EXHIBIT 10.56
EMPLOYMENT AGREEMENT
This AGREEMENT made effective July 24, 2000 between DIANON SYSTEMS, INC. a
Connecticut corporation, and any successor thereto, hereinafter referred to as
the "Company", and XXXX XXXXXX, M.D., residing at 0000 Xxxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Company wishes to employ Xxxx Xxxxxx, M.D. and Xxxx Xxxxxx,
M.D. wishes to accept such employment, in each case on the terms and subject to
the conditions set forth below; and
WHEREAS, the services that Xxxx Xxxxxx, M.D. should render hereunder to
the Company are unique and valuable; and
WHEREAS, the parties desire to reduce the terms and conditions of Xxxx
Xxxxxx, M.D.'s employment to writing;
NOW, THEREFORE, in consideration of the terms and conditions and the
mutual covenants contained in this Agreement, the Company and Xxxx Xxxxxx, M.D.
hereby agree as follows:
1. Employment
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The Company hereby employs Xxxx Xxxxxx, M.D. as of the first full
day of service he provides to the Company hereunder which shall be no later than
August 1, 2000 and Xxxx Xxxxxx, M.D. hereby accepts such employment upon the
terms and conditions hereinafter set forth. The parties acknowledge that Xxxx
Xxxxxx, M.D.'s employment with the Company is at will and terminable by either
party at any time with or without cause.
2. Duties and Responsibilities
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Xxxx Xxxxxx, M.D., as Chief Medical Officer, shall perform with
continuous diligence those activities assigned to Xxxx Xxxxxx, M.D. by the
Company's President or, in the absence of a President, its Board of Directors.
Commencing with the first full day of service he provides to the Company
hereunder, Xxxx Xxxxxx, M.D. will be elected as Chief Medical Officer of the
Company.
3. Term
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This Agreement shall begin on the effective date hereof and continue
until terminated under the terms contained herein.
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4. Salary and Incentive Program
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This Agreement shall compensate Xxxx Xxxxxx, M.D. for his services
during the term of this Agreement commencing with the first full day of service
he provides to the Company hereunder on a salaried basis paid in installments at
a rate determined by the Company from time to time, and the Company shall
endeavor annually to perform a salary review, provided that the initial base
salary shall be at an annualized rate of $290,000 and the base salary for the
position shall not be at a lower annualized rate at any time during the term of
this Agreement. Commencing with the first full day of service he provides to the
Company hereunder, Xxxx Xxxxxx, M.D. shall also participate, according to its
terms, in any management incentive compensation program maintained by the
Company for salaried Grade 18 management employees of the Company during the
term of this Agreement. A copy of the Management Incentive Plan currently in
effect is attached as Exhibit A.
5. Fringe Benefits
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During the term of this Agreement, commencing with the first full
day of service he provides to the Company hereunder, the Company shall provide
Xxxx Xxxxxx, M.D. benefits and emoluments as authorized for all other salaried
Grade 18 management employees of the Company as they may be modified from time
to time by the Company during the term of this Agreement, including at the time
of execution of this Agreement, health and medical insurance, life insurance,
sick leave, vacation, holidays, an automobile allowance, retirement plan
participation and stock purchase plan participation. In addition, the Company
shall provide Xxxx Xxxxxx, M.D. with other benefits as authorized for all other
salaried, management physician employees of the Company and as such benefits may
be modified from time to time by the Company during the term of this Agreement,
including at the time of execution of this Agreement, malpractice insurance,
disability insurance, professional license costs and Continuing Medical
Education allowance and of professional membership costs up to $1,500 per year,
provided that greater costs may also be paid by the Company if the parties so
agree.
6. Stock Options
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Effective on the date this agreement is signed by Xxxx Xxxxxx, M.D.,
the Company shall award Xxxx Xxxxxx, M.D. a Stock Option Grant to purchase
50,000 shares of common stock of the Company at the fair market value on said
date, on term, conditions, vesting schedules and expiration dates set forth in
the stock option award document attached to this Agreement as Exhibit B.
