EXHIBIT 10.16
AMENDMENT TO
KEY EMPLOYEE AGREEMENT
AND
CONFIDENTIAL INFORMATION AGREEMENT
THIS AGREEMENT, dated and effective as of February 28, 1997, among
Albert J. Agbay ("Agbay") and Nexar Technologies, Inc. (f/k/a Dynasys Systems
Corporation), a Delaware corporation (the "Company"), amends (i) the Key
Employee Agreement entered into on or about April 1, 1995 (the "Original
Employment Agreement") between the Company and Agbay and (ii) the Confidential
Information Agreement entered into on or about April 1, 1995 (the "Original
Confidentiality Agreement") between the Company and Agbay.
The parties hereto agree as follows:
1. The text of Section 2.1 (entitled "Term of Employment") of the
Original Employment Agreement is amended to read in its entirety as follows:
"The initial term of this Agreement shall be for the period of years
set forth on Exhibit A annexed hereto. Unless either party chooses
otherwise by notice to the other given prior to the expiration of each
such contract year, the Agreement automatically extends at the end of
each year for an additional year throughout the term of the Agreement.
Your employment with the Company may be terminated as provided in
Sections 2.2 or 2.3."
2. The text of Section 2.2(d) of the Original Employment Agreement is
amended to read in its entirety as follows:
"(d) at any time without Cause, provided the Company shall be obligated
to pay you the applicable severance compensation and other benefits set
forth on Exhibit A hereto."
3. The text of Section 2.4 of the Original Employment Agreement is
amended to read in its entirety as follows:
" "Cause" for the purposes of this Agreement shall mean (i) fraud or
embezzlement involving assets of the Company, its customers, suppliers
or affiliates; (ii) your conviction of a criminal felony offense; (iii)
the willful material breach or habitual neglect of your obligations
under this Agreement or your duties as an employee of the Company; or
(iv) your willful failure to follow lawful material directives of the
Board of Directors. The existence of Cause for termination of your
employment by the Company shall be subject, upon the written election
by you or the Company, to binding arbitration as provided in Section 9
hereof. The cost of arbitration, exclusive of the cost of each party's
legal representation (which, except as hereinafter otherwise provided,
shall be borne by the party incurring the expense), shall be borne by
the instigating party; provided, however, that the arbitrators' award
may require either
party to reimburse the other for the reasonable cost of legal
representation in the arbitration proceedings.
Further, any dispute, controversy, or claim arising out of, in
connection with or in relation to this definition of "Cause" shall be
settled by arbitration as provided in Section 9 hereof. Any award or
determination shall be final, binding, and conclusive upon the parties,
and a judgement rendered may be entered in any court having
jurisdiction thereof."
4. The text of Section 1 of Exhibit A (entitled "Term") to the Original
Employment Agreement is amended to read in its entirety as follows:
"The term of the Agreement to which this Exhibit A is annexed and
incorporated shall be for five (5) years, renewing automatically each
year pursuant to Section 2.1 of the Agreement, commencing March 1,
1997, unless terminated prior thereto in accordance with Section 2.2 or
2.3 of the Agreement."
5. The text of subparagraphs (a) and (c) (subparagraph (b) remaining in
full force and effect) of Section 2 of Exhibit A (entitled "Compensation") to
the Original Employment Agreement are each amended to read in their entirety as
follows:
"(a) Base Salary. Your Base Salary is Two Hundred Fifty Thousand
Dollars ($250,000) per annum as of April 1, 1997, and thereafter for
the term of the Agreement, to be paid in accordance with the Company's
payroll policies and subject to increases thereafter as determined in
good faith by the Company's Board of Directors (or a duly appointed
Compensation Committee thereof)."
