<PAGE>

                                                                   Exhibit 10.16

                             AMENDED AND RESTATED
                             --------------------
                             EMPLOYMENT AGREEMENT
                             --------------------

                              (Steven P. Fulton)


          THIS AGREEMENT, made as of September 1, 2000, by and between
RESPIRONICS, INC., a Delaware corporation (the "Company"), and STEVEN P. FULTON,
of Pittsburgh, Pennsylvania ("Executive").

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, the Company and Executive were party to an Employment
Agreement dated December 30, 1996 (the "Original Agreement");

          WHEREAS, Executive recognized that the Original Agreement may have
afforded insufficient protection for Executive in the event of a takeover or
merger;

          WHEREAS, the Company and Executive have agreed to enhance the
protection for Executive in the event of a takeover or merger and to make
certain other changes to the Original Agreement;

          WHEREAS, pursuant to Section 6.03 of the Original Agreement, the
Company and Executive have agreed to amend and restate the Employment Agreement
as set forth herein;

          WHEREAS, the Company is engaged in the business of the design,
development, manufacture, marketing and sale principally of respiratory and
other medical equipment and services;

          WHEREAS, Executive possesses valuable knowledge and skills that have
contributed to and will continue to contribute to the successful operation of
the Company's business;

          WHEREAS, the Company and Executive have agreed to execute and deliver
this Agreement in consideration, among other things, of (i) the access Executive
has had and will continue to have to confidential or proprietary information of
the Company, (ii) the access Executive will have to confidential or proprietary
information to be acquired hereafter by the Company, (iii) the willingness of
the Company to make valuable benefits available hereafter to Executive, and (iv)
Executive's receipt of compensation from time to time by the Company; and

          WHEREAS, the Company desires to retain the services of Executive, and
Executive is willing to accept employment with the Company, upon the terms and
subject to the conditions hereinafter set forth.

          NOW, THEREFORE, intending to be legally bound, the Company agrees to
employ Executive, and Executive hereby agrees to be employed by the Company,
upon the following terms and conditions:
<PAGE>

                                   ARTICLE I
                                  EMPLOYMENT
                                  ----------

          1.01.  Office.  Executive is hereby employed as Vice President and
                 ------
General Counsel of the Company and in such other executive and managerial
capacities as the Board of Directors or the President of the Company may from
time to time determine, and in such capacity or capacities shall use his or her
best energies or abilities in the performance of his or her duties hereunder and
as prescribed in the By-Laws of the Company.

          1.02. Term. Subject to the terms and provisions of Article II hereof,
                ----
Executive shall be employed by the Company for a period of three years (the
"Term"), commencing on the date of this Employment Agreement and ending
September 1, 2003.  Subject to the terms and provisions of Article II hereof,
the Term shall automatically be extended for an additional year (i.e., a rolling
three-year Term) unless, not less than ninety (90) days prior to the expiration
of the then-current first year of the Term, either Executive or the Company
shall advise the other that the Term will not be further extended.

          1.03. Base Salary.  During the Term, compensation shall be paid to
                -----------
Executive by the Company at the rate of $175,744 per annum (the "Base Salary"),
payable every other week. The Base Salary to be paid to Executive may be
adjusted upward or downward (but not below the amount specified in the preceding
sentence) by the Board of Directors of the Company at any time (but not less
frequently than annually) based upon Executive's contribution to the success of
the Company and on such other factors as the Board of Directors of the Company
shall deem appropriate.

          1.04. Executive Benefits. At all times during the Term, Executive
                ------------------
shall have the right to participate in and receive benefits under and in
accordance with the then-current provisions of all incentive, profit sharing,
retirement, stock option or purchase plans, life, health and accident insurance,
hospitalization and other incentive and benefit plans or programs (except for
any such plan in which Executive may not participate pursuant to the terms of
such plan or Executive's geographic location) which the Company may at any time
or from time to time have in effect for executive employees of the Company or
its subsidiaries, Executive's participation to be on a basis commensurate with
other executive employees considering their respective responsibilities and
compensation. Executive shall also be entitled to be reimbursed for all
reasonable expenses incurred by him or her in the performance of his or her
duties hereunder.

          1.05. Principal Place of Business. The headquarters and principal
                ---------------------------
place of business of the Company is located in Pittsburgh, Pennsylvania.
Executive's principal place of business will be in Pittsburgh, Pennsylvania, and
he or she will reside within a reasonable distance thereof.

