercise in full any stock option to acquire Stock during the
remainder of the term of such option. Without limitation of the preceding
sentence, upon the termination of the Term of Employment (including upon a
Non-Extension Event or Disability or death) otherwise than for Cause, Executive
shall become immediately entitled to exercise in full any stock option to
acquire Stock during the remainder of the term of such option, to the extent
such option would otherwise have vested or become exercisable within 12 months
after such termination of the Term of Employment but, unless a Change in
Control shall have occurred, all such options that have not previously expired
shall
11
12
automatically expire on the date that is 12 months after such termination of
the Term of Employment. If, in connection with a Change in Control or within 12
months after a Change in Control, the Term of Employment is terminated without
Cause, other than due to Disability or death, or due to a Constructive
Termination Without Cause, then, without limitation of the payments, benefits
and elections provided in Section 9(d) and the first sentence of this Section
9(e), upon such Change in Control or such later termination, all amounts,
entitlements and benefits awarded to Executive or to which Executive is
otherwise entitled under any grant, plan or program of the Company but which
are not yet vested shall become fully vested except to the extent such vesting
would be inconsistent with the terms of the relevant plan. Without limitation
of the benefits to Executive pursuant to the preceding sentence or any of the
other provisions of this Agreement, if, in connection with a Change in Control
or within 12 months after a Change in Control, the Term of Employment is
terminated due to a Constructive Termination Without Cause or by the Company
without Cause (other than due to Disability or death), then, (A) the "Minimum
Severance Period" for purposes of Section 9(d) shall be not less than 24 months
and (B) upon such Change in Control (or such later termination) all amounts,
entitlements and benefits awarded to Executive or to which Executive is
otherwise entitled under any grant, plan or program of the Company but which
are not yet vested shall become fully vested except to the extent such vesting
would be inconsistent with the terms of the relevant plan. In connection with
the occurrence of a Change in Control, Executive and the Company agree to
negotiate in good faith payment arrangements and covenant changes (without
reducing the total amount payable pursuant to this Section 9(e)) designed to
preserve to the Company the deductibility for federal income tax purposes of,
and eliminate any excise tax imposed by Section 4999 of the Code payable in
respect of, amounts paid or benefits inuring to Executive pursuant to this
Section 9(e).
(f) Voluntary Termination. A termination of the Term of Employment
by Executive on his own initiative, other than a termination due to death or
Disability or a Constructive Termination without Cause, shall be treated as a
Termination for Cause, and, accordingly, Executive shall have only the
entitlements provided in Section 9(c).
(g) Termination Because of Non-Renewal. In the event of a Non-
Extension Event, Executive shall be entitled to:
(i) Base Salary through the date of expiration of the Term of
Employment;
(ii) if the expiration of the Term of Employment coincides with
the last day of a bonus period, a bonus for such bonus period in accordance
with the terms of the applicable incentive plan; otherwise, a bonus for the
bonus period in which the Term of Employment expires, determined pro rata with
respect to Executive's target bonus for such bonus period based on the number
of completed months of Executive's employment by the Company during such bonus
period;
12
13
(iii) the balance of any bonus earned (but not yet paid) for
any bonus period prior to the bonus period in which the Term of Employment
expires;
(iv) any amounts earned, accrued or owing but not yet paid
under Section 6, 7 or 8;
(v) any other or additional benefits provided for in accordance
with applicable plans and programs of the Company; and
(vi) to elect within 30 days after such termination, either (x)
to cease being an employee of the Company and receive the lump-sum payment
described in section 9(g)(vi)(A) or (y) to remain an employee of the Company
for the period described in Section 9(g)(vi)(B). After Executive makes such
election, the following provisions shall apply:
(A) In the event Executive makes the election provided in
clause (x) of Section 9(g)(vi), subject to the requirements of
Section 9(j), the Company shall pay to Executive in a lump sum: (1)
an amount equal to Base Salary for a period of 12 months (or 24
months, if a Change in Control has occurred during the Term of
Employment and the Term of Employment has not been renewed at least
once after the Change in Control), plus (2) an amount equal to
Average Annual Bonus pro-rata for the same period.
