SPECIAL SEVERANCE AGREEMENT
---------------------------
THIS AGREEMENT is made and entered into this the
12th day of July, 1996, by and between Laboratory
Corporation of America Holdings ("Company") and Xxxx
X. Xxxxxx ("Employee").
WHEREAS Employee and the Company agree that
effective August 12, 1996 ("the Effective Date"), the
employment relationship between them will terminate;
AND, WHEREAS the Board of Directors of the
Company has approved the adoption of a severance plan
to contain terms generally consistent with the draft
"Laboratory Corporation of America Holdings Master
Senior Executive Severance Plan Effective April 17,
1996" ("the SES Plan"), a copy of which is attached
hereto as Exhibit A solely for identification
purposes;
AND, WHEREAS the severance plan, when reduced to
writing in its final form, would apply to an employee
holding the same position as the Employee;
AND, WHEREAS Employee and National Health
Laboratories Incorporated (to which the Company is a
successor) previously had entered into an agreement
dated January 1, 1991 as amended on April 1, 1991,
June 6, 1991, January 1, 1993, January 1, 1994, and
March 1, 1994 ("the Employment Agreement"), a copy of
which is attached hereto as Exhibit B solely for
identification purposes, which agreement is an
"individual agreement relating to employment (or the
termination thereof)" within the meaning of that
phrase in Article 3.2(a) of the SES Plan;
AND, WHEREAS Employee is a "Covered Employee"
within the meaning of Article 2.1 of the SES Plan;
AND, WHEREAS, pursuant to Article 3.2(a) of the
SES Plan, a Covered Employee who is also a party to an
employment agreement may not receive Severance Pay (as
defined in the SES Plan) unless he "expressly waives
[his] right to receive all payments and all other
benefits thereunder and expressly elects to receive
Severance payments pursuant to this Plan in lieu of
any payment that would otherwise be made to him
pursuant to any such agreement";
AND, WHEREAS the Company is willing to offer
Employee, and Employee would prefer to receive, the
Severance Pay and other benefits described in the SES
Plan, upon the terms and conditions described herein,
in lieu of those benefits and payments upon
termination described in the Employment Agreement;
AND, WHEREAS the SES Plan provides in pertinent
part that, as a condition to each eligible employee's
receipt of Severance Pay (as defined therein), the
eligible employee will be required to sign a Special
Severance Agreement which will include, among other
things, noncompetition, nonsolicitation, duty of
loyalty, confidentiality, and release provisions;
NOW, THEREFORE, in consideration of the mutual
covenants and promises hereinafter made by Employee
and the Company to each other, and for other good and
valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged by Employee
and the Company, IT IS AGREED THAT:
1. Upon the effective date of Employee's
termination, he shall perform no further services for
the Company, and his status as an employee of the
Company shall cease on that date. In addition,
Employee's execution of this Agreement shall also
constitute his resignation as a director or officer of
any and all subsidiaries or affiliates of the Company;
as a trustee or committee member of any Company
related committees or foundations to which he was
appointed; and as a member of the Management
Committee, all such resignations to be effective as of
the Effective Date. Employee and the Company further
agree that the relationship created by this Special
Severance Agreement is purely contractual and that no
employer/employee relationship is intended, nor shall
such be inferred from the performance of obligations
under this Agreement.
