{"id":39075,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-dragon-systems-inc-and-john-shagoury.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-dragon-systems-inc-and-john-shagoury","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-dragon-systems-inc-and-john-shagoury.html","title":{"rendered":"Employment Agreement &#8211; Dragon Systems Inc. and John Shagoury"},"content":{"rendered":"<pre>\n                       [DRAGON SYSTEMS, INC. LETTERHEAD]\n\n\n\nMay 14, 1998\n\nJohn Shagoury\n131 Buckskin Drive\nWeston, MA 02193\n\nDear John:\n\n     On behalf of Dragon Systems, Inc. (the 'Company'), I have set forth below\nthe terms of your employment:\n\n     1.  You are being employed to serve on a full-time basis as the Chief \nOperating Officer of the Company, effective during June, 1998 (the \n'Commencement Date').\n\n     2.  Your salary will be $250,000 per 12-month period, payable in monthly \ninstallments. Such salary will be fixed through July 1, 1999, and thereafter \nmay be increased from time to time in accordance with normal business practice.\n\n     You will also be eligible for a performance bonus for (i) the period from \nthe Commencement Date through December 31, 1998 and (ii) calendar year 1999, \nand thereafter in each case if certain performance criteria for the applicable \nperiod are achieved. The amount of the bonus will be up to $75,000 for the \nperiod commencing on the Commencement Date through December 31, 1998, and up to \n$150,000 for calendar year 1999 and thereafter. If your employment is \nterminated for any reason (including your death or disability) prior to the \nlast day of any applicable period, you will not be eligible to receive the \nbonus. The performance criteria for the period ending on December 31, 1998 are \nspecified on Exhibit A. The performance criteria for the 1999 calendar year \nwill be determined by the Company prior to January 1, 1999.\n\n     You will be entitled to severance pay (subject to your full and complete \ncompliance with the terms and conditions of any and all non-disclosure and \nnon-competition agreements, including but not limited to the non-disclosure and \nnon-competition clauses of the attached Employment Agreement), if the Company \nterminates your employment without cause (as hereinafter defined) on or before \nDecember 31, 2000. You will not be eligible for severance pay if you terminate \nyour employment with the Company, or if the Company terminates your employment \nwith cause. The amount of the severance pay will be (i) $250,000 (which amount \nshall be payable over 12 months, in equal installments), if the Company \nterminates Mr. Shagoury's employment without cause prior to December 31, 1999, \nand (ii) one-half of your base salary as of the date of termination (which \namount shall be payable over six months, in equal monthly\n\n\ninstallments), if the Company terminates his employment without cause on or\nafter January 1, 2000 or prior to December 31, 2000.\n\n     The Company shall have 'cause' to terminate your employment (a) upon a \nunanimous good faith finding by the Board of Directors of your failure to \nperform your assigned duties for the Company, dishonesty, gross negligence or \nmisconduct, or (b) upon your conviction of, or the entry of a pleading of \nguilty or nolo contendere by you to, any crime involving moral turpitude or any \nfelony.\n\n     3.   (a)  You will be entitled to participate in any profit sharing and \nbenefit plans that the Company establishes and makes available to its employees \nfor which you may be eligible under plan documents.\n\n          (b)  Subject to Board approval, you will be granted an incentive \nstock option to purchase 66,000 shares of the Company's common stock, at a \nprice equal to their fair market value per share (as determined by the \nCompany's Board of Directors). Such option will vest over a four-year period, \nwith 25% of the shares becoming purchasable at the end of each 12-month period.\n\n          (c)  Subject to Board approval, you will also be granted a \nnon-qualified stock option to purchase 46,200 shares, at a price equal to their \nfair market value per share (as determined by the Company's Board of \nDirectors). Such option will be exercisable on the seventh anniversary of the \nCommencement Date. Such exercise date will be subject to acceleration if, as \nand when certain performance criteria are achieved, as specified on Exhibit B.\n\n          (d)  The options described in paragraph 3(b) and (c) above will be \nsubject to the terms and conditions of the Company's 1994 Incentive Stock \nOption Plan.\n\n     4.   You will be entitled to three weeks of vacation per year to be taken \nat such times as are mutually agreeable to yourself and the Company.\n\n     5.   