(B) In the event Executive makes the election provided in
clause (y) of Section 9(g)(vi), subject to the requirements of
Section 9(j), Executive will remain an employee of the Company (but
without any title) for the period of 12 months following the
expiration of the Term of Employment (or 24 months, if a Change in
Control has occurred during the Term of Employment and the Term of
Employment has not been renewed at least once after the Change in
Control), and the Company shall pay to Executive Base Salary for
such period plus Average Annual Bonus pro-rata for such period;
provided, however, that
(1) if Executive dies during such period, Executive's
payments pursuant to this Section 9(g)(vi)(B) shall cease, and
Executive's estate or beneficiaries, as the case may be, will
be entitled to receive the Aggregate Life Insurance Benefits,
plus a lump sum amount (which shall be paid by the Company
promptly after Executive's death) equal to the excess, if any,
of (x) the balance of the payments of Base Salary and Average
Annual Bonus that Executive would have been entitled to receive
pursuant to this Section 9(g)(vi)(B) had Executive remained on
the Company's payroll until the end of such period over (y) the
amount of the Aggregate Life Insurance Benefits; and
13
14
(2) if Executive accepts substantially full-time
employment with any other Person during such period or notifies
the Company in writing of Executive's intention to terminate
Executive's employment during such period, Executive will cease
to be an employee of the Company, effective upon the earlier of
the effective date of such termination as specified by
Executive in such notice or the commencement of such
employment, and the Company shall promptly pay to Executive a
lump sum equal to the balance of the payments of Base Salary
and Average Annual Bonus that Executive would have been
entitled to receive pursuant to this Section 9(g)(vi)(B) had
Executive remained on the Company's payroll until the end of
such period.
(C) In the event Executive makes an election provided in
clause (y) of Section 9(g)(vi), then during the period Executive
remains on the payroll of the Company, Executive will continue to
be eligible to receive the medical and life insurance benefits all
other employees of the Company are then entitled to receive, as
amended, changed or eliminated, from time to time. Executive shall
not be entitled to any other perquisite or benefit provided by the
Company to its senior executives generally or otherwise
specifically provided for in this Agreement and shall not be
entitled to any additional awards or grants under any long-term
incentive plan. In the event of an election pursuant to clause (y)
of Section 9(d)(vi), Executive will continue to be an employee of
the Company for purposes of any stock option and restricted shares
agreements until such time as Executive leaves the payroll of the
Company.
(h) No Mitigation; No Offset. In the event of any termination of
the Term of Employment under this Section 9, Executive shall be under no
obligation to seek other employment and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment obtained by Executive except as
specifically provided in this Section 9.
(i) Nature of Payments. Any amounts due under this Section 9 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.
(j) General Release. In partial consideration for, and as a
condition of, the Company's obligation to make the payments described in
Sections 9(d)(vi) and 9(g)(vi), Executive shall execute and deliver to the
Company a release of all claims Executive shall then have against the Company,
its Affiliates and their related Persons arising out of or in connection with
Executive's employment or termination of employment, including, but not limited
to, a release of all claims of discrimination. The Company will deliver such
release to Executive at or about the time it delivers or receives the notice of
termination, and Executive shall execute and
14
15
deliver such release to the Company within 21 days thereafter, except that in
case of expiration of the Term of Employment following a Non-Extension Event,
the release will be delivered to Executive upon such expiration and shall be
executed and delivered by Executive within 21 days after such expiration. If
Executive fails to execute and deliver such release to the Company within such
21-day period, or if Executive revokes Executive's consent to such release as
provided for therein, Executive will not be eligible to receive any further
payments from the Company pursuant to Section 9(d)(vi) or 9(g)(vi).
(k) Other Severance. In the event the Company's written severance
pay policy applicable to Executive provides for greater severance pay and
benefits than are provided for in Section 9(d) or 9(g), Executive may elect to
receive termination pay and benefits under the terms and conditions of such
policy in lieu of the payments and benefits under Section 9(d) or 9(g). It is
understood by the Parties that Executive shall not be entitled to both the
payments and benefits under the severance pay policy and those available under
Section 9(d) or 9(g). Notwithstanding the foregoing, in addition to being
entitled to the greater of the payments and benefits under the severance pay
policy and under Section 9(d) or 9(g), as applicable, Executive shall be
entitled to professional outplacement services (including office space and
secretarial services), at a cost not exceeding 10% of Executive's annual Base
Salary, in accordance with the Company's policies regarding outplacement
services; provided, however, that payments pursuant to this sentence shall be
made only for actual outplacement services, and Executive shall not have the
option to elect to receive all or part of the maximum allowances therefor in
lieu of outplacement services.
