Document:

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                                                                     EXHIBIT 4.1

                       THIS DOCUMENT CONSTITUTES PART OF A
                  PROSPECTUS COVERING SECURITIES THAT HAVE BEEN
                   REGISTERED UNDER THE SECURITIES ACT OF 1933

                            KEY ENERGY SERVICES, INC.

                      ------------------------------------

              Key Energy Services 401(k) Savings & Retirement Plan

                      -------------------------------------

                             INFORMATION MEMORANDUM

                                  INTRODUCTION

         This Information Memorandum is provided by Key Energy Services, Inc., a
Maryland corporation (the "Company"), to all persons who participate in the Key
Energy Services 401(k) Savings and Retirement Plan (the "Plan"). The following
is a summary of the Plan. Reference is made to the complete text of the Plan,
and the following summary is qualified in its entirety by such reference.

                                PLAN DESCRIPTION

                      ------------------------------------

          The date of this Information Memorandum is March 14, 2001

                                        1

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GENERAL

         The Company is offering eligible employees the opportunity to
contribute and invest, through payroll deductions, a portion of their pre-tax
earnings in various investment options maintained by the Plan. One of the
investment options in the Plan will be the Company's common stock, par value
$0.10 per share (the "Common Stock"). Up to 400,000 shares of Common Stock may
be offered pursuant to the Plan. The Company's principal offices are located at
Two Tower Center, Twentieth Floor, East Brunswick, New Jersey 08816, telephone
(732) 247-4822. If you require additional information about the Plan and its
administrator or would like to request a copy of the Plan, you may contact the
Company at 6 Desta Drive, Suite 5900, Midland, Texas 79705, phone number (915)
498-0300. The principal terms of the Plan are described below.

         The Plan is intended to help employees create a financial plan and save
for retirement by providing a vehicle where participants can save and invest on
a regular basis for themselves and their beneficiaries. The Plan is established
and maintained for the exclusive benefit of eligible employees of the Company
and their beneficiaries.

         Any related business organization which is a member of the same
controlled group of corporations or other entities (as defined in Section 414(b)
and (c) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code" or the "Code")) or which is part of an affiliated service group (within
the meaning of Section 414(m) of the Code) with the Company may adopt the Plan
with the approval of the Board of Directors of Company. To date, the Plan has
been adopted by the following wholly-owned subsidiaries of the Company:

<TABLE>

         <S>                                      <C>
         Yale E. Key, Inc.                        Odessa Exploration, Inc.
         Key Energy Services-California, Inc.     Key Energy Services-South Texas, Inc.
         Key Four Corners, Inc.                   Key Rocky Mountain, Inc.
         Key Energy Drilling, Inc.                WellTech Eastern, Inc.

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         Well-Co Oil Service, Inc.                Updike Brothers, Inc.
         Rowland Trucking Company                 J.W. Gibson Well Service Company
         Dunbar Well Service, Inc.                Watson Oilfield Service & Supply, Inc.
         Frontier Well Service, Inc.              Brooks Well Servicing, Inc.
         WellTech Mid-Continent, Inc.             Jeter Well Service, Inc.
         Jeter Service Co.                        Landmark Fishing & Rental, Inc.
         Industrial Oilfield Supply, Inc.         Patrick Well Service, Inc.
         Ram Oil Well Service, Inc.

</TABLE>

The Company and each subsidiary which participates in the Plan are hereinafter
sometimes collectively referred to as the "Employers" and individually referred
to as an "Employer". In the future additional subsidiaries of the Company may
adopt the Plan.

         The Plan will continue in existence until terminated by the Board of
Directors of the Company. See "Amendment or Termination and Withdrawal".

         The Employee Retirement Income Security Act of 1974, as amended
("ERISA") covers most employee pension benefit plans and provides certain
minimum standards relating to, among other things, participation, vesting of
benefits, funding, fiduciary responsibility and reporting to the participants
and beneficiaries under the Plan. The Plan is subject to Titles I, II and III of
ERISA which contain the rules with respect to the above-mentioned areas.
Amendments to the Plan may be made in the future to achieve and maintain
compliance with ERISA law and regulations. The Plan is not subject to the
provisions of Title IV of ERISA, which concerns plan termination insurance, and
the protective provisions of Title IV thus do not extend to Participants and
Beneficiaries under the Plan.

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         The Company will seek a determination letter from the Internal Revenue
Service evidencing its determination that the Plan, as amended and restated,
continues to be a qualified plan under Sections 401(a) and 401(k) of the Code,
and its related trust is exempt from taxes under Section 501(a) of the Code. The
Company anticipates taking such actions that it deems reasonably necessary
(including amendment of the Plan, if required) to ensure issuance of a favorable
determination by the Internal Revenue Service to the effect that the Plan and
its trust are qualified and exempt under the above sections of the Code.

ELIGIBILITY AND PARTICIPATION

         Eligible employees of all Employers are entitled to participate in the
Plan. Eligible employees generally include all employees of an Employer except
the following:

         -        nonresident aliens; and

         -        employees whose employment is subject to the terms of a
                  collective bargaining agreement unless the collective
                  bargaining agreement specifically provides for participation
                  in the Plan. Leased employees, as defined in Section 414(n) of
                  the Code, are generally ineligible to participate in the Plan.

