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Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
JAMES M. PHILLIPS
THIS EMPLOYMENT AGREEMENT is made this 24th day of January, 1997 by and
between OMNIVIEW, INC., a Tennessee corporation (the "Company") and JAMES M.
PHILLIPS (the "Executive") (the "Employment Agreement");
W I T N E S S E T H:
WHEREAS, the Company is principally engaged in the business of
developing and designing applications and implementations of/for new
technologies (the "Business"); and
WHEREAS, Executive possesses certain skills, expertise and contacts
related to the Business; and
WHEREAS, because of such skills, expertise and contacts, the Company
desires to employ Executive, and Executive desires to accept employment with the
Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agrees as
follows:
1. EMPLOYMENT. The Company hereby employs Executive to perform the
duties described herein, and Executive hereby accepts such employment, on the
terms and conditions set forth herein.
2. TERM OF EMPLOYMENT. Subject to the provisions for termination set
forth in Paragraph 11 of this Employment Agreement, the term of Executive's
employment hereunder shall commence on the date hereof and shall expire at the
close of business on December 31, 1999 (the "Term"); provided, however, the Term
of such employment shall automatically renew for a one year period on December
31, 1999 and on each December 31 thereafter unless the Company shall have given
(3) months prior notice of termination to Executive.
3. DUTIES OF EXECUTIVE. Throughout the Term of his employment by the
Company under this Employment Agreement, Executive shall serve as a member of
the board of directors of the Company, President and Chief Executive Officer of
the Company and shall devote his full business time and talents to such services
for the Company as shall be designated from time to time by the Board of
Directors of the Company and shall have general and active day-to-day management
authority for the operation of the Business and affairs of the Company. As part
of such duties, Executive shall have the authority to employ and to terminate
the employment of all other persons employed in any capacity by the Company
subject to any contractual obligations that Company may have to any employee and
as Executive may deem necessary for the efficient operation of the Company's
activities. All employment agreements for executive level employees shall be
subject to the approval of the Board of Directors.
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Executive shall perform his duties from the offices of the Company and
from such other locations as he deemed to be in the best interest of the
Company, but Executive shall not be required to move his residence or principal
office from the Knoxville, Tennessee vicinity.
4. BASE COMPENSATION. Throughout the Term, the Company shall compensate
Executive for all services to be rendered by him hereunder at the annual rate of
Three Hundred Seventy Five Thousand Dollars ($375,000), subject to all
applicable income tax withholding and other payroll taxes. Such compensation
shall be payable monthly.
5. ANNUAL BONUS PAYMENT. Within 45 days following each fiscal year of
the Company covered by the Term hereof, and in addition to his Base
Compensation, Executive shall be paid an annual bonus equal to five percent (5%)
of the total income after taxes earned by the Company for such calendar year
(without reduction for the amount of the Bonus). For the purposes of this
Employment Agreement "income after taxes" shall mean net income after taxes as
computed in accordance with generally accepted accounting principles
consistently applied (without reduction for the amount of the bonus). Executive
shall cease to receive such bonus after the completion of an initial public
offering. However, Company will prorate the bonus amount due through the date of
the initial public offering and pay Executive such amount so determined. For
example, if an initial public offering is completed on February 28, 1998, the
Company's total income before taxes for the calendar year through such date
shall be determined and the Company shall pay 5% of such amount to Executive
upon completion of the initial public offering.
6. STOCK OPTION. Effective on the date hereof, Executive is granted an
option to purchase 412,559 shares of the capital stock of the Company issued as
an Incentive Stock Option and meeting the requirements of Section 442(b) of the
Internal Revenue Code of 1986 as amended. Executive may exercise this option at
a price of $5.00/share. The option shall be vested and exercisable as follows:
(a) 25% upon execution of this Employment Agreement;
(b) 25% twelve months from the date hereof;
(c) the remainder twenty-four months from the date hereof.
Notwithstanding the foregoing, the option shall become immediately and fully
vested upon an initial public offering of the capital stock of the Company
and/or upon a change in the present control of the Company which is defined as a
single sale of more than 50% of the outstanding stock of the Company or in the
event of a termination under 11b or 11c.
In the event of Executive's death during the Term hereof, the Company
shall have the option to buy back the appreciated value of unexercised vested
options and repurchase applicable stock of the Company owned by Executive from
Executive's estate. The Company shall exercise such option only if Company has
purchased a sufficient amount of life insurance on Executive's life to fund 100%
of the purchase price of the options and stock, subject to Executive's
insurability at standard risk assessments for persons of Executive's age.
Company's option to repurchase unexercised vested options and capital stock
owned by the Executive at death will expire upon the completion of an
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initial public offering. The terms and price shall be as determined in the
Motorola/DCI Agreements hereinafter defined. All Company stock issued to
Executive shall be restricted by the Motorola/DCI Agreements.
