Exhibit 10.38
AGREEMENT
This Agreement made effective February 27, 1997 between DIANON SYSTEMS,
INC., a Connecticut corporation; and any successor thereto, hereinafter referred
to as the "Company," and XXXXXXX X. XXXXXXXX, residing at 000 Xxxxxx Xxxxx, Xxx
Xxxxxx, Xxxxxxxxxxx 00000.
WITNESSETH
WHEREAS, Xxxxxxx X. Xxxxxxxx wishes to resign his position as Chairman
of the Board of Directors of the Company; and
WHEREAS, the Company wishes to continue to employ Xxxxxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxxxxx wishes to accept such continued employment, in each case
for the purposes, on the terms, for the period and subject to the conditions set
forth below; and
WHEREAS, the services that Xxxxxxx X. Xxxxxxxx should render under this
Agreement to the Company are unique and valuable; and
WHEREAS, the parties desire to reduce the terms and conditions of
Xxxxxxx X. Xxxxxxxx'x employment to writing; and
WHEREAS, the Compensation Committee has approved and recommended that
the Company enter into this Agreement; and
WHEREAS, based on the recommendation of the Compensation Committee, the
Board of Directors has ratified and approved this Agreement and, in particular,
(i) has ratified, approved and confirmed the original grant to Xxxxxxx X.
Xxxxxxxx of all options to purchase Company stock held by him as of the date
hereof, (ii) has approved the vesting in full of all options held by Xxxxxxx X.
Xxxxxxxx as of the date hereof to the extent not previously vested as set forth
in Section 2 hereof, and (iii) has approved the purchase of all options held by
Xxxxxxx X. Xxxxxxxx on terms set forth in Section 2 hereof.
NOW, THEREFORE, in consideration of the terms and conditions and the
mutual covenants contained in this Agreement, the Company and Xxxxxxx X.
Xxxxxxxx hereby agree as follows:
1. Resignation As Chairman
Xxxxxxx X. Xxxxxxxx resigns as Chairman of the Board and as an officer
of the Company effective as of February 27, 1997.
2. Stock Options
All options to buy Company stock held by Xxxxxxx X. Xxxxxxxx as of
February 27, 1997, (Options") to the extent not previously vested will vest in
full effective February 27, 1997, provided that Xxxxxxx X. Xxxxxxxx does not
revoke this Agreement pursuant to Section 24 of this Agreement. A revocation by
Xx. Xxxxxxxx of this Agreement pursuant to Section 24 of This Agreement shall
not affect (i) any Option (or portion thereof) that was not vested pursuant to
this Section 2 and (ii) any Option that was exercised or sold by Xxxxxxx X.
Xxxxxxxx prior to the date of such revocation. Xxxxxxx X. Xxxxxxxx may sell any
or all of the options to the Company on or before May 28, 1997 for cash at a
price equal to (i) the number of shares of Company stock covered by such Option
times (ii) the amount by which 10 7/8 exceeds the exercise price of such Option.
The options will otherwise be exercisable according to the terms of their
initial grant(s).
3. Employment As Consultant To The President
The Company hereby employs Xxxxxxx X. Xxxxxxxx as Consultant to the
President as of February 28, 1997 and Xxxxxxx X. Xxxxxxxx hereby accepts such
employment upon the terms and conditions set forth in this Agreement. The
position of Consultant to the President is not an officer position in the
Company.
4. Duties and Responsibilities
Xxxxxxx X. Xxxxxxxx will perform with continuous diligence those
activities assigned to Xxxxxxx X. Xxxxxxxx by the Company's President in
connection with special projects as the President may from time to time
identify. The parties acknowledge that the President has full discretion to
determine the nature of all such projects and location or locations at which
Xxxxxxx X. Xxxxxxxx shall perform assigned activities under this Agreement,
provided that Xxxxxxx X. Xxxxxxxx shall not be required to relocate from his
residence in New Canaan, Connecticut.