         With certain exceptions, an eligible employee of an Employer is
entitled to participate in the Plan (to become a "Participant") commencing on
the first day of each quarter in a Plan Year if the employee is at least 18
years of age and has completed 90 days of Eligibility Service (as defined in the
Plan). If a person is transferred directly from employment with an Employer, or
with a Related Company in a capacity other than as an eligible employee, to
employment as an eligible employee, he or she shall become a Participant as of
the transfer date if on or prior to the most recent Enrollment Date (as defined
in the Plan) such employee has met the eligibility requirements of the Plan.

                                        4

<PAGE>

ADMINISTRATION OF THE PLAN

PLAN ADMINISTRATOR

         The Company is the plan administrator and is responsible for the
day-to-day administration and operation of the Plan. The Company has the
authority to allocate any of the powers, authority or responsibilities for the
operation and administration of the Plan among "named fiduciaries" (as defined
in ERISA), such as a plan committee, provided that such named fiduciaries accept
such powers, authority or responsibilities in writing. The Company, as the plan
administrator, has broad powers regarding the supervision and administration of
the Plan in accordance with its terms and provisions. These powers generally
include the power to:

         -        establish rules for the administration of the Plan;

         -        interpret the Plan;

         -        employ advisors;

         -        direct and instruct, or appoint investment managers who may
                  direct and instruct, the trustee with respect to certain
                  investments;

         -        determine all questions relating to eligibility and the right
                  of any person to benefits under the Plan, and

         -        determine the amount, manner and time of payment of benefits.

         The Company reserves the right to delegate such authority and
responsibilities among named fiduciaries or to any person or persons other than
a named fiduciary.

                                        5

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CLAIMS FOR BENEFITS

         The Company, as the plan administrator, has established claims
procedures consistent with the regulations of the Department of Labor for the
presentment of claims by participants and beneficiaries. Information regarding
the rights to claim benefits under the claim procedures established by the plan
administrator, and the name of the person or persons with whom such claims
should be filed, are available from the Company. Whenever a claim for benefits
is denied, in whole or in part, the plan administrator will transmit a written
notice of such decision to the claimant within 90 days of the date the claim was
filed, or if special circumstances require an extension, within 180 days of such
date.

CLAIMS REVIEW PROCEDURE

         If a claim for benefits is denied, in whole or in part, the claimant
has the right within 60 days after receipt of the notice of the claim denial to
request that the plan administrator review his entitlement to the benefit that
was requested. The plan administrator will consider the claim for the benefit
within 60 days after receipt of a request for review, unless special
circumstances require a longer period of time, in which case a written decision
will be rendered as soon as possible and not later than 120 days after receipt
of the request for review. The decision on review will be written in a manner
calculated to be understood by the claimant and will specify the reasons and
Plan provisions upon which the denial was based.

TRUSTEE

         CG Trust Company serves as trustee (the "Trustee") of the Plan pursuant
to a Trust Agreement (the "Trust Agreement") executed by the Trustee and the
Company. The Trustee may resign, or be replaced by the Company, upon at least 30
days advance notice. The Common Stock purchased or acquired by the Plan will be
an asset of the trust which will be held by National

                                        6

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Financial Services Corporation, a Fidelity Investment Company (the "Custodian"),
pursuant to the terms and conditions of a Master Custody Agreement between the
Trustee and the Custodian.

TRUST

         The Trustee has no responsibility or authority with regard to the
management or disposition of Plan assets. Such responsibility and authority
rests entirely with the Participants or the Plan Administrator to the extent
each directs investments of Plan assets. Except as otherwise provided by ERISA,
each Participant assumes all investment risks associated with the investments
held for his account by the Trustee.

CONTRIBUTIONS

         TAX-DEFERRED CONTRIBUTIONS. Each Participant may elect to reduce his or
her compensation each pay period by an amount which is between 1% and 15% of the
employee's gross compensation and to have the Employer contribute that amount to
the Plan for such Participant as a "Tax-Deferred Contribution." A Participant
may change the amount of his or her Tax-Deferred Contributions by filing a new
election in such manner and within the time frame prescribed by the Plan
Administrator. A Participant may withdraw authorization for the Employer to
withhold amounts from his or her future compensation, and suspend Tax-Deferred
Contributions at any time, by giving such advance notice as prescribed by the
plan administrator. The suspension will take effect for compensation paid to the
Participant after the expiration of the required notice period. Tax-Deferred
Contributions will be allocated to the Participant's Tax-Deferred Contribution
Sub-Account and will be 100% vested at all times.

         MATCHING COMPANY CONTRIBUTIONS. The Company may make a matching
contribution to the Plan in an amount equal to a percentage, as determined by
the Company in its discretion, of the eligible Tax-Deferred Contributions made
on behalf of Participants who are eligible to participate in the allocation of
matching contributions for each contribution period. Eligible Tax-Deferred

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Contributions means Tax-Deferred Contributions which do not exceed 3% of a
Participant's compensation. Matching contributions will be allocated to the
Participant's Matching Contribution Sub-Account and will be subject to the
vesting schedule set forth in the "Termination of Employment" section below.

         QUALIFIED MATCHING CONTRIBUTIONS. An Employer may designate all or any
portion of its matching contribution as a Qualified Matching Contribution.
Amounts that are designated as Qualified Matching Contributions will be
allocable to a Participant's Employer Contribution Account, but shall be
accounted for separately and may be withdrawn only as permitted under the Plan.
A Participant's vested interest in his or her Employer Contributions Account
which is the result of Qualified Matching Contributions shall at all times be
100%. Qualified Matching Contributions may be applied to satisfy either the
average deferral percentage or the average contribution percentage tests.

