EXHIBIT 10.20
AMENDMENT TO
KEY EMPLOYEE AGREEMENT
AND
CONFIDENTIAL INFORMATION AGREEMENT
THIS AGREEMENT, dated and effective as of October 1, 1996, among Liaqat
Khan ("Khan"), Intelesys Corporation, a Delaware corporation formerly known as
Dynasys/ Intelligent Systems Corporation ("Intelesys"), and a Delaware
corporation currently known as Nexar Technologies, Inc. ("Nexar") which owns all
of the issued and outstanding capital stock of Intelesys, amends (i) the Key
Employee Agreement entered into on or about August 1, 1995 (the "Original
Employment Agreement") between Intelesys and Khan and (ii) the Confidential
Information Agreement entered into on or about August 1, 1995 (the "Original
Confidentiality Agreement") between Intelesys and Khan.
The parties hereto agree as follows:
1. The text of Section 1.1 of the Original Employment Agreement is
amended to read in its entirety as follows:
"You shall serve as Executive Vice President of Manufacturing of the
Company (or in such other executive capacity as shall be designated by
the Chairman of the Board of Directors or the President of the Company)
and you shall perform the duties customarily associated with such
capacity from time to time and at such place or places in Northern
California as the Chairman of the Board of Directors or the President
of the Company shall designate as appropriate and necessary in
connection with such employment."
2. 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."
3. 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 attached hereto."
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 October 1,
1996, 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 One Hundred Fifty Thousand
Dollars ($150,000) per annum as of October 1, 1996 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) One year base pay at highest prior level,
d) One year incentive bonus at highest prior
level,
e) One year 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,
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f) $750,000 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
California 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 is terminated by the Company (other than for Cause)
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 (g) (all payments set forth 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. 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
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) $750,000 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,
c) One year base pay at highest prior level,
d) One year incentive bonus at highest prior
level, and
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e) One year 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.
4. Termination For Cause: If your employment is terminated for
Cause (as defined in Section 2.4), 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, 1997 and
thereafter for the term of the Agreement, payable quarterly."
7. The text of the second paragraph of Section 5 of Exhibit A (entitled
"Expenses") of the Original Employment Agreement is amended to read in its
entirety as follows:
"The Company will provide you with a monthly automobile allowance of
$1,000."
8. The following new Section 8 of Exhibit A (entitled "Vesting of Stock
Options Upon IPO") is added to the Original Employment Agreement:
"8. Vesting of Stock Options Upon IPO. All stock options held by you as
of February 28, 1997, will vest 50% upon consummation of an
underwritten registered initial public offering ("IPO") of the common
stock of the Company and in full one year after the closing of such IPO
and immediately prior to a Change of Control."
9. 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 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
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suggested by any task assigned to me or any work performed by me or on
behalf of the Company."
10. 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."
11. All references herein and in the Original Employment Agreement to
the "Company" shall mean Nexar, rather than Intelesys. All references herein and
in the Original Employment Agreement to the Chairman of the Board of the Company
shall mean the Chairman of the Board of Nexar. All references in the Original
Confidentiality Agreement to the "Company" shall mean Nexar, any entities
directly or indirectly owned or controlled by, or affiliated with, Nexar, and
any successors or assigns of the foregoing.
12. Any notices under the Original Employment Agreement and the
Original Confidentiality Agreement required by their terms to be given to
Intelesys shall instead be given to Nexar. 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: Albert J. Agbay, Chairman
If to Khan: Liaqat Y. Khan
c/o Nexar Technologies, Inc.
30551 Huntwood Avenue
Hayward, CA 94544
13. 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.
* * * * *
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EXECUTED as of the date first above written.
By: Liaqat Khan
INTELESYS CORPORATION
(f/k/a Dynasys/Intelligent Systems Corporation)
By: Albert J. Agbay, Chairman
NEXAR TECHNOLOGIES, INC.
By: Albert J. Agbay, Chairman,
Chief Executive Officer and President
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