EMPLOYMENT AGREEMENT
AGREEMENT (this "AGREEMENT") made as of May 20, 1996 but effective as of
the Employment Date (as hereinafter defined), between CARDIOPULMONARY CORP., a
Delaware corporation with an office at 200 Cascade Boulevard, Milford,
Connecticut (the "COMPANY"), and Donald D. Gilmore, an individual residing at 7
Eastburn, Brighton, Massachusetts 02135 (the "EXECUTIVE").
W I T N E S S E T H :
WHEREAS, the Company desires that the Executive be employed to serve in a
senior executive capacity with the Company, and the Executive desires to be so
employed by the Company, upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants contained in this Agreement, the parties
agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby accepts
such employment, subject to the terms and conditions set forth in this
Agreement, as its Director of Software Development.
2. TERM.
The term of employment under this Agreement shall begin as of the closing
date of the Company's initial public offering of Common Stock (the "EMPLOYMENT
DATE") and shall continue for a period of two (2) years from that date, subject
to prior termination in accordance with the terms of this Agreement; provided,
however, that this Agreement shall automatically be renewed on the same terms
for successive one-year terms, unless terminated by written notice given by
either party to the other at least ninety (90) days prior to the end of the
applicable term.
3. DUTIES.
(a) The Executive shall perform the duties and functions normally
associated with the office of Director of Software Development of a corporation
and
shall report to the Chief Executive Officer of the Company or such other senior
officer of the Company as may be designated by the Chief Executive Officer.
(b) Until termination of his employment, the Executive agrees to devote all
his working time, attention and energies to the performance of the businesses of
the Company and of any of its affiliates by which he may be employed, and the
Executive shall not, directly or indirectly, alone or as a member of any
partnership or other organization, or as an officer, director or employee of any
other corporation, partnership or other organization, be actively engaged in or
concerned with any other duties or pursuits which materially interfere with the
performance of his duties under this Agreement, or which, even if
non-interfering, may be contrary to the best interests of the Company, except
those duties or pursuits specifically authorized by the Chief Executive Officer
of the Company.
4. COMPENSATION.
As compensation for the employment services to be rendered by the Executive
under this Agreement, including any services as an officer or director of the
Company and any of its affiliates, the Company agrees to pay, or cause to be
paid, to the Executive, and the Executive agrees to accept, a minimum annual
compensation of $110,000.00, or such higher amount as the Board of Directors may
determine, payable in equal installments in accordance with Company practice.
5. EXPENSES.
The Company shall pay or reimburse the Executive, subject to prior approval
and upon presentment of such vouchers, receipts and other supporting information
as the Company may require, for all reasonable business and travel expenses
which may be incurred or paid by the Executive in connection with the employment
of the Executive by the Company in accordance with the Company's standard
policies then in effect. The Executive shall comply with such restrictions and
shall keep such records as the Company may require of its executives generally
to facilitate compliance with the requirements of the Internal Revenue Code of
1986, as amended from time to time, and regulations promulgated thereunder.
6. INSURANCE AND OTHER BENEFITS.
The Executive shall be entitled to three (3) weeks annual vacation and to
participate in and receive any other benefits provided by the Company to other
executive employees generally (including any personal and sick days, 401(k) plan
participation, health insurance, dental coverage, life insurance and short and
long-term disability insurance plans in accordance with the terms of such
plans), all as determined
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from time to time by the Board of Directors of the Company or appropriate
committee thereof.
7. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) This Agreement shall terminate immediately upon the death of the
Executive. In such event, the estate of the Executive shall thereupon be
entitled to receive such portion of the Executive's annual salary and such
commissions as have been earned or accrued and remain unpaid through the date of
his death.
(b) The Company may terminate the Executive's employment in the Company's
sole discretion at any time, with or without Justifiable Cause (as hereinafter
defined), upon written notice to the Executive. In the event the Company seeks
to terminate the Executive's employment with Justifiable Cause in accordance
with subsections (f)(i), (f)(iii) or (f)(v), the Company shall first notify the
Executive in writing of such intention and afford the Executive a reasonable
period (as determined by the Company) in which to remedy the conduct in
question. If the conduct in question is not remedied in the time period
provided, the Company may terminate the Executive with Justifiable Cause.
(c) The Company may terminate the Executive's employment if he has been
unable to perform his duties hereunder due to Disability (as hereinafter
defined) if he has not resumed on a full-time basis the performance of such
duties within thirty days after written notice from the Company of its intent to
terminate his employment due to Disability.
(d) The Executive may terminate his employment hereunder for Good Reason
(as hereinafter defined) upon written notice to the Company.