(l) Relocation. Notwithstanding the provisions of Section 9(k), in
the event Executive becomes entitled to payments and benefits under Section
9(b), 9(d) or 9(g), Executive shall also be entitled to receive from the
Company relocation assistance payments, consisting of payment or reimbursement
of:
(i) costs incurred in the sale of Executive's primary residence
in the Dallas area, including sales commissions not to exceed local custom, and
all other normal closing costs in connection with such sale; provided that, at
Executive's election, Executive may, in lieu of Executive himself selling such
primary residence to a third party, sell the residence to the Company or its
designee at fair market value as determined immediately below. Fair market
value shall be deemed to be the average of two bona fide appraisals prepared at
the time of the proposed sale by two accredited appraisers selected by
Executive. In the event the fair market value, as determined above, is less
than the actual contract purchase price paid by Executive for the purchase of
said residence, then the Company will reimburse Executive for the difference
between such purchase and sales prices;
(ii) all reasonable moving expenses to another location in the
United States or Canada, including packing, transport, temporary storage and
unpacking
15
16
(including the cost of moving one vehicle), all through movers or moving agents
designated or approved by the Company;
(iii) reasonable costs (not exceeding costs of economy air fare
and appropriate lodging) of one house hunting trip for Executive and spouse;
and
(iv) a tax "gross-up" for all sums paid to Executive pursuant
to clauses (i) through (iv) of this paragraph (l) that are includable in
Executive's taxable income for U.S. Federal Income Tax purposes (i.e., an
amount which, after the payment of the U.S. Federal, state and local income
taxes to which Executive is subject on the payments made to or for Executive's
benefit pursuant to this paragraph (l), calculated at the maximum rate
applicable to individuals, irrespective of the actual tax payments made by
Executive, will be equal to the costs for which reimbursement is to be provided
pursuant to clauses (i) through (iii) of this paragraph (l));
provided, however, that payments pursuant to this paragraph (l) shall be made
only for actual expenses in connection with Executive's relocation outside the
Dallas area, and Executive shall not have the option to elect to receive all or
part of the maximum allowances therefor in lieu of relocation expenses; and
provided, further, that such payments shall only be available in respect of
relocation that occurs at or prior to nine months after the end of the Term of
Employment.
10. Indemnification.
(a) The Company agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that Executive is or was a director, officer or employee of the
Company or is or was serving at the request of the Company as a director,
officer, member, employee or agent of another Person, including service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, Executive shall be indemnified
and held harmless by the Company to the fullest extent permitted or authorized
by the Company's certificate of incorporation or bylaws or, if greater, by the
laws of the State of Delaware, against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes (other than such as may be imposed with respect to compensation received
by Executive) or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be a director, member, employee or agent of the Company or other Person and
shall inure to the benefit of Executive's heirs, executors and administrators.
The Company shall advance to Executive to the extent permitted by law all
reasonable costs and expenses incurred by him in connection with a Proceeding
within 20 days after receipt by the Company of a written request, with
appropriate documentation, for such advance. Such request shall include an
undertaking by
16
17
Executive to repay the amount of such advance if it shall ultimately be
determined that Executive is not entitled to be indemnified against such costs
and expenses.
(b) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering Executive to the extent the
Company provides such coverage for its other executive officers.
(c) Promptly after receipt by Executive of notice of any claim or
the commencement of any action or proceeding with respect to which Executive is
entitled to indemnity hereunder, Executive shall notify the Company in writing
of such claim or the commencement of such action or proceeding, and the Company
shall (i) assume the defense of such action or proceeding, (ii) employ counsel
reasonably satisfactory to Executive and (iii) pay the reasonable fees and
expenses of such counsel. Notwithstanding the preceding sentence, Executive
shall be entitled to employ counsel separate from counsel for the Company and
from any other party in such action if Company counsel reasonably determines
that a conflict of interest exists which makes representation by counsel chosen
by the Company not advisable. In such event, the reasonable fees and
disbursements of such separate counsel for Executive shall be paid by the
Company to the extent permitted by law.
(d) After the Term of Employment, (i) at the request of the
Company, Executive shall cooperate with and assist the Company (to the extent
that such activities do not unreasonably interfere with the performance of
Executive's other business activities or employment) to prepare for or defend
against any action, suit, proceeding or claim brought or threatened to be
brought against the Company or to prepare for or institute any action, suit,
proceeding or claim to be brought or threatened to be brought against a third
party arising out of or based upon any matter or thing whatsoever arising out
of or which may be related to matters as to which Executive has or acquires
knowledge or information by reason of his employment by the Company or any of
its Subsidiaries, and (ii) upon the request of Executive, the Company shall
reimburse Executive for all reasonable travel, legal and other out-of-pocket
expenses that may be incurred by Executive related to assisting the Company, at
its request, to prepare for or defend against any such action, suit, proceeding
or claim brought or threatened to be brought against the Company or to prepare
for or institute any action, suit, proceeding or claim to be brought or
threatened to be brought against a third party and in providing evidence,
producing documents or otherwise participating in any such action, suit,
proceeding or claim.
11. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence
of this Agreement shall not prohibit or restrict Executive's entitlement to
full participation in the employee benefit and other plans or programs in which
senior executives of the Company are eligible to participate.
17
18
12. Confidentiality.
Executive acknowledges that Executive is bound by that certain
nondisclosure agreement executed by Executive upon the commencement of his
employment with the Company and that the terms thereof shall not be modified or
affected by this Agreement.
13. Non-Competition.
(a) During the Term of Employment and (unless the Term of
Employment expires following a Non-Extension Event or is terminated by the
Company without Cause or voluntarily by Employee due to a Constructive
Termination Without Cause) for a period of nine months thereafter, Executive
shall not, directly or indirectly, except when acting on behalf of the Company,
whether as an employee, consultant, partner, principal, agent, distributor,
representative, stockholder or otherwise, plan, develop, conduct or otherwise
engage in the MDU Business in any metropolitan area world-wide in which the
Company or any Subsidiary then conducts or is actively planning to conduct the
MDU Business (except that he may be a stockholder holding not more than a 1%
common stock interest in a Person whose shares are publicly traded and which
engages in the MDU Business in any such area). Notwithstanding the foregoing,
Executive shall be free at any time following the Term of Employment to accept
employment with or provide other services to any Person whose business includes
the MDU Business but only if (i) the MDU Business is not the principal or
predominant business of such Person and (ii) the services of Executive do not
principally or predominantly relate to the MDU Business. By way of example
only, if the Term of Employment were to end on the date of this Agreement,
Executive would be free to be employed by a typical incumbent local exchange or
long distance carrier or by a typical franchised cable operator for so long as
Executive's services did not principally or predominantly relate to the
provision of video and telecommunications services to residential multiple
dwelling units in the markets in which the Company now operates or is actively
planning to operate.
(b) During the Term of Employment and for a period of 12 months
thereafter, Executive shall not, directly or indirectly, (i) solicit any
customer of the Company or any Subsidiary to do business with any Person that
engages in the MDU Business or (ii) solicit any Person, other than his
secretary/administrative assistant, who is employed by the Company or any
Subsidiary or who was employed by the Company or any Subsidiary within 12
months of such solicitation to (A) terminate his or her employment with the
Company or any Subsidiary, (B) accept employment with anyone other than the
Company or any Subsidiary or (C) in any manner interfere with the business of
the Company or any Subsidiary.
(c) Executive acknowledges that the Company has no adequate remedy
at law and would be irreparably harmed if Executive breaches or threatens to
breach any of the provisions of Section 12 or Section 13(a) or 13(b), and
therefore Executive agrees that the Company or any Subsidiary, as the case may
be, shall be entitled to temporary or permanent
18
19
mandatory or injunctive relief to terminate or forestall any breach or
threatened breach of any of those provisions and to specific performance of the
terms of each of those provisions, without the need to demonstrate irreparable
injury or post bond or other security. Executive further agrees that he shall
not, in any proceeding seeking injunctive or other equitable relief to enforce
the provisions of Section 12 or Section 13(a) or 13(b), raise the defense that
the Company or any Subsidiary has an adequate remedy at law. Nothing in this
Section 13(c) shall be construed to prohibit the Company or any Subsidiary from
pursuing any other rights or remedies available to it at law or in equity or
which may be otherwise available to it.
(d) If it is determined that any of the provisions of this Section
13, or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, it is the intention of the Parties that
the duration or scope of such provision, as the case may be, shall be reduced
so that such provision becomes enforceable and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
14. Intellectual Property.
Any processes, inventions, ideas, know-how and other similar data
created or developed by Executive while employed by the Company which relate to
the business then conducted by the Company or any of its Subsidiaries shall be
the Company's exclusive and absolute property, and Executive hereby assigns to
the Company, now and hereafter, all of his right, title and interest to any and
all of the same. Any work in connection with the services rendered by Executive
hereunder shall be considered "work made for hire" under the Copyright Law of
1976 or any successor law, and the Company shall be the owner of such work as
if the Company were the author of such work.
