Exhibit 10.4


 


TRANSOMA MEDICAL, INC.


CONFIDENTIALITY AND NONCOMPETITION AGREEMENT


 


THIS
AGREEMENT  (“Agreement”)
is entered into as of             , 20   , by and
between Transoma Medical, Inc., a Delaware corporation (hereinafter referred to
as “Transoma Medical”), and                    ,
individual resident of the state of             
(“Employee”).


 


RECITALS


 


A.                                   Transoma
Medical is engaged in the business of (a) providing wireless implantable
monitors and data collection products for monitoring the vital signs of
untethered, conscious, freely moving laboratory animals, and (b) developing and
commercializing monitoring devices for human use (the “Business”). The success
of the Business depends to a significant extent upon maintaining the secrecy of
Transoma Medical’s Confidential Information (as defined below).


 


B.                                     Transoma Medical developed its Confidential
Information at great expense, time, and effort. Disclosure of any such Confidential Information to a
competitor would cause irreparable harm to Transoma Medical.


 


C.                                     Transoma Medical and Employee entered into
that certain                        
Agreement, dated as                                
(“Original Agreement”), which contained reasonable, post-employment,
competitive restrictions for which Employee acknowledges that Employee received
good and valuable consideration.


 


D.                                    Transoma Medical is entering into a Stock
Purchase Agreement, dated January 22, 2002, pursuant to which the Investors
listed on Schedule 1 thereto are purchasing Transoma Medical’s Series A
Preferred Shares, and as a condition to that agreement, Employee has agreed to
sign this Agreement. This Agreement supersedes and replaces any and all prior
understandings with respect to its subject matter, including those
understandings contained in the Original Agreement.


 


E.                                      Transoma Medical will not allow Employee to
have access to or control over any of Transoma Medical’s Confidential
Information, in any capacity, unless Employee has previously signed this
Agreement.


 


F.                                      Both Transoma Medical and Employee understand
and agree that Employee’s employment with Transoma Medical is “at will” and
that by entering into this Agreement, neither party intends to create an
Agreement that determines or affects the duration of Employee’s employment with
Transoma Medical.


 


G.                                     In consideration of the reasonable,
post-employment, competitive restrictions set forth in this Agreement, which
are beyond those to which Employee agreed in the Original Agreement, Transoma
Medical has offered Employee good and valuable consideration contingent upon
Employee signing this Agreement and subject to the terms and conditions
contained herein.


 

















 


NOW, THEREFORE,
in consideration of the premises, the respective undertakings of Transoma
Medical and Employee set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Transoma Medical and Employee agree as follows:


 


SECTION
1.  DEFINITIONS


 


In this Agreement, the following definitions apply.


 


1.1                                 “Confidential
Information” means information, not generally known or ascertainable to persons
outside of Transoma Medical by proper means, and that is proprietary to
Transoma Medical. Confidential Information includes trade secret information
about Transoma Medical’s methods or processes and products, including
information relating to research, development, manufacture, purchasing,
accounting, engineering, marketing, merchandising, selling, leasing, servicing,
finance and business systems and techniques. Confidential Information includes
“Inventions” as defined herein. It also means, to the extent not previously
stated, all information disclosed to Employee, or to which Employee obtains
access, whether originated by Employee or others, during the period of
Employee’s employment, which Employee has a reasonable basis to believe to be
Confidential Information, or which is treated by Transoma Medical as being
Confidential Information. If Transoma Medical’s competitors acquire any of such
Confidential Information, it would be valuable to them and harm Transoma
Medical.


 


1.2                                 “Third
Party Information” means information that Transoma Medical has received or will
receive in the future from third parties that is considered Confidential or
proprietary information of that third party, and is subject to a duty on
Transoma Medical’s part to maintain the Confidentiality of such information and
to use it only for certain limited purposes.