7. BENEFITS. Throughout the Term, Executive shall be entitled to
participate in those benefit plans and insurance programs that are customarily
provided by the Company to its executive employees subject to the eligibility
requirements of such plans and programs. In addition, Executive shall receive:
(a) life insurance throughout the Term equal to three (3)
times his Base Compensation, subject to Executive's insurability at
standard risk assessments for persons of Executive's age;
(b) a dislocation payment in the amount of Twenty Five
Thousand Dollars ($25,000);
(c) the cost of moving Executive's household effects to
Knoxville, and for house hunting trips which amounts should be paid
directly by the Company;
(d) reimbursement for up to six (6) months of Executive's
mortgage payments which shall not exceed $8,500 per month on
Executive's home in Illinois incurred after Executive relocates to
Knoxville, Tennessee, to be paid upon the due date of each mortgage
payment; and
(e) in the event of a loss on the sale of Executive's home in
Illinois, 50% of such loss and Executive's sales commission fees up to
an aggregate maximum for both such items of $150,000 based upon actual
receipts and closing statements.
8. ATTORNEYS' FEES. The Company will pay Executive's attorneys
for services rendered by them in connection with the preparation of this
Employment Agreement and for counseling and other services rendered to Executive
in connection with his affiliation with the Company. The amount of such
attorneys' fees to be paid by the Company shall not exceed eight thousand
dollars ($8,000).
9. VACATION. Executive shall be entitled to four (4) paid weeks
of vacation each year.
10. REIMBURSEMENT OF EXPENSES. The Company shall pay or reimburse
Executive for all legal, appropriate and reasonable travel, communications,
entertainment and other expenses incurred by Executive in performing his
obligations under this Employment Agreement.
11. TERMINATION.
(a) During the Term hereof, the Company shall have the right
to terminate Executive's employment with the Company for Cause. For
the purpose of this Employment Agreement, a termination for Cause
shall be a bona fide termination of Executive for egregious acts of
dereliction of duty on his part. Prior to any termination for Cause,
however,
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Executive must be provided a written explanation of the concerns felt
by the Company and provided a reasonable opportunity to cure or
mitigate such concerns. Further, any termination for Cause must be in
writing, approved by the Board of Directors of the Company excluding
Executive and must state the bona fide reasons therefor. No
termination for Cause shall affect in any manner Executive's right to
receive or exercise the options which have vested as of the date of
such termination.
(b) In the event the Company elects to terminate Executive
prior to the expiration of the Term or any renewal term for reasons
that do not constitute a termination for Cause, in the event the
Company changes Executive's responsibilities or job title(s) without
his prior written consent, or in the event the Company fails to honor
the terms of this Employment Agreement, then Executive is free to
obtain other employment and the Company shall immediately pay Executive
a lump sum Severance Payment in the amount of $500,000. After
completion of an Initial Public Offering, the amount of such Severance
Payment shall increase to $1,000,000.
(c) Executive's obligations and Executive's employment
hereunder shall terminate immediately without further notice or action
if any of the following events shall occur:
(i) the Term or any renewal term shall expire without
renewal;
(ii) Executive shall die while employed during the
Term or any renewal term; or
(iii) Executive shall be unable while employed during
the Term or any renewal term to perform the normal duties of
his employment for a period of 180 days as a result of illness
or injury.
In such event as is described in this Paragraph 11.c, Employee shall
not be entitled to further Base Compensation or the Severance Payment
referenced in Paragraph 11.b above, but shall be entitled to receive
the prorated amount of any Annual Bonus determined as of the
termination date as set forth in Paragraph 5 hereof.
12. MISCELLANEOUS.
(a) Written Agreement to Govern. This Employment Agreement
sets forth the entire understanding of the parties with respect to the
subject matter hereof, and supersedes all prior discussions,
negotiations, understandings or written agreements among the parties
hereto relating to the subject matter contained herein, and merges all
prior and contemporaneous discussions among them.
(b) Severability. The parties hereto expressly agree that it
is not the intention of any party hereto to violate any public policy,
statutory or common law rules, regulations, treaties or decisions of
any government or agency thereof. If any provision of this Employment
Agreement is judicially or administratively interpreted or construed as
being in violation of any such provision, such articles, sections,
sentences, words, clauses or
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combinations thereof shall be inoperative, and the remainder of this
Employment Agreement shall remain binding upon the parties hereto.
(c) Notices and Other Communications. Every notice or other
communication required, contemplated or permitted by this Employment
Agreement by any party shall be in writing and shall be delivered
either by personal delivery, telegram, private courier service, or by
certified or registered mail, postage prepaid, return receipt
requested, addressed to the party to whom intended at the following
address:
If to the Company: Omniview, Inc.
7325 Oak Ridge Highway
Knoxville, TN 37931
Attn: H. Lee Martin
with a copy to: Mark K. Williams, Esq.
McCampbell & Young
P.O. Box 550
Knoxville, TN 37901-0550
If to Executive: Mr. James M. Phillips
c/o Omniview, Inc.
7325 Oak Ridge Highway
Knoxville, TN 37931
with a copy to: Shepherd D. Tate, Esq.
Martin, Tate, Morrow & Marston, P.C.