You will be required to execute the Company's standard form of \nEmployee Assignment and Nondisclosure Agreement and Non-Competition and \nNon-Solicitation Agreement as a condition of employment.\n\n     6.   You represent that you are not bound by any employment contracts, \nrestrictive covenants or other restrictions preventing you from entering into \nthis Agreement or carrying out your responsibilities for the Company, or which \nis in any way inconsistent with any of the terms of this Agreement.\n\n\n                                     Page 2\n\n\n\n     7.   This letter is not to be construed as an agreement, either expressed \nor implied, to employ you for any stated term, and shall in no way alter the \nCompany's policy of employment at will, allowing either you or the Company to \nterminate the employment relationship with or without cause at any time.\n\n     8.   This Agreement shall be construed, interpreted and enforced in \naccordance with the laws of the Commonwealth of Massachusetts.\n\n     If this letter correctly sets forth the terms under which you will be \ninitially employed by the Company, would you please so indicate by signing the \nenclosed copy of this letter in the space provided below and returning it to \nthe Company.\n\n                                             Very truly yours,\n\n                                             \/s\/ Tamah S. Rosker, Esq.\n                                             -----------------------------------\n\n                                             Name:  Tamah S. Rosker, Esq.\n                                             Title: Director, Human Resources\n                                                     Dragon Systems, Inc.\n\nThe foregoing correctly sets forth the terms of my employment by Dragon \nSystems, Inc.\n\n\/s\/ John Shagoury\n--------------------\nJohn Shagoury\n\n                                     Page 3\n\n                                   Exhibit A\n\n                          Bonus Criteria for the Bonus\n                       Period Ending on December 31, 1998\n\n     1.    If the Company's International Net Revenues, determined in accordance\nwith generally accepted accounting principles ('GAAP'), for the third fiscal\nquarter of 1998 exceed those of the Company for its second fiscal quarter of\n1998 by 50% or more of such Net Revenues for the second fiscal quarter of 1998,\nyou will receive a cash bonus of $9,375.\n\n     2.    If the Company's International Net Revenues, determined in accordance\nwith GAAP, for the fourth fiscal quarter of 1998 exceed those of the Company for\nits third fiscal quarter of 1998 by 50% or more of such Net Revenues for the\nthird fiscal quarter of 1998, you will receive a cash bonus of $9,375.\n\n     3.    If the Company ships 100% of its products on time (as defined in the\nCompany's 1998 Business Plan) during both the third and fourth fiscal quarters\nof 1998, you will receive a cash bonus of $18,750.\n\n     4.   If the Company ships 90% or more (but less than 100%) of its products\non time (as determined in accordance with a delivery schedule to be determined\nby and mutually acceptable to the Company and you) during both the third and\nfourth fiscal quarters of 1998, you will receive a cash bonus of $13,125.\n\n     5.   If the Company ships 80% or more (but less than 90%) of its products\non time (as determined in accordance with a delivery schedule to be determined\nby and mutually acceptable to the Company and you) during both the third and\nfourth fiscal quarters of 1998, you will receive a cash bonus of $9,375. (Note:\nyou may receive a cash bonus pursuant to only one of paragraphs 3,4,or 5 of this\nExhibit A.)\n\n     6.   If the Company's Pre-Tax Operating Profit, determined in accordance\nwith GAAP (and exclusive of extraordinary items), for the third fiscal quarter\nof 1998 equals or exceeds $4.7 million, you will receive a cash bonus of $5,625.\n\n     7.   If the Company's Pre-Tax Operating Profit margin, determined in\naccordance with GAAP (and exclusive of extraordinary items), for the third\nfiscal quarter of 1998 equals or exceeds 21.5%, you will receive a cash bonus of\n$3,750.\n\n\n\n                                     Page 4\n\n     8.   If the Company's Pre-Tax Operating Profit, determined in accordance \nwith GAAP (exclusive of extraordinary items), for the fourth fiscal quarter of\n1998 equals or exceeds $8.6 million, you will receive a cash bonus of $5,625.\n\n     7.   If the Company's Pre-Tax Operating Profit margin, determined in \naccordance with GAAP (exclusive of extraordinary items), for the fourth fiscal \nquarter of 1998 equals or exceeds 29.5%, you will receive a cash bonus of \n$3,750.\n\n     8.   If the Company's Net Revenues, determined in accordance with GAAP, \nfor the third fiscal quarter of 1998 equal or exceed $22 million, you will \nreceive a cash bonus of $9,375.