5. Term
Xxxxxxx X. Xxxxxxxx'x employment as Consultant to the President of the
Company will commence on February 28, 1997 and terminate according to the terms
of Section 8 of this Agreement.
6. Compensation
The Company will compensate Xxxxxxx X. Xxxxxxxx for his services during
the term of his employment as Consultant to the President under this Agreement
on a salaried basis paid in installments at an annualized rate of $232,000.
Xxxxxxx X. Xxxxxxxx will not participate in any management incentive
compensation program maintained by the Company during the term of his employment
as Consultant to the President under this Agreement.
7. Fringe Benefits
During the term of his employment as Consultant to the President under
this Agreement, the Company will provide Xxxxxxx X. Xxxxxxxx benefits and
emoluments as authorized for all other salaried Grade 19 management employees of
the Company as they may be modified from time to time by the Company, including
at the time of the execution of this Agreement, health and medical insurance,
life insurance, sick leave, vacation, holidays, car allowance, retirement plan
participation and stock purchase plan participation.
8. Termination
Xxxxxxx X. Xxxxxxxx'x employment as Special Consultant to the President
under this Agreement will terminate on the first of any of the following
occurrences:
(a) Xxxxxxx X. Xxxxxxxx'x death;
(b) Xxxxxxx A, Xxxxxxxx'x disability for a period of 90 days or
more unless waived by the Board of Directors;
(c) mutual agreement of the parties reduced to writing signed by
both parties;
(d) voluntary resignation by Xxxxxxx X. Xxxxxxxx;
(e) February 27, 1998, absent renewal of this Agreement by mutual
agree-ment of the parties memorialized in a writing signed by
both parties;
(f) termination by the Company for Cause, i.e., gross negligence,
insub-ordination, or willful misconduct.
9. Compensation After Termination
(a) Xxxxxxx X. Xxxxxxxx will not receive compensation from the Company
after the termination of his employment as Consultant to the President under
this Agree-ment, other than unused vacation, except as described under 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 Xxxxxxx X. Xxxxxxxx'x employment as Consultant to the President
of the Company terminates because of the occurrence of the event described in
paragraph (e) of Section 8 of this Agreement:
(i) For a period of six months beginning with February 28, 1998,
the Company will pay Xxxxxxx X. Xxxxxxxx xxxxxxxxx pay at his
rate of base pay on that date;
(ii) During said six month period, the Company will pay the full
premium cost of medical continuation coverage for Xxxxxxx X.
Xxxxxxxx and/or his dependents for any months in said period
during which Xxxxxxx X. Xxxxxxxx and/or his dependents are
eligible and elect to continue such coverage;
(iii) During said six month period, the Company will provide Xxxxxxx
X. Xxxxxxxx any Company car allowance Xxxxxxx X. Xxxxxxxx was
receiving on February 28, 1998; and
(iv) For purposes of stock option exercise, a termination of
Xxxxxxx X. Xxxxxxxx'x employment pursuant to paragraph (e) of
Section 8 of this Agreement shall be a termination by the
Company.
10. Return of Property
On the date Xxxxxxx X. Xxxxxxxx'x employment as Consultant to the
President terminates pursuant to Section 8 of this Agreement, or at any earlier
point in time when a request is made by the Company for same, Xxxxxxx X.
Xxxxxxxx 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 Xxxxxxx X. Xxxxxxxx'x possession or
under his control, whether prepared by him or others related to the Company or
relating to the business of the Company. Xxxxxxx X. Xxxxxxxx will also return to
the Company at the time his employment terminates, or on an earlier Company
request, any Company keys, parking card, credit card, business cards or other
materials related to this employment with the Company or the operation of the
Company. Xxxxxxx X. Xxxxxxxx will return to the Company any car this Agreement
permits him to use for six months after the termination of his employment with
the Company at the conclusion of said six month period.
11. Confidential Information
Xxxxxxx X. Xxxxxxxx acknowledges his pre-existing and continuing
obligation not to use or disclose, other than as authorized by the Company, any
trade secrets or other confidential information he has acquired through his
association with the Company.
