EXHIBIT 10.4
CONSULTING AGREEMENT
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This Agreement is entered into effective as of December 1, 1999, by and
between XXXXX X. XXXXXX ("Consultant") and UNILAB CORPORATION, a Delaware
corporation ("Unilab") with reference to the following:
A. Consultant has served as President, Chief Executive Officer and
Chairman of the Board of Unilab since January 20, 1997.
B. Consultant has been a leading executive in the clinical laboratory
industry for more than a decade.
C. On May 25, 1999, Unilab agreed to merge with UC Acquisition Sub, Inc.,
a Delaware corporation, in a leveraged recapitalization transaction (the
"Recapitalization") in which Unilab survives and its business continues.
D. Unilab desires to continue to have the benefit of Consultant's
experience and knowledge of the clinical laboratory industry following the
termination of Consultant's employment as President and Chief Executive Officer
of Unilab, and Consultant desires to be retained by Unilab as a consultant.
NOW THEREFORE, in consideration of the material covenants and agreements
set forth herein, the parties hereto covenant and agree as follows:
1. Engagement of Consultant. Unilab hereby engages Consultant to advise
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and consult with Unilab's senior management and, if and when requested by
Unilab's Board of Directors, its Board of Directors with respect to laboratory
industry developments, investment opportunities, financing possibilities, client
development, and laboratory operations (collectively, the "Consulting
Services"). Consultant represents and warrants to Unilab that he has no
commitments, arrangements, or other agreements with any other clinical
laboratory companies and that there are no restrictions under applicable law or
licensing regulations which might preclude the carrying out of his obligations
under this Agreement.
2. Term. The term of this Agreement shall be for a sixty (60)
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consecutive month period commencing upon the Closing of the Recapitalization,
unless sooner terminated as provided herein.
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3. Compensation.
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(a) Unilab shall pay Consultant One Million One Hundred Thousand
Dollars ($1,100,000) for the Consulting Services, payable in sixty (60)
equal monthly installments of Eighteen Thousand Three Hundred Thirty-Three
Dollars and Thirty-Three Cents ($18,333.33) on the last day of each
calendar month during the Term. Consultant shall make himself available to
provide up to twenty-five (25) hours per month of Consulting Services
during normal business hours, at Unilab's request.
(b) During the Term, Consultant shall be entitled to (i) office space
and secretarial and administrative support services, (ii) continued car
allowance on terms equivalent to Consultant's current allowance, and (iii)
reimbursement for out-of-pocket expenses related to the Consulting Services
rendered.
4. Equity Participation in Unilab. Consultant shall be entitled to
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receive options to acquire in the aggregate Two Hundred Fifty Six Thousand Four
Hundred Ten (256,410) shares of stock of the surviving corporation in the
Recapitalization. Such options shall be granted to Consultant on substantially
the same terms as options granted to management of the surviving corporation at
such time, including exercise price, vesting provisions, and performance
criteria, including continued employment criteria applicable to the options
granted to management of the surviving corporation; provided, however, that such
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continued employment criteria shall be deemed satisfied so long as this
Agreement is not terminated by reason of a Default by Consultant hereunder.
5. Indemnification.
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(a) Consultant agrees to defend, indemnify, and hold Unilab, its
subsidiaries, directors, officers, employees, and agents, wholly harmless
from and against any and all costs (including reasonable attorney's fees,
including advancement of fees) liabilities, claims, losses, lawsuits,
settlements, demands, causes, judgements, and expenses arising from the
performance of this Agreement to the extent that such costs and liabilities
result from the fraudulent misconduct of Consultant as determined by a
court of competent jurisdiction.
(b) Unilab agrees to defend, indemnify, and hold Consultant, his
employees, and agents, wholly harmless, to the fullest extent permitted by
law (and as if Consultant were still an officer of Unilab) from and against
any and all costs (including reasonable attorney's fees, including
advancement of fees) liabilities, claims, losses, lawsuits, settlements,
demands, causes, judgements, and expenses arising from the performance of
this Agreement, except to the extent that such costs and liabilities result
from the fraudulent misconduct of Consultant as determined by a court of
competent jurisdiction.
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6. Termination. This Agreement shall terminate on the occurrence of any
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of the following conditions:
(a) Five (5) years from the date Consultant's employment as President
and Chief Executive Officer of Unilab is terminated.
(b) In the event of a Default (as defined below) of this Agreement by
either party hereto, the other party shall have the right immediately to
begin cancellation proceedings of this Agreement by giving written notice
of cancellation to the defaulting party (the "Default Notice"). The non-
defaulting party shall give a thirty (30) day cure period during which the
defaulting party may have the opportunity to cure the breach to the
satisfaction of the non-defaulting party. Nothing herein shall eliminate
the non-defaulting party's right to damages for the Default, in addition to
the remedies described herein.
(c) For purposes of this Agreement, Consultant shall be deemed to be
in Default hereunder upon (i) Consultant having been convicted by a court
of competent jurisdiction of any felony involving moral turpitude, (ii) the
material violation by Consultant of any material provision of this
Agreement, or (iii) Consultant having been found by a court of competent
jurisdiction to have engaged in conduct constituting fraud against Unilab.