7. Stock Grants
------------
Provided Xxxx Xxxxxx, M.D.'s employment with the Company continues
through the date below without notice of intent to terminate having been given
by either party, the Company shall issue to Xxxx Xxxxxx, M.D. 7,500 shares of
common stock of the Company on April 2, 2001. Xxxx Xxxxxx, M.D. agrees not to
sell any such stock for a period of six months from the date of such grant.
8. Relocation
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The Company shall pay for and reimburse expenses associated with
Xxxx Xxxxxx, M.D.'s relocation connected with his hire and provide local
representatives from Prudential Relocation to manage the selling and/or buying
process as authorized for other salaried, management employees of the Company
and as such expenses that the Company will pay for or reimburse may be modified
at any time relevant to the relocation of Xx. Xxxxxx in connection with his
hire. Currently, the Company's practice is to pay all costs incurred as part of
selling and buying a new home, excluding personal expenses such as property
taxes, points and interest, but including real estate commissions, filing fees,
moving expenses, attorney fees and reasonable expenses relating to reasonable
house hunting trips.
9. Termination
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a) This Agreement shall terminate on any of the following
occurrences:
(i) Xxxx Xxxxxx, M.D.'s death;
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(ii) Xxxx Xxxxxx, M.D.'s disability (inability to perform
essential job functions with or without reasonable
accommodation which reasonable accommodation does not
cause undue hardship on Company operations) for a
period of 120 days or more unless waived by the Board
of Directors;
(iii) mutual agreement of the parties reduced to writing
signed by both parties;
(iv) voluntary resignation by Xxxx Xxxxxx, M.D.;
(v) termination by the Company without Stated Cause;
(vi) termination by the Company with Stated Cause.
b) Cause for termination by the Company shall mean Xxxx Xxxxxx,
M.D.'s
(i) gross negligence;
(ii) intentional insubordination; -
(iii) intentional misconduct;
c) Good Cause for resignation by Xxxx Xxxxxx, M.D., shall exist only
if one of the following three (3) circumstances occurs within the first 12
months of Xxxx Xxxxxx, M.D.'s employment with the Company.
(i) Without Xxxx Xxxxxx, M.D.'s expires written consent,
any assignment of duties materially inconsistent with
his position or material adverse change in his
reporting responsibilities, titles or offices or any
removal of Xxxx Xxxxxx, M.D. from or any failure to
reelect him to his then position, except in connection
with his termination as a result of death, disability,
or mutual agreement of the parties, voluntary
resignation by Xxxx Xxxxxx, M.D. not for Good Reason,
or termination by Xxxx Xxxxxx, M.D. with Stated Cause;
(ii) A reduction of Xxxx Xxxxxx, M.D.'s base salary from the
Company or the taking of any action by the Company
which would materially adversely affect Xxxx Xxxxxx,
M.D.'s participation in or materially reduce his
benefits under any plan established to provide
compensation for the Company's executive level
employees, including but not limited to the Company's
bonus plan, stock incentive plan, or any other stock
award or stock grant opportunity applicable to him;
(iii) The relocation of the office at which Xxxx Xxxxxx, M.D.
regularly performs his duties for the Company that
requires him to relocate his residence.
d) "Stated Cause" shall mean Cause communicated to Xxxx Xxxxxx,
M.D. by the Company in a Notice of Termination.
e) "Notice of Termination" shall mean written notice given by either
party to the other of an intention to terminate this Agreement pursuant to
subparagraphs (a) (iv), (v) or (vi) of this Paragraph 9 of this Agreement.
f) Notice of Termination shall be sent by certified mail or
registered mail, return receipt requested, first class postage prepaid, to the
residence in the case of Xxxx Xxxxxx, M.D., and to its principal office in the
Town of Stratford, Connecticut, to the attention of the President, in the case
of the Company.