                                   ARTICLE II
                                  TERMINATION
                                  -----------

                                      -2-
<PAGE>

          2.01. Illness, Incapacity. If, during the Term of Executive's
                -------------------
employment hereunder, the Board of Directors of the Company shall determine that
Executive shall be prevented from effectively performing all his or her duties
hereunder by reason of illness or disability and such failure so to perform
shall have continued for a period of not less than three months, then the
Company may, by written notice to Executive, terminate Executive's employment
hereunder effective at any time after such three month period. Upon delivery to
Executive of such notice, together with payment of any salary accrued and unpaid
under Section 1.03 hereof, Executive's employment and all obligations of the
Company under Article I hereof shall forthwith terminate. The obligations of
Executive under Article IV hereof shall continue notwithstanding termination of
Executive's employment pursuant to this Section 2.01.

          2.02. Death. If Executive dies during the Term of his or her
                -----
employment hereunder, Executive's employment hereunder shall terminate and all
obligations of the Company hereunder, other than any obligations with respect to
the payment of accrued and unpaid salary, shall terminate.

          2.03. Company Termination. (a) For Cause. In the event that, in the
                -------------------
reasonable judgment of the Board of Directors of the Company, Executive shall
have (a) been guilty of any act of dishonesty material with respect to the
Company, (b) been convicted of a crime involving moral turpitude, (c)
intentionally disregarded the provisions of this Agreement or d) intentionally
disregarded express instructions of the Board of Directors of the Company with
respect to matters of policy continuing (in the case of clause (d)) for a period
of not less than thirty (30) days after notice of such disregard, the Company
may terminate this Agreement effective at such date as it shall specify in a
written notice to Executive. Any such termination by the Company shall be deemed
to be termination "for cause". Upon delivery to Executive of such notice of
termination, together with payment of any salary accrued and unpaid under
Section 1.03 hereof, Executive's employment and all obligations of the Company
under Articles I and II hereof shall forthwith terminate. The obligations of
Executive under Article IV hereof shall continue notwithstanding termination of
Executive's employment pursuant to this Section 2.03(a).

          (b) Without Cause. Executive's employment hereunder may be terminated
              -------------
at any time by the Company without cause if the Board of Directors of the
Company, by resolution duly adopted by the Board, so determines. Except as set
forth in Section 2.05 hereof, all obligations of the Company under Article I
cease upon termination. The obligations of Executive under Article IV hereof
shall continue notwithstanding termination of Executive's employment pursuant to
this Section 2.03(b).

          2.04. Executive Termination. Executive agrees to give the Company
                ---------------------
ninety (90) days prior written notice of the termination of his or her
employment with the Company. Simultaneously with such notice, Executive shall
inform the Company in writing as to his or her employment/consulting plans
following the termination of his or her employment with the Company. In the
event Executive has terminated his or her employment with the Company because,
in his or her reasonable judgment, there has been: (a) a material downgrading in
Executive's duties, titles or responsibilities, (b) a change in Executive's
principal place of business to a location not within 30 miles of its present
location, (c) any significant and prolonged increase in the traveling
requirements applicable to the discharge of Executive's responsibilities or (d)
any other significant material adverse change in working conditions,

                                      -3-
<PAGE>

responsibilities or prestige (including a notice under Section 1.02 hereof that
the Term will not be further extended), Executive shall be entitled to the
compensation provided for in Section 2.05 upon such termination; provided that
                                                                 --------
Executive must provide notice of termination within ninety (90) days of the
occurrence of a change Executive believes to be covered by clause (a), (b) or
(d) herein in order to claim that the termination is because of such change.
Otherwise, all obligations of the Company under Article I cease upon
termination, except for the payment of any salary accrued and unpaid under
Section 1.03 hereof. The obligations of Executive under Article IV hereof shall
continue notwithstanding termination of Executive's employment pursuant to this
Section 2.04.

          2.05. Termination Payments - Discharge Without Cause. If the Company
                ----------------------------------------------
terminates Executive's employment without cause pursuant to Section 2.03(b),
Executive shall be paid for the balance of the Term the Base Salary then in
effect; provided that if Executive's notice of termination occurs within ninety
        --------
(90) days of a reduction in Executive's Base Salary, the Base Salary prior to
the reduction shall be used for purposes of this Section 2.05.  In addition to
these termination payments, for the balance of the Term, the Company will
provide Executive with health and dental insurance coverage as though Executive
remained an employee.  Executive will be required to pay the same portion of the
premium for such insurance coverage as if Executive remained an employee.
Executive agrees to inform the Company of his or her employment/consulting jobs
during the period of time which Executive is receiving money under this Section.