         QUALIFIED NON-ELECTIVE CONTRIBUTIONS. The Employer may contribute to
the Trust a "Qualified Non-Elective Contribution" ("QNEC") in such amount as is
determined in its discretion. A QNEC will only be made on behalf of Participants
who are not "highly compensated employees," as defined in the Plan and Section
414(q) of the Code. QNECs will be allocated to the Participant's Employer
Contributions Account and will be accounted for separately. The portion of a
Participant's Employer Contributions Account which is the result of QNEC shall
at all times be 100% vested and may be withdrawn only as provided in the Plan.

         PROFIT SHARING CONTRIBUTIONS. The Company, in its discretion, may make
a Profit Sharing Contribution to the Plan on behalf of eligible Participants who
complete 1,000 Hours of Service during the plan year and who are employed on the
last day of the plan year. A Participant who terminates employment during the
plan year is also eligible to receive an allocation of any Profit Sharing
Contribution if his or her termination was due to retirement at normal
retirement age (age 65). The Participant shall also receive an allocation if his
or her termination during the plan year is due to death or physical or mental
disability such that he or she can no longer continue in the service

                                        8

<PAGE>

of the Employer. Profit Sharing Contributions will be allocated to each
Participant's Employer Contributions Account and will be subject to the vesting
schedule set forth in the "Termination of Employment" section below.

         LIMITATIONS ON CONTRIBUTIONS. With respect to any taxable year of any
Participant, a Participant's Tax-Deferred Contributions under the Plan, together
with any deferrals pursuant to any salary reduction agreement under any other
qualified retirement plan, simplified pension plan or tax sheltered annuity
which facilitates deferral of otherwise taxable income for federal income tax
purposes, may not exceed the Code Section 402(g) limit, as adjusted by the
Secretary of the Treasury ($10,500 for plan years beginning on or after January
1, 2000). Participants who make Tax-Deferred Contributions in excess of such
amount must notify the plan administrator of such excess deferral by March 1 of
the year following the year in which the excess deferral was made.

         No contributions may be made by the Employer to the Plan in violation
of the nondiscrimination rules under the Plan and Sections 401(k) and 401(m) of
the Code, which limit the amount the Employer may contribute to the Plan on
behalf of "highly compensated employees". In the event any such excess
contributions are made, they must be refunded unless the Employer elects to make
a QNEC or a Qualified Matching Contribution in an amount sufficient to satisfy
the nondiscrimination tests.

         The total amount of contributions allocated to a Participant's account
during any plan year cannot exceed the lesser of (i) 25% of his compensation (as
defined in the Plan and Section 415 of the Code) for such year or (ii) $30,000.
This limitation applies with respect to the total contributions allocated under
this Plan and any other qualified defined contribution plan maintained by the
Employer.

         It is contemplated that all contributions (except rollover
contributions) to the Plan will be deductible by the Employer under applicable
provisions of the Code. Accordingly, no contribution to the Plan by the
Employer shall exceed a sum equal to 15% of the total compensation

                                        9

<PAGE>

paid or accrued to all Participants during a taxable year of the Employer
ending with or within a plan year.

         ROLLOVER CONTRIBUTIONS. Rollover contributions to the Plan of amounts
distributed from another qualified retirement plan are permitted. A Rollover
Contribution Account will share in the income or losses and/or depreciation of
the trust fund, but will have no effect on any limitation under the Plan based
on contributions. A Participant may have to furnish proof satisfactory to the
plan administrator that the funds are eligible to be rolled over into the Plan.

         Once accepted, the rollover contribution will become subject to all the
terms and conditions of the Plan and will be distributable to the Participant
under the terms of the Plan. The Participant is always 100% vested in the value
of the rollover contributions (including any investment gains or losses)
credited to his or her account and may withdraw such amounts at any time.

TOP-HEAVY PLAN PROVISIONS

         If the Plan becomes "top-heavy" for any plan year, certain provisions
of the Plan supersede and override any conflicting provisions of the Plan.
Generally, the Plan is top-heavy if more than 60% of the sum of account balances
of all Employees is credited to the accounts of Participants who are considered
to be "key employees" under the Code. The top-heavy provisions include
accelerated vesting, minimum Employer contributions and other conditions for the
benefit of non-key employees.

                                       10

<PAGE>

THE TRUST FUND

         The Company has entered into a trust agreement (the "Trust
Agreement"), and established a trust fund (the "Trust Fund") with the Trustee.
The Trustee is entitled to receive such compensation as may be agreed upon from
time to time by the Trustee and the Company.

         The Trust Fund will be invested for the benefit of the Participants,
subject to the provisions of the Plan and the Trust Agreement. Each Participant
will be entitled to direct the investment of his or her account in certain
commingled mutual funds and in Common Stock. The Plan is intended to qualify as
a self-directed, individual account plan under Section 404(c) of ERISA. Except
to the extent expressly provided by ERISA, each person who claims the right to
any payment under the Plan will be entitled to look only to the Trust Fund for
such payment.

VALUATION OF FUNDS; REPORTS

         The Trustee shall determine the fair market value, and the
appreciation or depreciation and net income or loss, of each investment fund in
which the Participant's account balance is invested. The income or loss and
appreciation or depreciation of each such investment fund shall be allocated to
the Participant's account. Each Participant will be furnished a quarterly
statement of his or her account.