12. Activity Against Company's Interest
For the period of the employment of Xxxxxxx X. Xxxxxxxx as Consultant
to the President of the Company and for a period of two years after the
termination of that employment, Xxxxxxx X. Xxxxxxxx will not engage or otherwise
be involved, either directly or indirectly, in the recruitment of the Company's
employees or take any other action ad-verse to the management of the Company.
Notwithstanding the foregoing, the parties agree that Xxxxxxx X. Xxxxxxxx will
not violate his obligations under this paragraph by voting his shares in the
Company, by voting on matters before the Board of Directors of the Company so
long as he continues to be a Director of the Company; or by engaging in any
non-Company business activity other than those he commits to avoid in this
Agreement.
13. Non Competition
Xxxxxxx X. Xxxxxxxx will not compete with any business activity of the
Company during his employment with the Company and for a period of two years
after the termination of that employment. Competition includes ownership,
management (including serving as an officer or director), operation, control,
employment or consultation of, by or to any business organization or entity
which directly or indirectly offers the same or similar services as those
offered or actively being developed by the Company on the date Xxxxxxx X.
Xxxxxxxx'x employment with the Company terminates. The obligation in this
paragraph shall not be violated by Xxxxxxx X. Xxxxxxxx'x ownership of shares of
stock in a corporation involved in such activities provided such shares are
publicly traded, Xxxxxxx X. Xxxxxxxx owns less than two percent of the total
number of issued and outstanding shares and Xxxxxxx X. Xxxxxxxx is not otherwise
connected with or active in, the business of such corporation. The parties
recognize that the Company's business is carried on by telephone and from time
to time in person in each of the 00 Xxxxxx xx xxx Xxxxxx Xxxxxx xx Xxxxxxx and
therefore that Xxxxxxx X. Xxxxxxxx'x Agreement not to compete must apply in all
such 50 States.
14. Remedies For Breach Of Certain Covenants
The parties acknowledge that because Xxxxxxx X. Xxxxxxxx has been an
officer and director of the Company and as such was and remains conversant with
and had 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 con-fidential and
proprietary information of the Company, his compliance with Sections 10, 11, 12
and 13 of this Agreement is necessary to protect the goodwill and other
proprietary interests of the Company and a breach of said 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. Therefore, the
parties acknowledge that in the event of a breach of Xxxxxxx X. Xxxxxxxx'x
commitments in Sections 10, 11, 12 or 13 of this Agreement, 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 and/or to enforce the specific performance thereof by
Xxxxxxx X. Xxxxxxxx and/or to enjoin Xxxxxxx X. Xxxxxxxx from retaining Company
property, using confidential Company information, competing with the Company or
soliciting or recruiting its employees or otherwise acting against the Company's
interests.
15. Release And Waiver
Xxxxxxx X. Xxxxxxxx, on behalf of himself, his executors,
administrators and assigns, hereby releases the Company, its affiliates, and
their respective directors, officers, agents, employees, benefit plans,
fiduciaries and administrators of such benefit plans and their successors and
assigns (hereinafter "Released Parties") from any and all claims or causes of
action of any kind, other than vested rights under benefit plans or claims to
enforce this Agreement, arising on or before the effective date of this
Agreement, which Xxxxxxx X. Xxxxxxxx has, had or may have against any of them,
whether or not now known, including but not limited to, any claims arising from
Xxxxxxx X. Xxxxxxxx'x employment or officership with the Company, or the
termination thereof, including without limitation any claims under the Age
Discrimination In Employment Act.