In the event of a termination of this Agreement by Unilab under this
Paragraph 5(c), Consultant shall be entitled only to payment of
compensation accrued and earned hereunder through the date of such
termination.
(d) For purposes of this Agreement, Unilab shall be deemed to be in
Default hereunder upon (i) the willful malfeasance or gross negligence by
Unilab in the performance of its duties hereunder, (ii) material violation
by Unilab of any material provision of this Agreement, or (iii) Unilab or
any of its officers or directors having been found by a court of competent
jurisdiction to have engaged in conduct constituting fraud against
Consultant. In the event of a termination of this Agreement by Consultant
under this Paragraph 6(d), Consultant shall still be entitled to payment of
all compensation that otherwise would have been payable to Consultant
during the remainder of the Term at the times and the installments provided
for herein.
7. Confidential Information.
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(a) Consultant shall not directly or indirectly disclose to anyone
who is not authorized by Unilab to receive such information, or use or
appropriate for his own benefit or the benefit of anyone other than Unilab,
any documents, materials, or information relating to Unilab's clinical
laboratory business (the "Business") or its customers which Consultant
obtained during his employment or which Consultant obtain during the Term
of this Agreement, including files, Business descriptions, Business
relationships and accounts, pricing policies, customer lists, computer
software and hardware, or any other materials relating to the Business or
its customers or any trade secrets or confidential information including,
without limitation, any Business methods, know-how, processes, financial or
other performance data, plans, policies and/or personnel of Unilab, whether
generated by Consultant or any employee of Unilab; provided, however, that
confidential information shall not include any information generally known
to the public (other than as a direct or indirect result of unauthorized
disclosure by Consultant).
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(b) At no time during or after the Term of this Agreement shall
Consultant remove or cause to be removed from the premises of Unilab any
record, file, memorandum, document, equipment, or any like item relating to
the Business of Unilab, except in furtherance of his duties hereunder or
with the permission of Unilab. In the event that any such items are removed
or caused to be removed by Consultant, such items shall be returned
promptly and in no event later than the expiration of this Agreement.
8. Independent Contractor. It is understood that Consultant's services
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hereunder are to be rendered in the capacity of an independent contractor and
that Consultant is not in any respect or under any circumstances an employee of
Unilab. Neither party has authority to enter into contracts or assume any
obligations for or on behalf of the other party or to make any warranties or
representations for or on behalf of the other party. Consultant shall be solely
responsible for any taxes imposed on the performance of services or the payment
for such services, including withholding of state and federal income, sales or
ad valorem, unemployment compensation, worker's compensation, Federal Insurance
Contributions Act, Federal Unemployment Tax Act, or other, taxes, costs, or
expenses incurred in the performance of any engagement hereunder. Consultant
expressly indemnifies and holds Unilab harmless from any such liabilities.
9. Miscellaneous.
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(a) Severability. Each provision of this Agreement shall be treated
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as a separate and independent clause, and the unenforceability of any one
clause shall in no way impair the enforceability of any of the other
clauses herein. If one or more of the provisions contained in this
Agreement shall, for any reason, be held to be unenforceable, such
provision shall be construed by an appropriate judicial body by limiting
and reducing it, so that this Agreement shall be enforceable to the maximum
extent compatible with the applicable law as it shall then appear.
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(b) No Waiver. No waiver of any Breach of failure by any party to enforce
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any of the terms or conditions of this Agreement at any time shall, in any
manner, limit or waive such party's right thereafter to enforce and to compel
strict compliance with every term and condition hereof.
(c) Assignment. This Agreement is not assignable in whole or in part by
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either party without the prior written consent of the other party. This
Agreement shall be binding upon and shall inure to the benefit of any successors
or assigns of Unilab, whether by merger, consolidation, sale of all or
substantially all of its assets, or otherwise.
(d) Applicable Law. This Agreement is to be governed by and construed under
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the laws of the State of Delaware.
(e) Captions and Paragraph Headings. Captions and paragraph headings used
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herein are for convenience only and are not a part of this Agreement and will
not be used in construing it.
(f) Entire Agreement. This Agreement contains the entire agreement of the
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parties with respect to the subject matter contained herein and supersedes any
and all other agreements, either oral or in writing, between the parties hereto.
Each party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, oral or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement will be
valid or binding.
(g) Modification. This Agreement may not be modified or amended by oral
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agreement, but only by an agreement in writing signed by Consultant and Unilab.
(h) Notices. All notices, requests, demands, and other communications
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hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, by nationally recognized overnight delivery service, or
mailed by certified or registered mail, postage prepaid, addressed as follows:
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If to Consultant: Xxxxx X. Xxxxxx
00000 Xxxxx Xxxxx
Xxxxxxx Xxxxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxx LLP
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
If to Unilab: Unilab Corporation
00000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Corporate Secretary
With a copy to: Unilab Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Legal Department
The above addresses for the purpose of receiving notices hereunder may be
changed by giving written notice of such change in the manner provided
herein for giving notices.
IN WITNESS WHEREOF, this Agreement has been executed at Tarzana,
California on December 1, 1999.
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
UNILAB CORPORATION, a Delaware corporation
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Executive Vice President,
Secretary, and General Counsel
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