Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment Agreement
(the “Agreement”) entered into June 1, 2009, by
and between Purple Communications, Inc., a Delaware corporation
(the “Company”), and Dominic Gomez (the
“Executive”).
1. Duties and Scope of
Employment.
(a) Positions; Duties. During the
Employment Term (as defined in Section 2), the Company shall
employ Executive as the President of the Company. In his capacity
as President, Executive shall report directly to the Chief
Executive Officer of the Company.
(b) Full-Time Employment. Commencing
May 14, 2009, (the “Employment Commencement
Date”), Executive shall be employed on a full-time basis as
President and he shall begin to receive one hundred percent
(100%) of any cash compensation to which he is entitled under
Section 3(a).
(c) Obligations. During the
Employment Term, Executive shall devote substantially all of his
business efforts and time to the Company. Executive agrees, during
the Employment Term, not to actively engage in any other
employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board;
provided, however, that Executive may (i) serve in any
capacity with any professional, community, industry, civic,
educational or charitable organization, (ii) serve as a member
of corporate boards of directors on which Executive currently
serves and, with the consent of the Board (which consent shall not
be unreasonably withheld or delayed), other corporate boards of
directors, and (iii) manage his and his family’s
personal investments and legal affairs; provided, however, that in
each instance, such activities do not materially interfere with the
discharge of Executive’s duties.
2. Employment Term. The Company
hereby agrees to employ Executive and Executive hereby accepts such
employment (the period of such employment, referred to as the
“Employment Term”), in accordance with the terms and
conditions set forth herein, commencing on the Employment
Commencement Date. Executive and the Company understand and
acknowledge that Executive’s employment with the Company
constitutes “at-will” employment. Subject to the
Company’s obligation to provide severance benefits as
specified herein, Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written
notice to the other party, with or without Cause or Good Reason (as
defined in Section 4(b) and 4(c), respectively) and for any or
no cause or reason, at the option of either the Company or
Executive.
3. Compensation/Benefits. During the
Employment Term, the Company shall pay and provide to Executive the
following:
(a) Cash Compensation. As
compensation for his services to the Company, Executive shall
receive a base salary and shall be eligible to receive additional
variable compensation. During the Employment Term, the Board or its
Compensation Committee (the “Compensation Committee”)
shall review Executive’s Base Salary (as defined below) and
Bonus (as defined below) then in effect at least annually and may
increase (but not decrease, except as provided in
Section 1(b)) such Base Salary as the Compensation Committee
may approve. The Base Salary shall be payable in accordance with
the Company’s normal payroll practices in effect from time to
time, but in no event less frequently than monthly and, in the case
of Bonus, as soon as practical during the year following the year
with respect to which such Bonus is payable, but in no event later
than March 15 of such following year. No increase in Base
Salary shall be used to offset or otherwise reduce any obligations
of the Company to Executive hereunder or otherwise.
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(i) Annual Base Salary. As of the
Employment Commencement Date, Executive’s gross annual Base
Salary shall be Two Hundred Seventy-Five Thousand Dollars
($275,000) (“Base Salary”); provided, however, that
such Base Salary shall be subject to the reduction contemplated in
Section 1(b).
(ii) Discretionary Bonus. Executive
shall also be eligible to earn annual variable compensation, the
amount of which shall range from zero percent (0%) to One Hundred
percent (100%) of the Base Salary (such variable compensation,
the “Bonus,” which, together with the Base Salary,
shall be referred to herein as “Target Pay”). The Bonus
for any calendar year shall be awarded at the sole discretion of
the Compensation Committee based upon the Company’s
achievement of stated financial and strategic goals, as established
by the Compensation Committee.
(b) Equity Compensation.
(i) Initial Stock Option Grant. Upon
or promptly following the Employment Commencement Date, pending
approval by the Board, the Company shall grant Executive an option
(the “Initial Option”) to purchase Two Hundred Thirty
Thousand (230,000) shares of the common stock of Company (the
“Initial Option Shares”) under the Company’s 2005
Equity Compensation Plan, as amended and in effect on the date of
such grant (the “Stock Plan”), at a per share exercise
price equal to the fair market value of the common stock of the
Company on the date on which the Initial Option is granted, as
determined by the Compensation Committee, in accordance with the
Stock Plan. The Initial Option Shares will vest ratably over a four
(4) year period on a monthly basis, with vesting commencing
upon the Employment Commencement Date. Such Initial Option shall be
substantially in the form attached hereto as Exhibit A (the
“Stock Option Agreement”).