          2.06. Termination Payments - After Change of Control.
                ----------------------------------------------

          (a)    Change of Control shall mean the occurrence of any of the
                 following events:

                 (i)   Individuals who on December 1, 1999 constitute the Board
                       of Directors ("Board") of the Company (the "Incumbent
                       Directors") cease for any reason to constitute at least a
                       majority of the Board, provided that any person becoming
                       a director subsequent to December 1, 1999, whose election
                       or nomination for election was approved by a vote of at
                       least two-thirds of the Incumbent Directors then on the
                       Board (either by a specific vote or by approval of the
                       proxy statement of the Company in which such person is
                       named as a nominee for director, without written
                       objection by such Incumbent Directors to such nomination)
                       shall be deemed to be an Incumbent Director.

                 (ii)  Any "person" (as such term is defined in Section 3(a)(9)
                       of the Securities Exchange Act of 1934, as amended (the
                       "Exchange Act") and as used in Sections 13(d)(3) and
                       14(d)(2) of the Exchange Act) is or becomes a "beneficial
                       owner" (as defined in Rule 13d-3 under the Exchange Act),
                       directly or indirectly, of securities of the Company
                       representing a majority of the combined voting power of
                       the Company's then outstanding securities eligible to
                       vote for the election of the Board ("Company Voting

                                      -4-
<PAGE>

                        Securities"); provided, however, that the event
                                      --------  -------
                        described in this paragraph (ii) shall not be deemed to
                        be a Change of Control by virtue of any of the following
                        acquisitions: (A) by the Company or any subsidiary, (B)
                        by any employee benefit plan sponsored or maintained by
                        the Company or any subsidiary, or by any employee stock
                        benefit trust created by the Company or any subsidiary
                        or (C) by any underwriter temporarily holding securities
                        pursuant to an offering of such securities.

                 (iii)  Consummation of any merger, consolidation, stock-for-
                        stock exchange or similar transaction (collectively,
                        "Business Combination") involving the Company or any of
                        its subsidiaries that requires the approval of the
                        Company's shareholders (whether for such transaction or
                        the issuance of securities in the transaction), in which
                        the holders of Company Voting Securities immediately
                        prior to consummation of the Business Combination own,
                        as a group, immediately after consummation of the
                        Business Combination, voting securities of the Company
                        (or, if the Company does not survive the Business
                        Combination, voting securities of the corporation
                        surviving the Business Combination) having less than 50%
                        of the total voting power in an election of directors of
                        the Company (or such other surviving corporation),
                        excluding securities received by any holders of Company
                        Voting Securities in the Business Combination which
                        represent disproportionate percentage increases in their
                        shareholdings in comparison to other holders of Company
                        Voting Securities.

                 (iv)   Consummation of any sale, lease, exchange or other
                        transfer (in one transaction or a series of related
                        transactions, excluding any Business Combination) of all
                        or substantially all of the assets of the Company to a
                        person or entity which is not controlled by or under
                        common control with the Company.

          (b)    If Executive is terminated without cause upon or within
                 eighteen (18) months after a Change of Control, or if Executive
                 provides notice (as provided for in Section 2.04) to the
                 Company upon or within eighteen (18) months after the
                 occurrence of a Change of Control that he or she is terminating
                 employment with the Company because, in his or her reasonable
                 judgment, there has been: (i) a material downgrading in
                 Executive's duties, titles or responsibilities, (ii) a change
                 in Executive's principal place of business to a location not
                 within 30 miles of its present location, (iii) any significant
                 and prolonged increase in the traveling requirements applicable
                 to the discharge of Executive's responsibilities or (iv) any
                 other significant material adverse change in working
                 conditions, responsibilities or prestige, Executive shall be
                 entitled to the payments and other benefits provided for in
                 Section 2.05 upon such termination; provided that in this
                 Change of Control circumstance, notwithstanding

                                      -5-
<PAGE>

               Section 2.05, the termination payments shall be in an amount
               equal to (i) three (3) full years of Executive's base salary
               (regardless of the remaining Term) and (ii) three (3) times the
               average "year end" bonus paid to Executive over the prior three
               (3) years, and such payment shall be made to Executive in a lump
               sum to be paid to Executive within five (5) business days after
               the termination of employment. Otherwise, all obligations of the
               Company under Article I cease upon termination, except for the
               payment of any salary accrued and unpaid under Section 1.03
               hereof. The obligations of Executive under Article IV hereof
               shall continue notwithstanding termination of Executive's
               employment pursuant to this Section 2.06.