(e) In the event that the Executive's employment is terminated at any time
either (i) by the Company for any reason other than Justifiable Cause,
Disability or death or (ii) by the Executive for Good Reason, the Company shall
pay the Executive his salary at his then current rate (including an amount equal
to any bonuses paid to the Executive during the prior twelve (12) month period)
for a period of twelve (12) months, such payments to be made ratably over the
term of the Non-Compete Period (as hereinafter defined) provided, however, that
termination by the Executive pursuant to subsection (h)(v) must occur within
ninety (90) days following the first day on which the Change in Control (as
hereinafter defined) occurs. Such payments shall be in lieu of any and all other
payments due and owing to the Executive under the terms of this Agreement. The
Company shall also provide to the Executive health insurance until such time as
Executive obtains new employment and is covered under the new employer's health
insurance plan but in no event longer than Non-Compete Period. The Executive
shall not be required to seek other employment or to otherwise mitigate the
effects of such termination, and such payments shall not be reduced by any
income received from other sources.
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(f) For the purposes of this Agreement, the term "JUSTIFIABLE CAUSE" shall
mean: (i) intentional gross misconduct by the Executive in the performance of
his duties hereunder; (ii) the conviction of a felony; (iii) misuse of the
Company's position or knowledge of the Company's affairs for personal gain; (iv)
any other violation of law in connection with the Company's business which would
have a material effect on the Executive's ability to perform his duties
hereunder or on the Company's business; or (v) a breach of the Confidentiality
provision set forth in Section 10 below. "Intentional gross misconduct" shall
include personal dishonesty, willful misconduct or intentional failure to
perform stated duties.
(g) For the purposes of this Agreement, the term "DISABILITY" shall mean
the inability of the Executive, due to illness, accident or any other physical
or mental incapacity, to perform his duties in a normal manner for a period of
six (6) consecutive months during the term of this Agreement.
(h) For the purposes of this Agreement, the term "GOOD REASON" shall mean:
(i) a substantial reduction of the Executive's duties, position, authority or
responsibilities hereunder which is not corrected within thirty (30) days after
written notice from the Executive; (ii) material breach by the Company of its
obligations hereunder if not remedied within thirty (30) days after written
notice from Executive; (iii) a reduction in the Executive's compensation; (iv) a
material adverse change in the working conditions to which the Executive has
been subject or a material reduction in the discretionary fringe benefits the
Executive has been enjoying; or (v) a Change in Control.
(i) For the purposes of this Agreement, a "CHANGE IN CONTROL" shall be
deemed to have occurred: (i) if any "person" (as such term is used in Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), other than the Executive, who is not a shareholder of the
Company as of the date hereof, shall have become the beneficial owner, directly
or indirectly, of Common Stock representing thirty-three and one-third percent
(33-1/3%) or more of the combined voting power of the Company's then outstanding
securities, unless three-quarters of the Board of Directors, as constituted
immediately prior to the date of the Change in Control, decide in their
reasonable discretion that no Change in Control has occurred, the Executive not
being allowed to vote on such matter if he is then a Director; provided,
however, that if any such person other than the Executive (whether or not a
stockholder of the Company as of the date hereof) shall become the beneficial
owner, directly or indirectly, of Common Stock representing fifty percent (50%)
or more of the Company's then outstanding securities, a Change in Control shall
ipso facto have occurred; (ii) if at any time individuals who at the date of
this Agreement constitute a majority of the Board of Directors, or individuals
designated by such a majority as "continuing directors," cease, for any reason
other than death or voluntary resignation (being a resignation not requested by
any other person or persons), to constitute at least a majority of the Board of
Directors; or (iii) if there is a Change in Control of a nature that, in the
opinion of counsel for the Company, would be required to be reported in response
to Item 6(e) of Schedule 14A under the Exchange
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Act, unless three-quarters of the Board of Directors, as constituted immediately
prior to the date of the Change in Control, decide in their reasonable
discretion that no Change in Control has occurred, the Executive not being
allowed to vote on such matter if he is then a Director.
8. REPRESENTATIONS AND AGREEMENTS OF THE EXECUTIVE.
(a) The Executive represents and warrants that he is free to enter into
this Agreement and to perform the duties required under this Agreement, and that
there are no employment contracts or understandings, restrictive covenants or
other restrictions, whether written or oral, preventing the performance of his
duties under this Agreement.
(b) The Executive agrees to submit on reasonable notice to a medical
examination (at the Company's expense) and to cooperate and supply such other
information and documents as are in Executive's possession as may reasonably be
required by any insurance company in connection with the Company's obtaining any
type of insurance or fringe benefit as the Company shall determine from time to
time to obtain for Executive. Executive shall be given a complete report of any
such examination.
