<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JUNE 17, 1997
CS WIRELESS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-20295 23-2751747
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
200 CHISHOLM PLACE
SUITE 202
PLANO, TEXAS 75075
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 633-4000
<PAGE>
ITEM 5. OTHER EVENTS
Effective June 17, 1997, CS Wireless Systems, Inc. (the "Company" or
the "Registrant") reached final settlement of all matters related to the
previously announced termination of employment of Lowell Hussey, the
Company's former President and Chief Executive Officer, including settlement
of litigation commenced by Mr. Hussey in the United States District Court
for the District of Oregon. The settlement terms are set forth in a Settlement
Agreement and General Release (the "Agreement") which resolved all claims by
Mr. Hussey, including severance claims under his employment agreement.
Pursuant to the Agreement, Mr. Hussey received (i) payments totaling
$500,000, which amount includes $300,000 paid at the time of termination,
(ii) reimbursement of certain expenses, (iii) permission to retain certain
office furniture and (iv) acknowledgment by the Company of the vesting of
Mr. Hussey's options to purchase 161,291 shares of the Company's common stock
at an option price of $6.50 per share. The options represent one half of the
options originally granted to Mr. Hussey in February, 1996, which vested in
36 equal monthly installments, and are exercisable at any time for a term of
five (5) years from the date of the Agreement.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit No. Description
----------- -----------
10.18 Settlement Agreement and General Release
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 6th , 1997 CS WIRELESS SYSTEMS, INC.
------------------
By: /s/Jeffrey A. Kupp
----------------------------
Jeffrey A. Kupp
Senior Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.18 Settlement Agreement and General Release
<PAGE>
EXHIBIT 10.18
SETTLEMENT AGREEMENT AND GENERAL RELEASE
This Settlement and General Release (this "AGREEMENT") is entered into
by LOWELL HUSSEY, ("EMPLOYEE"), and CS WIRELESS SYSTEMS, INC., (the "COMPANY"
or "EMPLOYER"), (collectively the "Parties").
RECITALS:
A. EMPLOYEE and the COMPANY are parties to a certain Employment Agreement
dated as of January 1, 1996, (the "Employment Agreement"), pursuant to
which EMPLOYEE was employed by the COMPANY.
C. On or about January 22, 1997, EMPLOYEE'S employment with the COMPANY
was terminated.
D. EMPLOYEE has commenced an action against the COMPANY, entitled LOWELL
HUSSEY V. CS WIRELESS SYSTEMS, INC., CV 97-402-HA, which action is
pending in the United States District Court for the District of
Oregon, (the "Action").
E. EMPLOYEE has asserted certain claims and causes of action against the
COMPANY related to the termination of his employment.
F. The COMPANY denies that EMPLOYEE has any valid claims or causes of
action against the COMPANY related to the termination of his
employment.
G. The Parties resolved all issues related to the Action.
H. The COMPANY and EMPLOYEE now wish to settle the Action to avoid the
uncertainty, expense and burden of this litigation and any and all
other actions and proceedings that might arise between the COMPANY
and EMPLOYEE.
Therefore, in accordance with the mutual covenants and agreements set forth
herein, and with full authority to enter into this Agreement and to be bound
thereby, the Parties agree as follows:
1. The COMPANY shall pay EMPLOYEE the amount of $500,000, minus required
withholdings under state and federal law ("the Settlement Amount") as follows:
(1) a lump sum of $300,000, which already has been paid by wire transfer on
January 31, 1997, receipt of which is hereby acknowledged by EMPLOYEE, and (ii)
a second lump sum of $40,273.04, which
<PAGE>
represents the remainder of the Settlement Amount after applicable
withholdings in respect of all amounts payable hereunder, and which shall be
paid to EMPLOYEE via wire transfer on the Effective Date of this Agreement,
(as defined below).