2. The Company shall provide the following payments
and other benefits to Employee following the
termination of his employment:
x. Xxxxxxxxx Pay. The Company shall pay
to the Employee, in two installments (which will
be as nearly equal as practicable), one of which
shall be paid within 10 days of the Effective
Date, and the other of which shall be paid within
one year and thirty days of the Effective Date,
an amount equal to twice his Base Pay (as defined
herein), plus an amount equal to twice his Target
Bonus (as defined herein). For purposes of this
Agreement, "Base Pay" shall mean the Employee's
$325,000 annual base salary, as of the Effective
Date ("Base Pay"), before reduction because of
any election between benefits or cash provided
under a plan maintained by the Company pursuant
to Sections 125 or 401(k) of the Internal Revenue
Code of 1986, as amended, and before reduction
for any other amounts of compensation contributed
to any other employee benefit plan. For purposes
of this Agreement, "Target Bonus" shall mean
($162,500). Other cash payments or target
incentives from long-term or synergy-related
incentives shall not be included in the Target
Bonus. Employee and Company agree that the total
of twice the Employee's Base Pay, plus twice the
Employee's Target Bonus, is equal to $975,000,
and therefore that the gross payment due Employee
on each of the two payment dates referred to
above is equal to $487,500. It is understood and
agreed that the actual payments made to Employee
hereunder will be net of all taxes and other
amounts withheld pursuant to any applicable
federal, state or municipal law. It is expressly
agreed and understood that one percent of the
payments made under this Section 2(a) are in
exchange for Employee's waiver of his rights
under the Age Discrimination In Employment Act of
1967 ("ADEA"), as more fully described in Section 3.
In the event that Employee shall die prior to the receipt
of any payment then due and payable, any balance due and
payable shall be paid to his estate at such time or times
as the payments would be otherwise due.
b. Continuation of Coverage Under Medical and
Dental Plans. Employee, his spouse, and his other
dependent(s) will be eligible to elect continued
health care coverage under the group medical and
dental plans sponsored by the Company, as provided in
the applicable provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended
("COBRA"), which provides generally that certain
employees and their dependents may elect to continue
coverage under employer-sponsored group health plans
for a period of at least 18 months under certain
conditions, including payment of the "Applicable
Premium" as defined in Section 604 of the Employee
Retirement Income Security Act of 1974, as amended, 29
U.S.C. ''1001 et. seq. ("ERISA"). In the event that
Employee elects continuation coverage under COBRA, the
Company will pay the Applicable Premium for such
coverage for the first twelve months thereof.
c. Option to Purchase Company Car. Employee shall
have the option to purchase the company car presently
assigned to him for his use for $13,928 ("Option
Price") on the Effective Date. Such option must be
exercised within 20 days following the Effective Date
by providing the Company with a written notice of the
intent to exercise the option. In the event of such
an election, the Option Price shall be deducted from
the first severance payment installment. In addition,
to the extent federal or state law requires that
amounts be reflected as income to the Employee, the
Employee shall be responsible for all related income
tax liability.
d. Normal Plan Benefits. This Agreement
shall not affect Employee's entitlement to
receive benefits under the Laboratory Corporation
of America Employee's Retirement Savings Plan
[401(k)], Laboratory Corporation of America Cash
Balance Retirement Plan, LabCorp Defined Benefit
Plan, or the LabCorp Pension Equalization Plan as
are provided under the circumstances pursuant to
the terms of the Plan documents governing each of
these plans. Except as otherwise provided herein
or in the terms of any documents governing any
employee benefit plan maintained by the Company,
Employee will cease to be a participant in and
will no longer have any coverage or entitlement
to benefits, accruals, or contributions under any
of the Company's employee benefit plans effective
upon the termination of his employment. Employee
agrees that the payments made to him by the
Company pursuant to this Agreement do not
constitute compensation for purposes of
calculating the amount of benefits Employee may
be entitled to under the terms of any pension
plan, or for the purposes of accruing any
benefit, receiving any allocation of any
contribution, or having the right to defer any
income in any profit-sharing or other employee
pension benefit plan, including any cash or
deferred arrangement.
3. In consideration of the Company's agreement
to provide Employee with the payments and benefits
listed in Section 2, Employee, for himself, his heirs,
his legal representatives and assigns, fully releases,
discharges, and covenants not to make any claims or
demands or to commence any type of legal action
against the Company (including administrative charges
or lawsuits) regarding any matters arising from his
employment with or separation from the Company,
including, but not be limited to, all claims under
Title VII of the Civil Rights Act of 1964, as amended,
42 U.S.C. '' 2000e et seq.; the ADEA, as amended, 29
U.S.C. '' 621-34; ERISA; COBRA; the Americans with
Disabilities Act of 1990, 42 U.S.C. '' 12101 et seq.;
and any and all other claims of which he now knows or
should know that may be stated under federal or
applicable state statutory, decisional, or
administrative law, including (without limitation)
claims under wage payment laws, or claims of wrongful
termination, breach of employment contract,
intentional or negligent infliction of emotional
distress, outrage, and any and all other causes of
action. More specifically, and without limiting the
foregoing, Employee hereby releases, discharges, and
covenants not to make any claims or demands or to
commence any type of legal action against the Company
(including administrative charges or lawsuits)
regarding any claim arising under the Employment
Agreement, and Employee expressly waives any rights he
may have had under the Employment Agreement as fully
as if such Employment Agreement had never existed.