"(c) Severance Package Pursuant to Section 2.2(d) of the Agreement:
1. Termination Without Cause after Change in Control: If there
occurs a Change of Control of the Company (for purposes
hereof, "Change of Control" is defined as any merger (other
than a merger with a subsidiary or in which the Company is the
survivor and "acquiror"), a sale of substantially all assets
or similar change in control transaction involving the
Company) at any time, and your employment is terminated (i) by
the Company for any reason other than Cause or (ii) by you
after a reduction in either responsibilities or pay or change
in location, you will receive the following:
a) Full immediate vesting of any issued,
unvested stock options,
b) Full payment of any accrued, unpaid salary,
bonus or benefit payments,
c) Three years base pay at highest prior level,
2
d) Three years incentive bonus at highest prior
level,
e) Three years of full benefits package
including health, disability and life
insurance, full contributions to all
qualified and non-qualified retirement and
pension plans or (then) current value of
same in cash if terms of plans preclude
participation, but only to the extent
similar benefits are not received in another
position,
f) $2,250,000 cash, and
g) In the event that your employment is
terminated pursuant to this item 1 and the
excise tax imposed by Section 4999 of the
Internal Revenue Service Code (the "Code")
(or any successor penalty or excise tax
subsequently imposed by law) applies to any
payments under this item 1, an additional
amount shall be paid by the Company to you
such that the aggregate after-tax amount
that you shall receive under this item 1,
shall have a present value equal to the
aggregate after-tax amount that you would
have received and retained had such excise
tax not applied to you. For this purpose,
you shall be assumed to be subject to tax in
each year relevant to the computation at the
then maximum applicable combined Federal and
Massachusetts income tax rate, and the
determination of the present value of
payments to you shall be made consistent
with the principles of Section 280G of the
Code.
2. Termination Without Cause Absent Change in Control: If your
employment as Chief Executive Officer is terminated by the
Company (other than for Cause as defined below) or by you
after a reduction in either responsibilities or pay or change
in location, you will receive all of the items listed in item
1 above, except (f) and (g). In lieu of item (f), you shall be
entitled to a minimum (the "Minimum Amount") of (i) $1,000,000
if you are terminated on or prior to December 31, 1997, or
(ii) $1,500,000 if you are terminated on or after January 1,
1998, subject in either case to increase as follows:
(x) If the Company achieves $150,000,000 in
total revenues in any fiscal year prior to
your termination, you shall be entitled to
$3,000,000; and
(y) if (x) is not achieved, you shall receive a
sum equal to (but not greater, in any event,
than $3,000,000) the applicable Minimum
Amount plus either (i) if the Minimum Amount
is $1,000,000, an amount equal to the
product of $2,000,000 multiplied by the
3
quotient of (A) the amount by which the
Company's total revenues for the four
previous completed fiscal quarters of the
Company prior to the date of your
termination exceeds $70,000,000, divided by
(B) $80,000,000, or (ii) if the Minimum
Amount is $1,500,000, an amount equal to the
product of $1,500,000 multiplied by the
quotient of (A) the amount by which the
Company's total revenues for the four
previous completed fiscal quarters of the
Company prior to the date of your
termination exceeds $70,000,000, divided by
(B) $80,000,000.
In addition, if your termination occurs after January
1, 2000, and the remaining term of your contract immediately
prior to your termination is more than three years, in lieu of
(c) and (d) of item 1 you shall receive an amount of cash
equal to (at the highest prior levels) the amount of both your
base pay and incentive bonus which would be paid out over such
remaining period of time.
All payments set forth above in this item 2 shall be
guaranteed by Palomar Medical Technologies, Inc. ("Palomar")
for as long as Palomar and its subsidiaries own 50% or more of
the voting power of the capital stock of the Company.
3. Resignation by Agbay: If you resign in the absence of a
reduction in either responsibilities or pay or change in
location, you will be entitled to receive the following (all
payments set forth in this item 3 shall be guaranteed by
Palomar for as long as Palomar and its subsidiaries own 50% or
more of the voting power of the capital stock of the Company):
a) Full payment of any accrued, unpaid salary,
bonus or benefit payments,
b) Eighteen months of base pay at highest prior
level,
c) Eighteen months of incentive bonus at
highest prior level,
d) Eighteen months of full benefits package
including health, disability and life
insurance, full contributions to all
qualified and non-qualified retirement and
pension plans or (then) current value of
same in cash if terms of plans preclude
participation, but only to the extent
similar benefits are not received in another
position, and
e) $1,000,000 cash, but only if your
resignation is on or after January 1, 2000.
