SPECIAL SEVERANCE AGREEMENT
---------------------------
THIS AGREEMENT is made and entered into this the 28th
day of June, 1996, by and between Laboratory Corporation of
America Holdings ("Company") and Xxxxxxx X. Xxxxxxx
("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 May 1, 1991
as amended on 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 $16,412 ("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. Outplacement Assistance. Employee shall have the option to
receive up to $5,000 in reimbursement of the cost or payment for his
account for outplacement assistance and/or temporary office space
utilized in the year following the Effective Date.
e. 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 8th day of August, 1996, after the same was read over and explained
to me by my attorney.
/s/ XXXXXXX X. XXXXXXX
----------------------------------
Xxxxxxx X. Xxxxxxx
Sworn to and subscribed before me
the 8th day of August 1996.
/s/ XXXXXX XXXXX XXXXXXXX
---------------------------------
Notary Public
My Commission Expires: 6/30/00
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ XXXXXXXX X. XXXXX
----------------------------
Xxxxxxxx X. Xxxxx
Executive Vice President
