EXHIBIT 10.6
DATED MARCH 24 1998
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CARDIOTECH INTERNATIONAL INC.
and
▇▇▇▇ ▇▇▇▇▇▇▇
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
--------------------
PARTIES
This Employment Agreement ("the Agreement") dated the 24th day of March, 1998 is
entered into by and between
(1) CARDIOTECH INTERNATIONAL INC., a Massachusetts corporation having its
principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("the
Company"), and
(2) ▇▇▇▇ ▇▇▇▇▇▇▇ of Lianfair D.C., ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("the
Executive")
TERMS OF AGREEMENT
In consideration of this Agreement and the continued employment of the Executive
by the Company and the payment of $1 by the Company to the Executive and the
covenants contained in the Service Agreement (as hereinafter defined) the
parties agree as follows:
1. Employment
----------
1.1. The Company hereby agrees to employ the Executive to act as Executive
Vice President of the Company and to perform such acts and duties and
furnish such services to the Company in connection with and related to
that position as is customary for persons with similar positions in
like companies and as the Chief Executive Officer of the Company shall
from time to time reasonably direct. The Executive shall be an officer
of the Company.
1.2. The Executive hereby accepts the said employment.
1.3. The Executive shall use his diligent efforts to promote the interests
of the Company and shall discharge his duties in a competent manner.
1.4. The Executive shall report directly to the Chief Executive Officer of
the Company.
1.5. It is acknowledged by the Company that the Executive is employed on a
full time basis by its United Kingdom subsidiary company, CardioTech
International Limited ("Cardio Limited") pursuant to the terms of a
Service Agreement (the "Service Agreement") made between Cardio
Limited and the Executive on the date hereof. The Executive is
required to devote his full business time to Cardio Limited pursuant
to the terms of the Service Agreement and the duties set out in this
Agreement shall be interpreted accordingly.
2. Term of Employment
------------------
2.1. The Company agrees to employ the Executive initially for the period
commencing on 1st January 1998 and ending on 31st December 1998 ("the
Employment Period') provided that both the Executive and the Company
shall have the right to terminate the Executive's employment under
this Agreement upon not less than thirty (30) days written notice to
the other party, subject to the Company's obligation to pay severance
benefits in accordance with the terms of this Agreement.
2.2. If the Executive remains employed by the Company beyond the Employment
Period in the absence of any other express agreement between the
parties this Agreement shall be deemed to continue on a month-to-month
basis ("the Extended Employment Period").
2.3. For the purpose of calculating the Executive's period of continuous
employment, the Executive's employment with Newtec Vascular Products
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Limited from March 1989 to August 1993, and with PolyMedica UK Limited
from August 1993 until June 1996, shall be taken into account. The
Executive's period of continuous employment with the Company began in
March 1989.
3. Salary and Benefits after Termination
-------------------------------------
3.1. Salary
------
During the Executive's employment, the Company shall pay the Executive
a nominal annual salary of one US dollar ($1).
3.2. Disability or Death
-------------------
If during the Employment Period or the Extended Employment Period, the
Executive shall
3.2.1. become ill, disabled or otherwise incapacitated so as to be
unable to perform his usual duties either for a period in
excess of one hundred twenty (120) consecutive days, or for
more than one hundred eighty (180) days in any consecutive
twelve (12) month period, or
3.2.2. die;
then the Company shall have the right to terminate this Agreement on
thirty (30) days written notice to the Executive or his personal
representative(s).
3.3. Severance Payment
-----------------
3.3.1. In the event that
3.3.1.1. the Company terminates this Agreement without cause
(i.e. other than pursuant to Clause 3.2 hereof) at any
time (including during the Extended Employment
Period); or
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3.3.1.2. the Executive terminates his employment For Good Reason
following a Change in Control of the Company; or
3.3.1.3. the Company fails to renew this Agreement within two
(2) years following the occurrence of a Change in
Control;
the Company shall pay the Executive a severance payment, equal to
the current or last base salary paid to the Executive by Cardio
Limited pursuant to the terms of the Service Agreement multiplied
by 2.