          (c)  After a Change of Control, Executive has the option to terminate
               his or her employment with the Company for any reason by
               providing notice (as provided for in Section 2.04) of termination
               to the Company, such notice to be provided to the Company at any
               time within six (6) months after the Change of Control.  Within
               five (5) business days after a termination of employment governed
               by this provision, Executive shall receive from the Company a
               lump sum payment equal to (i) one (1) year of Executive's base
               salary and (ii) the average of the "year end" bonuses paid to
               Executive over the prior three (3) years.  Additionally, for one
               year after the termination, the Company will provide Executive
               with health and dental insurance coverage as though Executive
               remained an employee.  Executive will be required to pay the same
               portion of the premium for such insurance coverage as if
               Executive remained an employee. Otherwise, all obligations of the
               Company under Article I cease upon termination, except for the
               payment of any salary accrued and unpaid under Section 1.03
               hereof.  The obligations of Executive under Article IV hereof
               shall continue notwithstanding termination of Executive's
               employment pursuant to this Section 2.06.

                                  ARTICLE III
                          EXECUTIVE'S ACKNOWLEDGMENTS
                          ---------------------------

          Executive recognizes and acknowledges that: (a) in the course of
Executive's employment by the Company it will be necessary for Executive to
acquire information including, without limitation, information concerning the
Company's sales, sales volume, sales methods, sales proposals, customers and
prospective customers, identity of customers and prospective customers, identity
of key purchasing personnel in the employ of customers and prospective
customers, amount or kind of customer's purchases from the Company, the
Company's sources of supply, the Company's computer programs, system
documentation, special hardware, product hardware, related software development,
the Company's manuals, formulae, processes, methods, machines, compositions,
ideas, improvements, inventions or other confidential or proprietary information
belonging to the Company or relating to the Company's affairs (collectively
referred to herein as the "Confidential Information"); (b) for purposes of this
Employment Agreement, confidential information of an affiliate of the Company or
of a person or entity with which the Company explores or conducts business is
considered to be Confidential Information; (c) the

                                      -6-
<PAGE>

Confidential Information is the property of the Company; (d) the use,
misappropriation or disclosure of the Confidential Information would constitute
a breach of trust and could cause irreparable injury to the Company; and (e) it
is essential to the protection of the Company's good will and to the maintenance
of the Company's competitive position that the Confidential Information be kept
secret and that Executive not disclose the Confidential Information to others or
use the Confidential Information to Executive's own advantage or the advantage
of others. For purposes of this Agreement, Confidential Information shall not
include any information that is in the public domain, so long as such
information is not in the public domain as a result of any action or inaction by
Executive which would constitute a violation of this Agreement or the Company's
policies with respect to such information.

          Executive further recognizes and acknowledges that it is essential for
the proper protection of the business of the Company that Executive be
restrained, but only to the extent hereinafter provided (a) from soliciting or
inducing any employee of the Company to leave the employ of the Company, (b)
from hiring or attempting to hire any employee of the Company, (c) from
soliciting the trade of or trading with the customers and suppliers of the
Company, and (d) from competing against the Company for a reasonable period
following the termination of Executive's employment with the Company.

          Executive further recognizes and understands that his or her duties at
the Company may include the preparation of materials, including written or
graphic materials, and that any such materials conceived or written by him or
her shall be done as "work made for hire" as defined and used in the Copyright
Act of 1976, 17 USC (S) 1 et seq. In the event of publication of such materials,
                          -- ---
Executive understands that the Company will solely retain and own all rights in
said materials, including right of copyright, and that the Company may, at its
discretion, on a case-by-case basis, grant Executive by-line credit on such
materials as the Company may deem appropriate.

          For purposes of interpreting Article III and Article IV hereof, the
acknowledgments, covenants and obligations of Executive with respect to the
Company apply equally with respect to its affiliates.