 


1.3                                 “Competing
Product” means any product, method or process, system or service of any person
or organization other than Transoma Medical, in existence or under development,
which is the same as or similar to or competes with, or has a usage allied to,
a product, method or process, system or service upon which Employee will work
(in either a sales or nonsales capacity) or has worked at anytime during the
last two (2) years of Employee’s employment by Transoma Medical, or about which
Employee acquires Confidential Information.


 


1.4                                 “Competing
Organization” means any person or organization which is engaged in or about to
become engaged in, research on or development, production, marketing, leasing,
selling or servicing of a Competing Product.


 


1.5                                 “Invention”
or “Inventions” means discoveries, improvements, ideas, processes, formulas,
methods, source and object codes, mask works, data, programs, algorithms and
other mathematical formulae, know-how, developments, designs, devices and
techniques (whether or not shown or described in writing or reduced to
practice) and works of authorship, whether or not patentable or registrable
under copyright or similar statutes, (1) which relate directly to the Business
of Transoma Medical (defined below), or (2) 


 

















 


which relate to
Transoma Medical’s actual or demonstrably anticipated research or development,
or (3) which result from
any work performed by Employee for Transoma Medical, or (4) for which
equipment, supplies, facilities or Confidential Information of Transoma Medical
is used, or (5) which is developed on any Transoma Medical time.


 


SECTION
2.  INVENTIONS


 


2.1                                 Disclosures
Regarding Inventions. With respect to Inventions made, authored or
conceived by Employee, either solely or jointly with others, during Employee’s
employment, whether during normal working hours or whether at Transoma
Medical’s premises; or within eighteen (18) months after termination of
Employee’s employment, Employee will:


 


a)                                      Keep
accurate, complete, and timely records of such Inventions (in the form of
notes, sketches, drawings and in any other form that may be required by
Transoma Medical), which records will be Transoma Medical’s property.


 


b)                                     Promptly
and fully disclose and describe such Inventions in writing to Transoma Medical.


 


c)                                      Assign
(and Employee does hereby assign) to Transoma Medical (or its designee as
directed by Transoma Medical) all of Employee’s rights, title, and interest of
every kind and nature whatsoever to such Inventions, and to applications for
letters patent and/or copyright in all countries and to letters patent and/or
copyrights granted upon such Inventions in all countries. Employee acknowledges
that all copyrightable material Employee produces is work made for hire.


 


d)                                     Deliver
promptly to Transoma Medical (without charge to Transoma Medical) such written
instruments and to do such others acts as may be necessary in the opinion of
Transoma Medical to preserve property rights against forfeiture, abandonment or
loss.


 


e)                                      To
avoid any possible uncertainty, Employee has listed on Exhibit A
attached hereto all Inventions that Employee has, alone or jointly with others,
conceived, developed, or reduced to practice or caused to be conceived,
developed, or reduced to practice prior to the commencement of Employee’s
employment with Transoma Medical that Employee considers to be Employee’s
property or the property of third parties and that Employee wishes to have
excluded from the scope of this Agreement (collectively, “Prior Inventions”).
If no such disclosure is attached, Employee represents that there are no Prior
Inventions. Except as listed in this Exhibit A, Employee will not assert
any rights under any Inventions as having been made, conceived, authored or
acquired by Employee prior to being employed by Transoma Medical.


 


f)                                        If,
in the course of Employee’s employment with Transoma Medical, Employee
incorporates a Prior Invention into a Transoma Medical product, process,
machine, or Transoma Medical Invention (defined above), Transoma Medical is 


 

















 


hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of sublicensees) to
make, have made, modify, use, and sell such Prior Invention. Notwithstanding
the foregoing, Employee agrees that Employee will not incorporate or permit to
be incorporated Prior Inventions into any Transoma Medical product, process,
machine, or Transoma Medical Invention without Transoma Medical’s prior written
consent.