3.3.2. "Good Reason" shall mean, during the nine (9) month period
following a Change in Control:
3.3.2.1. a determination in good faith by the Executive that as
a result of such Change in Control he is not able to
discharge his duties effectively or
3.3.2.2. without the Executive's express written consent, the
occurrence of any of the following circumstances: (a)
the assignment to the Executive of any duties
inconsistent (except in the nature of a promotion) with
the position in the Company that be held immediately
prior to the Change in Control or a substantial adverse
alteration in the nature or status of his position or
responsibilities or the conditions of his employment
from those in effect immediately prior to the Change in
Control; (b) a reduction by the Company in the Base
Salary as in effect on the date of the Change in
Control; (c) the Company's requiring the Executive to
be based more than twenty-five (25) miles from the
offices at which he was principally employed
immediately prior to the date of the Change in Control
except for required travel
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on the Company's business to an extent substantially
consistent with his present business travel
obligations; or (d) the failure by the Company to
continue in effect any material compensation or benefit
plan in which the Executive participates immediately
prior to the Change in Control unless an equitable
arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the
Executive's participation therein (or in such
substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount
of benefits provided and the level of his participation
relative to other participants, than existed at the
time of the Change in Control.
3.3.2.3. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with
respect to any circumstance constituting Good Reason
hereunder.
3.3.3. For purposes of this Agreement, a "Change in Control" shall occur
or be deemed to have occurred only if any of the following events
occur:
3.3.3.1. any "person" as such term is used in Clauses 13(d) and
14(d) of the United States' Securities Exchange Act of
1934, as amended ("the Exchange Act"), is or becomes
the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of
the combined voting power of the Company's then
outstanding securities
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on any matter which could come before its shareholders
for approval;
3.3.3.2. individuals who, as of the date of this Agreement,
constitute the Board (the "Incumbent Board") cease for
any reason to constitute at lease a majority of the
Board, provided that any person becoming a director
subsequent to the date hereof whose election or
nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be,
for purposes of this Agreement, considered as though
such person were a member of the Incumbent Board;
3.3.3.3. the shareholders of the Company approve a merger or
consolidation of the Company with any other company or
corporation, other than (A) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of
the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a re-
capitalisation of the Company (or similar transaction)
in which no "person" (as herein above defined) acquires
more than 50% of the combined voting power of the
Company's then outstanding securities; or
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3.3.3.4. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets.
3.3.4. The Company shall not be liable to pay the Executive a severance
payment pursuant to the terms set out herein if a severance
payment has been paid to the Executive pursuant to the terms of
the Service Agreement.
3.4. Benefits After Termination
--------------------------
3.4.1. Other than as required at law, the Executive shall not be
entitled to any employee benefits pursuant to the terms of this
Agreement after termination of the employment of the Executive,
whether or not severance pay is being provided, except that if
the Executive is entitled to the severance payment pursuant to
the terms of this Agreement.
3.4.1.1. the Company shall continue in full force and effect, at
its expense, life insurance provided pursuant to the
terms of the Service Agreement for a period of one (1)
year after termination of the Executive's employment
hereunder or until the Executive becomes employed,
whichever first occurs; and
3.4.1.2. during the six (6) month period following the
termination of the Executive's employment, the Company
shall reimburse the Executive for out-of-pocket health
insurance expenses incurred by the Executive. If the
Executive elects not to maintain health insurance, the
Company is under no
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obligation to reimburse the Executive for his otherwise
elected coverage.
3.4.1.3. the Executive shall be obliged to give the Company
prompt notice of his re-employment.
3.4.2. The Company shall not be liable to pay the Executive benefits
pursuant to the terms set out herein if a severance payment has
been paid to the Executive pursuant to the terms of the Service
Agreement.
4. Expenses
--------
Pursuant to the Company's customary policies in force at the time of
payment, the Executive shall be promptly reimbursed, against presentation of
vouchers or receipts therefor, for all authorised expenses properly incurred
by him on the Company's behalf in the performance of his duties hereunder.