INVESTMENTS OF THE TRUST FUND

         In accordance with rules prescribed by the plan administrator, each
Participant will be entitled to direct the investment of amounts allocated to
his or her account in Common Stock or in certain commingled mutual funds as
made available for investments under the Plan from time to time. Participants
will receive information regarding investment alternatives, as well as the
manner in which investment elections are to be made or changed. Except as
provided below, a Participant may change his or her investment elections daily
provided that all prior investment

                                       11
<PAGE>

election changes have settled. Each investment option has a different
investment objective; consequently, the risk of loss and potential for gain is
greater in some funds than in others. The Trustee has advised the Company that
the following is representative of investment fund performance through November
30, 2000 for each investment option available under the Plan.

<TABLE>
<CAPTION>
                                                                 AVERAGE ANNUALIZED RETURNS
                                                            -----------------------------------
                                                               1 YR.       3 YR.        5 YR.
                                                            ----------- ----------- -----------
<S>                                                         <C>         <C>         <C>

GUARANTEED INCOME FUNDS
     CIGNA Charter Guaranteed Income Fund                       5.40%       N/A          N/A

FIXED INCOME FUNDS
     STATE STREET Intermediate Bond Account                     7.60%       5.57%        N/A

BALANCED FUNDS
     CIGNA Charter Balanced Fund - Invesco                     (5.26)%      N/A          N/A
     DREYFUS Founders Balanced Account                        (10.63)%       .17%        7.16%

EQUITY FUNDS
     CIGNA Charter Large Company Stock Index Fund              (4.50)%     12.41%       18.31%
     CIGNA Charter Large Company Stock Growth Fund             (9.93)%      N/A          N/A
         - Putnam
      CIGNA Charter Large Company Stock Growth II Fund         (2.12)%      N/A          N/A
         - Morgan
     CIGNA Charter Large Company Stock Value I Fund            12.46%       N/A          N/A
         - Levin
     FIDELITY Growth Opportunities Account                    (17.01)%      2.35%       10.15%
     JANUS Advisor Growth Account                              (4.17)%     19.35%        N/A
     NEUBERGER & BERMAN Partners Fund                          (1.78)%      2.84%       12.55%
     AIM Constellation Fund                                     1.56%      13.77%       13.69%
     INVESCO Dynamics Account                                    .39%      23.65%       21.85%
     WARBURG-PINCUS Emerging Growth Fund                       (4.62)%      7.44%       10.90%
     CIGNA Charter Small Company Stock Growth Fund -           17.53%       N/A          N/A
          Times Square
     CIGNA Charter Small Company Stock Value I Fund -          21.47%       N/A          N/A
         Berger
     FIDELITY Advisor Value Strategies Fund                    10.99%       7.62%       10.64%
     INVESCO Small Company Growth Account                      (1.26)%     19.51%       18.75%
     KEY ENERGY Stock Fund                                     45.00%     (33.91)%       5.68%
     LAZARD Small Cap Portfolio Fund                            9.92%      (1.35)%       N/A

                                              12
<PAGE>

                                                                 AVERAGE ANNUALIZED RETURNS
                                                            -----------------------------------
                                                               1 YR.       3 YR.        5 YR.
                                                            ----------- ----------- -----------
INTERNATIONAL EQUITY FUNDS
    JANUS Worldwide Fund                                       (3.34)%     20.69%       22.50%
    TEMPLETON Foreign Fund                                     (1.27)%      6.43%        9.02%

</TABLE>

         Matching contributions made to the Plan beginning on or after April 1,
2000 will be invested in Common Stock. Effective April 1, 2000, a Participant
who is 100% vested in his Employer Contributions Account may elect to transfer
the matching contributions which are automatically invested in Common Stock to
another investment fund at any time after the matching contribution has been
allocated to his Matching Contributions Sub-Account.

         Purchases and sales of Common Stock by the Trustee on behalf of the
Plan will be made on the open market through a licensed stock broker. It is
intended that purchases of Common Stock will be made on the business day
immediately following the date on which the Trustee receives from the Plan
Administrator all information and wire transfer of funds (if applicable) and
documentation necessary to accurately effect such transactions at prevailing
market prices. After shares of Common Stock are purchased by the Trustee, such
Common Stock will be allocated pro rata among the plan accounts of affected
Participants in the same ratio that the dollar amount of contributions to be
invested in Common Stock for each affected Participant bears to the dollar
amount of contributions to be invested in Common Stock for all affected
Participants. It is intended that sales of Common Stock will be made through a
licensed stock broker on the business day immediately following the date that
the Trustee receives instructions from the Participant to transfer such
Participant's account to another investment option or to distribute the
Participant's account.

VOTING OF SECURITIES

         The Trustee will exercise the voting rights, in its sole discretion,
of all stock held in all funds other than Common Stock. The plan administrator
may give the Trustee written instructions

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with respect to voting the Common Stock held by the Plan. Absent instruction
with respect to voting the Common Stock, the Trustee will not vote such shares.

         The expenses of administration of the Plan shall be paid from the
Trust to the extent permissible under ERISA, unless the Company elects to make
any such payment directly.

DISTRIBUTIONS AND WITHDRAWALS

         Participants can only receive distributions or withdrawals from vested
account balances. Distributions or withdrawals of vested account balances will
be made to Participants (or their beneficiaries, as applicable) only upon
retirement, death, total and permanent disability, or other severance of
employment with the Employer, or in the event of the financial hardship of the
Participant or the termination of the Plan.