                                  ARTICLE IV
                     EXECUTIVE'S COVENANTS AND AGREEMENTS
                     ------------------------------------

          4.01. Non-Disclosure of Confidential Information. Executive agrees to
                ------------------------------------------
hold and safeguard the Confidential Information in trust for the Company, its
successors and assigns and agrees that he or she shall not, without the prior
written consent of the Company, misappropriate or disclose or make available to
anyone for use outside the Company's organization at any time, either during his
or her employment with the Company or subsequent to the termination of his or
her employment with the Company for any reason, including without limitation
termination by the Company for cause or without cause, any of the Confidential
Information, whether or not developed by Executive, except as required in the
performance of Executive's duties to the Company.

                                      -7-
<PAGE>

          4.02. Disclosure of Works and Inventions/Assignment of Patents and
                ------------------------------------------------------------
Other Rights. (a) Executive shall disclose promptly to the Company or its
------------
nominee any and all works, inventions, discoveries and improvements authored,
conceived or made by Executive during the period of employment and related to
the business, prospective business or activities of the Company, and hereby
assigns and agrees to assign all his or her interest therein to the Company or
its nominee. Whenever requested to do so by the Company, Executive shall execute
any and all applications, assignments or other instruments, and otherwise
cooperate with the Company at no expense to Executive, to assist the Company in
applying for and obtaining Letters Patent or Copyrights of the United States or
any foreign country or to otherwise protect the Company's interest therein. Such
obligations shall continue beyond the termination of employment with respect to
works, inventions, discoveries and improvements authored, conceived or made by
Executive during the period of employment, and shall be binding upon Executive's
assigns, executors, administrators and other legal representatives.

          (b) Executive agrees that in the event of publication by Executive of
written or graphic materials the Company will retain and own all rights in said
materials, including right of copyright.

          4.03. Duties. Executive agrees to be a loyal employee of the Company.
                ------
Executive agrees to devote his or her best efforts full time to the performance
of his or her duties for the Company, to give proper time and attention to
furthering the Company's business, and to comply with all rules, regulations and
instruments established or issued by the Company. Executive further agrees that
during the term of this Agreement, Executive shall not, directly or indirectly,
engage in any business which would detract from Executive's ability to apply his
or her best efforts to the performance of his or her duties hereunder. Executive
also agrees that he shall not usurp any corporate opportunities of the Company.

          4.04. Return of Materials. Upon the termination of Executive's
                -------------------
employment with the Company for any reason, including without limitation
termination by the Company for cause or without cause, Executive shall promptly
deliver to the Company all correspondence, drawings, blueprints, manuals,
letters, notes, notebooks, reports, flow-charts, programs, proposals and any
documents concerning the Company's customers or concerning products or processes
used by the Company and, without limiting the foregoing, will promptly deliver
to the Company any and all other documents or materials containing or
constituting Confidential Information.

          4.05. Restrictions on Competition. Executive covenants and agrees that
                ---------------------------
during the period of Executive's employment hereunder plus a period of two years
(or such longer period, not in excess of three years, in respect of which base
salary is paid to Executive pursuant to (S) 2.04 or 2.05) following the
termination of Executive's employment, including without limitation termination
by the Company for cause or without cause, Executive shall not, in the United
States of America or in any other country of the world in which the Company has
done business at any time during the last three years prior to termination of
Executive's employment with the Company, engage, directly or indirectly, whether
as principal or as agent, officer, director, employee, consultant, shareholder,
or otherwise, alone or in association with any other person, corporation or
other entity, in any Competing Business. For purposes of this Agreement, the
term "Competing Business" shall mean and include any person, corporation or
other entity which develops, manufactures, sells, markets or attempts to
develop, manufacture, sell or market any