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g) The "Termination Date" shall be the date Xxxx Xxxxxx, M.D.
ceases providing services to the Company as an employee.
10. Compensation after Termination
a) Xxxx Xxxxxx, M.D. will not receive any compensation from the
Company after the Termination Date other than accrued, unused vacation, except
as described under Paragraph (b) of this Section of this Agreement, if
applicable. Xxxx Xxxxxx, M.D.'s participation in all fringe benefits offered by
the Company to its employees will cease immediately on the Termination Date
except as described in Paragraph (b) of this section of this Agreement, if
applicable. Nothing in this Agreement, however, is intended to impair any rights
vested under the law in any benefit plan of the Company.
b) If this Agreement and Xxxx Xxxxxx, M.D.'s employment with the
Company is terminated by the Company without Stated Cause, or through Xxxx
Xxxxxx'x resignation for Good Cause, then during the applicable "Post Notice of
Termination Without Stated Cause Period" described in subparagraph (vi) of this
paragraph.
(i) The Company will pay Xxxx Xxxxxx, M.D. at his rate of
base pay determined as of the date preceding the Notice
of Termination Without Stated Cause issuance.
(ii) Xxxx Xxxxxx, M.D. shall act as a consultant to the
Company as requested by the Company for up to six days
per month.
(iii) The Company will continue participation in all
applicable Company benefit plans for Xxxx Xxxxxx, M.D.
and/or his eligible dependents on the same basis as if
Xxxx Xxxxxx, M.D. continued to be an active full-time
employee of the Company.
(iv) The Company will pay up to $10,000 for outplacement
services for Xxxx Xxxxxx, M.D. provided by an
outplacement provider of Xxxx Xxxxxx, M.D.'s choice.
(v) The Company will continue to honor any option-vesting
schedule in effect for options granted to Xxxx Xxxxxx,
M.D. as of the date preceding the Notice of Termination
Without Stated Cause Issuance Date.
(vi) If termination occurs within twelve months after the
Company experiences a change in control, the Post
Notice of Without Stated Cause Termination Period shall
be twelve months beginning with the Notice of Without
Stated Cause Termination Issuance Date. Otherwise, the
Post Notice of Without Stated Cause Termination Period
shall be six months beginning with the Notice of
Without Stated Cause Termination Issuance Date or
Resignation for Good Cause Notice.
A. For purposes of this paragraph, "change in
control" shall have the meaning set forth in
Exhibit C attached hereto and incorporated
herein.
11. Company Property
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On the Termination date, or at any earlier point in time after a
Notice of Termination is received when a request is made by the Company for
same, Xxxx Xxxxxx, M.D. will turn over to the Company all notes, reports,
memoranda, books, records, chemicals, devices and documents, whether in written,
typewritten, computerized or any other form, which are in Xxxx Xxxxxx, M.D.'s
possession or under his control, whether prepared by him or others, related to
the Company or related to the business of the Company provided such material was
acquired by Xxxx Xxxxxx, M.D. during the course of his employment with the
Company and is not in the public domain. At the conclusion of the period
described in paragraph (b) of Section 10 of this Agreement, or at any earlier
point in time when a request is made by the Company for same, Xxxx Xxxxxx, M.D.
shall also return to the Company any keys, parking card, credit card, business
cards or other materials related to this employment with the Company or the
operation of the Company.
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12. Proprietary Information
-----------------------
Xxxx Xxxxxx, M.D. hereby agrees to all the terms and conditions of
the Agreement regarding confidential Company information attached hereto as
Exhibit D and incorporated herein.
