EXHIBIT 10.5
NON COMPETE AND NON SOLICITATION AGREEMENT
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This Non Compete Agreement is entered into on November 23, 1999, by
and among UNILAB CORPORATION, a Delaware corporation ("Unilab"), UC Acquisition
Sub, Inc., a Delaware corporation ("UC Acquisition"), and XXXXX X. XXXXXX
("Xxxxxx") with reference to the following:
X. Xxxxxx is the President, Chief Executive Officer, and Chairman of
the Board of Directors of Unilab.
B. On May 25, 1999, Unilab agreed to merge with UC Acquisition in a
leveraged recapitalization transaction (the "Recapitalization") in which Unilab
survives and the business of Unilab continues.
X. Xxxxxx and UC Acquisition have agreed that effective upon the
closing of the Recapitalization, Xxxxxx will cease to be employed by Unilab as
its President and Chief Executive Officer.
D. UC Acquisition and Unilab want to ensure that Xxxxxx will not (a)
enter into an employment or any other similar arrangement during the two-year
period following the closing of Recapitalization that would result in Xxxxxx
competing with Unilab under certain circumstances, or (b) solicit customers and
employees of Unilab during the five-year period following the closing of the
Recapitalization, and Xxxxxx is willing to enter into such a non-compete and
non-solicitation agreement, all as described in this Agreement.
NOW THEREFORE, the parties to this Agreement agree as follows:
1. Non-Compete and Non-Solicitation. Xxxxxx agrees that, following
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termination of Xxxxxx'x employment with Unilab upon the closing of the
Recapitalization.
(a) during the twenty-four (24) consecutive month period commencing
on the closing of the Recapitalization, he will not become employed by, or
enter into any similar agreement as a director, employee, independent
contractor, consultant, agent, partner, member, or otherwise with,
Laboratory Corporation of America, Quest Diagnostic Inc., or Xxxxx-Xxxxx
Clinical Laboratories, or any entity affiliated with any of Laboratory
Corporation of America, Quest Diagnostic Inc., or Xxxxx-Xxxxx Clinical
Laboratories, or any other person, firm, or entity that competes, directly
or indirectly, with Unilab, whether or not so competing in the same
geographic area as Unilab, or any company or entity affiliated therewith,
and
(b) during the sixty (60) consecutive month period commencing on the
closing of the Recapitalization, he will not, directly or indirectly, for his
benefit of the benefit of any other person, firm, or entity, do any of the
following:
(i) solicit from any customer doing business with Unilab as of
Xxxxxx'x termination of employment with Unilab, business of the same
or of a similar nature to the business of Unilab with such customer;
(ii) solicit from any known potential customer of Unilab
business of the same or of a similar nature to that which has been the
subject of a known written or oral bid, offer, or proposal by Unilab,
or of substantial preparation with a view to making such a bid, offer,
or proposal within six (6) months prior to Xxxxxx'x termination of
employment with Unilab;
(iii) solicit the employment or services of, or hire, any person
who was known to be employed by or was a known consultant to Unilab
upon the termination of Xxxxxx'x employment with Unilab or within six
(6) months prior thereto; or
(iv) otherwise interfere with the business or accounts of
Unilab.
2. Payment. In consideration of Xxxxxx'x non-compete and
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non-solicitation agreement described in Xxxxxxxxx 0, Xxxxxx shall pay to Xxxxxx,
solely for his agreement not to compete with Unilab, the sum of Two Million Five
Hundred Thousand Dollars ($2,500,000) immediately following the closing of the
Recapitalization.
3. Breach. Xxxxxx shall be deemed to have breached his obligations
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under this Agreement (a) if, at any time during the twenty-four (24) consecutive
month period described in Paragraph 1, he violates his agreement not to compete,
or (b) if, at any time during the sixty (60) consecutive month period described
in Paragraph 1, he violates his agreement not to solicit customers and employees
as described in Paragraph 1. In the event of any such breach, and without
limiting any other remedies available to Unilab, Xxxxxx shall promptly repay the
entire Payment specified in Paragraph 2 to Unilab. Unilab shall be deemed to
have breached its obligations under this Agreement if the Payment specified in
Paragraph 2 is not made in good funds to Xxxxxx immediately following the
closing of the Recapitalization.
4. Severability. In the event that any one or more of the
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provisions of this Agreement shall be held to be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remainder of
this Agreement shall not in any way be
affected or impaired thereby. Moreover, if any one or more of the provisions
contained in this Agreement shall be held to be excessively broad as to
duration, activity, or subject, such provisions shall be construed by limiting
and reducing them so as to be enforceable to the maximum extent allowed by
applicable law.
5. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware.
6. Entire Agreement. This Agreement constitutes the entire
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understanding between the parties with respect to the subject matter hereof,
superceding all negotiations, prior discussions, and preliminary agreements not
specifically included in the terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on November 23, 1999.
UNILAB CORPORATION, a Delaware corporation
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Executive Vice
President, Secretary, and General
Counsel
UC ACQUISITION SUB, INC., a Delaware
corporation
By: __________________________________
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