9. NON-COMPETITION.
(a) The Executive acknowledges that his duties under this Agreement and the
services he will provide to the Company are of a special, unique, unusual and
extraordinary character, which gives this Agreement particular value to the
Company, and that it would be difficult to employ any individual or individuals
to replace the Executive in the performance of such duties and services.
Therefore, the Executive agrees that during his employment by the Company, and
for a period of two (2) years after termination of this Agreement for any
reason, including expiration of the term of this Agreement (the "NON-COMPETE
PERIOD"), the Executive shall not, directly or indirectly, as owner, partner,
joint venturer, stockholder, employee, broker, agent, principal, trustee,
corporate officer, director, or in any capacity whatsoever engage in, become
financially interested in, be employed by, render any consultation or business
advice with respect to, or have any connection with, any business engaged in the
design or manufacture of mechanical ventilators or anaesthesia equipment or
which are otherwise competitive with products or services with respect to which
the Company or any of its affiliates are actively engaged during the term of
this Agreement, in any geographic area where, at the time of the termination of
his employment, the business of the Company or any of its affiliates was being
conducted or was proposed to be conducted; provided, however, that the Executive
may own any securities of any corporation which is engaged in such business and
is publicly owned and traded but in an amount not to exceed at any one time two
percent (2%) of any class of stock or securities of such corporation. In
addition, the Executive shall not, directly or
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indirectly, during the Non-Compete Period, request or cause contracting parties,
suppliers or customers with whom the Company or any of its affiliates has a
business relationship to cancel or terminate any such business relationship with
the Company or any of its affiliates or solicit, interfere with or entice from
the Company any employee (or former employee) of the Company.
(b) If any portion of the restrictions set forth in this Section 9 should,
for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) The Executive acknowledges that the Company intends to conduct business
on a world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in this Section 9 are reasonable and properly required for
the adequate protection of the business of the Company and its affiliates. In
the event any such territorial or time limitation is deemed to be unreasonable
by a court of competent jurisdiction, the Executive agrees to the reduction of
the territorial or time limitation to the area or period which such court deems
reasonable.
(d) The existence of any claim or cause of action by the Executive against
the Company shall not constitute a defense to the enforcement by the Company of
the foregoing restrictive covenants, but such claim or cause of action shall be
litigated separately.
10. CONFIDENTIALITY
(a) The Executive acknowledges that, during the course of his employment by
the Company, the Executive will have access to confidential or proprietary
information, documents and other materials relating to the Company, its
affiliates and their respective business which are not generally known to
persons outside the Company (whether conceived or developed by the Executive or
others) and confidential or proprietary information, documents and other
materials entrusted to the Company by third parties, including, without
limitation, any "know-how," trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business plans, acquisition
plans of the Company or its affiliates that are valuable and not generally known
to the competitors of the Company, whether or not in written or tangible form,
and including all memoranda, notes, plans, reports, records, documents and other
evidence thereof ("CONFIDENTIAL INFORMATION"). Neither the Executive nor any
entity affiliated with the Executive will, directly or indirectly, during the
term of the Executive's employment by the Company and/or thereafter, disclose to
anyone, or use or otherwise exploit for the Executive's own benefit or for the
benefit of anyone other than the Company or its affiliates, any Confidential
Information. Confidential Information shall not include information which (i)
the Executive can show was already
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in the possession of the Executive prior to employment with the Company, and
which was not acquired or obtained from the Company or any of its affiliates
(whether received before or after the date of this Agreement), or (ii) is or
becomes generally available to the industry other than as a result of a
disclosure, directly or indirectly, by the Executive.
(b) The Executive agrees that all Confidential Information conceived,
discovered or made by the Executive during the term of employment belongs to the
Company. The Executive will promptly disclose such Confidential Information to
the Company and perform all actions reasonably requested by the Company to
establish and confirm such ownership.
(c) All Confidential Information relating to the Company and its affiliates
shall be the exclusive property of the Company and its affiliates, and the
Executive shall use all reasonable efforts to prevent any publication or
disclosure thereof. Upon termination of the Executive's employment with the
Company, all documents, records, reports, writings and other similar documents
containing Confidential Information, including copies thereof, then in
Executive's possession or control shall be returned to and left with the
Company.