\n\n     9.   If the Company's Net Revenues, determined in accordance with GAAP, \nfor the fourth fiscal quarter of 1998 equal or exceed $29 million, you will\nreceive a cash bonus of $9,375.\n\n     For purposes of determining Net Revenues, Pre-Tax Operating Profit and \nPre-Tax Operating Profit margin, there shall not be taken into account Net \nRevenues, Pre-Tax Operating Profit or Pre-Tax Operating Profit margin generated \nby or allocable to any business entity acquired (by merger, acquisition of \nstock, acquisition of assets or otherwise) by the Company after the \nCommencement Date.\n\n     All cash bonuses for performance which are based on Quarter 3 results, \nwill be payable on December 31, 1998. All cash bonuses for performance which \nare based upon Quarter 4 results will be payable no later than February 15, \n1999.\n\n                                     Page 5\n\n                                   EXHIBIT B\n\n                   NON-QUALIFIED OPTION ACCELERATION CRITERIA\n\n     (1) Revenue Growth. Options for up to 18,000 shares will become exercisable\nprior to the seventh anniversary of the Commencement Date, if the Company's Net\nRevenues (determined in accordance with GAAP), for its 1999 fiscal year exceed\nthose of the Company for its 1998 fiscal year by a percentage of such 1998 Net\nRevenues. If the percentage is 85% or more, but less than 100%, options to\npurchase 6,000 shares will be exercisable; if the percentage is 100% or more,\nbut less than 125%, options for 9,000 shares will become exercisable; if the\npercentage is 125% or more, but less than 200%, options for 12,000 shares will\nbecome exercisable; and if the percentage is 200% or more, options to purchase\n18,000 shares will become exercisable. Note that such categories are mutually\nexclusive, and if the percentage falls within any category, options for that\ncategory only will accelerate (and not any other). If the percentage increase in\nNet Revenues is less than 85%, no options will accelerate under this paragraph.\n\n     (2) Earnings Growth. Options for up to 12,000 shares will become\nexercisable prior to the seventh anniversary of the Commencement Date, if the\nCompany's Net After-Tax Profit (determined exclusive of extraordinary items (and\nin accordance with GAAP), for its 1999 fiscal year exceeds that of the Company\nfor its 1998 fiscal year by a percentage of such 1998 Net After-Tax Profit. If\nthe percentage is 150% or more, but less than 170%, options for 6,000 shares\nwill become exercisable; if the percentage is 170% or more, but less than 185%,\noptions for 9,000 shares will become exercisable; if the percentage is 185% or\nmore, options for 12,000 shares will become exercisable. Note that such\ncategories are mutually exclusive, and if the percentage falls within any\ncategory, options for that category only will accelerate (and not any other). If\nthe percentage increase is less than 150%, no options will accelerate under this\nparagraph.\n\n     (3) Quarterly Revenue Growth. Options for up to 18,000 shares will become\nexercisable prior to the seventh anniversary of the Commencement Date, if the\nCompany's Net Revenues (determined in accordance with GAAP) increase during ten\nconsecutive fiscal quarters at any time during the five-year period commencing\non the first day of the first full fiscal quarter commencing after the\nCommencement Date. The number of option shares which will become exercisable\nearlier will be determined based on the percentage increase over prior fiscal\nquarters for each of the applicable ten consecutive fiscal quarters. If such\nincrease, in each of such ten consecutive fiscal quarters, is greater than 0%\nbut less than 15%, options for 6,000 shares will become exercisable; if the\npercentage is 15% or more, but less than 18%, options for 12,000 shares will\nbecome exercisable; if the percentage is 18% or more, but less than 22%, options\nfor 15,000 shares will become exercisable; if the percentage is 22% or more,\n\n\n                                     Page 6\n\n\noptions for 18,000 shares will become exercisable. Note that such categories \nare mutually exclusive, and if the percentage falls within any category, \noptions for that category only will accelerate (and not any other). \nFurthermore, such acceleration may occur only once during the term of your \nemployment (so that if, during the relevant five-year period, the Company's Net \nRevenues increase for ten consecutive fiscal quarters more than one time, the \nnumber of shares subject to acceleration will be determined in accordance with \nthe formula described above based only on the first ten such consecutive fiscal \nquarters).\n\n     (4)  Quarterly Earnings Growth.  