This Agreement is not intended to waive any claims
that may arise after the date the Agreement is
executed. Notwithstanding the foregoing, nothing
herein shall release any claim that the Employee may
have (a) for contribution or indemnity in any third
party action, proceeding, or investigation, whether
under the Company's bylaws or pursuant to common law,
which rights are specifically reserved; (b) claims to
enforce any vested rights under benefit plans or
programs (except as expressly provided herein); or (c)
claims arising prior to the Effective Date under
Company insurance policies which named the Employee
(generally or specifically) as a beneficiary.
4. In further consideration for the Company's
agreement to provide the benefits set forth above,
Employee agrees:
a. Noncompetition.
i. Employee acknowledges that in the
course of its business, the Company develops
and maintains personal and confidential
relationships between the Company and its
customers. Employee further acknowledges
that the Company's customers and the
relationships and goodwill with its
customers are among the Company's most
valuable assets.
ii. Employee acknowledges that as
Executive Vice President for the Company, he
developed an intimate knowledge of the
Company's business and also developed
significant relationships with the Company's
customers.
iii. The parties agree that the Company
will suffer significant and irreparable
damage if Employee obtains employment with
or provides services to certain companies
engaged in the same or similar business as
that engaged in by the Company.
iv. As a result, for a period of
one year following the Effective Date,
Employee will not directly or indirectly, as
an officer, director, stockholder, partner,
associate, owner, employee, consultant or
otherwise, become or be interested in or
associated with Corning Clinical
Laboratories, Inc. ("Corning"), SmithKline
Clinical Laboratories Inc. ("SmithKline"),
or Dianon Laboratories, Inc. ("Dianon")
including their subsidiaries, affiliates,
and successors in interest or any other
entity in which Corning, SmithKline, or
Dianon becomes a partner, joint venturer, or
owner in competition with the Company in the
same or similar business, provided that the
Employee's ownership, directly or
indirectly, of not more than five percent of
the issued and outstanding stock of a
corporation, the shares of which are
regularly traded on a national securities
exchange or in the over-the-counter market,
shall not, in any event, be deemed to be a
violation of the provision of this Section
4(a)(iv).
b. Nonsolicitation. For a period of
one year from the Effective Date, Employee will not
solicit sales from any trade or business that was a
customer of the Company or its affiliates during
Employee's employment with the Company or its
predecessors, (including specifically National Health
Laboratories Holdings Inc. and its subsidiaries),
provided, however, that the solicitation of sales of
products or services not offered by the Company or its
affiliates at the time of such solicitation, or the
solicitation of customers who have not done business
with the Company during the past twelve months prior
to such solicitation, shall not be deemed a violation
of this Section 4(b). Employee's duties under this
Section 4(b) are cumulative with Employee's duties
under Section 4(a), and neither section shall be
interpreted as a limitation on the other.
It is further agreed that for a period of one
year from the Effective Date, Employee shall not directly
or indirectly induce or attempt to induce any other
employee to leave the employ of the Company or attempt to
hire any employee of the Company. In addition, Employee
agrees that he shall not assist directly or indirectly any
other person to induce or attempt to induce any other
employee to leave the employ of the Company or to hire or
attempt to hire any employee of the Company.
c. Duty of Loyalty/Nondisparagement. For
a period of five years from the Effective Date,
Employee will not (except as required by law)
communicate to anyone, whether by word or deed,
whether directly or through any intermediary, and
whether expressly or by suggestion or innuendo, any
statement, whether characterized as one of fact or of
opinion, that is intended to cause or that reasonably
would be expected to cause any person to whom it is
communicated to have: (1) a lowered opinion of the
Company or any affiliates, including a lowered opinion
of any products manufactured, sold, or used by, or any
services offered or rendered by the Company or its
affiliates; and/or (2) a lowered opinion of the
Company's credit-worthiness or business prospects.
