EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of
the 1st day of May, 1999, by and between DIANON Systems, Inc., a Delaware
corporation ("DIANON"), and Xxxx Xxxxxxx ("Employee").
RECITALS:
WHEREAS, DIANON has acquired substantially all of the assets and business
of Kyto Meridien Diagnostics, L.L.C., a New York limited liability company
("Kyto Meridien"), pursuant to the terms of an Asset Purchase Agreement dated as
of April 7, 1999, by and among DIANON, Kyto Meridien, Kyto Diagnostics, L.P.,
Meridien Diagnostics Labs, Inc., Xxxxx X. Xxxxxxx, M.D., and A. Xxxxx Xxxxxxx
(the "Asset Purchase Agreement"); and
WHEREAS, DIANON desires to employ Employee for a period commencing as of
the Closing Date ("Closing Date") of the Asset Purchase Agreement and ending two
years from that date and Employee desires to work for DIANON for such period on
the terms and conditions hereinafter provided; and
WHEREAS, Employee's position with Kyto Meridien has given her access to
and familiarity with the confidential information and business of Kyto Meridien
acquired by DIANON and her employment with DIANON will give her access to and
familiarity with the confidential information and business of DIANON; and
WHEREAS, DIANON would be irreparably harmed if Employee should disclose
any of the confidential information which Employee has acquired and will acquire
or by entering into any activity competing with DIANON or the business of Kyto
Meridien acquired by DIANON.
NOW, THEREFORE, in consideration of the mutual covenants, terms and
conditions of this Agreement, Employee and DIANON agree as follows:
1. EMPLOYMENT. DIANON hereby employs Employee to serve as the Cytology
Supervisor at the Woodbury facility. Employee's duties shall include: (i)
part-time (as defined below) service as statutory Cytology Supervisor and
provision of overall supervision and direction of cytotechnologists at the
laboratory facility acquired by DIANON from Kyto Meridien currently located at
00 Xxxxxxxxx Xxxx Xxxxx xx Xxxxxxxx, Xxx Xxxx; (ii) performance of all
requirements of a cytology supervisor specified under CLIA, New York State law
and other federal, state and local laws, rules and regulations; (iii) assuring
that the laboratory facility for which she serves as cytology supervisor is in
compliance with applicable laws, rules and regulations; and (iv) such other
tasks and assignments commensurate with her position that are reasonably
assigned to her by the senior management of DIANON. Employee shall have a
reporting relationship with the general manager of Kyto Meridien or such other
person or persons as are designated by the President of DIANON.
For purposes of this Agreement, the term "part-time" means an on-site
schedule from 9 a.m. to 2 p.m. (hereinafter referred to as a "work day"), on
normal business days, two hundred and sixty (260) days per year less such four
weeks (twenty business days) vacation, holiday and
other paid time off days (hereinafter referred to as "paid time off days") to
which Employee is entitled. Employee may work fewer work days than otherwise
would be required by the preceding sentence, provided that: (a) compensation
under Section 2(a) below shall be paid only for actual work days performed by
Employee or paid time off days recognized by DIANON; and (b) Employee shall
provide no less than two (2) calendar weeks advance notice to the general
manager of Kyto Meridien prior to taking additional days off.
During her employment Employee shall at all times conduct herself and
perform her professional services in a proficient and professional manner, in
accordance with the applicable standards of care and the highest standards of
ethics of the medical profession.
2. COMPENSATION. As full consideration for the services rendered by
Employee pursuant to this Agreement, together with Employee's undertakings
pertaining to the preservation of confidential information and the restrictive
covenant set forth, respectively, in Sections 4 and 5 below, DIANON shall,
during the term of this Agreement, compensate Employee as follows:
(a) DIANON shall pay Employee on a biweekly (once every two weeks)
basis a per diem equal to two hundred eighty-eight dollars and forty-six cents
($288.46) for each work day performed by Employee and each paid time off day
during the preceding two week pay period, provided that the total of all such
payments shall not exceed seventy-five thousand ($75,000) dollars in any one
year;
(b) DIANON shall reimburse the reasonable business expenses of
Employee in performing her duties hereunder in accordance with such policies
regarding employee expenses as DIANON may have in effect from time to time
during the term;
(c) Employee shall be eligible for group health insurance benefits
as are generally provided by DIANON to its employees subject to the terms and
conditions, including eligibility conditions other than status as a full-time or
part-time employee, that are applicable to such health insurance programs.
Employee shall be eligible for such other employee benefits as are generally
provided by DIANON to its employees subject to the terms and conditions,
including eligibility conditions, of any applicable employee benefit plan or
program; provided that, during the period of employee conversion, as determined
by DIANON consistent with the requirements of the Asset Purchase Agreement,
Employee shall be entitled to such Kyto Meridien benefits that are required by
Section 7(c) of the Asset Purchase Agreement to be extended to all Kyto Meridien
employees hired by DIANON;
(d) Upon termination of employment, Employee may, at her own cost
and in accordance with the requirements of COBRA, extend her employee insurance
benefits.