22 N. Front Street, 11th Floor
Memphis, TN 38103
or at such other address as the intended recipient shall from time to
time designate by written notice delivered in accordance herewith.
Notice by courier or certified or registered mail shall be effective on
the date it is officially recorded as delivered to the intended
recipient by return receipt or the date of attempted delivery where
delivery is refused by the intended recipient.
(d) Law to Govern. The validity, construction and
enforceability of this Employment Agreement shall be governed in all
respects by the laws of the State of Tennessee, without regard to its
conflict of laws rules.
(e) Successors and Assigns. This Employment Agreement shall be
binding upon and shall insure to the benefit of the Company and its
successors and assigns. Upon his death, Executive's rights hereunder
shall inure to the benefit of his estate.
(f) Waiver of Provisions. The terms and conditions of this
Employment Agreement may be waived only by a written instrument
executed by the party waiving compliance. The failure of any party at
any time to require performance of any provision hereof shall in no
manner affect the right at a later date to enforce the same.
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(g) Motorola, Inc. and Discovery Communications, Inc.
Consents. This Employment Agreement is subject to the consents of
Motorola, Inc. ("Motorola") and Discovery Communications, Inc. ("DCI")
as described in the Stock Purchase Agreement dated December 20, 1996
Section 5(p)6. Executive acknowledges that the Company and Motorola and
DCI have entered into a Stock Purchase Agreement dated December 20,
1996, including a Stock Option and Voting Agreement and a Voting Trust
Agreement of even date therewith (the "Motorola/DCI Agreements") which
restrict the ability of the Company to take certain actions. Executive
agrees that any provisions of this Employment Agreement which are
determined by Motorola or DCI to be prohibited by the Motorola/DCI
Agreements shall be stricken from this Employment Agreement and shall
be unenforceable by either party. Executive shall execute any
agreements required by Motorola or DCI as well as the Company's
nondisclosure and noncompetition agreement which is required to be
executed by all Company employees and otherwise comply with all
Motorola/DCI Agreements. Executive shall not take any action which
would cause the Company to breach the Motorola/DCI Agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
COMPANY:
OMNIVIEW, INC.
By: /s/ H. Lee Martin
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Its: President
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EXECUTIVE:
/s/ James M. Phillips
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JAMES M. PHILLIPS
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AMENDMENT NUMBER 1 TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment Number 1 is effective as of November 21, 1997, by and
between INTERACTIVE PICTURES CORPORATION, a Tennessee corporation (the
"Company") and JAMES M. PHILLIPS (the "Executive) (the "Amendment").
W I T N E S S E T H:
WHEREAS, the Company and the Executive entered into an Executive
Employment Agreement dated January 24, 1997 (the "Employment Agreement"); and
WHEREAS, it was, at that time, the intent of the parties to grant the
Executive a stock option to purchase an amount of shares equal to ten percent
(10%) of the total issued and outstanding shares of common stock of the Company;
and
WHEREAS, there is an error in Section 6 of the Employment Agreement
that sets forth the number of shares of Common Stock issuable pursuant to the
Stock Option; and
WHEREAS, the parties desire to amend the Employment Agreement to
correct the error and recognize the four-for-one stock split effected by the
Company in March, 1997.
NOW, THEREFORE, consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Section 6 of the Employment Agreement is hereby amended by deleting
the number "412,559" and inserting in its place "2,270,049".
2. All other terms of the Employment Agreement not otherwise amended
hereby shall continue to be in full force and effect.
3. This Amendment may be executed in counterparts, with each such
counterpart being deemed an original.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
as the date first above written.
COMPANY:
INTERACTIVE PICTURES CORPORATION
By: /s/ Edmond Lewis
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Its: Corporate Secretary
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EXECUTIVE:
/s/ James M. Phillips
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JAMES M. PHILLIPS
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AMENDMENT NUMBER 2 TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment Number 2 is effective as of January 20, 1999, by and
between INTERACTIVE PICTURES CORPORATION, a Tennessee corporation (the
"Company") and JAMES M. PHILLIPS (the "Executive") (the "Amendment").
W I T N E S S E T H:
WHEREAS, the Company and the Executive entered into an Executive
Employment Agreement dated January 24, 1997, as amended by Amendment No. 1 dated
November 21, 1997 (as amended, the "Employment Agreement"); and
WHEREAS, the parties desire to amend the Employment Agreement to extend
the term of the Agreement.
NOW, THEREFORE, consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Section 2 of the Employment Agreement is hereby amended by deleting
the date December 31, 1999" in both places where said date appears and inserting
in its place "December 31, 2001".
2. All other terms of the Employment Agreement not otherwise amended
hereby shall continue to be in full force and effect.
3. This Amendment may be executed in counterparts, with each such
counterpart being deemed an original.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
as of the date first above written.
COMPANY:
INTERACTIVE PICTURES CORPORATION
By: /s/ Jeffrey D. Peters
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Its: President
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EXECUTIVE:
/s/ James M. Phillips
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JAMES M. PHILLIPS