Options for up to 18,000 shares will \nbecome exercisable prior to the seventh anniversary of the Commencement Date if \nthe Company's Net After-Tax Profit (exclusive of extraordinary items and \ndetermined in accordance with GAAP) increases during ten consecutive fiscal \nquarters at any time during the five-year period commencing on the first day of \nthe first full fiscal quarter commencing after the Commencement Date. The \nnumber of option shares which will become exercisable earlier will be \ndetermined based on the percentage increase over prior quarters for each of the \napplicable ten consecutive fiscal quarters. If such increase, in each of such \nten quarters, is greater than 0% but less than 15%, options for 6,000 shares \nwill become exercisable; if the percentage is 15% or more, but less than 17%, \noptions for 12,000 shares will become exercisable; if the percentage is 17% or \nmore, but less than 19%, options for 15,000 shares will become exercisable; if \nthe percentage is 19% or more, options for 18,000 shares will become \nexercisable. Note that such categories are mutually exclusive, and if the \npercentage falls within any category, options for that category only will \naccelerate (and not any other). Furthermore, such acceleration may occur only \nonce during the term of your employment (so that if, during the relevant \nfive-year period of your employment, the Company's After-Tax Net Profit \nincreases for ten consecutive quarters more than one time, the number of shares \nsubject to acceleration will be determined in accordance with the formula \ndescribed above based only on the first ten such consecutive quarters).\n\n     (5)  Market Capitalization.  Options for up to 21,000 shares of the \nCompany's Common Stock shall become exercisable prior to the seventh \nanniversary of the Commencement Date if, during the five-year period commencing \non the Commencement Date the Company sells, in a public offering pursuant to a \nregistration statement filed with the Securities and Exchange Commission, its \nequity securities, and the Company maintains on each day for any 90 consecutive \nbusiness day period ending on or before the last day of such five-year period, \na Market Capitalization (as defined below) at certain minimum levels. If the \nMarket Capitalization for each day of any such consecutive 90-business day \nperiod is at least $1.8 billion but less than $2.2 billion, options for 6,000 \nshares will become exercisable; if such Market Capitalization is at least $2.2 \nbillion but less than $2.4 billion, options for 9,000 shares will become \nexercisable; if such Market Capitalization is at least $2.4 billion but less \nthan $3.0 billion, options for \n\n                                     Page 7\n\n\n18,000 shares will become exercisable; and if such Market Capitalization is $3.0\nbillion or more, options for 21,000 shares will become exercisable. The\nCompany's Market Capitalization on any business day shall mean the product of\n(A) the issued and outstanding shares of the Company's Common Stock on such\nbusiness day and (B) the closing price per share of the Company's Common\nStock on such business day, as reported in The Wall Street Journal. Note that\nsuch categories are mutually exclusive, and if Market Capitalization falls\nwithin any category, options for that category only will accelerate (and not any\nother). Furthermore, you will be entitled to such acceleration only once during\nthe term of your employment (so that if, during the relevant five-year period,\nthe Company's Market Capitalization for 90 consecutive business days equals or\nexceeds the levels indicated more than one time, the number of shares subject to\nthe acceleration will be determined in accordance with the formula described\nabove based only on the first such 90 consecutive business day period).\n\n     Notwithstanding anything to the contrary, in no event may the total \nnumber of option shares granted to you pursuant to this Section 3(c) exceed \n46,200 shares.\n\n     For purposes of determining Net Revenues and After-Tax Net Profits, there \nshall not be taken into account Net Revenues or After-Tax Net Profits generated \nby or allocable to any business entity acquired (by merger, acquisition of \nstock, acquisition of assets or otherwise) by the Company after the \nCommencement Date.\n\n\n\n\n\n                                     Page 8\n\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7354],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9539,9544],"class_list":["post-39075","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-dragon-systems-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39075"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39075"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39075"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}