3. TERM. Unless sooner terminated in accordance with Section 9 below,
the term of this Agreement and Employee's employment shall commence on the
Closing Date of the Asset Purchase Agreement and end on the second anniversary
thereof.
4. CONFIDENTIAL INFORMATION. From and after the date hereof, Employee
will not, directly or indirectly, use for her own benefit or purposes, or
disclose to, or use for the benefit or purpose of any person or entity other
than DIANON, any confidential information, knowledge or data relating to the
business or operations of DIANON or those acquired by
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DIANON from Kyto Meridien. Such information, knowledge or data includes, but is
not limited to, secret or confidential matters not published or generally known
in the industry, such as information regarding pricing, costs, purchasing,
profits, financing, markets, sales or customer lists, future developments,
audits, investigations, enforcement actions, regulatory compliance, laboratory
procedures and marketing and expansion plans. Any and all materials which may be
produced or created by Employee or others, or which may come into her possession
in the course of her employment, or which relate in any manner to the business
or prospective business of DIANON are and shall be the exclusive property of
DIANON and Employee shall not have any right, title or interest in any such
materials. Upon termination of her employment, Employee shall not have the right
to remove any such materials from the offices of DIANON and shall promptly
return to DIANON all things of whatever nature that belong to DIANON, including
all materials and records in any form, format or medium containing or related to
the confidential information of DIANON, and she shall neither make nor retain
any part or copy thereof for her personal use or the use of third parties.
Notwithstanding the foregoing, confidential information shall not
include any information that is: (i) demonstrably developed independently by
Employee; (ii) publicly disclosed by DIANON or otherwise in the public domain
without violation of this Agreement by Employee; or (iii) rightfully received by
Employee from a third party, which, by disclosing to Employee, does not breach
any obligation or duty to DIANON. Notwithstanding this Section 4, Employee may
make such disclosures of confidential information as are duly compelled by court
order or as required by law.
5. RESTRICTIVE COVENANT. In consideration of this Agreement and the
purchase of the assets and business of Kyto Meridien by DIANON, for a period of
three years from and after the Closing Date and for any renewal period or
extension of the term hereof, and notwithstanding the expiration or any earlier
termination of this Agreement, except with the express written consent of DIANON
(which consent may be unreasonably withheld), Employee shall not, for her own
account, on behalf of, or jointly with, any other person, directly or
indirectly, own, manage, operate, join, control, finance, invest in, perform
services for, advise (or advise others with respect to), or otherwise
participate in, or be connected with, or become or act as a partner, manager,
member, director, officer, employee, consultant, representative or agent of any
business (other than DIANON), individual, partnership, firm, proprietorship,
professional practice, corporation, limited liability company or other entity
that provides clinical laboratory or anatomic or surgical pathology services
within a one hundred and fifty mile radius of New York City (the "Territory");
provided however, that Employee may purchase or own, solely as an inactive
investor, the securities of any entity that are publicly traded on a national
securities exchange where Employee's aggregate holdings of such securities do
not exceed two percent of the voting power or of any class of stock of such
entity.
In addition to the foregoing, during the same three-year period and
for any renewal period or extension of the term hereof, Employee shall not, on
her own behalf, or on behalf of any other person or entity: (i) solicit the
customers, suppliers or employees of DIANON or any affiliated entity; (ii)
solicit or seek to hire any employee of DIANON or any affiliated entity; or
(iii) attempt in any manner, directly or indirectly, to influence, induce or
encourage any such employee to leave the employment of DIANON or any affiliated
entity. Employee shall not take any action intended, or which may reasonably
expected, directly or indirectly, to impair the goodwill, reputation or good
name of DIANON or Kyto Meridien, or
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otherwise to be detrimental to the interests of DIANON, including any action
intended, or which may reasonably be expected, directly or indirectly, to
benefit a competitor of DIANON.
Notwithstanding the foregoing, Employee may, upon the expiration or
termination of this Agreement other than for cause, be employed within the
Territory as a cytotechnologist or cytology supervisor in a hospital laboratory,
for so long as such hospital laboratory does not conduct outreach activities
having annual sales in excess of two million ($2,000,000) dollars, and provided
further that Employee otherwise abides by the requirements of this restrictive
covenant and the other provisions of this Agreement that survive expiration or
termination.
6. SCOPE OF RESTRICTIONS. Employee agrees that the restrictions set
forth in Section 5 are reasonable. If, however, a court determines that any
provision of Section 5 is unreasonable, either in geographic scope, length of
time or otherwise, then Section 5 shall be interpreted and enforced to the
maximum extent permitted by law and Employee consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce such
restriction.