5. Additional Agreements
---------------------
Upon execution of this Agreement, the Executive shall execute and deliver
to the Company an Agreement Not to Compete (the "Non-Competition
Agreement") and a Confidential and Proprietary Information Agreement (the
"Confidential and Proprietary Information Agreement"), substantially in the
forms attached hereto as Schedules A and B. The agreements attached hereto
as Schedules A and B shall survive the expiration of or termination of this
Agreement and the termination of Executive's employment with the Company.
6. Notices
-------
Any notice of communication given by either party hereto to the other party
shall be in writing and personally delivered, posted by recorded delivery,
postage prepaid, or delivered by a recognised overnight carrier, to the
addresses provided
8
above. All notices shall be deemed given when actually received. My person
entitled to receive notice (or a copy thereof) may designate in writing, any
notice to the others, another address to which notices to such person shall
thereafter be sent.
7. Miscellaneous
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7.1. Entire Agreement
----------------
This Agreement contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings between the parties with respect to such subject
matter, provided however that nothing in this Agreement shall affect
the Executive's or the Company's obligations under the Non Competition
Agreement or the Confidential and Proprietary Information Agreement
attached as Schedules A and B nor shall anything contained herein
affect the respective obligations of the Executive and Cardio Limited
in the Service Agreement.
7.2. Amendment: Waiver
-----------------
This Agreement may not be amended. supplemented, cancelled or
discharged except by written instrument executed by the party affected
thereby No failure to exercise, and no delay in exercising, any right,
power or privilege hereunder shall operate as a waiver thereof. No
waiver of any breach of any provision of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the
same or any other provisions.
7.3. Binding Effect: Assignment
--------------------------
The rights and obligations of this Agreement shall bind and inure to
the benefit of any successor of the Company by reorganisation, merger
or consolidation or any assignee of all or substantially all of the
Company's
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business and properties. The Executive's rights or obligations under
this Agreement may not be assigned by the Executive.
7.4. Headings
--------
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
7.5. Governing Law: Interpretation
-----------------------------
This Agreement shall be construed in accordance with and governed for
all purposes by the laws and public policy of the Commonwealth of
Massachusetts applicable to contracts executed and to be wholly
performed within such commonwealth. Service of process in any dispute
shall be effective (a) upon the Company, if service is made on an
officer of the Company other than the Executive; (b) upon the
Executive, if served at the Executive's residence last known to the
Company with an information copy to the Executive at any other
residence, or in care of a subsequent employer of which the Company
may be aware.
7.6. Further Assurances
------------------
Each of the parties agrees to execute, acknowledge, deliver and
perform, or cause to be executed, acknowledged, delivered or
performed, at any time, or from time to time, as the case may be, all
such further acts, deeds, assignments, transfers, conveyances, powers
of attorney, and assurances as may be necessary or proper to carry out
the provisions or intent of this Agreement.
7.7. Severability
------------
If any one or more of the terms, provisions, covenants or restrictions
of this Agreement shall be determined by a court of competent
jurisdiction in the United State to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall
10
remain in full force and effect and shall in no way be affected,
impaired or invalidated. If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be
determined by a court of competent jurisdiction in the United States
to be excessively broad as to duration, geographical scope, activity
or subject, it shall be construed by limiting or reducing it so as to
be enforceable to the extent compatible with then applicable law.
EXECUTION
---------
The parties executed this Agreement as a sealed instrument as of the date first
above written, whereupon it became binding in accordance with its terms.
CARDIOTECH INTERNATIONAL INC.
By:
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
Chairman of the Board
EXECUTIVE
By:
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Attachments:
Exhibit A: Non-competition Agreement
---------
Exhibit B: Confidential and Proprietary Information Agreement
---------
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SCHEDULE A
AGREEMENT NOT TO COMPETE
------------------------
I recognise that CardioTech International Inc., a Massachusetts corporation
having its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Company" which term shall include its subsidiaries and affiliated entities)
desires to retain me in its employ and that the Company wishes to ensure that I
do not compete with the Company, as specified below, in the event my employment
with the Company is terminated.
