EXHIBIT 10.38
September 1, 1998
Xxxxx Xxxxxxx, Ph.D.
0000 Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Dear Xxxxx:
This will confirm our recent conversations in connection with your
decision to leave LabCorp to pursue other interests. As we
discussed, we are anxious to maintain a vehicle to take advantage of
the special experience and knowledge that you possess after you
leave LabCorp and are pleased that you have expressed an interest in
entering into a Consulting Agreement with us beginning on the last
day of your employment with LabCorp. This letter agreement
("Agreement") sets forth the terms and conditions of the
consultantship which shall be as follows:
1. The field of the consultantship shall cover your providing
advice and assistance to Laboratory Corporation of America
Holdings and its subsidiaries and affiliates ("LabCorp") at the
request of the Chief Executive Officer ("CEO") in the following
areas:
a) Acting as the Company's liaison with Medical City of Dallas;
b) pricing programs;
c) operational implementation of regulatory compliance programs;
d) managed care programs;
e) cost control programs;
f) mergers and acquisitions;
g) Western Regional Consolidation;
h) new test analysis;
i) serving as LabCorp's Representative on corporate boards
as requested (subject to coverage in each case acceptable to
you under a policy covering Directors and Officers
Liability); and
j) such other projects as may be requested by the CEO from time
to time.
In undertaking any such project, you will be provided with an
objective or a set of objectives to achieve, and you will be
required to use your best professional judgment as to the manner and
means of achieving the stated objectives.
2. This Agreement shall be effective for a period of two (2) years
("Term") effective on the day following your retirement from
LabCorp, January 1, 1999. You agree to make reasonable efforts
during the Term to be available for consultation by phone or in
person for an average of eighty hours per month during the Term
(approximately two to three days per week on average, or
between one-hundred ten (110) to one-hundred twenty-five (125)
days during each year of the Term).
3. As compensation for the services to be rendered hereunder,
LabCorp agrees to pay you the following:
(a) A total of $350,000 per year, payable in equal
monthly installments on or before the fifteenth day of
each month during the Term;
(b) Following each year of the Term, at the sole
discretion of the CEO, you will be eligible to be
considered for a "Consultancy Success Bonus" based upon
the performance of the Company and your contribution to
the Company's performance;
(c) Reasonable travel and other out-of-pocket expenses
incurred in connection with the services provided under
this Agreement at the request of LabCorp, subject to the
travel and expense policy applicable to employees then in
effect at LabCorp.
4. You will be entitled to retain the 554,130 options previously
granted to you in connection with the Company's Employee Stock
Option Plan(s) ("Plan(s)") until the termination of this
Agreement at which time you will have the option of exercising
vested options in accordance with the terms of the Plan(s). In
addition, you will be entitled to be paid any Management
Incentive Bonus earned during 1998 at the time such bonus would
be otherwise paid in 1999. The Company will also pay the cost
of coverage under COBRA if you elect to continue coverage under
COBRA, for the eighteen months thereof, and pay you an amount
equal to the cost of six months COBRA coverage at the beginning
of the eighteenth month of the Term, provided that you supply
evidence reasonably acceptable to LabCorp that such amount is
used to obtain alternative medical and/or dental coverage for
yourself and/or any dependents. The Company will also use its
best efforts to have you covered by its disability, life
insurance, and excess personal liability plans to the same
extent as its Executive Officers. However, if LabCorp is unable
to obtain any such coverage, the Company shall pay you each year
during the Term an amount equal to its annual cost for such unavailable
coverage for you at the time that such payments would otherwise
be made to obtain such coverage, plus (in the case of life
insurance) an additional cash amount equal to .613 times
LabCorp's annual cost of life insurance coverage for coverage
in excess of $50,000 on your life for the year preceding the
Term, plus (in the cases of excess personal liability
insurance) an additional cash amount equal to .613 times
LabCorp's annual cost of excess personal liability insurance
coverage for you for the year preceding the Term. In addition,
when calculating your benefit under the Company's Pension
Equalization Plan, the compensation paid and time spent in
connection with this Consulting Agreement, shall be added to
the income earned and years of service calculation. For
example, if you serve as a Consultant for two (2) years and are
compensated at the rate of $350,000, two (2) years would be
added to your years of service and income of $350,000 for 1999
and 2000 would be used to calculate your PEP benefit.