The Company agrees to provide the Employee with a copy
of any language planned for inclusion in announcing
Employee's departure at least 24 hours prior to any
such release. The Company agrees further to consider
any suggestions or comments that Employee may have
regarding such language.
d. Confidentiality.
i. The parties acknowledge that during the
course of Employee's employment with the Company, he
was given access, on a confidential basis, to
Confidential Information, which the Company has for
years collected, developed, and/or discovered through
a significant amount of effort and at great expense.
The parties acknowledge that the Confidential
Information of the Company is not generally known or
easily obtained in the Company's trade, industry,
business, or otherwise and that maintaining the
secrecy of the Confidential Information is extremely
important to the Company's ability to compete with its
competitors.
ii. Employee agrees that for a period of five
years from the date of this Agreement, Employee shall
not, without the prior written consent of the Company,
divulge to any third-party or use for his own benefit,
or for any purpose other than the exclusive benefit of
the Company, any Confidential Information of the
Company; provided however, that nothing herein
contained shall restrict Employee's ability to make
such disclosures as such disclosures may be required
by law; and further providing that nothing herein
contained shall restrict Employee from divulging
information which is readily available to the general
public as long as such information did not become
available to the general public as a direct or
indirect result of the Employee's breach of this
Section of this Agreement.
iii. The term "Confidential Information" in
this Agreement shall mean information that is not
readily and easily available to the public or to
those in the Company's business, trade, or industry,
and that concerns the Company's prices, pricing
methods, costs, profits, profit margins, suppliers,
methods, procedures, processes or combinations or
applications thereof developed in, by, or for the
Company's business, research and development projects,
data, business strategies, sales techniques, customer
lists, customer information, or any other information
concerning the Company or its business that is not
readily and easily available to the public or to those
in the Company's business. The term "customer information"
in this Agreement shall mean information that is not
readily and easily available to the public or to those in
the Company's business, trade, or industry and that
concerns the course of dealing between the Company and
its customers or potential customers solicited by the
Company, customer preferences, particular contracts or
locations of customers, negotiations with customers, and
any other information concerning customers obtained by
the Company that is not readily and easily available to
the public or to those in the business, trade, or industry
of the Company.
iv. Employee acknowledges that all information the
disclosure of which is prohibited hereby is of a
confidential and proprietary character and of great value
to the Company and, upon the execution of this Agreement
(or as soon thereafter as is reasonably practicable),
Employee shall forthwith deliver up to the Company all
records, memoranda, data and documents of any description
which refer to or relate in any way to such information
and return to the Company any of its equipment and property
which may then be in the Employee's possession or under
the Employee's personal control. The Employee also agrees,
for a two-year period after the Effective Date, not to
disclose the existence or the terms of this Agreement to
any person, other than the Employee's immediate family, his
attorneys, accountants and other professional advisors, or
a prospective employer, except as otherwise required by
law or until such time as the Company discloses such
information to the public in its filings with the Securities
and Exchange Commission.
5. Employee agrees that because he has rendered services of a
special, unique, and extraordinary character, damages would not be
an adequate or reasonable remedy for breach of his obligations under
this Agreement. Accordingly, in the event of a breach or threatened
breach by the Employee of the provisions of Sections 4(a)-4(d) of
this Agreement, the Company shall be entitled to an injunction
restraining the Employee from violating the terms hereof, or from
rendering services to any person, firm, corporation, association,
or other entity to whom any confidential information, trade secrets,
or proprietary materials of the Company have been disclosed or are
threatened to be disclosed, or for whom the Employee is working
or rendering services, or threatens to work or render services.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or
threatened breach of this Agreement, including the right to
terminate any payments to Employee pursuant to this Agreement or
the recovery of damages from the Employee. The Employee agrees
that the issuance of the injunction described in this Section may
be without the posting of any bond or other security by the Company.