In consideration of the Company's employment or continued employment of me, I
agree as follows:
1. I will not, for a period of one (1) year commencing with the termination of
my employment with the Company, engage (directly or indirectly) in any
activities or render any services similar or reasonably related to these in
which I shall be engaged or those reasonably related to those in which I
shall have engaged or those which I shall have rendered as an employee of
the Company during any part of the two year period preceding my termination
for any trade or business which directly competes with the Company in any
place where the Company does or may do business in any line of business
engaged in (or planned to be engaged in) by the Company, where now existing
or hereafter established, nor shall I engage in such activities nor render
such services for any other person or entity engaged or about to become
engaged in such activities to, for or on behalf of any such trade or
business.
2. I agree that for a period of one (1) year following termination of my
employment with the Company, I will not solicit or in any manner encourage
employees of the Company to leave their employ. I further agree that during
such period I will not offer or cause to be offered employment to any
person who was employed by the Company at any time during the six (6)
months prior to the termination of my employment with the Company.
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3. For the purposes of this Agreement, "termination of employment" shall mean
voluntary termination by me or termination by the Company for "Cause" (as
that term is defined in a Service Agreement of even date herewith between
me and CardioTech International Inc.).
4. I understand that nothing in this Agreement shall affect my obligations
under the "Confidential and Proprietary Information Agreement" between the
Company and myself of even date herewith.
5. I understand that in addition to any other rights and remedies available to
the Company for any breach by me of my obligations hereunder, the Company
shall be entitled to seek enforcement of my obligations hereunder by court
injunction.
6. If any provision of this Agreement shall be declared invalid, illegal or
unenforceable by a court of competent jurisdiction in the United States,
then such provision shall be enforceable to the extent that such court
shall deem it reasonable to enforce such provision. If such provision shall
be unreasonable to enforce to any extent, such provision shall be severed
from this Agreement and all remaining provisions shall continue in full
force and effect.
7. This Agreement shall be governed in all respects by the Laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF I have executed this Agreement.
Date
--------------------------------- ------------------
▇▇▇▇ ▇▇▇▇▇▇▇
13
ACCEPTED AND AGREED TO:
CardioTech International Inc.
By: Date
------------------------------------------ ------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Ph.D.
Chairman of the Board
14
SCHEDULE B
FOR EMPLOYEES
-------------
CONFIDENTIAL AND PROPRIETARY INFORMATION AGREEMENT
--------------------------------------------------
In consideration of my employment by CardioTech International Inc. a
Massachusetts corporation having its principal place of business at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), which term shall include its
subsidiaries and affiliated entities), I hereby agree as follows:
1. I will make full and prompt disclosure to the Company of all inventions,
improvements, modification, discoveries, methods, data, ideas and
developments (all of which are collectively termed "Developments"
hereinafter), whether patentable or not, made or conceived or reduced to
practice or learned by me either alone or jointly with others or under my
direction during the period of my employment, whether or not made or
conceived during normal working hours or on the premises of the Company. I
do not have any Developments other than those I have already disclosed to
the Company.
2. I agree that all Developments covered by paragraph 1 shall be the sole
property of the Company and its assigns, and the Company and its assigns
shall be the sole owner of all patents and other rights in connection
therewith. I hereby assign to the Company any rights in connection
therewith. I hereby assign to the Company any rights I may have or acquire
in all Developments. I further agree as to all Developments to assist the
Company in every proper way (but at the Company's expense) to obtain and
from time to time enforce patents in Developments in any and all countries,
and to that end I will execute all documents for use in applying for and
obtaining such patents thereon and enforcing same as the Company may
desire, together with any assignments thereof to the Company or persons
designated by it. My obligation to assist the Company in obtaining and
enforcing patents for Developments in any and all countries shall continue
beyond the termination of my employment, but the Company shall compensate
me at a
15
reasonable rate after such termination for time actually spent by me at the
Company's request on such assistance.
I understand that this paragraph 2 does not apply to Developments for which
no equipment, supplies, facility or trade secret information of the Company
was used and which were developed entirely on my own time, and (a) which do
not relate (1) to the business of the Company or (2) to the Company's
actual or demonstrable anticipated research or Development, and (b) which
do not result from any work performed by me for the Company, but I agree
that the Company shall have a non-exclusive royalty free license to use
such Developments for all purposes.