(ii) Ongoing Awards. Executive shall
be eligible to participate fully in annual stock option grants and
any other long-term equity incentive program at levels commensurate
with his positions as President of the Company.
(c) Employee Benefits. Executive
shall, to the extent eligible, be entitled to participate at a
level commensurate with his position as President of the Company in
all employee benefit, welfare and retirement plans and programs, as
well as equity plans, provided by the Company to its senior
executives in accordance with the terms thereof as in effect from
time to time. Notwithstanding the foregoing, at all times, the
Company reserves the right to amend, modify, or terminate any such
plan or program.
(i) The Company will provide to
Executive, at its expense, executive office, secretarial
assistance, facilities, supplies and equipment appropriate to his
position as president of the Company.
(d) Business and Entertainment
Expenses. Upon submission of appropriate documentation by Executive
in accordance with the Company’s policies in effect from time
to time, the Company shall pay or reimburse Executive for all
business expenses that Executive incurs in performing his duties
under this Agreement, including, but not limited to, travel
(including gas mileage), reasonable rent for an apartment pending
relocation, entertainment, and professional dues and subscriptions,
in accordance with the Company’s policies in effect from time
to time. The Company shall not be obligated to reimburse Executive
for personal legal fees or taxes incurred for any
reason.
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(e) Reimbursement of up to five
dollars ($5,000) per month for the direct, incurred expenses, in
the Executive’s sole discretion for (A) corporate
housing (including apartment or hotel) reasonably near the
Company’s executive offices in California; (B) use of a
rental car or other transportation services, for Executive’s
business purposes (including travel between his home or apartment
and the Company’s executive offices in California),
(C) club and professional organization dues or memberships;
provided, however, that this benefit shall terminate upon the
earliest of (Y) three (3) years from the Employment
Commencement Date, (Z) relocation of Executive’s
residence to be within forty-five (45) miles of the
Company’s executive offices in California.
(f) Paid Time Off
(“PTO”). Executive shall be entitled to accrue PTO
equal to three (3) weeks per calendar year; and provided,
however, that Executive shall be limited to future accruals of no
more than four (4) weeks of PTO, to be used by Executive in
accordance with the Company’s employment manual or current
procedures and policies, as the case may be, as the same may be
amended from time to time.
4. Termination of
Employment.
(a) Death or Disability. The Company
may terminate Executive’s employment for disability in the
event Executive has been unable to perform his material duties
hereunder for six (6) consecutive months because of physical
or mental incapacity by giving Executive notice of such termination
while such continuing incapacity continues (a “Disability
Termination”). Executive’s employment shall
automatically terminate on Executive’s death. In the event
Executive’s employment with the Company terminates during the
Employment Term by reason of Executive’s death or a
Disability Termination, then upon the date of such
termination:
(i) any Option Shares that would
have vested solely due to the passage of time during the twelve
(12) month period beginning on the date of Executive’s
death or Disability Termination shall immediately vest;
(ii) the Company shall, within
thirty (30) days of the date Executive’s employment is
terminated, pay and provide Executive (or in the event of
Executive’s death, Executive’s estate) (A) any
unpaid Base Salary through the date of termination and any accrued
vacation, (B) reimbursement for any unreimbursed expenses
incurred through the date of termination, and (C) all other
payments, benefits or fringe benefits to which Executive may be
entitled subject to and in accordance with, the terms of any
applicable compensation arrangement or benefit, equity or fringe
benefit plan or program or grant and amounts that may become due
under Sections 5 and 9 hereof (collectively, items under this
clause (i) are referred to as “Accrued Benefits”);
and
(iii) the Company shall pay to
Executive at the time other senior executives are paid under any
cash bonus or long-term incentive plan, but in no event later than
March 15 of the year following the year in which
Executive’s employment is terminated, a pro-rata bonus equal
to the amount Executive would have received if Executive’s
employment had continued (without any discretionary cutback)
multiplied by a fraction where the numerator is the number of days
in each respective bonus period prior to Executive’s
termination and the denominator is the number of days n the bonus
period (the “Prorated Bonus”); provided, however, that
at the time of death or Disability Termination, Executive is on
pace to achieve the performance milestones necessary to be eligible
for such bonus.
