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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of April 15, 1999, by
and between OPTEL, INC., a Delaware corporation (the "Company"), and MICHAEL E.
KATZENSTEIN ("Executive").
W I T N E S S E T H :
WHEREAS, Executive is currently employed by the Company as
Vice President, General Counsel and Secretary 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:
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(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
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(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 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 responsibilities 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
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(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
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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 Vice President, General Counsel and Secretary 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, (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 $235,000, 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 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.
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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 (including insurance and maintenance) 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.
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;
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(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:
(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;
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(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;
(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
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(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 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.
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(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
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
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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;
(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
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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
(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
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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 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
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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;
(ii) all reasonable moving expenses to
another location in the United States or Canada, including packing, transport,
temporary storage and unpacking (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 within (x) nine months after the end of the Term of
Employment and (y) February 28, 2002.
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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 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
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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.
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
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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 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
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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,
publicly 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.
(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.
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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.
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.
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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.
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: Chief Executive Officer
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If to Executive:
4352 Potomac Avenue
Dallas, TX 75205
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:
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MICHAEL E. KATZENSTEIN
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