16. Covenant Not To Xxx
Xxxxxxx X. Xxxxxxxx on behalf of himself, his heirs, executors,
administrators and assigns, further agrees never directly or indirectly to
commence or prosecute, or to permit or advise to be commenced or prosecuted, any
action, proceeding, or charge against any Released Party, in any state or
federal court, administrative agency or arbitral forum with respect to any
matter other than to enforce this Agreement, whether or not now known, for any
claim whatsoever (including but not limited to, any claim arising from Xxxxxxx
X. Xxxxxxxx'x employment or officership with the Company, or the termination
thereof) based upon any act, transaction, practice, conduct, or omission that
occurred prior to the effective date of this Agreement, which he now has, or
claims to have, or which at any time heretofore had, or which at any time
hereafter may have. This covenant includes but is not limited to, rights under
the Age Discrimination in Employment Act or any other federal, state, or local
laws prohibiting age, race, sex, national origin, religion, or other forms of
discrimination, claims for breach of contract or promissory estoppel or tort,
and claims growing out of any legal restrictions on the Company's right to
terminate its employees or officers.
17. Non Admission
The parties recognize and agree that this Agreement does not and shall
not constitute an admission of liability or wrongdoing by Xxxxxxx X. Xxxxxxxx or
the Company or its present or former affiliates, directors, officers, agents,
employees.
18. No Abridgment of Indemnification
Nothing in this Agreement is intended to limit or abridge any
indemnification the Company would otherwise provide Xxxxxxx X. Xxxxxxxx of and
from any claims based on his actions as an officer or director of the Company.
19. Intent To Be Enforced As Fully As Possible
In the event that any of the terms or provisions of this Agreement
shall violate any statutory provision or may be otherwise unlawful or
inoperative, it is the intent of the parties that this Agreement operate and be
of full force and effect insofar as it does not violate said statutory
provisions or is otherwise lawful and that this Agreement be carried out as far
as possible in a manner consistent with its intent.
20. Litigation Costs
In the event Xxxxxxx X. Xxxxxxxx does not exercise his rights to revoke
this Agreement in accordance with Section 24 and files a claim, lawsuit or
complaint against the Company in any court or governmental agency with respect
to the claims released under this Agreement, Xxxxxxx X. Xxxxxxxx shall be liable
for all costs and expenses including legal fees, incurred by any Released Party
in defense of that action.
21. Voluntariness
Xxxxxxx X. Xxxxxxxx represents that he has carefully read and
completely understands this Agreement and that he has entered into this
Agreement voluntarily after having had an opportunity to consult with his legal
advisors, which he has been encouraged to do in writing by the Company.
(Attachment A)
22. Time To Review
Xxxxxxx X. Xxxxxxxx acknowledges that he has been advised he has 21
days to review the waivers and releases contained in this Agreement if he so
chooses.
23. Adequacy Of Consideration
Xxxxxxx X. Xxxxxxxx acknowledges that the commitments, waivers and
releases he gives in this Agreement are in exchange for valuable consideration
to which he is not otherwise entitled.
24. Revocation Option
Xxxxxxx X. Xxxxxxxx shall have seven (7) days after the execution of
this Agreement to revoke the waivers and releases in this Agreement and the
Agreement shall not be effective unless and until those seven (7) days have
lapsed without Xxxxxxx X. Xxxxxxxx so revoking.
25. Entire Agreement
This Agreement constitutes the entire Agreement of the parties on the
subject matter hereof and supersedes any and all prior agreements,
understandings or commit-ments, oral or written, including without limitation,
the Executive Severance Agreement between the Company and Xxxxxxx X. Xxxxxxxx
dated March 9, 1989.
26. Governing Law
This Agreement shall be governed by the laws of the State of
Connecticut.
XXXXXXX X. XXXXXXXX
2/27/97 /s/Xxxxxxx X. Xxxxxxxx
-------------------------- -------------------------------------
Dated Signature
DIANON SYSTEMS, INC.
2/27/97 /s/Xxxxx X. Xxxxxxx
-------------------------- -------------------------------------
Dated Signature
/29203
Attachment A
Xx. Xxxxxxx X. Xxxxxxxx
Dear Xxxxxxx:
The law requires us to inform you in writing that you should consult a lawyer
before executing the Agreement we have proposed to become effective between you
and the Company on February 27, 1997, because it includes releases and waivers
of potential rights.
Sincerely,
/s/Xxxxx X. Xxxxxxx
Xxxxx Xxxxxxx