6. The parties agree that the Company has no prior legal
obligation to make the additional payments set forth above in
Section 2 that have been exchanged for the promises of Employee
stated in this Agreement. It is specifically understood and
agreed that the additional payments, and each of them, are good
and sufficient consideration to support the waivers and releases
contained herein, and each of the payments set forth in Section 2
above are things of value in addition to anything to which
Employee already was entitled prior to the execution of this
Agreement.
7. Employee acknowledges that he has read this Agreement
and that he possesses sufficient education and experience to fully
understand the terms of this Agreement as it has been written, the
legal and binding effect of this Agreement, and the exchange of
benefits and payments for promises hereunder, and that he has had
a full opportunity to discuss or ask questions about all such terms.
8. Employee further acknowledges that he has been provided
with a copy of this Agreement and has been given 21 consecutive
calendar days in which to review and consider the Agreement.
Further, Employee acknowledges that he has been advised to consult
with an attorney prior to executing this Agreement.
9. Employee acknowledges that he has a period of seven
calendar days following his signing of this Agreement to revoke
the Agreement and that until such time has passed, the Agreement
will have no effect and the obligations of the Company and
Employee set forth in this Agreement will not be enforceable.
In the event that Employee intends to revoke the Agreement, he
must notify Xxxxxxxx X. Xxxxx, General Counsel in writing no later
than 9 a.m. on the eighth calendar day following the date of his
signing this Agreement.
10. Employee agrees that the only consideration for signing
this Agreement are the terms stated above and that no other
representations, promises, or assurances of any kind have been
made to him by the Company, its attorneys, or any other person as
an inducement to sign this Agreement.
11. Employee understands and agrees that the Company's
obligation to perform under this Agreement is conditioned upon
Employee's performance of, and the enforceability of, all
agreements, releases, and covenants to the Company as set forth
herein.
12. This Agreement shall inure to and be binding upon the
parties hereto, their respective heirs, legal representatives,
successors, and assigns.
13. This Agreement shall be construed in accordance with
the laws of the state of North Carolina, except as federal
law may apply. If any provision of this Agreement is found to be
unenforceable as a matter of law, the provision(s) shall be
severed and the remaining provisions will be enforceable.
14. This Agreement represents, constitutes, and
incorporates the entire, exclusive, and complete understanding
of the parties mentioned herein and reduces to writing all oral
negotiations and agreements. The terms, provisions, and conditions
of this Agreement may not be altered, modified, changed, or
otherwise admitted unless made in writing and signed by the parties.
The terms of the Employment Agreement and of the SES Plan are
expressly not incorporated herein.
15. This Agreement does not constitute an admission of any
wrongdoing toward Employee by the Company or toward the Company by
Employee.
16. The parties agree that the provisions of this Agreement
shall be deemed severable and that the invalidity or
unenforceability of any portion of any provision shall not affect
the validity or enforceability of other portions of such provision or
of other provisions. Such provisions shall be appropriately limited
and given effect to the extent that they may be enforceable.
17. This Agreement may not be changed orally but only by an
agreement in writing signed by the parties.
18. EMPLOYEE FURTHER STATES THAT HE HAS CAREFULLY READ THE
FOREGOING AGREEMENT AND KNOWS THE CONTENTS THEREOF AND SIGNS THE
SAME OF HIS OWN FREE ACT.
IN WITNESS WHEREOF, I voluntarily execute the foregoing Agreement
this 10th day of August, 1996, after the same was read over and
explained to me by my attorney.
/s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
Sworn to and subscribed before me
the 10th day of August 1996.
/s/ XXXXXXX XXXXXX
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Notary Public
My Commission Expires: 8/31/98
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ XXXXXXXX X. XXXXX
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Xxxxxxxx X. Xxxxx
Executive Vice President