11. COPYRIGHTS, PATENTS, TRADEMARKS.
(a) All right, title and interest, of every kind whatsoever, in the United
States and throughout the world, in (i) any work, including the copyright
thereof (for the full terms and extensions thereof in every jurisdiction),
created by the Executive at any time during the term of this Agreement and all
material embodiments of the work subject to such rights (collectively, "Works")
and (ii) all inventions, ideas, discoveries, designs and improvements,
patentable or not (collectively "Inventions"), which Works or Inventions are
made or conceived by the Executive at any time during the term of this
Agreement, and which either relate to the business of the Company, or are
created, made or conceived using the facilities of the Company (collectively,
"COMPANY WORKS AND INVENTIONS"), shall be and remain the sole property of the
Company without payment of any further consideration to the Executive or any
other person, and each of the Company Works and Inventions shall, for purposes
of United States copyright law, be deemed created by the Executive pursuant to
his duties under this Agreement and within the scope of his employment and shall
be deemed a work made for hire; and the Executive agrees to assign, at the
Company's expense, and the Executive does hereby assign, all of his right, title
and interest in and to all Company Works or Inventions, patentable or not, and
any copyrights, letters patent, trademarks, trade secrets, and similar rights,
and the applications therefor, which may exist or be issued with respect
thereto. For the purposes of this Section 11, "WORKS" shall include all
materials created during the term of this Agreement, whether or not ever used by
or submitted to the Company, including, without limitation, any work which may
be the subject matter of a copyright under United States copyright law. In
addition to its other rights, the Company may copyright any such work in its
name in the United
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States in accordance with the requirements of the United States copyright law
and the Universal Copyright Convention and any other convention or treaty to
which the United States is or may become a party.
(b) Whenever the Company shall so request, whether during or after the term
of this Agreement, the Executive shall execute, acknowledge and deliver all
applications, assignments or other instruments; make or cause to be made all
rightful oaths; testify in all legal proceedings; communicate all known facts
which relate to Company Works and Inventions; perform all lawful acts and
otherwise render all such assistance as the Company may deem necessary to apply
for, obtain, register, enforce and maintain any copyrights, letters patent and
trademark registrations of the United States or any foreign jurisdiction or
under the Universal Copyright Convention (or any other convention or treaty to
which the United States is or may become a party), or otherwise to protect the
Company's interests therein, including any which the Company shall deem
necessary in connection with any proceeding or litigation involving the same.
The Company shall reimburse the Executive for all reasonable out-of-pocket costs
incurred by the Executive in testifying at the Company's request or in rendering
any other assistance requested by the Company pursuant to this Section 11. All
registration and filing fees and similar expenses shall be paid by the Company.
12. RIGHT TO INJUNCTION; REMEDIES.
(a) The Executive recognizes that the services to be rendered by him under
this Agreement are of a special, unique, unusual, extraordinary and intellectual
character involving skill of the highest order and giving them peculiar value
the loss of which cannot be adequately compensated for in damages. In the event
of a breach of Section 9, 10 or 11 of this Agreement by the Executive, the
Company shall be entitled to injunctive relief or any other legal or equitable
remedies. The remedies provided in this Agreement shall be deemed cumulative and
the exercise of one shall not preclude the exercise of any other remedy at law
or in equity for the same event or any other event.
(b) The Executive shall not incur any liability to the Company solely by
reason of the Executive's termination of his employment with the Company,
whether such termination is for Good Reason or otherwise.
13. ASSIGNMENT.
The rights and obligations of the Company under this Agreement shall inure
to the benefit of and shall be binding upon the successors and assigns of the
Company.
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14. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement shall be valid
unless made in writing and signed by both of the parties to this Agreement.
15. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Connecticut
applicable to agreements made and to be performed therein.
16. SEVERABILITY.
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
17. NOTICES.
Any notices required or permitted to be given under this Agreement shall be
sufficient if in writing, and if delivered by hand, or sent by certified mail,
return receipt requested, to the addresses set forth above or such other address
as either party may from time to time designate in writing to the other, and
shall be deemed given as of the date of the delivery or mailing.
18. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any provision of
this Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties with respect to
the subject matter hereof and shall be binding upon and inure to the benefit of
the parties to this Agreement and their respective legal representatives, heirs,
distributors, successors and assigns. Notwithstanding the foregoing, no prior
agreements between the Executive and the Company relating to the confidentiality
of information, trade secrets and patents shall be affected by this Agreement.
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20. SURVIVAL.
The termination of the Executive's employment hereunder shall not affect
the enforceability of Sections 9, 10, 11 and 12 of this Agreement.
21. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
22. HEADINGS.
The section headings appearing in this Agreement are for the purposes of
easy reference and shall not be considered a part of this Agreement or in any
way modify, demand or affect its provisions.
23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CARDIOPULMONARY CORP.
By: /s/ JAMES W. BIONDI, M.D.
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By: /s/ DONALD D. GILMORE
----------------------------
Donald D. Gilmore
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