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(b) Termination for Cause. The
Company may terminate Executive’s employment for Cause (as
defined below). In the event that Executive’s employment with
the Company is terminated during the Employment Term by the Company
for Cause, Executive shall not be entitled to any additional
payments or benefits hereunder, other than Accrued Benefits
(including, but not limited to, any then-vested Option Shares and
other equity awards), to be paid or provided within thirty
(30) days of the date Executive’s employment is
terminated.
(i) For the purposes of this
Agreement, “Cause” shall mean:
(A) material breach of any provision
of this Agreement by Executive;
(B) the willful failure by Executive
to perform his duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental
impairment), unless any such failure is corrected within thirty
(30) days following written notice by the Board that
specifically identifies the manner in which the Board believes
Executive has not materially performed his duties; provided,
however, that no act, or failure to act, by Executive shall be
“willful” unless committed without good faith and
without a reasonable belief that the act or omission was in the
best interest of the Company; or
(C) an act of gross misconduct by
Executive with regard to the Company that is materially injurious
to the Company.
(c) Termination by the Company Other
Than for Cause; Termination by Executive With Good Reason. Any
payments to be made or benefits to be provided under this
Section 4(c) are conditioned on (x) Executive’s
execution of a general release and/or termination agreement
satisfactory to the Company, and (y) such general release
and/or termination agreement becoming effective.
(i) During the first Six
(6) months of the Employment Term, if Executive’s
employment with the Company is involuntarily terminated by the
Company other than for Cause or if Executive voluntarily terminates
his employment with the Company for Good Reason (as defined below),
then the Company shall pay or provide Executive with the following
as of the date of termination:
(A) any Accrued Benefits, to be paid
or provided within thirty (30) days of the date
Executive’s employment is terminated;
(B) a severance amount equal to one
(1) month pay of the Executive’s then-current annual
Base Salary, payable in a lump sum within thirty (30) days of
the date Executive’s employment is terminated;
provided;
(ii) After the first Six
(6) months of the Employment Term, if Executive’s
employment with the Company is involuntarily terminated by the
Company other than for Cause or if Executive voluntarily terminates
his employment with the Company for Good Reason (as defined below),
then the Company shall pay or provide Executive with the following
as of the date of termination:
(A) any Accrued Benefits, to be paid
or provided within thirty (30) days of the date
Executive’s employment is terminated;
(B) the Prorated Bonus; provided,
however, that at the time of the termination of Executive’s
employment, Executive is on pace to achieve the performance
milestones necessary to be eligible for such bonus and provided
further that such Prorated Bonus is paid no later than
March 15 of the year following the year in which
Executive’s employment is terminated;
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(C) a severance amount equal to the
Executive’s then-current annual Base Salary, payable over
twelve (12) months in the form of salary continuation
according to the Company’s standard payroll
scheduled;
(D) the right to continue his
participation in the Company’s health benefit plans to the
extent that he is then a participant therein, at no additional cost
to Executive other than he would have incurred as an employee, for
a period of twelve (12) months starting with the first
calendar month after such date of termination; provided, however,
that Company shall pay the full premium for COBRA continuation
coverage under its health plans for Executive (and, if applicable,
his dependents enrolled as participants in such health plans as of
the date of termination) for such twelve-month period. In the event
Executive obtains other employment during the twelve-month period
in this clause (D), pursuant to which he becomes covered for
substantially similar or improved benefits, the right to continue
to participate in any health benefit plan, at the Company’s
expense, offered or provided by the Company shall immediately
cease; and
(E) reasonable outplacement services
at a level commensurate with Executive’s position as
President of the Company, including use of an executive office and
secretary, for a period of ninety (90) days commencing on
Executive’s date of termination but in no event extending
beyond the date on which Executive commences other full time
employment.
(ii) For purposes of this Agreement,
“Good Reason” for termination by Executive shall arise
from the Material breach of any provision of this Agreement by the
Company without Executive’s consent (other than in connection
with or subsequent to the termination or suspension of
Executive’s employment or duties for Cause or in connection
with Executive’s death or disability, and excluding any
isolated action not taken in bad faith and which is promptly
remedied by the Company after receipt of notice thereof from
Executive); provided, however, that in each instance, Executive
shall provide reasonably detailed written notice of any action or
event that would constitute Good Reason under this
Section 4(c)(ii) to the Company within ninety (90) days
of such action or event, and the Company shall have thirty
(30) days to cure such action or event, and provided further
that if such action or event is not cured by the Company within
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