                                      -8-
<PAGE>

product or services which are the same as, similar to or compete with the
Products and services (i) sold by the Company at any time and from time to time
during the last three years prior to the termination of Executive's employment
hereunder or (ii) which are active research and development projects of the
Company of which Executive is aware at the time of termination; provided,
however, that for purposes of determining what constitutes a Competing Business
there shall not be included (x) any product or service of any entity which
product or service Executive determines is not material to the business or
prospects of the Company and which product or service the Company's Board,
having been requested to do so by Executive, also so determines; or (y) any
product or service of any entity so long as the Executive and such entity can
demonstrate to the reasonable satisfaction of the Company that Executive is and
will continue to be effectively isolated from and not participate in the
development, manufacture, sale or marketing of such product or service, but only
so long as Executive is effectively so isolated and does not so participate. In
the event the employment of Executive terminates at the conclusion of the Term
before Executive obtains the age of 65 and because the Company has elected not
to further extend the Term pursuant to (S) 1.02, then the provisions of this (S)
4.05 and (S)'s 4.06 and 4.07 shall not be applicable after the conclusion of the
Term unless the Company advises Executive at least six months prior to
conclusion of the Term that it will continue to pay the Base Salary in effect at
conclusion of the Term for such two-year period or such shorter portion thereof
as the Company may specify (which specification shall foreshorten such two-year
period accordingly) and the Company pays such amounts during such two-year or
shorter period.

          4.06. Non-Solicitation of Customers and Suppliers. Executive agrees
                -------------------------------------------
that during his or her employment with the Company he or she shall not, directly
or indirectly, solicit the trade of, or trade with, any customer, prospective
customer, supplier, or prospective supplier of the Company for any business
purpose other than for the benefit of the Company, with respect to any products
competitive with those of the Company. Executive further agrees that for two
years following termination of his or her employment with the Company, including
without limitation termination by the Company for cause or without cause,
Executive shall not, directly or indirectly, solicit the trade of, or trade
with, any customers or suppliers, or prospective customers or suppliers, of the
Company with respect to any products competitive with those of the Company.

          4.07. Non-Solicitation of Employees. Executive agrees that, during his
                -----------------------------
or her employment with the Company and for two years following termination of
Executive's employment with the Company, including without limitation
termination by the Company for cause or without cause, Executive shall not,
directly or indirectly, solicit or induce, or attempt to solicit or induce, any
employee of the Company to leave the Company for any reason whatsoever, or hire
any employee of the Company.


                                   ARTICLE V
                  EXECUTIVE'S REPRESENTATIONS AND WARRANTIES
                  ------------------------------------------

          5.01. No Prior Agreements. Executive represents and warrants that he
                -------------------
or she is not a party to or otherwise subject to or bound by the terms of any
contract, agreement or understanding which in any manner would limit or
otherwise affect his or her ability perform his or her obligations hereunder,
including without limitation any contract, agreement or

                                      -9-
<PAGE>

understanding containing terms and provisions similar in any manner to those
contained in Article IV hereof. Executive further represents and warrants that
his or her employment with the Company will not require him or her to disclose
or use any confidential information belonging to prior employers or other
persons or entities.

          5.02. Executive's Abilities. Executive represents that his or her
                ---------------------
experience and capabilities are such that the provisions of Article IV will not
prevent him or her from earning his or her livelihood, and acknowledges that it
would cause the Company serious and irreparable injury and cost if Executive
were to use his or her ability and knowledge in competition with the Company or
to otherwise breach the obligations contained in Article IV.

          5.03. Remedies. In the event of a breach by Executive of the terms of
                --------
this Agreement, the Company shall be entitled, if it shall so elect, to
institute legal proceedings to obtain damages for any such breach, or to enforce
the specific performance of this Agreement by Executive and to enjoin Executive
from any further violation of this Agreement and to exercise such remedies
cumulatively or in conjunction with all other rights and remedies provided by
law. Executive acknowledges, however, that the remedies at law for any breach by
him or her of the provisions of this Agreement may be inadequate and that the
Company shall be entitled to injunctive relief against him or her in the event
of any breach.

                                  ARTICLE VI
                                 MISCELLANEOUS
                                 -------------

          6.01. Authorization to Modify Restrictions. It is the intention of the
                ------------------------------------
parties that the provisions of Article IV hereof shall be enforceable to the
fullest extent permissible under applicable law, but that the unenforceability
(or modification to conform to such law) of any provision or provisions hereof
shall not render unenforceable, or impair, the remainder thereof. If any
provision or provisions hereof shall be deemed invalid or unenforceable, either
in whole or in part, this Agreement shall be deemed amended to modify, as
necessary, the offending provision or provisions and to alter the bounds thereof
in order to render it valid and enforceable or, if necessary, to delete the
offending provision.

          6.02. Tolling Period. The non-competition, non-disclosure and non-
                --------------
solicitation obligations contained in Article IV hereof shall be extended by the
length of time during which Executive shall have been in breach of any of the
provisions of such Article IV.