2. The Parties acknowledge the full vesting of EMPLOYEE's options to
purchase 161, 291 shares of CS Wireless Systems, Inc. common stock, par value
$.001, at an option price of $6.50, (the "Options"), under the 1996 CS Wireless
Systems, Inc. Incentive Stock Plan, as amended from time to time, (the "Plan"),
which Options shall continue to be governed by the Plan. The Plan is the same as
that which covers all senior executives of CS Wireless Systems, Inc., and any
amendments to the Plan will be applicable to EMPLOYEE. EMPLOYEE may exercise
the Options at any time for five (5) years from the date of this Agreement in
accordance with the Plan.
3. The COMPANY has shipped, at no expense to EMPLOYEE, EMPLOYEE'S office
furniture to the place designated by him in the continental United States, which
EMPLOYEE acknowledges satisfactorily was performed on or about May 10, 1997; and
4. The COMPANY shall reimburse EMPLOYEE in the amount of $8,322.45, which
represents outstanding business expenses incurred by EMPLOYEE during his
employment.
5. EMPLOYEE agrees that for two years following the execution of this
Agreement, EMPLOYEE shall not, directly or indirectly, as a consultant,
employee, independent contractor, agent, proprietor, officer, director, partner,
member, principal shareholder or otherwise, other than on behalf of the COMPANY,
engage in any business or undertaking, directly competitive with the wireless
cable television, cable television, subscription television, direct broadcast
satellite, direct to home wired video programming or non-wired video
programming, or wireless Internet access businesses, (each a "Related
Business"), carried on by the COMPANY or any affiliate in any Principal Market,
(defined below), serviced by the COMPANY or any Affiliate, (the "Related
Business Protected Service Area"), without the prior written consent of the
Board of Directors of the COMPANY. For purposes of this Agreement, "Principal
Market" shall mean the following cities and the entire area within 25 miles of
the city limits of these cities: Dallas/Fort Worth, Texas; Cleveland, Ohio;
Dayton, Ohio; Minneapolis, Minnesota; Kansas City, Missouri; San Antonio, Texas;
Bakersfield, California; Stockton Modesto, California; and Grand Rapids,
Michigan.
The Parties acknowledge that there are major telecommunications companies,
(each a "Major Company"), that have interests or properties in the Related
Business Protected Service Area and it shall not be a violation of this
provision if EMPLOYEE is employed by such a Major Company provided that such
Major Company's business conducted directly or through affiliates in the Related
Business Protected Service Area does not comprise more than fifteen percent of
such in the Major Company's business, measured both by (a) subscribers,
customers or other consumer and (b) by gross revenue. Moreover, any such
involvement with a Major Company must not include direct supervisory
responsibility for a Related Business Protected Service Area. The EMPLOYEE
shall give the COMPANY notice of acceptance of any such
2
<PAGE>
position with a Major Company and shall provide a statement executed by an
authorized officer of the Major Company acknowledging that the requirements
of this commitment will be satisfied. Upon request, the Major Company shall
provide reassurance of any of such commitment during the term hereof.
The Parties agree that the time period and the geographical area of
noncompetition specified above are reasonable and necessary in light of the
transactions entered into in this Agreement. If, however, it shall be
determined at any time by a court of competent jurisdiction that either the time
period restriction or the geographical area restriction, or both, are invalid or
unenforceable, the parties agree that any such restriction deemed valid and
enforceable by said court shall be enforceable between the parties to the same
extent as if such restrictions had been made as of the date of this Agreement.
6. EMPLOYEE shall take all necessary steps to withdraw the Action
promptly after the Effective Date, (as defined below), of this Agreement.