15. Documents; Conduct; References.
(a) Executive hereby expressly covenants and agrees that,
following termination of the Term of Employment for any reason, or any time,
upon the Company's request, Executive will promptly return to the Company all
property of the Company and its Subsidiaries in his or her possession or
control (whether maintained at his or her office, home or elsewhere),
including, without limitation, all copies of all management studies, business
or strategic plans, budgets, notebooks and other printed, typed electronically
stored or written materials, documents, diaries, disks, calendars and data of
or relating to the Company or its Subsidiaries or their respective personnel or
affairs.
(b) Executive hereby expressly covenants and agrees that Executive
will not at any time, during or after the Term of Employment, denigrate,
ridicule or intentionally criticize the Company or any of its Subsidiaries or
any of their respective products or services, properties, employees, officers
or directors, including, without limitation, by way of news interviews or the
expression of personal view, opinions or judgments to the news media.
19
20
(c) The Company hereby expressly covenants and agrees that the
Company will not at any time, during or after the Term of Employment, publicly
denigrate, ridicule or intentionally criticize Executive, including, without
limitation, by way of news interviews or the expression of personal views,
opinions or judgments to the news media.
(d) The Company hereby expressly covenants and agrees that,
following the Term of Employment, the Company will, unless otherwise requested
by Executive in any instance or required by law, provide to any prospective
employer seeking information regarding Executive's employment with the Company
a neutral reference in accordance with the general policies of the Company
applicable to requests for employment references.
16. Acknowledgment of Representation by Counsel.
The Parties acknowledge that they have been represented by counsel
or knowingly waive their right to be represented by counsel with regard to this
Agreement and the subject matter hereof. Each Party agrees and acknowledges
that he or it has not relied upon any tax advice, legal counsel or business
advice provided by the other Party.
17. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of Executive)
and assigns. No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company, except that such rights or
obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the surviving corporation, or the
sale or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or by operation of law. The Company
further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it shall take whatever action it legally
can in order to cause such assignee or transferee to expressly assume the
liabilities, obligations and duties of the Company hereunder. No rights or
obligations of Executive under this Agreement may be assigned or transferred by
Executive other than Executive's rights to compensation and benefits.
18. Entire Agreement.
Except as herein otherwise expressly provided, this Agreement
contains the entire understanding and agreement between the Parties concerning
the subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between
the Parties with respect thereto, including any agreement between Executive and
any Affiliate of the Company dated prior to the date hereof.
20
21
19. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by Executive and an authorized
officer of the Company. No waiver by either Party of any breach by the other
Party of any condition or provision contained in this Agreement to be performed
by such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by Executive or an authorized officer of the
Company, as the case may be.
20. Severability.
In the event that any provision or portion of any provision of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions and portions remaining of
any provisions of this Agreement shall be unaffected thereby and shall remain
in full force and effect to the fullest extent permitted by law.
21. Beneficiaries/References.
Executive shall be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following Executive's death by
giving the Company written notice thereof. In the event of Executive's death or
a judicial determination of Executive's incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
22. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of Texas without reference to
principles of conflict of laws.
23. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall be resolved by binding arbitration before a single arbitrator, to be held
in Dallas, Texas, in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator
shall be final and subject to appeal only to the extent permitted by law. Each
Party shall bear its or his own expenses incurred in connection with any
arbitration. Anything to the contrary notwithstanding, each Party has the right
to proceed with a court action for injunctive relief or relief from violations
of law not within the jurisdiction of an arbitrator.
21
22
24. Notices.
Any notice required or permitted hereunder to be given to a Party
shall be effective only if given in writing and shall be deemed to have been
given when delivered personally or sent by certified or registered mail,
postage prepaid, return receipt requested or by Federal Express or other
similar service, duly addressed to the Party concerned at the address indicated
below or to such changed address as such Party may hereafter specify by notice
to the other Party:
If to the Company:
OpTel, Inc.
1111 W. Mockingbird Lane, #1000
Dallas, Texas 75247
Attention: General Counsel
22
23
If to Executive:
4730 Chapel Hill Road
Dallas, TX 75214
25. Headings.
The captions or headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
26. Execution of Agreement and Further Actions.
This Agreement may be executed in several counterpart copies each
of which shall constitute an original and the same instrument notwithstanding
that both Parties are not signatories to the same counterpart. The Parties
agree to execute such other documents and to take such other action as may from
time to time be necessary or appropriate to carry out the intent of this
Agreement, provided that the same are not inconsistent with the provisions
hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
OPTEL, INC.
By:
--------------------------------------
-----------------------------------------
STEPHEN R. DUBE
23