 


NOTICE: Any
provision in this Agreement requiring Employee to assign Employee’s rights in
any Invention does not apply to ·an invention which qualifies for exclusion
under the provisions of Minnesota Statute Section 181.78. That section provides
that the requirement to assign “does not apply to an invention for which no
equipment, supplies, facility or trade secret information of the employer was used
and which was developed entirely on the employee’s own time, and (1) which does
not relate (a) directly to the business of the employer or (b) to the
employer’s actual or demonstrably anticipated research or development, or (2)
which does not result from any work performed by the employee for the
employer.”  Employee understands that
Employee bears the burden of proving that an Invention qualifies for exclusion
under Minnesota Statute Section 181.78.


 


2.2                                 Obtaining
Letters Patent, Copyright Registrations & Other Protections.


 


a)                                      Employee
shall assist Transoma Medical in every proper way to obtain and enforce United
States and foreign proprietary rights relating to any and all inventions,
original works of authorship, developments, improvements or trade secrets of
Transoma Medical in any and all countries. Employee will execute, verify and
deliver such documents and perform such other acts (including appearing as a
witness) Transoma Medical may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining and enforcing such proprietary
rights and the assignment thereof Employee shall execute, verify and deliver
assignments of such proprietary rights to Transoma Medical or its designee.
Employee shall assist Transoma Medical with respect to proprietary rights in
any and all countries beyond the termination of Employee’s employment, subject
to Employee’s compensation by Transoma Medical at a reasonable rate after
termination for the time actually spent by Employee at Transoma Medical’s
request on such assistance.


 


b)                                     If
Transoma Medical is unable for any reason, after reasonable effort, to secure
Employee’s signature on any document needed in connection with the actions
specified in the preceding paragraph, Employee hereby irrevocably designates
and appoints Transoma Medical and its duly authorized officers and agents as
Employee’s agent and attorney-in-fact, to act for and on behalf of Employee to
execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the same
legal force and effect as if executed by Employee. Employee hereby waives and
quitclaims to Transoma Medical any and all claims of any nature whatsoever
which 


 

















 


Employee now or
may hereafter have for infringement of any proprietary rights assigned to
Transoma Medical in accordance with this Agreement.


 


2.3                                 Future
Inventions. As to any future Inventions made by Employee, which relate to
the Business, products or practices of Transoma Medical and which are first
conceived or reduced to practice during the term of this Agreement, or within
six (6) months thereafter, but which are claimed for any reason to belong to an
entity or person other than Transoma Medical, Employee will promptly disclose
the same in writing to Transoma Medical and shall not disclose the same to
others if Transoma Medical, within twenty (20) days thereafter, shall claim
ownership of such Inventions under the terms of this Agreement. If Transoma
Medical makes no such claim, Employee hereby acknowledges that Transoma Medical
has made no promise to receive and hold in confidence any such information
disclosed by Employee.


 


SECTION
3.         CONFIDENTIAL INFORMATION


 


3.1                                 Protection
of Confidential and Third Party Information. Except as required in
Employee’s duties to Transoma Medical, Employee will never, either during
Employee’s employment by Transoma Medical or thereafter, use or disclose any
Confidential Information or Third Party Information as defined hereinabove
absent prior written approval from Transoma Medical for his or her own benefit
or any benefit to a Third Party. The foregoing obligation of Confidentiality
shall not apply to any knowledge or information that is now published or which
subsequently becomes generally publicly known in the form in which it was
obtained from Transoma Medical other than as a direct or indirect result of the
breach of this Agreement by the Employee.


 


3.2                                 Return
of Confidential Information. Upon termination of Employee’s employment with
Transoma Medical, all records and any compositions, articles, devices,
equipment and other items which disclose or embody Confidential Information,
including all copies or specimens thereof in Employee’s possession, whether
prepared or made by Employee or others, will be left with Transoma Medical.


 


SECTION
4.         NOTIFICATION OF NEW EMPLOYER


 


4.1                                 Notification
of New Employer. In the event that Employee leaves the employ of Transoma
Medical, Employee hereby consents to the notification of Employee’s new
employer of Employee’s rights and obligations under this Agreement.