EMPLOYEE hereby releases, remises, and forever discharges, and by these presents
does, for himself, his heirs, executors, administrators, legal representatives
and assigns, release, remise, and forever discharge the COMPANY, its
subsidiaries and affiliates, its past, present and future divisions; its past,
present and future subsidiary and parent corporations; its past, present and
future affiliates and related companies; its successors and assigns; its past,
present and future directors, officers, shareholders, agents and employees both
personally and as directors, officers, shareholders, agents and employees; and
the past, present and future directors, officers, shareholders, agents and
employees of its parents, subsidiaries, divisions, affiliates, related companies
and successors and assigns (hereinafter collectively referred to as "the COMPANY
and/or its affiliates"), from any claim, known or unknown, asserted or
unasserted, suspected or unsuspected, arising in any way from any actions taken
by the COMPANY and/or its affiliates up to and including the date of the
execution of this Agreement, including any claims, demands and causes of action
under federal or state law, regulation or decision including any rights to bring
any demands, complaints, causes of action, claims and charges under Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. section 2000e ET SEQ., the
Civil Rights Act of 1991, 42 U.S.C. section 1981a ET SEQ., the Employee
Retirement Income Security Act, 29 U.S.C. section 1001 ET SEQ., the Age
Discrimination Employment Act of 1967, as amended, 29 U.S.C. section 601 ET
SEQ., the Americans with Disabilities Act of 1990, 42 U.S.C. section 12101 ET
SEQ., and any other federal or state law, regulation or decision, including but
not limited to any claims arising out of his employment or the termination or
resignation of his employment, including claims for wages owed, constructive
discharge, wrongful discharge, infliction of emotional distress, breach of
contract, breach of any implied covenant of good faith and fair dealing,
violation of public policy, violation of company policy or any other common law
claims, and any claims, demands or causes of action for injunctive or
declaratory relief, reinstatement, compensation for lost wages, workers'
compensation, employee or fringe benefits, compensatory or punitive damages, and
any claims for attorneys' fees, interest and expenses and costs of litigation,
and any other or additional relief.
3
<PAGE>
THIS MEANS THAT, BY SIGNING THIS AGREEMENT, EMPLOYEE WAIVES ANY RIGHT HE HAS OR
EVER HAD TO BRING OR MAINTAIN A LAWSUIT OR MAKE ANY AND ALL LEGAL OR EQUITABLE
CLAIMS AGAINST THE COMPANY AND ITS AFFILIATES INVOLVING ANY MATTER ARISING PRIOR
TO THE EFFECTIVE DATE OF THIS AGREEMENT. THIS RELEASE APPLIES SOLELY TO ANY AND
ALL LEGAL OR EQUITABLE CLAIMS ARISING FROM ACTIONS OR OMISSIONS OCCURRING ON OR
BEFORE THE EFFECTIVE DATE OF THIS AGREEMENT.
(a) Without in any way limiting the scope and effect of the paragraph 6,
EMPLOYEE acknowledges that (1) he would not otherwise be entitled to all of the
consideration described in paragraphs 1 through 4, and that the COMPANY is
providing such consideration in return for EMPLOYEE'S agreement to be bound by
the terms of this Agreement; (2) among the rights he knowingly and voluntarily
waives by executing this Agreement is his right to bring against the COMPANY any
demands, complaints, causes of action, claims and charges under the Age
Discrimination in Employment Act, 29 U.S.C. subsection 621 ET SEQ., or under any
other federal or state law, regulation or decision prohibiting discrimination on
the basis of race, color, religion, sex, age, national origin, sexual
orientation or physical or mental handicap; (3) he has been advised to consult
with an attorney regarding this Agreement and he has in fact consulted with an
attorney regarding this Agreement; and (4) he has been given a reasonable period
of time within which to consider this Agreement and if he wanted additional
time, such time was available to him, up to and including June 27, 1997, which
is more than twenty-one (21) calendar days from June 5, 1997, the date on which
EMPLOYEE first was provided with this Agreement and EMPLOYEE further
acknowledges that he does not want more time to consider this Agreement and that
he has requested that the Agreement be executed on this date. EMPLOYEE
understands that he may revoke this Agreement during the first seven days after
he signs it by delivering written notice of his revocation to the COMPANY
pursuant to paragraph 12 below. EMPLOYEE understands that if he does not revoke
this Agreement within the first seven days after he signs it, it will become
effective on the eighth day after he signs it.
(b) Except as necessary to enforce the terms of this Agreement, the
COMPANY agrees to release, remise, forever discharge, and not to file any claims
against, and by these presents does, for the COMPANY, release, remise, forever
discharge, and agree not to file any claims against EMPLOYEE, his heirs,
executors and administrators before any agency, court, or other forum, and
agrees to release EMPLOYEE, his heirs, executors and administrators from any
claim, known or unknown, asserted or unasserted, suspected or unsuspected,
arising in any way from any actions taken by EMPLOYEE up to and including the
execution of this Agreement.