4
4. Expiration of Employment Agreement: Upon the expiration of
this Agreement (or successor agreement), you will be entitled
to receive the following (all payments set forth in this item
4 shall be guaranteed by Palomar for as long as Palomar and
its subsidiaries own 50% or more of the voting power of the
capital stock of the Company):
a) Full payment of any accrued, unpaid salary,
bonus or benefit payments,
b) Eighteen months of base pay at highest prior
level,
c) Eighteen months of incentive bonus at
highest prior level,
d) Eighteen months of full benefits package
including health, disability and life
insurance, full contributions to all
qualified and non-qualified retirement and
pension plans or (then) current value of
same in cash if terms of plans preclude
participation, but only to the extent
similar benefits are not received in another
position, and
e) $2,250,000 cash, but only if the Company has
achieved cumulative total revenues of
$150,000,000 for the period commencing on
January 1, 1997 to the date of expiration.
5. Termination For Cause: If your employment as Chief
Executive Officer is terminated for Cause, you will be
entitled only to full payment of any accrued, unpaid salary,
bonus and benefit payments and retention of any fully vested
stock options and other benefits.
6. The following new subparagraph (d) is added to Section 2 of Exhibit
A (entitled "Compensation") to the Original Employment Agreement:
"(d) Per Unit Sold Bonus. In addition to the Bonus determined
pursuant to subparagraph (b) above, an amount equal to the product of
$2.00 multiplied by the number of personal computers sold by the
Company (subject to reduction for returns, credits, set-offs and
allowances) during the period commencing on April 1, 1996, and
thereafter for the term of the Agreement, payable quarterly."
7. Section 3.2 of the Original Confidentiality Agreement is hereby
amended to read in its entirety as follows:
"For purposes of this Agreement, "Inventions" shall mean all
discoveries, processes, designs, methods, works, technologies, devices,
or improvements in any of the foregoing or other ideas, whether or not
patentable or copyrightable, or reduced to
5
practice, made, conceived, authored or developed by me (whether solely
or jointly with others) during the period of my employment with the
Company, or within one year thereafter, which relate in any manner to
the actual or demonstrably anticipated business, products, or research
and development of the Company, or result from or are suggested by any
task assigned to me or any work performed by me or on behalf of the
Company."
8. Section 3.3 of the Original Confidentiality Agreement is hereby
amended to read in its entirety as follows:
"Any discovery, process, design, method, technique, work, technology,
device, or improvement in any of the foregoing or other ideas, whether
or not patentable or copyrightable and whether or not reduced to
practice, made or conceived by me (whether solely or jointly with
others) which I develop entirely on my own time not using any of the
Company's equipment, supplies, facilities, or trade secret information
("Personal Invention") is excluded from this Agreement provided such
Personal Invention (i) does not relate to the actual or demonstrably
anticipated business, products, or research and development of the
Company, and (ii) does not result, directly or indirectly, from any
work performed by me or on behalf of the Company."
9. The respective addresses for notices under the Original Employment
Agreement and the Original Confidentiality Agreement shall be as follows:
If to Nexar: Nexar Technologies, Inc.
182 Turnpike Road
Westborough, MA 01581
Attention: Gerald Y. Hattori
If to Agbay: Albert J. Agbay
c/o Nexar Technologies, Inc.
182 Turnpike Road
Westborough, MA 01581
10. Except to the extent modified hereby, all terms of the Original
Employment Agreement and the Original Confidentiality Agreement shall be
unaffected hereby and shall continue in full force and effect.
* * * * *
6
EXECUTED as of the date first above written.
By: Albert J. Agbay
NEXAR TECHNOLOGIES, INC.
By: Gerald Y. Hattori
Vice President and Chief Financial Officer
7