 


SECTION
5.         NONCOMPETITION & NONSOLICITATION


 


Transoma Medical and Employee agree that, solely due
to Employee’s position with Transoma Medical, Employee will have access to
certain Confidential Information of Transoma Medical. Employee acknowledges
that Transoma Medical will only release this Confidential Information upon the
receipt of assurances that Employee will not use the information to Transoma
Medical’s disadvantage and, accordingly, agrees to the following provisions:


 


5.1                                 Agreement
Not to Compete. During the term of Employee’s employment by Transoma
Medical or any affiliate of Transoma Medical (the period to include Employee’s
initial 


 

















 


period of
employment and any subsequent periods of employment “at-will” by Transoma
Medical of Employee) and for a period of twelve (12) consecutive months from
the date of termination of such employment for whatever reason (whether
occasioned by Employee or Transoma Medical) (“the Period”), Employee agrees that
he or she will not directly or indirectly render services (including services
in research) to any person or entity in connection with the design,
development, manufacture, marketing, or sale of a Competing Product that is
sold or intended for use or sale in any geographic area in which Transoma
Medical actively markets a product of Transoma Medical or intends to actively
market a product of Transoma Medical of the same general type or function. At
the conclusion of the Period, the Company may, at its election, extend the
provisions of this Section 5.1 for up to an additional six months (“Extended
Period”). During the Extended Period, the Employee is eligible to receive
Employee’s final monthly base salary (“the Compensation”) for each month during
the Extended Period that Employee can reasonably demonstrate that Employee is
searching for employment and would have received employment in the absence of
the provisions of this Section. It is expressly understood that the Employee is
free to work for a competitor of Transoma Medical, provided that such
employment does not include any responsibilities for, or in connection with, a
Competing Product as defined in this Agreement for the Period and the Extended
Period.


 


5.2                                 Agreement
Not to Compete, Sales Positions. If the Employee’s only responsibilities
for Transoma Medical during the last two (2) years of employment have been in a
field sales or field sales management capacity, then Section 5.1 shall apply to
only prohibit for eighteen (18) consecutive months the Employee’s provision of
services in connection with the sale of a Competing Product to persons or
entities located in any sales territory the Employee covered or supervised for
Transoma Medical during the last year of employment.


 


5.3                                 Nonsolicitation
of Customers. During the term of Employee’s employment by Transoma Medical
or any affiliate of Transoma Medical (the period to include Employee’s initial
period of employment and any subsequent periods of employment “at-will” by
Transoma Medical of Employee), and for a period of eighteen (18) months from
the date of termination of such employment for whatever reason (whether
occasioned by Employee or Transoma Medical), Employee agrees that he or she
will not, directly or indirectly, either individually, in partnership, jointly,
or in conjunction with any person, firm, partnership, limited liability
company, corporation, or unincorporated association of any kind, whether as
principal, agent, shareholder, or in any other capacity whatsoever, divert,
solicit or accept business from any of the customers of Transoma Medical, or
actively seek its prospective customers, for the purposes of providing
Competing Products directly or indirectly in the United States, or in a
country, in which Transoma Medical has a plant for manufacturing a product upon
which Employee worked during Employee’s employment by Transoma Medical or in
which Transoma Medical provides a service in which Employee participated during
Employee’s employment by Transoma Medical.


 


5.4                                 Nonsolicitation
of Employees. During the term of Employee’s employment by Transoma Medical
or any affiliate of Transoma Medical (the period to include Employee’s initial 


 

















 


period of
employment and any subsequent periods of employment “at-will” by Transoma
Medical of Employee), and for a period of eighteen (18) months from the date of
termination of such employment for whatever reason (whether occasioned by
Employee or Transoma Medical), Employee will not, directly or indirectly,
either individually, in partnership, jointly, or in “conjunction with any
person, firm, partnership, limited liability company, corporation, or
unincorporated association of any kind, whether as principal, agent,
shareholder, or in any other capacity whatsoever, hire, engage, solicit or
otherwise directly or indirectly interfere with or disrupt relationships,
contractual or otherwise, with any person who was an employee of Transoma
Medical at the time of the termination of Employee’s employment by Transoma
Medical, or whose employment was terminated within twelve (12) months prior to
Transoma Medical’s termination of such employee and whom Employee worked or
associated with, or supervised, in any manner or capacity, including but not
limited to as an employee, agent, consultant, partner, member, manager, officer,
director, shareholder, or otherwise.