3. I hereby represent that, to the best of my knowledge, I have no present
obligation to assign to any former employer or any other person,
corporation or firm, any Development covered by paragraph 2. I represent
that my performance of all the terms of this Agreement as an employee of
the Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by me in confidence or in trust
prior to my employment by the Company. I have no entered into, and I agree
I will not enter into, any agreement (either written or oral) in conflict
herewith.
4. I will also assign to the Company and all copyrights and reproduction
rights to any material prepared by me in connection with my employment.
5. I understand as part of the consideration for the offer of employment
extended to me by the Company and of my employment or continued employment
by the Company that have not brought and will not bring with me to the
Company or use in the performance of my responsibilities at the Company any
materials or documents of a former employer which are not generally
available to the public, unless I have obtained written authorisation from
the former employer for their possession and use.
16
6. During the course of my employment by the Company, I may learn of the
Company's confidential information or confidential information entrusted to
the Company by other persons, corporations, or firms. The Company's
confidential information includes matters not generally known outside the
Company, such as Developments relating to existing and future products and
services marketed or used by the Company and data relating to the general
business operations of the Company (e.g. concerning sales, costs, profits,
organisations, customer lists, pricing methods etc.). I agree not to
disclose any confidential information of the Company or of such other
persons, corporations, or firms to others or to make use of it, except on
the Company's behalf, whether or not such information is produced by my own
efforts. Also, I may learn of Developments, ways of business, etc. which in
themselves are generally known, but whose use by the Company is not
generally known, and I agree not to disclose to other such use, whether or
not such use is due to my own efforts.
7. At the time I begin my employment and during the term of my employment by
the Company, I will not become employed by or act on behalf of any other
person, company, or firm which is engaged in any business or activity
similar to or competitive with that of the Company, unless such employment
has been approved by the Company in writing and signed by an appropriate
authorised official of the Company.
8. In the event that my employment is transferred by the Company to a
subsidiary or affiliated company (as the case may be), my employment by
such company will, for the purposes of this Agreement, be considered as
continued employment by the Company, unless I execute an agreement
substantially similar in substance to this Agreement, in which event my
employment by the Company shall be deemed to continue until the effective
date of said agreement in any such company for which I become employed.
17
9. I hereby give the Company and its assigns permission to reasonably use
photographs of me, either during or after my employment, with or without
using my name, for whatever purposes it deems necessary.
10. Upon termination of my employment, unless my employment is transferred to a
subsidiary or affiliated company of the Company, I agree to leave with the
Company all records, drawings, notebooks and other documents pertaining to
the Company's confidential information, whether prepared by me or others,
and also any equipment, tools or other devices owned by the Company, then
in my possession however such items are obtained, and I agree not to
reproduce any document or data relating thereto.
11. My obligations under this Agreement shall survive the termination of my
employment regardless of the manner of such termination, and shall be
binding upon my heirs, executors, and administrators.
12. Contemporaneously with entering thc employ of the Company I have terminated
employment with all past employers.
13. I represent that I have made no Developments relevant to the subject matter
of my employment by the Company that have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my
engagement by the Company.
14. I agree that in addition to any other rights and remedies available to the
Company for any breach by me of my obligations hereunder, the Company shall
be entitled to seek enforcement of my obligations hereunder by court
injunction.
15. If any provision of this Agreement shall be declared invalid, illegal or
unenforceable by a court of competent jurisdiction in the United States,
then such provision shall be enforceable to the extent that such court
shall deem it reasonable to enforce such provision. If such provision shall
be unreasonable to
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any extent, such provision shall be severed from this Agreement and all
remaining provisions shall continue in full force and effect.
16. This Agreement shall be effective as of the date set forth below next to my
signature.
17. This Agreement shall be governed in all respects by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF I have executed this Agreement.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
ACCEPTED AND AGREED TO:
CardioTech International, Ltd.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Date March 24, 1998
-------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Ph.D.
Chairman of the Board
19