7. The Parties agree that the terms and provisions of this Agreement are
confidential and that neither EMPLOYEE nor the COMPANY, without the prior
written consent of the other, shall individually, jointly or through their
agents or other representatives or those acting on their behalf, in any manner
publish, publicize, disclose or otherwise make known or permit or cause to be
made known to any third person the terms and conditions of this Agreement and
any of the facts, events or circumstances concerning, pertaining or relating to
EMPLOYEE'S employment or termination of employment with the EMPLOYER, including
but not limited to the
4
<PAGE>
circumstances, events or facts which gave rise to and which are stated in the
Action, except if the Parties are asked about certain corporate transactions
referred to in the Action, they will respond that the Parties resolved all
issues related to the Action. For purposes of this paragraph, "any third
person" includes, but is not limited to, members of EMPLOYEE'S NON-IMMEDIATE
family, any past or present employees of the COMPANY, (other than EMPLOYEE),
or any member of such employee's family, any organization, association or
group, and the news and communication media or any agents thereof. Nothing
in this paragraph shall be construed to prohibit the disclosure, by either
EMPLOYEE or the COMPANY, of such information as may be required by law, or by
judicial or administrative process or order, provided that written notice of
such intended disclosure shall be given to the other party as far in advance
of such disclosure as practicable. Nothing in this paragraph shall be
construed to prohibit the disclosure of such information in the usual course
of any legal proceedings to the extent necessary to enforce the provisions of
this Agreement. Nothing in this paragraph shall be construed to prohibit the
disclosure of such information by either party to any legal or financial
consultant retained by them, provided the persons to whom the disclosure is
being made agree to be bound by the confidentiality provisions of this
paragraph.
8. EMPLOYEE agrees that he will refrain from soliciting any employee of
the COMPANY to terminate his or her employment and agrees that he will not
discuss, advise, counsel or otherwise cooperate with or assist employees or
former employees of the COMPANY to pursue any type of legal actions or
administrative proceedings against the COMPANY. EMPLOYEE further agrees that he
will not participate, directly or indirectly, as a witness, consultant, expert
or otherwise, in any action at law, proceeding in equity, or in any
administrative proceeding involving the COMPANY in which the COMPANY or any
past, present or future director, officer, or employee of the COMPANY is a
party, unless compelled to do so by force of law. Neither this paragraph nor
any other provision of this Agreement shall prevent or prohibit (or is intended
to prevent or prohibit) EMPLOYEE from pursuing as a party any claim against the
COMPANY arising from actions or omissions of the COMPANY that occur after the
effective date of this Agreement. The COMPANY shall indemnify EMPLOYEE for a
period of two years against any legal or administrative action commenced
against employee for actions undertaken in the course of the scope of his
employment including legal fees and travel costs, and nothing in this Agreement
shall prevent EMPLOYEE from pursuing a claim against the COMPANY for any
decision not to so indemnify EMPLOYEE.
9. EMPLOYEE and EMPLOYER agree to make no Statement for Publication, as
hereafter defined, intended to cause the COMPANY or EMPLOYEE embarrassment or
humiliation or otherwise cause or contribute to the COMPANY or EMPLOYEE being
held in disrepute by the general public or the COMPANY's employees, agents,
officers, directors or stockholders provided that EMPLOYEE may respond to public
inquiry by stating "no comment" or similar response. For the purpose of this
paragraph, Statement for Publication means any statement whether oral or in
writing intended to be disseminated by or through any media organization
including, but not limited to, television, radio, newspaper, magazine,
newsletter, and trade publications.
5
<PAGE>
10. THE COMPANY shall provide to EMPLOYEE the ability to continue to
maintain health care coverage, at EMPLOYEE's expense, to the maximum extent
provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA).
11. EMPLOYEE and the COMPANY agree that this Agreement is not, and shall
not be considered as, an admission of any wrongdoing on the part of EMPLOYEE or
the COMPANY, any of its subsidiaries or affiliated corporations, or any of their
shareholders, directors, officers, employees or agents.