5. Except as provided otherwise in this Agreement, or in the terms
of any documents governing any employee benefit plan maintained
by LabCorp, (i.e. retirement plans), you will cease to be a
participant in and will no longer have any coverage or
entitlement to benefits, accruals, or contributions under any
of LabCorp's employee benefit plans effective upon the
termination of your employment. You agree that the payments
made to you pursuant to this Agreement do not constitute
compensation for purposes of calculating the amount of any
benefits that you 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
plan.
6. It is understood that the payments and other benefits referred
to or to be made by LabCorp pursuant to this Agreement take
into account any accrued vacation, severance, and other
benefits to which you might otherwise be entitled. Therefore,
upon your termination and retirement from LabCorp, you shall
not be entitled to any accrued vacation, bonuses, severance
benefits, or other amounts, except as otherwise specified
herein.
7. You agree that during the Term you will not, directly or
indirectly, in any capacity, become associated with or assist,
any entity or person engaged in the same or a similar
competitive business with LabCorp or its affiliates in the
geographic areas in which LabCorp or its affiliates operates.
You also agree that during the Term you will not solicit sales
from any trade or business that was a customer of LabCorp or
its affiliates during your employment with LabCorp, nor will
you assist, directly or indirectly any person or entity to do
so. This duty of nonsolicitation is intended to be cumulative
with
your duty not to compete and neither shall be interpreted as a
limitation on the other. In addition, you agree that during
the Term you will not (and will not attempt, directly or
indirectly, to) encourage, solicit, or otherwise induce any
LabCorp employee, officer, or director to terminate their
employment with LabCorp or any affiliates or subsidiaries. In
addition, you agree not to communicate to anyone by word or
deed, directly or indirectly, whether characterized as fact or
opinion, or by suggestion or innuendo, any statement that could
reasonably be expected to cause any person to whom it is
communicated to have a lower opinion of LabCorp, its services,
or credit worthiness.
8. You agree to maintain in confidence and to keep secret
indefinitely, even beyond the termination of this Agreement and
not to use for any purpose, any unpublished, proprietary or
confidential information ("Information") disclosed to you by or
on behalf of LabCorp, or developed by you directly in
connection with this Agreement. All reports, drawings, data,
information, and property given to you by LabCorp hereunder or
any similar materials of any kind shall be held in confidence
by you and you agree not to use, reproduce, or transmit such
material to any other party without the prior written approval
of LabCorp. Said material shall remain the sole property, and
be immediately returnable to LabCorp, upon request by LabCorp.
9. Nothing contained in this Agreement shall be deemed to create
an employer/employee, principal/agent, or joint venture
relationship between the parties. Rather, you agree that the
services shall be performed pursuant to this Agreement as an
independent contractor.
10. Nothing in this Agreement shall prohibit you from performing
other consulting services not in conflict with the commitments
you have made in this Agreement or the restrictive covenants
that it contains.
11. During the Term, you agree that you will comply with all
applicable laws and governmental regulations pertaining to
services to be performed pursuant to this Agreement, and with
all Corporate Compliance Policies of LabCorp as in effect at
the beginning of the Term and as amended from time to time by
any amendment of which you have actual notice or with respect
to which you have been mailed a notice or a copy, by first
class mail, postage pre-paid, addressed to you at 0000
Xxxxxxxxx, Xxxxxx, XX 00000, or at such other address as you
may designate in a writing delivered to the General Counsel of
LabCorp.
12. LabCorp agrees to indemnify you and save you harmless from any
claims, demands, actions, suits, and liabilities with respect
to your services on LabCorp's behalf hereunder to the same
extent, and subject to the same conditions, as LabCorp
indemnifies and saves harmless senior executive employees
engaged in providing comparable services to LabCorp. As a
further inducement to LabCorp to enter into this agreement you
agree:
a) never to sue, or file any administrative action
against, LabCorp, its subsidiaries, parent corporation or
any other affiliates, their present or former directors,
officers, employees and agents, and any and all employee benefit
plans maintained by LabCorp and any and all committees and
agents thereunder, or any of them with respect to any
matter relating to or arising out of your employment by
LabCorp or its affiliates or termination thereof;
b) to agree to the Release, which is incorporated in
this Agreement as Paragraph 13; and
c) never to commit an act that is detrimental or
injurious to the reputation of LabCorp, its subsidiaries
or affiliates, or any of their present or former officers,
directors, employees, or agents.