         DEATH. On the death of a Participant, the death benefit will be 100%
of the amount credited to the Participant's account. If a Participant dies
prior to the date that distribution of his or her account balance begins, the
Participant's beneficiary will receive distribution of the Participant's vested
interest in his or her account in the form provided under the terms of the
Plan. This distribution will begin as soon as reasonably practicable following
the date the beneficiary's application for distribution is filed with the plan
administrator. The Participant's death benefit will be paid to such
Participant's surviving spouse, or, if there is no surviving spouse or the
surviving spouse consents in writing, to such Participant's designated
beneficiary (other than such spouse). At any time each Participant will have
the right to designate any primary beneficiary to receive the death benefit and
the right to revoke any such designation; provided, however, that any primary
beneficiary designation (other than the Participant's spouse) by a Participant
who is lawfully married will require a new spousal consent. If no such
beneficiary designation is on file with the plan administrator at the time of
the Participant's death, or if the plan administrator at such time

                                      14
<PAGE>

determines that such designation is ineffective, such Participant's spouse, if
then living, or if not, then the executor or other personal representative of
the Participant's estate, will be deemed the designated beneficiary.

         Whenever the Trustee is authorized to pay funds to a minor or an
incompetent, the Trustee is authorized to pay such funds to a parent or
guardian of such minor or incompetent, or to apply such funds for the benefit
of such minor or incompetent in such manner as the Plan Administrator may
direct.

         RETIREMENT. Upon the retirement of a Participant at or after age 65,
the Participant's retirement benefit will be 100% of the amount credited to his
or her account.

         TERMINATION OF EMPLOYMENT. Upon a Participant's termination from
employment with an Employer for any reason other than death, retirement or
total and permanent disability, the distributable benefit will be an amount
equal to the vested interest in his or her account.

         The vested percentage is based upon the vesting table set forth below:

<TABLE>
<CAPTION>

                    NUMBER OF YEARS                    VESTING
    OF ACTIVE SERVICE AS OF THE DATE OF TERMINATION  PERCENTAGE
    -----------------------------------------------  ----------
    <S>                                              <C>
    Less than one year.............................      0%
    One year, but less than two years..............     25%
    Two years, but less than three years...........     50%
    Three years, but less than four years..........     75%
    Four years or more.............................    100%

</TABLE>

         The amount credited to a Participant's account which is not vested upon
termination of employment will be forfeited on the earlier to occur of:

         -        distribution of the vested portion of the Participant's
                  account; or

                                      15
<PAGE>

         -        the date the Participant incurs five consecutive
                  Breaks-in-Service (as defined by the Plan).

If a Participant forfeits a portion of his or her account, the forfeited amount
will be used first to pay plan expenses for the plan year and then to reduce the
amount of Employer contributions for the plan Year in which the forfeiture
occurs or in the subsequent plan year. If a former Participant returns to the
employment of an Employer after forfeiting the non-vested portion of his or her
account, the amount forfeited will be recredited to such Participant's account
if:

         -        he or she is reemployed by any Employer before the date on
                  which he or she incurs five consecutive Breaks-in-Service
                  beginning after the later of (a) the date his or her
                  employment terminated or (b) the date the vested portion of
                  such Participant's account was distributed; and

         -        the Participant repays the amount previously distributed, if
                  any, before the earlier of (a) the five year period ending on
                  the date of reemployment or (b) the date he or she incurs five
                  consecutive Breaks-in-Service after the date of distribution.
                  All Participants are always 100% vested in their Tax-Deferred
                  Contributions Sub-Account, Qualified Matching Contributions
                  Sub-Account and Qualified Nonelective Contribution
                  Sub-Account.

         FULL VESTING UPON TOTAL OR PARTIAL TERMINATION OF PLAN. In the event
there is a total or partial termination of the Plan, or complete discontinuance
of the Employer's contributions thereto, the vesting schedule will become
inapplicable and each affected Participant will become 100% vested in his or
her account.

         FORM, METHOD AND TIMING OF DISTRIBUTIONS. Unless the Participant, or
beneficiary if the Participant has died, elects an optional form of payment,
distribution will be made in the form of a single premium, nontransferable
annuity contract for such term and in such form as the Participant,

                                      16
<PAGE>

or if applicable the beneficiary, may select. The normal form of annuity for a
married Participant is a 50% joint and survivor annuity and the normal form of
annuity for an unmarried Participant is a single life annuity. If the
Participant waives the normal form of benefit, the Participant may elect to
receive distribution of his of her account in the form of (i) a single, lump
sum payment or (ii) installment payments over a period not exceeding the life
expectancy of the Participant or the joint and last survivor life expectancy of
the Participant and a designated beneficiary. The election to waive the normal
form of annuity payment may require spousal consent. A Participant must consent
to a distribution if his distributable account balance exceeds $5,000. If the
distributable balance in the Participant's account does not exceed $5,000, the
plan administrator may direct the Trustee to distribute the Participant's
account in the form of a lump sum payment without the consent of the
Participant, or if applicable, the consent of the Participant's spouse.

         In the event that a Participant dies prior to distribution of his or
her account balance, such Participant's entire vested interest shall be
distributed to his or her surviving spouse or other designated beneficiary.
Unless distribution is to be made over the life or over a period certain not
greater than the life expectancy of the Beneficiary, distribution of the
Participant's entire vested interest will be made to the Beneficiary no later
than the end of the fifth calender year beginning after the Participant's
death. If distribution is made over the life or over a period certain,
distribution will begin no later than the end of the first calender year
beginning after the Participant's death if the Beneficiary is not the
Participant's surviving spouse. If distribution is to be made to the
Participant's surviving spouse, the surviving spouse may elect to postpone
receipt of the distribution until the later of (i) the end of the calendar year
beginning after the Participant's death or (ii) the end of the calendar year in
which the Participant would have attained age 70-1/2.

