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Exhibit 10.1
Execution Copy
EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as
of this 19th day of December, 2008 (the "Effective Date"), by and
between Douglas J. Shaw (the "Executive") and Monotype Imaging
Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company and Executive entered into an Executive
Employment Agreement dated as of November 5, 2004 (the "Prior
Agreement");
WHEREAS, the Company desires to continue to employ the
Executive, and the Executive desires to continue employment with
the Company; and
WHEREAS, the Company and Executive desire to make certain
amendments to the Prior Agreement as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as
follows:
1. Effective Date; Employment; Prior Agreement . Subject
to the provisions of Section 5, on the Effective Date the
Company agrees to employ Executive and Executive agrees to be an
employee and perform services for the Company, upon the terms and
hereinafter set forth. On the Effective Date, the Prior Agreement
is terminated and shall have no further force and effect.
2. Duties; Extent of Service . During Executive’s
employment under this Agreement, Executive (a) shall serve as
an employee of the Company with the title and position of
President/Chief Executive Officer, reporting to the Board of
Directors (or the Chief Executive Officer, as appropriate) of the
Company, (b) shall have such executive responsibilities
consistent with the foregoing title and position as the Board of
Directors (or the Chief Executive Officer, as appropriate) of the
Company shall from time to time designate, provided that ,
in all cases Executive shall be subject to the oversight and
supervision of the Board of Directors (or the Chief Executive
Officer, as appropriate) of the Company in the performance of his
duties, (c) upon the request of the Board of Directors (or the
Chief Executive Officer, as appropriate) of the Company, shall
serve as an officer and/or director of any of the Company’s
subsidiaries, and (d) shall render all services reasonably
incident to the foregoing. Executive hereby accepts such
employment, agrees to serve the Company in the capacities
indicated, and agrees to use Executive’s reasonable best
efforts in, and shall devote Executive’s full working time,
attention, skill and energies to, the advancement of the interests
of the Company and its subsidiaries and the performance of
Executive’s duties and responsibilities hereunder. The
foregoing, however, shall not be construed as preventing Executive
from (i) engaging in religious, charitable or other community
or non-profit activities, or (ii) managing Executive’s
personal investments and business interests, in each case in a
manner that does not impair Executive’s ability to fulfill
Executive’s duties and responsibilities under this Agreement
(the activities described in clauses (i) and (ii), the
"Permitted Activities").
3. Salary and Bonus .
(a) During Executive’s employment under this Agreement,
the Company shall pay Executive a salary at the annual rate of
$270,000 per annum (the "Base Salary"). Such Base Salary shall be
subject to withholding under applicable law, and shall be payable
in periodic installments in accordance with the Company’s
usual payroll practice for executive officers of the Company as in
effect from time to time.
(b) Executive shall be eligible to participate in any group
bonus or other group performance plan established by the Board of
Directors from time to time for senior management of the
Company.
4. Benefits .
(a) During Executive’s employment under this Agreement,
Executive shall be entitled to participate in any and all medical,
pension, profit sharing, dental and life insurance plans and
disability income plans, retirement arrangements and other
employment benefits, including option plans, as in effect from time
to time for similarly situated senior management of the Company
generally. Such participation shall be subject to (i) the
terms of the applicable plan documents (including, as applicable,
provisions granting discretion to the Board of Directors of the
Company or any administrative or other committee provided for
therein or contemplated thereby), and (ii) generally
applicable policies of the Company. Executive shall be eligible to
participate in all such plans and other benefits as of the
Effective Date.
(b) During Executive’s employment under this Agreement,
Executive shall be entitled to earn paid vacation annually in
accordance with the Company’s practices for executive
officers, as in effect from time to time.
(c) The Company shall promptly reimburse Executive for all
reasonable business expenses incurred by Executive during
Executive’s employment hereunder in accordance with the
Company’s practices for senior executive officers of the
Company, as in effect from time to time.
(d) Except to the extent expressly provided in this Agreement,
compliance with the provisions of this Section 4 shall in no
way create or be deemed to create any obligation, express or
implied, on the part of the Company or any of its affiliates with
respect to the continuation of any particular benefit or other plan
or arrangement maintained by them or their subsidiaries as of or
prior to the Effective Date or the creation and maintenance of any
particular benefit or other plan or arrangement at any time after
the Effective Date.