12. Any notices necessary or required hereunder shall be in writing and
shall be given to the parties by hand, by nationally recognized overnight
courier service, or by Express, registered or certified mail, postage prepaid,
return receipt requested, at the addresses set forth below or by facsimile:
If to EMPLOYEE, at 2850 N.W. Cornell Road, Portland, Oregon 97210, with
copy to John S. Ransom, Esq., Ransom, Blackman & Maxfield, 1400 Security
Pacific Plaza, 1001 S.W. Fifth Avenue, Portland, Oregon 97204-1130, and
If to the COMPANY, at the principal headquarters of the COMPANY in Dallas,
Attn: David Webb, with copy to Day, Berry & Howard, One Canterbury Green,
Stamford, CT 06901, Fax No.: 203-977-7301, Attn: Sabino Rodriguez III, Esq.
13. EMPLOYEE and the COMPANY agree that any violation of this Agreement
would result in irreparable injury and that the non-breaching party shall be
authorized and entitled to obtain from any court of competent jurisdiction,
preliminary and permanent injunctive relief. In addition, EMPLOYEE and the
COMPANY further agree that the non-breaching party also shall be authorized to
recover from the breaching party money damages, and all attorneys' fees and
costs incurred in bringing an action to enforce this Agreement. Provided,
however, that prior to instituting any such action for enforcement, the
aggrieved party shall notify in writing the other party of any alleged breach of
this Agreement. Furthermore, EMPLOYEE and the COMPANY agree that after such
notification, the aggrieved party shall not file any enforcement action for a
sixty (60) day period, during which time the parties shall attempt to resolve
their dispute through direct negotiation and/or mediation.
14. This Agreement shall be governed by and construed under the laws of
the State of Delaware.
15. This Agreement constitutes the entire agreement between EMPLOYEE and
the COMPANY, and supersedes any prior agreements between the Parties to the
extent that they are inconsistent with the terms of this Agreement.
16. The "Effective Date" of this Agreement shall be the eighth day after
EMPLOYEE executes this Agreement, if EMPLOYEE has not revoked it pursuant to
paragraph 6(a) above.
6
<PAGE>
17. This Agreement may be executed in one (1) or more counterparts, each
of which need not contain the signatures of all of the parties, but all of which
taken together shall constitute one agreement. No changes to this Agreement
shall be effective unless made in writing and signed by the parties hereto.
The complete release and waiver of claims set out in paragraphs 6, 6(a) and
6(b) of this Agreement are essential and material parts of this Agreement. If
any portion of the complete release and waiver of claims is determined to be
illegal or unenforceable, the remaining portions of the release and waiver of
claims shall remain in full force and effect. If EMPLOYEE files a lawsuit,
charge, complaint or other claim asserting any claim or demand which is within
the scope of the release and waiver, the COMPANY, whether or not such claim is
valid, shall retain all right and benefits of the release and waiver of claims
and, in addition, shall be entitled to cancel any and all future obligations of
this Agreement and recoup the value of all payments and benefits paid hereunder,
together with interest and the COMPANY'S costs and attorney's fees.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto affix their signatures.
EMPLOYEE:
/s/ Lowell Hussey
------------------------------------
Lowell Hussey
State of ____________________)
) ss. _____________________
County of _____________________)
On this _____ day of June, 1997, before me, the undersigned officer,
personally appeared Lowell Hussey, who before me subscribed and swore to his
voluntary execution of the foregoing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of June,
1997.
--------------------------------------
Notary Public
My Commission Expires:
COMPANY:
CS WIRELESS SYSTEMS, INC.
By: /s/ David E. Webb
----------------------------------
Its: Chief Executive Officer
State of ____________________)
) ss. _____________________
County of _____________________)
On this ____ day of June, 1997, before me, the undersigned officer,
personally appeared, who acknowledged himself to be the _____________________
of CS Wireless Systems, Inc., a corporation, and that as such was authorized to
execute the foregoing Agreement and did execute the foregoing Agreement, by
signing the name of the corporation by and through himself.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of ______,
1997.
--------------------------------------
Notary Public
My Commission Expires:
8