         IMMEDIATE AND HEAVY FINANCIAL HARDSHIP. Upon proof satisfactory to the
plan administrator (i) that a Participant is suffering an immediate and heavy
financial hardship (as defined in the Plan), and (ii) the amount required to be
withdrawn in order to alleviate the hardship, and (iii) that such amount is not
reasonably available from other sources, the Participant will be entitled to
withdraw from his or her Tax-Deferred Contributions Sub-Account an amount equal
to the lesser

                                      17
<PAGE>

of (a) the amount needed to alleviate the hardship or (b) the portion of such
account that is attributable to Tax-Deferred Contributions (net of earnings
thereon). Prior to receipt of a hardship distribution, the Participant must
have obtained all distributions, other than hardship distributions, and all
non-taxable loans currently available under all plans maintained by the
Employer or any Related Company (as defined by the plan). The Participant's
Tax-Deferred Contributions to this Plan and the Participant's elective
tax-deferred contributions under all other tax-qualified plans will be
suspended for a period of twelve months after receipt of a hardship
distribution. In addition, after the end of the twelve-month suspension period,
the maximum amount which may be contributed as a Tax-Deferred Contribution to
the Plan by a Participant who has received a hardship distribution may be
limited as provided in the Code.

         OTHER IN-SERVICE WITHDRAWALS. A Participant may elect to withdraw the
total amounts credited to his or her After-Tax Contributions Sub-Account (if
any was transferred from a predecessor plan) or his Rollover Account, subject
to the overall conditions and limitations on withdrawals as set forth in the
Plan. In addition, upon the attainment of age 59-1/2, a Participant may elect
to withdraw the total vested amounts credited to his or her account. Any
withdrawal pursuant to this paragraph may require spousal consent.

LOANS TO PARTICIPANTS

         A Participant may apply for a loan from the vested portion of his or
her account while still employed by an Employer. The Plan Administrator will
provide the Participant with a copy of the rules governing loans. Any loan made
to a Participant will be treated as a separate investment of the assets held in
his or her account.

         Specific Code rules govern loans from tax-qualified plans such as the
Plan. Any loan must meet the minimum requirements set forth in the Code and
applicable regulations. In addition, any loan must meet the requirements set
forth in the loan guidelines provided by the plan administrator.

                                      18
<PAGE>

         The interest rate charged on a loan must be a reasonable rate similar
to the rate charged for a loan made under similar circumstances by persons in
the business of lending money. The amount of any loan, when added to the
outstanding balance of all other loans made to the Participant from any other
plan maintained by the Employer, may not exceed specified limits. The term of
any loan may not exceed five years, unless it is used to purchase the
Participant's principal residence in which case the repayment period may be up
to 10 years. Any loan must be repaid in substantially equal installments
through payroll deductions over the term of the loan.

         A loan will be treated as a directed investment of the Participant's
account and will be secured by his or her vested account balance. If a loan is
still outstanding at the time of distribution of the Participant's account, the
amount distributed to the Participant will be reduced by the amount of the
vested Participant account that is held as collateral for the loan, but only to
the extent necessary to fully repay the loan including accrued interest.

         No Participant will receive a loan unless the Participant agrees that
his or her Account may be charged for unpaid principal and interest in the
event of a default on the loan. A loan may be declared by the Plan
Administrator to be in default if (i) the Participant fails to make required
payments on the loan by the end of the calendar quarter beginning after the due
date or there is an outstanding balance on the last scheduled repayment date,
(ii) an event occurs which requires distribution of the Participant's account
and the Participant's distributable balance in his or her account is less than
$5,000 or, if the distributable balance in the Participant's account is greater
than $5,000, the Participant requests a distribution of all or a portion of his
account, or (iii) the Plan Administrator believes, in good faith, that the
prospect of repayment of the loan is impaired. If a loan is declared to be in
default, the entire unpaid balance of the loan, together with accrued interest,
is immediately due and payable. If the loan balance with accrued interest is
not then paid within five (5) days, the loan balance will be deemed to be a
distribution for income tax purposes and the Participant's account will be
charged with such amount at the earliest date that distribution may be made to
the Participant without affecting the tax qualification of the Plan. A
Participant may not

                                      19
<PAGE>

have more than one loan outstanding under the Plan. A Participant may not apply
for a second loan until any existing loan is repaid in full.

EXPENSES

         Generally, the expenses of administering the Plan are paid from Plan
assets, unless the Employer elects to make the payment directly. In addition, a
Participant's account may be charged for the cost of an administrative expense
that is attributable directly to such account, unless the Employer elects to
make the payment.

ASSIGNMENT OF INTERESTS

         As a general rule, the balance credited to a Participant's account may
not be alienated, sold, assigned, pledged, encumbered or otherwise transferred.
In addition, a Participant's creditors may not attach, garnish, or otherwise
interfere with his or her account balance or with any payment from the Plan
until it is received.