7. INJUNCTIVE RELIEF. Employee acknowledges that irreparable harm would
be suffered by DIANON in the event that any of the provisions of Sections 4 or 5
were not performed fully in accordance with the terms specified therein and that
monetary damages are an inadequate remedy for breach thereof because of the
difficulty of ascertaining and quantifying the amount of damage that will be
suffered by DIANON in the event that such undertakings and provisions were
breached or violated. Accordingly, Employee agrees that DIANON shall be entitled
to an injunction or injunctions to restrain, enjoin and prevent breaches or
threatened breaches of the covenants, undertakings and provisions of those
sections and to enforce specifically the provisions therein in any court of the
United States or any state having jurisdiction over the matter, it being
understood that any such remedies shall be in addition to, and not in lieu of,
any other rights and remedies available at law or in equity and shall not be
deemed exclusive of any common law or other rights of DIANON in connection with
the matters covered hereby.
8. INTELLECTUAL PROPERTY RIGHTS. Employee agrees to assign, and hereby
does assign to DIANON all of her right, title and interest in and to all
inventions, improvements, discoveries and technical developments, whether or not
patentable, which she solely or jointly with others, may conceive or reduce to
practice during the term of her employment, which are related, in whole or in
part, directly or indirectly, to the business of, or services or products of the
type, provided by DIANON, or which may reasonably be provided or used by DIANON,
or which are otherwise developed, in whole or in part, at DIANON's expense.
Employee shall disclose promptly to DIANON's Chief Executive Officer, all
such ideas, discoveries and improvements conceived by her alone or in
collaboration with others, and shall cooperate fully with DIANON both during and
after employment, with respect to the procurement of patents for the
establishment and maintenance of DIANON's rights and interests in said
inventions, improvements, discoveries or developments, and shall sign all papers
which DIANON may reasonably deem necessary or desirable for the purpose of
vesting it with such rights.
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9. TERMINATION. (a) Employee's employment under this Agreement
shall terminate on the occurrence of any of the following events:
(i) Upon the disqualification of Employee, or her failure to
maintain all necessary licenses and certifications, to serve as a cytology
supervisor in the State of New York or under CLIA;
(ii) Upon the death of Employee;
(iii) Upon the passage of thirty (30) days after written notice of
termination without cause from DIANON to Employee;
(iv) Upon the sending of written notice from DIANON describing the
activities constituting an act of default falling within any one or more of the
following categories:
(i) Employee's breach of any material promise or agreement
set forth herein, including, without limitation, those
set forth in Sections 4 and 5 above, or failure to
perform substantially all of the duties reasonably
required by Section 1; or
(ii) Employee's commission of an act of gross negligence or
willful misconduct in the performance of her duties or
obligations hereunder, or an act of negligence in the
performance of a medical function;
Provided that no such termination under this subsection 9(a)(iv) shall be
effective unless Employee has first been afforded an opportunity to correct the
alleged default, but such default continues, recurs or can not otherwise be
corrected, in the good faith judgment of DIANON, within thirty days after
delivery of such written notice of default to Employee; and
(v) Upon the occurrence of an event or the commission of an act
under which Employee is or may become subject to mandatory or permissive
exclusion from Medicare and State health care programs, including those set
forth in sections 1128, 1156 and 1892 of the Social security Act and any
regulations promulgated thereunder.
(b) In the event of a termination of this Agreement pursuant to
subsections 9(a)(ii) or 9(a)(iii) above, DIANON shall continue to pay the
maximum compensation required by Section 2(a) above until the second anniversary
of the Closing Date of the Asset Purchase Agreement.
(c) Sections 4, 5, 6, 7, 11 and 13 of this Agreement shall survive, in
accordance with their terms, any termination or expiration of this Agreement,
whether any such termination be with or without cause or expiration occurs with
the passage of time. No termination or expiration of this Agreement shall
relieve Employee of her obligations to DIANON with respect to the restrictive
covenant in Section 5 and the preservation of confidential information under
Section 4. Should Employee violate any of the requirements of Sections 4 or 5 of
this Agreement, DIANON may, in addition to any other remedies provided to DIANON
under this Agreement, the Asset Purchase Agreement, at law or in equity,
immediately terminate any further post-termination payments to Employee
hereunder that otherwise may have been required.
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10. WAIVER. The failure of either party at any time to require
performance by the other party of any provision hereof shall not affect in any
way the full right to require such performance at any time thereafter, nor shall
a waiver by either party of a breach of any provision hereof be taken or held to
be a waiver of the provision itself.
11. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, by nationally recognized overnight delivery service, or
mailed by certified or registered mail, postage prepaid, and addressed as
follows:
If to Employee:
Xxxx Xxxxxxx
00 Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
If to DIANON: DIANON Systems, Inc.
000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: President
12. ENTIRE AGREEMENT. This Agreement and the Asset Purchase Agreement
set forth the entire agreement and understanding of the parties concerning the
subject matter hereof. This Agreement may be amended only by a written
instrument signed by both parties, which instrument must make specific reference
to this Agreement and the intention to modify it.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to the
conflicts of laws provisions of that state.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
first above written.
/s/ Xxxx Xxxxxxx
----------------
Xxxx Xxxxxxx
DIANON SYSTEMS, INC.
/s/ Xxxxx X. Xxxxxxx
--------------------
By: Xxxxx X. Xxxxxxx
Its: President & CEO
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