13. Non-Competition
---------------
Xxxx Xxxxxx, M.D. agrees that, to the fullest extent permitted by
law, for the period of one (1) year after his Termination Date, Xxxx Xxxxxx,
M.D. (a) will not solicit business on behalf of any for-profit entity in the
clinical chemistry business, which is performing or marketing anatomic pathology
services other than PAP tests ("Competing Entity"), (b) will not solicit
competing business from customers of the Company, (c) will not solicit the
employment or services (except through the Company) of any of the employees of
the Company, and (d) will not, directly or indirectly, participate in the
ownership, management, operation or control of any Competing Entity in the
continental United States provided that nothing in this Paragraph shall prevent
investment ownership of less than 5% of the shares of a publicly traded
Competing Entity.
14. Remedy for Breach
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Xxxx Xxxxxx, M.D. acknowledges:
a) that he may be an officer of the Company and as such he would
be conversant with, and have access to, the business affairs,
records, trade secrets, customers and customer lists,
suppliers, supplier lists, patents, technical know-how,
chemicals, devices, sales or distribution agents and
representatives, sales or distribution agents and
representatives' lists and other confidential and proprietary
information of the Company; and other confidential and
proprietary information of the Company; and
b) that his compliance with the covenants and agreements in this
Agreement is necessary to protect the goodwill and other
proprietary interests of the Company; and
c) that a breach of his covenants and agreements in this
Agreement will result in continuing and irreparable damage to
the Company for which there will be no adequate remedy at law.
Both parties recognize that the services to be rendered under this
Agreement by Xxxx Xxxxxx, M.D. are special and unique and of an extraordinary
character, and that in the event there is a breach by Xxxx Xxxxxx, M.D. of the
terms and conditions of this Agreement to be performed by him, then the Company
shall be entitled, if it so elects, to institute and prosecute proceedings in
any court of competent jurisdiction either in law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the specific performance
thereof by Xxxx Xxxxxx, M.D., or to enjoin Xxxx Xxxxxx, M.D. from performing
services for any Competing Entity. The parties further recognize and agree that
breach by Xxxx Xxxxxx, M.D. of his obligations under Sections 11, 12 or 13 of
this Agreement shall relieve the Company of its obligations under paragraph (b)
of Section 10 of this Agreement but that such relief shall not be an adequate
remedy at law.
The parties agree that any dispute arising under this Agreement
(other than those arising under Sections 11, 12, 13 or 14 of this Agreement)
shall be subject to arbitration in the State of Connecticut according to the
rules of the American Arbitration Association for employment dispute
arbitration.
15. Xxxx Xxxxxx, M.D.'s Representation
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Xxxx Xxxxxx, M.D. warrants and represents that neither the execution
and delivery nor the performance of this Agreement by him will in any way
violate, or conflict with, any other agreement by which he may be bound or any
duty or obligation to which he may be subject and that he will take all steps
necessary to comply with the representation.
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00. Assignments
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The rights and obligations of Xxxx Xxxxxx, M.D. under this Agreement
shall be assignable to and binding upon the successors and assigns of the
Company including any corporation organized by the Company to carry on the
business of the Company.
17. Entire Agreement
----------------
This instrument contains the entire Agreement of the parties. It may
not be changed orally, but only by agreement in writing signed by the party
against whom enforcement of any waiver, change, modification extension or
discharge is sought. This Agreement supercedes any verbal, written or other
agreement(s) or understanding(s) existing between Xxxx Xxxxxx, M.D. and the
Company relating to his employment or the other matters covered herein.
18. Severability
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If any provision of this Agreement shall be held invalid, such
invalidity shall not affect any other provisions of this Agreement not held so
invalid, and only such provisions shall to the full extent consistent with the
law remain in full force and effect.
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19. Applicable Law
--------------
This Agreement shall be governed by the laws of the State of
Connecticut.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement.
DIANON SYSTEMS, INC.
28 June 2000 By: /s/ Xxxxx X. Xxxxxxx
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Date Xxxxx X. Xxxxxxx
26 June 2000 By: /s/ Xxxx X. Xxxxxx
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Date Xxxx Xxxxxx, M.D.
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