         There is a statutory exception to the general rule described in the
previous paragraph. The Plan is required by law to recognize certain
obligations that a Participant incurs as the result of court ordered child
support or alimony payments. In particular, the Plan is required to honor a
"qualified domestic relations order" ("QDRO"). A QDRO is a decree or order
issued by a court that obligates the Participant to pay child support or
alimony, or otherwise allocates a portion of his or her account balance to an
alternate payee such as his or her former spouse, child or other dependent. If
the Plan receives a QDRO, all or a portion of the Participant's account may be
used to satisfy the resulting obligation to each alternate payee. The Plan
Administrator will determine whether any domestic relations order received by
the Plan is a QDRO.

RESALES OF COMMON STOCK

                                      20
<PAGE>

         The Plan does not impose any restriction on resales or distributions
of Common Stock acquired by a Participant through the Plan. However, resales
are subject to applicable securities laws, including those relating to sales of
securities by "affiliates" of the Company and the provisions of Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
regarding certain resales by officers, directors and 10% shareholders of the
Company.

AMENDMENT OR TERMINATION AND WITHDRAWAL

         The Company currently intends to continue the Plan indefinitely, but
the Board of Directors of the Company may at any time terminate the Plan, amend
it in whole or in part, or discontinue Employer Contributions, for any reason.

FEDERAL INCOME TAXES

         The following statements concerning certain tax implications resulting
from participation under the Plan are based on the assumption that at all times
the Plan meets the requirements for qualification under Sections 401(a) and
401(k) of the Code. These statements are only intended to summarize briefly
certain Federal income tax consequences and are not meant to provide or
supplement tax advice to Participants. The following general statements are
based upon present Federal income tax statutes, regulations and currently
available interpretations thereof, and are intended to apply to the Plan as
normally operated. Participants should consult their own tax advisers with
respect to any specific tax question that may arise in connection with the
Plan, including any state or foreign tax consequences and the effect, if any,
of gift, estate and inheritance taxes.

         The Trust Fund will be exempt from tax on its earnings. Participants
will not be taxed on contributions and income or gains allocated to their
Accounts until such amounts are distributed. The Employer, subject to certain
statutory limitations, may deduct all of its contributions to the Plan.
Distributions to Participants will generally be taxable upon receipt as
ordinary income. In addition,

                                      21
<PAGE>

taxable amounts distributed or withdrawn will generally be subject to a 10%
additional tax, unless the Participant is at least age 59-1/2 or meets one of
the other exceptions described in Section 72(t) of the Code. In certain
situations under the tax laws, however, Participants and beneficiaries may be
able to avail themselves of special rules for tax-free rollover of
distributions to individual retirement accounts ("IRAs") or to another
employer-sponsored, qualified retirement plan.

         The Company will seek a determination letter from the Internal Revenue
Service evidencing its determination that the Plan continues to be a qualified
plan under Sections 401(a) and 401(k) of the Code and the Trust Fund is exempt
from federal income taxes under Section 501(a) of the Code. The Company intends
to take such actions as it deems reasonably necessary (including amendment of
the Plan, if required) to ensure issuance of a favorable determination by the
Internal Revenue Service to the effect that the Plan is a qualified plan under
Sections 401(a) and 401(k) of the Code and the Trust Fund is exempt from
federal income taxes under Section 501(a) of the Code.

                                      22
<PAGE>

                             AVAILABILITY OF CERTAIN
                       DOCUMENTS INCORPORATED BY REFERENCE

         A copy of the Plan and certain documents (excluding exhibits thereto
other than exhibits which are specifically incorporated by reference therein)
described below are available without charge upon written or oral request
directed to the Company at 6 Desta Drive, Suite 5900, Midland, Texas 79705,
(915) 498-0300. You may also read and copy the documents incorporated by
reference at the following locations of the SEC:

 Public Reference Room   New York Regional Office    Chicago Regional Office
405 Fifth Street, N.W.     7 World Trade Center          Citicorp Center
       Room 1024                Suite 1300           500 West Madison Street
Washington, D.C. 20549   New York, New York 10048           Suite 1400
                                                   Chicago, Illinois 60661-2511

You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The Commission also maintains an Internet
world wide web site that contains reports, proxy statements and other
information about issuers who file electronically with the SEC. The address of
that site is http;//www.sec.gov.

         This Information Memorandum and the Company's registration statement
on Form S-8 registering the Common Stock issuable under, and plan interests in,
the Plan (the "Registration Statement") incorporate by reference the following
documents that the Company has filed with the U.S. Securities and Exchange
Commission (the "SEC"):

         (1)      Annual Report on Form 10-K for the fiscal year ended June 30,
                  2000;

         (2)      Amendment to the Annual Report on Form 10-K/A for the fiscal
                  year ended June 30, 2000;

         (3)      Quarterly Report on Form 10-Q for the quarter ended September
                  30, 2000;

                                      23
<PAGE>

         (4)      Quarterly Report on Form 10-Q for the quarter ended December
                  31, 2000; and

         (5)      the description of the Company's common stock, par value $0.10
                  per share, contained in the registration statement on Form 8-A
                  dated March 27, 1998, including any amendments or reports that
                  have been filed to update the description.

         All documents the Company files with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Information Memorandum and prior to the filing of a post-effective amendment
to the Registration Statement which indicates that all securities offered
pursuant to the Registration Statement have been sold or which deregisters all
securities then remaining unsold, shall deemed to be incorporated by reference
in this Information Memorandum and to be part hereof from the date of the
filing of such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which is also incorporated by reference herein),
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed in its unmodified or unsuperseded form to constitute a part
hereof.

         The Company's Annual Report to Stockholders, Proxy Statements and
other communications to stockholders generally, will be delivered without
charge, to persons participating in the Plan.