5. Termination and Termination Benefits .
Executive’s employment may terminate without breach of this
Agreement under the following circumstances:
(a) Termination by the Company for Cause .
Executive’s employment may be terminated for Cause without
further liability on the part of the Company or any affiliate
thereof effective immediately upon a vote of the Board of Directors
of the Company (or determination by the Chief Executive Officer, as
appropriate) and written notice to Executive. Only the following
shall constitute "Cause" for such termination:
(i) any act, whether or not involving the Company or any of its
affiliates or their respective businesses, of fraud, gross
misconduct or harassment that materially and adversely affects the
Company;
(ii) any act of dishonesty, deceit or illegality,
in any such case, materially and adversely affecting the
Company;
(iii) the commission of Executive of, or indictment of Executive
for (A) a felony, or (B) any misdemeanor involving moral
turpitude ("indictment", for these purposes, meaning an indictment,
or determination of probable cause in a probable cause hearing or
any other similar procedure pursuant to which an initial
determination of probable cause with respect to such offense is
made), if, in the case of an indictment, such indictment has
material adverse affect on the Company;
(iv) the commission, in the reasonable judgment of the Board of
Directors of the Company, of an act involving a violation of
procedures or policies of the Company which are material to the
Company;
(v) a material and sustained failure of Executive to perform the
duties and responsibilities assigned or delegated under this
Agreement, which such failure continues for thirty (30) days
after written notice has been given to the Executive by the
Board of Directors (or the Chief Executive Officer, as
appropriate);
(vi) gross negligence or willful misconduct by Executive related
to his job duties or responsibilities; or
(vii) a breach by Executive of any of Executive’s
obligations under Section 6 below.
(b) Termination by Executive Other than for Good Reason .
Executive’s employment may be terminated by Executive without
further liability on the part of Executive (other than with respect
to those provisions of this Agreement expressly surviving such
termination) by written notice to the Board of Directors at least
sixty (60) days prior to such termination; provided ,
however , the Company may waive the notice period and
accelerate the termination date without converting the Termination
by Executive into a Termination by the Company.
(c) Termination by Executive for Good Reason . Subject to
the payment of Termination Benefits pursuant to Section 5(e)
below, Executive’s employment also may be terminated by
Executive for Good Reason (as defined below). For purposes of this
Agreement, "Good Reason" shall mean that the Executive has complied
with the "Good Reason Process" (hereinafter defined) following the
occurrence of any of the following events: (i) a material
diminution in the Executive’s responsibilities, authority or
duties; (ii) a material diminution in the Executive’s
Base Salary except for across-the-board salary reductions based on
the Company’s financial performance similarly affecting all
or substantially all senior management employees of the Company;
(iii) a material change in the geographic location at which
the
Executive provides services to the Company; or
(iv) the material breach of this Agreement by the Company.
"Good Reason Process" shall mean that (i) the Executive
reasonably determines in good faith that a "Good Reason" condition
has occurred; (ii) the Executive notifies the Company in
writing of the occurrence of the Good Reason condition within 60
days of the occurrence of such condition; (iii) the Executive
cooperates in good faith with the Company’s efforts, for a
period not less than 30 days following such notice (the "Cure
Period"), to remedy the condition; (iv) notwithstanding such
efforts, the Good Reason condition continues to exist; and
(v) the Executive terminates his employment within 60 days
after the end of the Cure Period. If the Company cures the Good
Reason condition during the Cure Period, Good Reason shall be
deemed not to have occurred.
(d) Termination by the Company Without Cause . Subject to
the payment of Termination Benefits pursuant to Section 5(e),
Executive’s employment may be terminated without Cause by the
Company by a vote of the Board of Directors of the Company (or
determination by the Chief Executive Officer, as appropriate) upon
written notice to Executive. It is expressly agreed and understood
that if Executive’s employment is terminated by the Company
without Cause as provided in this Section 5(d), it shall not
impair, limit or otherwise affect Executive’s Continuing
Obligations (as defined below).
