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 Xxxxxx 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 La Jolla Management Corp. (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 member or
trustee of the Investment and Administrative Committees of the
Company's Retirement and Savings Investment Plan and any similar
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 $17,366 ("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/ XXXXXX X. XXXXXX
-------------------------------------
Xxxxxx X. Xxxxxx
Sworn to and subscribed before me
the 8th day of August 1996.
/s/ XXXXXXX XXXXXX
-------------------------------------
Notary Public
My Commission Expires: 11/30/98
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ XXXXXXXX X. XXXXX
---------------------------
Xxxxxxxx X. Xxxxx
Executive Vice President