It is understood and agreed, however, that this Paragraph 12
and the Release included in Paragraph 13 are not intended as a
release by you of any rights you may have as a present or
former officer or employee of LabCorp to indemnification by
LabCorp under its by-laws or Delaware Corporate law, or
pursuant to this Paragraph 12.
13. In consideration for LabCorp's agreement to provide you with
the payments and benefits listed in this Agreement, you, your
heirs, your legal representatives and assigns, fully release,
discharge, and covenant not to make any claims or demands or to
commence any type of legal action against LabCorp (including
administrative charges or lawsuits) regarding any matters
arising from your employment with or separation from LabCorp,
including, but not be limited to, all claims under Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C.
Section 2000e et seq.; the ADEA, as amended, 29 U.S.C.
Section 621-34; ERISA; COBRA; the Americans with Disabilities
Act of 1990, 42 U.S.C. Section 12101 et seq.; and any and all
other claims of which you now know 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. This Agreement is not intended to
waive any claims that may arise after the date the Agreement is
executed.
14. You agree that this Agreement does not constitute an admission
by LabCorp of any wrongdoing or liability. LabCorp expressly
denies any wrongdoing or liability.
15. If you breach any provision of this Agreement, LabCorp shall
have the right to discontinue permanently all further payments
hereunder (except as otherwise required by applicable law).
16. The remedy provided by Paragraph 15 shall not be deemed to be
the exclusive remedy for your breach of this Agreement, but
shall be in addition to all other remedies available at law or
equity to LabCorp. You understand and agree that any breach by
you of any of the covenants contained in this Agreement shall
entitle LabCorp to bring an action for
failure to comply with the terms of this Agreement and, further,
LabCorp shall be entitled to reasonable attorney's fees and
costs as part of such action. In addition, you agree that no
adequate remedy exists at law for breach of this Agreement and
that LabCorp shall be entitled to injunctive relief.
17. You agree that if, in any judicial proceedings, a court should
refuse to enforce or give effect to any covenant set forth in
this Agreement because of its term, scope or subject matter,
then, for the purpose of such proceedings, such unenforceable
covenant shall be deemed to be modified or eliminated to
permit, to the maximum extent permitted by law, its enforcement
or the enforcement of any covenant not held to be
unenforceable.
18. You may not assign this Agreement or any of your rights
hereunder. Subject to the foregoing, this Agreement shall
inure to the benefit of LabCorp, its successors and assigns,
and shall be binding upon you, your heirs, successors, and
legal representatives. Nothing hereinshall be construed to
prohibit you from retaining the services of any person, at your
expense, to assist you in rendering any services under this
agreement, or from assigning to any such person any work to be
performed in connection with rendering any services under this
agreement.
19. No modifications or amendments hereof shall be effective unless
made in writing and signed by you and an authorized
representative of LabCorp.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of North Carolina.
21. The terms and conditions contained herein constitute the entire
understanding and agreement of you and LabCorp with respect to
your termination and special Consultancy/Severance Agreement.
22. You are advised to consult an attorney before signing this
Agreement and the Release referred to in Paragraph 13. You
have twenty-one (21) days after your receipt of this Agreement
to consider the terms before signing.
23. Your signature below indicates that you have read and
understand all of the provisions of this Agreement and Release
referred to in Paragraph 13, and you have executed them
voluntarily and with full knowledge of the significance of all
provisions.
24. If you agree with the foregoing, please sign below and return
the originals to me. You should retain the enclosed copy of
this Agreement for your records.
25. You may revoke this Agreement within seven (7) days following
the date it is signed by you (the "Revocation Period") by
notifying my office by telephone and mailing written
confirmation of your revocation to the attention of the General
Counsel of LabCorp, during the Revocation Period. Subject to
Paragraph 26, unless revoked, this Agreement
shall become effective on the day immediately following expiration
of the Revocation Period.
26. LabCorp shall have no obligations under this Agreement if you
do not execute or if you revoke in accordance with Paragraph
25, this Agreement and the Release referred to in Paragraph 13.
On behalf of LabCorp, I thank you for your outstanding years of
service. My best wishes to you in your future endeavors.
Very truly yours,
Laboratory Corporation of America Holdings
By: _________________________________
Xxxxxx X. Xxx Xxxxx
Chief Executive Officer
AGREED TO AND ACCEPTED BY:
__________________________ DATE:___________________
Xxxxx Xxxxxxx, Ph.D.