          6.03. Entire Agreement. This Agreement represents the entire agreement
                ----------------
of the parties with respect to the employment of Executive by the Company and
may be amended only by a writing signed by each of them.  To the extent any
obligation on Executive set forth in Article IV herein should be held invalid or
unenforceable, the obligations on Executive with respect to such Section shall
revert back to the obligations on Executive set forth in the corresponding
Section of the Original Agreement.

          6.04. Governing Law. This Agreement shall be governed by and construed
                -------------
in accordance with the laws of the Commonwealth of Pennsylvania.

                                      -10-
<PAGE>

          6.05. Consent to Jurisdiction; Venue. Executive hereby irrevocably
                ------------------------------
submits to the personal jurisdiction of the United States District Court for the
Western District of Pennsylvania or the Court of Common Pleas of Allegheny
County, Pennsylvania in any action or proceeding arising out of or relating to
this Agreement, and Executive hereby irrevocably agrees that all claims in
respect of any such action or proceeding may be heard and determined in either
such court. Executive hereby irrevocably waives any objection which he or she
now or hereafter may have to the laying of venue of any action or proceeding
arising out of or relating to this Agreement brought in the United States
District Court for the Western District of Pennsylvania or the Court of Common
Pleas of Allegheny County, Pennsylvania and any objection on the ground that any
such action or proceeding in either of such Courts has been brought in an
inconvenient forum. Nothing in this Section 6.05 shall affect the right of the
Company to bring any action or proceeding against Executive or his or her
property in the courts of other jurisdictions where the Executive resides or has
his or her principal place of business or where such property is located.

          6.06. Service of Process. Executive hereby irrevocably consents to the
                ------------------
service of any summons and complaint and any other process which may be served
in any action or proceeding arising out of or related to this Agreement brought
in the United States District Court for the Western District of Pennsylvania or
the Court of Common Pleas of Allegheny County by the mailing by certified or
registered mail of copies of such process to Executive at his or her address as
set forth on the signature page hereof.

          6.07. Agreement Binding. The obligations of Executive under this
                -----------------
Agreement shall continue after the termination of his or her employment with the
Company for any reason, with or without cause, and shall be binding on, and
inure to the benefit of, his or her heirs, executors, legal representatives and
assigns. If the Executive should die while any amounts are still payable to him
or her hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or designee or, if there be no such designee, to the Executive's
estate.  This Agreement also shall be binding upon, and inure to the benefit of,
any successors and assigns of the Company.

          6.08. Successor to the Company.  The Company will require any
                ------------------------
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, to expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place.  Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of
this Agreement and shall entitle the Executive to terminate the Executive's
employment and to receive the payments and other benefits set forth in Section
2.06(b) as if Executive had been terminated without cause upon a Change of
Control.  As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assign to its business and/or assets
as aforesaid.

          6.09. Counterparts, Section Headings. This Agreement may be executed
                ------------------------------
in any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument. The
section headings of this Agreement

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<PAGE>

are for convenience of reference only and shall not affect the construction or
interpretation of any of the provisions hereof.

          6.10. Notices. All notices, requests, demands and other communications
                -------
hereunder shall be in writing and shall be deemed to have been duly given if (a)
hand delivered, (b) mailed, registered mail, first class postage paid, return
receipt requested, (c) sent via overnight delivery service or courier, delivery
acknowledgment requested, or (d) sent via any other delivery service with proof
of delivery:

          if to the Company:

          1501 Ardmore Boulevard
          Pittsburgh, PA  15221-4401
          Attn:  General Counsel

          if to Executive, at the address set forth on the signature page hereof
or to such other address or to such other person as either party hereto shall
have last designated by notice to the other party.

          Executive acknowledges that he or she has read and understands the
foregoing provisions and that such provisions are reasonable and enforceable.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed the day and year first above written.

Witness:                                 STEVEN P. FULTON

/s/ William R. Decker                    /s/ Steven P. Fulton
---------------------                    ----------------------------------




                                         Address: 157 Penhurst Drive
                                                  Pittsburgh, Pennsylvania 15235

Attest

                                         RESPIRONICS, INC.
/s/ Dorita A. Pishko
---------------------                       /s/ James W. Liken
     Secretary                           By:------------------------------------

                                         Print Name: James W. Liken

                                         Title: President and Chief Executive
                                                Officer



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