 


5.5                                 Acknowledgement.
Employee agrees that the restrictions and agreements contained in this Section
5 are reasonable and necessary to protect the legitimate interests of Transoma
Medical, and that any violation of this Section 5 will cause substantial and
irreparable harm to Transoma Medical that would not be quantifiable and for
which no adequate remedy would exist at law. Employee further acknowledges that
Employee has requested, or has had the opportunity to request, that legal
counsel review this Agreement’s Section 5, and having exhausted such right,
agrees to the terms herein without reservation. Accordingly, Employee
authorizes the issuance of injunctive relief by any court of appropriate
jurisdiction, without the requirement of posting bond, for any violation of
this Section 5.


 


SECTION
6.         MISCELLANEOUS


 


6.1                                 Severability.
The covenants in this Agreement are fair and reasonable. Nonetheless, it is
agreed that if a court finds any of these covenants to be invalid in whole or
in part under the laws of any state, such finding will not invalidate such
covenant(s), but rather the covenant(s) will be construed as if the most
restrictive covenants permissible under applicable law were contained herein; provided,
that if such court refuses to so construe such covenant(s), then this
Agreement will be construed as if such provision is not contained herein
insofar as enforcement of this Agreement against Employee in such particular
state.


 


6.2                                 Remedies.
Any breach by Employee of any of the provisions of this Agreement will render
irreparable harm to Transoma Medical, and money damages may not be an adequate
remedy. Transoma Medical will therefore be entitled to any and all equitable
relief, including but not limited to, injunctive relief, to prevent new,
further, or continuing violations; and, further, to any other remedy that may
be available under any applicable law or agreement between the parties. Neither
the existence or exercise of any specific remedy is intended to be exclusive or
impair or otherwise adversely affect in any manner whatsoever any rights,
remedies, or relief otherwise available, and each and every right and remedy
will be cumulative and in addition to every other right and remedy provided in
this Agreement.


 

















 


6.3                                 Assignment.
Transoma Medical will have the right to assign this contract to its successors
or assigns, and all covenants or agreements hereunder, including this
provision, shall inure to the benefit of and be enforceable solely by its
successors or assigns.


 


6.4                                 Voluntary
Agreement. Prior to signing this Agreement, Employee has read it carefully
and understands its terms and Employee’s obligations. Employee understands that
this Agreement is a condition of Employee’s employment with Transoma Medical.
Employee has had the opportunity first to discuss this Agreement any concerns
or questions Employee has about it with counsel of his or her choice and with
Transoma Medical. Employee agrees that this Agreement is reasonable, and a fair
means for Transoma Medical to protect its Confidential Information. Employee
signs this Agreement voluntarily, without coercion or duress.


 


6.5                                 Survival.
Employee understands that Employee’s obligations in this Agreement survive the
termination of Employee’s employment with Transoma Medical in the future,
regardless of the reason for termination, and regardless of whether termination
was voluntary or involuntary.


 


6.6                                 Legal
& Equitable Remedies. Employee’s services are personal and unique and
because Employee shall have access to and shall become acquainted with the
Confidential Information of Transoma Medical, Transoma Medical shall have the
right to enforce this Agreement and any of its provisions by injunction,
specific performance or other equitable relief, without bond and without
prejudice to any other rights and remedies that Transoma Medical may have for a
breach of this Agreement.


 


6.7                                 Prior
Agreements. Any and all previous agreements between Transoma Medical and
Employee are hereby terminated by the parties. This Agreement and the exhibits
attached hereto and hereby incorporated herein contain the entire agreement of
Transoma Medical and the Employee relating to the employment of Employee by
Transoma Medical and the ancillary matters discussed herein and supersedes and
replaces any and all prior agreements (including but not limited to the
Original Agreement and understandings with respect to such matters, and the
parties hereto have made no agreements, representations or warranties relating
to such employment or ancillary matters which are not set forth herein.


