EXHIBIT 10.5
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 Beth Phillips ("Phillips").
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., A. Bruce Shapiro and Ralph M. Richart, M.D.
(the "Asset Purchase Agreement"); and
WHEREAS, DIANON desires to employ Phillips for a period commencing as of
the Closing Date ("Closing Date") of the Asset Purchase Agreement and ending two
years from that date and Phillips desires to work for DIANON for such period on
the terms and conditions hereinafter provided; and
WHEREAS, Phillips'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 Phillips should disclose
any of the confidential information which Phillips 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, Phillips and DIANON agree as follows:
1. EMPLOYMENT. DIANON hereby employs Phillips on a full-time basis to
serve as Operations Manager of the New City facility to perform such services
and such tasks and assignments that are reasonably assigned to her by the
general manager of the business acquired by DIANON consistent with her
knowledge, experience and position, which services shall include, but not
necessarily be limited to, initially aiding in the conversion and implementation
of the Kyto Meridien business to the administrative, financial and laboratory
systems and operations of DIANON and, over time, assuming duties for the
management and coordination of non-technical areas of laboratory operations and
client service.
During her employment, Phillips shall at all times conduct herself and
perform her services in a proficient and professional manner, in accordance with
the applicable standards of care and the highest standards of business
ethics.
2. COMPENSATION. As full consideration for the services rendered by
Phillips pursuant to this Agreement, together with Phillips'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 Phillips as follows:
(a) DIANON shall pay Phillips an annualized salary of ninety-three
thousand seven hundred ($93,700) dollars, payable in twenty-six equal biweekly
(once every two weeks) increments of three thousand six hundred three dollars
and eighty-five cents ($3,603.85);
(b) DIANON shall reimburse the reasonable business expenses of
Phillips 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) Phillips 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;
(d) Upon termination of employment, Phillips 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 Phillips'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, Phillips
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 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
Phillips 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
Phillips shall not have any right, title or interest in any such materials. Upon
termination of her employment, Phillips 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
Phillips; (ii) publicly disclosed by DIANON or otherwise in the public domain
without violation of this Agreement by Phillips; or (iii) rightfully received by
Phillips from a third party, which, by disclosing to Phillips, does not breach
any obligation or duty to DIANON. Notwithstanding this Section 4, Phillips may
make such disclosures of confidential information as are duly compelled by court
order or as required by law.
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5. RESTRICTIVE COVENANT. In consideration of this Agreement, for a
period of two years from and after the Closing Date and for any renewal period
or extension of the term hereof, and notwithstanding any earlier termination of
this Agreement, except upon the express written consent of DIANON (which consent
may be unreasonably withheld), Phillips 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; provided however, that Phillips may purchase
or own, solely as an inactive investor, the securities of any entity that are
publicly traded on a national securities exchange where Phillips'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 two-year period and
for any renewal period or extension of the term hereof, Phillips 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. Phillips shall not take any action intended, or which may reasonably be
expected, directly or indirectly, to impair the goodwill, reputation or good
name of DIANON or Kyto Meridien, or 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.
6. SCOPE OF RESTRICTIONS. Phillips 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 Phillips consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce such
restriction.
7. INJUNCTIVE RELIEF. Phillips 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 n 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, Phillips 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.
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8. INTELLECTUAL PROPERTY RIGHTS. Phillips 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.
Phillips shall disclose promptly to DIANON, 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.
9. TERMINATION. (a) Phillips's employment under this Agreement
shall terminate on the occurrence of any of the following events:
(i) Upon the death of Phillips;
(ii) 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:
(A) Phillips's breach of any material promise or agreement set
forth herein or failure to perform (other than for reasons
beyond her control) substantially all of the duties reasonably
required by Section 1; or
(B) Phillips's commission of an act of gross negligence or
willful misconduct, or acts showing a pattern of negligence,
in the performance of her duties or obligations hereunder;
Provided that no such termination under this subsection 9(b) shall be effective
unless Phillips 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 Phillips;
(iii) Upon the occurrence of an event or the commission of an act
under which Phillips 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; and
(iv) Upon the passage of thirty (30)days after written notice of
termination without cause from DIANON to Phillips.
(b) In the event of a termination of this Agreement pursuant to
subsection 9(a)(iv) above, DIANON shall continue to pay the compensation
required by subsection 2(a) above until the second anniversary of the Closing
Date of the Asset Purchase Agreement.
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(c) Section 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. Without limitation, no termination or expiration of this
Agreement shall relieve Phillips of her obligations to DIANON with respect to
the restrictive covenant in Section 5 and the preservation of confidential
information under Section 4. Should Phillips 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, at law or in equity, immediately
terminate any further post-termination payments to Phillips hereunder that
otherwise may have been required.
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 Phillips: Beth Phillips
3 South Grant Ave.
Congers, New York 10920
If to DIANON: DIANON Systems, Inc.
200 Watson Boulevard
Stratford, Connecticut 06497
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/ Beth Phillips
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Beth Phillips
DIANON SYSTEMS, INC.
/s/ Kevin C. Johnson
--------------------
By: Kevin C. Johnson
Its: President & CEO
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