(e) Certain Termination Benefits . Unless otherwise
specifically provided in this Agreement or otherwise required by
law, all compensation and benefits payable to Executive under this
Agreement shall terminate on the date of termination of
Executive’s employment under this Agreement. Notwithstanding
the foregoing, in the event of termination of Executive’s
employment with the Company pursuant to Section 5(c) or
Section 5(d) above, the Company shall provide to Executive the
following termination benefits ("Termination Benefits"):
(i) continuation of salary at a rate equal to one-hundred
(100%) of Executive’s Base Salary as in effect on the
date of termination for a period of twelve months (payment shall be
subject to withholding under applicable law and shall be made in
periodic installments in accordance with the Company’s usual
payroll practice for executive officers of the Company as in effect
from time to time) with the first payment starting on the first
payroll date that occurs 30 days after the Termination Date;
(ii) provided Executive elects and remains eligible for the
continuation of group health plan benefits pursuant to 29 U.S.C.
§ 1161 et seq . (commonly known as "COBRA"), the
Company will pay with the cost of the regular premium for such
benefits shared in the same relative proportion by the Company and
Executive as in effect on the date of termination from the date of
termination until the earlier of: (1) twelve months after the
date of termination, or (2) the date Executive is no longer
eligible for COBRA; and
(iii) payment of the bonus that the Executive would have been
entitled to receive under the bonus or other performance plan
referred to in Section 3(b) had his employment not been
terminated, prorated based on the number of days the Executive was
employed by the Company during the relevant bonus period. Such
payment shall be made to the Executive at the time bonuses under
such plan are generally paid to other participants but in no event
later than March 15 of the calendar year following the
termination date.
The Company shall have the right to terminate all
of the Termination Benefits set forth in Section 5(e)(i) and
Section 5(e)(ii) in the event that Executive fails to comply
in any material respect with Executive’s Continuing
Obligations under this Agreement. Notwithstanding the foregoing,
nothing in this Section 5(e) shall be construed to affect
Executive’s right to receive COBRA continuation entirely at
Executive’s own cost to the extent that Executive may
continue to be entitled to COBRA continuation after
Executive’s right to cost sharing under Section 5(e)(ii)
ceases. The Company and Executive agree that the Termination
Benefits paid by the Company to Executive under this
Section 5(e) shall be in full satisfaction, compromise and
release of any claims arising exclusively out of any termination of
Executive’s employment pursuant to Section 5(c) or
Section 5(d), and that the payment of the Termination Benefits
shall be contingent upon Executive’s delivery of a separation
agreement in a form satisfactory to the Company that shall include
a general release of claims in favor of the Company and related
persons and entities ("Release Agreement"), it being understood
that no Termination Benefits shall be provided unless and until
such Release agreement becomes fully effective.
(f) Disability . The Company may terminate the
Executive’s employment if he is disabled and unable to
perform the essential functions of the Executive’s then
existing position or positions under this Agreement with or without
reasonable accommodation for a period of 365 days (which need not
be consecutive) in any 18-month period. If any question shall arise
as to whether during any period the Executive is disabled so as to
be unable to perform the essential functions of the
Executive’s then existing position or positions with or
without reasonable accommodation, the Executive may, and at the
request of the Company shall, submit to the Company a certification
in reasonable detail by a physician selected by the Company to whom
the Executive or the Executive’s guardian has no reasonable
objection as to whether the Executive is so disabled or how long
such disability is expected to continue, and such certification
shall for the purposes of this Agreement be conclusive of the
issue. The Executive shall cooperate with any reasonable request of
the physician in connection with such certification. If such
question shall arise and the Executive shall fail to submit such
certification, the Company’s determination of such issue
shall be binding on the Executive. Nothing in this
Section 5(f) shall be construed to waive the Executive’s
rights, if any, under existing law including, without limitation,
the Family and Medical Leave Act of 1993, 29 U.S.C. §2601
et seq . and the Americans with Disabilities Act, 42 U.S.C.
§12101 et seq.
(g) Death . Executive’s employment and all
obligations of the Company hereunder shall terminate in the event
of the death of the Executive other than any obligation to pay
earned but unpaid Base Salary.
(h) Continuing Obligations . Notwithstanding termination
of this Agreement as provided in this Section 5 or any other
termination of Executive’s employment with the Company,
Executive’s obligations under Section 6 hereof
(collectively, the "Continuing Obligations") shall survive any
termination of Executive’s employment with the Company at any
time and for any reason.
6. Confidentiality; Proprietary Rights;
Non-Competition and Non-Solicitation .
(a) In the course of performing services
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