                                      24EXHIBIT 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 JACK SNYDER, M.D., residing at 1653 Lindsay Drive, North
Wales, Pennsylvania 19454.

                                   WITNESSETH:

      WHEREAS, the Company wishes to employ Jack Snyder, M.D. and Jack Snyder,
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 Jack Snyder, M.D. should render hereunder to
the Company are unique and valuable; and

      WHEREAS, the parties desire to reduce the terms and conditions of Jack
Snyder, 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 Jack Snyder, M.D.
hereby agree as follows:

      1.    Employment
            ----------

            The Company hereby employs Jack Snyder, 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 Jack Snyder, M.D. hereby accepts such employment upon the
terms and conditions hereinafter set forth. The parties acknowledge that Jack
Snyder, 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
            ---------------------------

            Jack Snyder, M.D., as Chief Medical Officer, shall perform with
continuous diligence those activities assigned to Jack Snyder, 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, Jack Snyder, M.D. will be elected as Chief Medical Officer of the
Company.

      3.    Term
            ----

            This Agreement shall begin on the effective date hereof and continue
until terminated under the terms contained herein.

                                      E-2
<PAGE>

      4.    Salary and Incentive Program
            ----------------------------

            This Agreement shall compensate Jack Snyder, 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, Jack Snyder, 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
            ---------------

            During the term of this Agreement, commencing with the first full
day of service he provides to the Company hereunder, the Company shall provide
Jack Snyder, 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 Jack Snyder, 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
            -------------

            Effective on the date this agreement is signed by Jack Snyder, M.D.,
the Company shall award Jack Snyder, 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 Jack Snyder, 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 Jack Snyder, M.D. 7,500 shares of
common stock of the Company on April 2, 2001. Jack Snyder, M.D. agrees not to
sell any such stock for a period of six months from the date of such grant.

      8.    Relocation
            ----------

            The Company shall pay for and reimburse expenses associated with
Jack Snyder, 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 Dr. Snyder 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
            -----------

            a)    This Agreement shall terminate on any of the following
                  occurrences:

                  (i)    Jack Snyder, M.D.'s death;

                                      F-3

<PAGE>

                  (ii)   Jack Snyder, 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 Jack Snyder, 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 Jack Snyder,
M.D.'s

                  (i)    gross negligence;

                  (ii)   intentional insubordination; -

                  (iii)  intentional misconduct;

            c) Good Cause for resignation by Jack Snyder, M.D., shall exist only
if one of the following three (3) circumstances occurs within the first 12
months of Jack Snyder, M.D.'s employment with the Company.

                  (i)    Without Jack Snyder, 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 Jack Snyder, 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 Jack Snyder, M.D. not for Good Reason,
                         or termination by Jack Snyder, M.D. with Stated Cause;

                  (ii)   A reduction of Jack Snyder, M.D.'s base salary from the
                         Company or the taking of any action by the Company
                         which would materially adversely affect Jack Snyder,
                         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 Jack Snyder, M.D.
                         regularly performs his duties for the Company that
                         requires him to relocate his residence.

            d) "Stated Cause" shall mean Cause communicated to Jack Snyder,
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 Jack Snyder, 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.

                                      E-4
<PAGE>

            g)    The "Termination Date" shall be the date Jack Snyder, M.D.
ceases providing services to the Company as an employee.

      10.   Compensation after Termination

            a) Jack Snyder, 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. Jack Snyder, 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 Jack Snyder, M.D.'s employment with the
Company is terminated by the Company without Stated Cause, or through Jack
Snyder's 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 Jack Snyder, M.D. at his rate of
                         base pay determined as of the date preceding the Notice
                         of Termination Without Stated Cause issuance.

                  (ii)   Jack Snyder, 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 Jack Snyder, M.D.
                         and/or his eligible dependents on the same basis as if
                         Jack Snyder, 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 Jack Snyder, M.D. provided by an
                         outplacement provider of Jack Snyder, M.D.'s choice.

                  (v)    The Company will continue to honor any option-vesting
                         schedule in effect for options granted to Jack Snyder,
                         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
                  ----------------

            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, Jack Snyder, 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 Jack Snyder, 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 Jack Snyder, 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, Jack Snyder, 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.

                                      E-5
<PAGE>

      12.   Proprietary Information
            -----------------------

            Jack Snyder, 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
            ---------------

            Jack Snyder, M.D. agrees that, to the fullest extent permitted by
law, for the period of one (1) year after his Termination Date, Jack Snyder,
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
            -----------------

            Jack Snyder, 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 Jack Snyder, M.D. are special and unique and of an extraordinary
character, and that in the event there is a breach by Jack Snyder, 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 Jack Snyder, M.D., or to enjoin Jack Snyder, M.D. from performing
services for any Competing Entity. The parties further recognize and agree that
breach by Jack Snyder, 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.   Jack Snyder, M.D.'s Representation
            ----------------------------------

            Jack Snyder, 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.

                                      E-6
<PAGE>

      16.   Assignments
            -----------

            The rights and obligations of Jack Snyder, 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 Jack Snyder, M.D. and the
Company relating to his employment or the other matters covered herein.

      18.   Severability
            ------------

            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.

                                      E-7

<PAGE>

      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/ Kevin C. Johnson
 ------------                              ---------------------
Date                                      Kevin C. Johnson

26 June 2000                        By:    /s/ Jack W. Snyder
 ------------                              ---------------------
Date                                      Jack Snyder, M.D.

                                      E-8

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