 


6.8                                 Amendments.
No amendment or modification of this Agreement shall be deemed effective unless
made in writing and signed by both Employee and Transoma Medical.


 


6.9                                 No
Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provisions of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought. Any written waiver shall not
be deemed a continuing waiver unless specifically stated, shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.


 

















 


6.10                           Counterparts.
This Agreement may be simultaneously executed in any number of counterparts,
anyone of which need not contain the signatures of more than one of the parties
and any or all of which may be facsimile, but all of which taken together shall
constitute one and the same instrument.


 


6.11                           Captions
& Headings. The captions and section headings used in this Agreement
are for convenience of reference only, and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.


 


6.12                           Past
Representations, Employment. Employee warrants and confirms, as a condition
of this Agreement and Employee’s employment, that the information previously
provided to Transoma Medical and contained in any resume, curriculum vitae or other writing furnished by the Employee; as well as in any
oral representations made by the Employee, regarding the Employee’s
qualifications (including, but not limited to, educational background, degrees,
job history, et cetera), were truthful, accurate, and not
misleading. The Employee further warrants that Employee is free to enter into
and perform this Agreement and that by doing so the Employee will not be in
breach of any obligation to any third party, including, but not limited to, any
former employer of Employee.


 


6.13                           Employment
at Will. Employee and Transoma Medical understand and agree that the
Employee’s employment with Transoma Medical is “at will.” Employee and Transoma
Medical understand and agree that the phrase “at will” is intended to mean that
either Transoma Medical or the Employee may end their employment relationship
at any time, for any reason. Employee and Transoma Medical agree that this
Agreement is not intended to be and should not be construed as an employment
contract that determines or affects the duration of the Employee’s employment
or any other terms or conditions of the Employee’s employment, except for those
set forth herein.


 


[The remainder of this page is left blank
intentionally;


 signature
page follows.]


 

















 


IN WITNESS WHEREOF, Employee and Transoma Medical have
executed this Agreement as of the date set forth in the first paragraph.


 


	
   

  	
  TRANSOMA MEDICAL INTERNATIONAL,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Employee]

  
					



 

















 


EXHIBIT A


 


LIST OF PRIOR INVENTIONS


 


Transoma Medical,
Inc.


4211 Lexington
Avenue North, Suite 2244


Arden Hills,
MN  55126-6164


To Whom It May Concern:


 


1.             Except as listed in
section 2 below, the following is a complete disclosure of all inventions,
original works of authorship, developments, improvements, and trade secrets
that Employee has alone or jointly with others, conceived, developed or reduced
to practice or caused to be conceived, developed or reduced to practice prior
to the date of this Agreement, that Employee considers to be Employee’s
property or the property of third parties and that Employee wishes to have
excluded from the scope of this Agreement.


 


o            No Inventions or
Improvements.


 


o            See below.


 


o            Additional sheets
attached.


 


2.             Due to a prior
confidentiality agreement, I cannot complete the disclosure under section 1
above with respect to inventions or improvements generally listed below, the
proprietary rights and duty of confidentiality with respect to which I owe to
the following party(ies):


 


	
   

  	
   

  	
  Invention or Improvement

  	
   

  	
  Party(ies)

  	
   

  	
  Relationship

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


o            Additional Sheets
attached.


 


3.             I propose to bring to
my employment the following devices, materials and documents of a former
employer or other person whom I have an obligation of confidentiality that are
not generally available to the public, which materials and documents may be
used in my employment pursuant to the express written authorization of my
former employer or such other person (a copy of which is attached hereto):


 


o            No Inventions or
Improvements.


 


o            See below.


 


o            Additional sheets
attached.


 


 


	
  Date:                                ,
  20           

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  [Name of Employee]