Exhibit 10.28
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is
made as of April 2, 2002 by and among Unilab Corporation ("Unilab"), Quest
Diagnostics Incorporated ("Quest Diagnostics" and, together with Unilab, the
"Company") and Xxxxx X. Xxxxx (the "Executive").
WHEREAS, the Company and the Executive have an existing employment
agreement between them made as of November 11, 1993 and amended as of November
1, 1996 (the "Existing Agreement"); and
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of the
date hereof, among Quest Diagnostics, Quest Diagnostics Newco Incorporated
("Newco") and Unilab (the "Merger Agreement"), it is intended that Unilab will
merge with and into Newco (the "Merger");
WHEREAS, the Executive, directly, and indirectly through family
members, is currently the owner of (i) 49,316 shares of Unilab common stock and
(ii) options to purchase 398,540 shares of Unilab common stock, with an
aggregate value, based on the consideration payable in the Merger, equal to
$9,170,591.80;
WHEREAS, as a condition and as an inducement to Quest Diagnostics to
enter into the Merger Agreement, the Executive has agreed to enter into this
Agreement, restricting the Executive's future activities as outlined herein and,
accordingly, it is a condition to the consummation of the transactions
contemplated by the Merger Agreement that the Executive enter into this
Agreement with Quest Diagnostics; and
WHEREAS, the Company and the Executive desire to enter into this
Agreement, which shall supersede the Existing Agreement and govern the terms of
the Executive's continued employment with the Company on and following the
Merger.
NOW THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom the parties hereby agree as follows.
1. EFFECTIVE DATE; EMPLOYMENT:
(a) This Agreement shall become effective as a valid and
binding contract as of the date first above written. However, the operative
provisions hereof shall not be effective until the date on which the Acceptance
Date (as defined in the Merger Agreement) occurs (the "Effective Date"), and
this Agreement shall be substituted for and supersede the Existing Agreement in
its entirety as of such date. This Agreement shall be void and of no further
force or effect if the Merger Agreement is terminated, and in such event the
Existing Agreement shall be reinstated in its entirety as of the date of such
termination. Notwithstanding the foregoing, and notwithstanding anything to the
contrary contained in the Existing Agreement, the Executive
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agrees that neither the Offer (as defined in the Merger Agreement) nor any other
transaction contemplated by the Merger Agreement shall be deemed to constitute a
"Change of Control" for purposes of the Existing Agreement.
(b) The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve, subject to the provisions of this Agreement,
as an employee of the Company, effective as of the Effective Date. The Executive
shall perform such duties and have such responsibilities as are from time to
time assigned to the Executive by the Regional Vice President, California and/or
the Chief Financial Officer of Quest Diagnostics or their designees. The
Executive agrees to devote all of his business time, attention and energies to
the performance of the duties assigned to him hereunder, and to perform such
duties faithfully, diligently and to the best of his abilities and subject to
such laws, rules, regulations and policies from time to time applicable to the
Company's employees. The Executive agrees to refrain from engaging in any
activity that does, will or could reasonably be deemed to conflict with the best
interests of the Company.
2. TERM: The term of the Executive's employment pursuant to this
Agreement (the "Term") shall commence on Effective Date and shall expire on the
first anniversary of the Effective Date (the "Expiration Date"), unless sooner
terminated in accordance with Section 6 hereof. There shall be no extension of
this Agreement other than by written instrument executed by both parties hereto.
3. COMPENSATION:
(a) Salary: The Executive's base salary ("Salary") shall be at
the annual rate of $225,000, payable in accordance with Quest Diagnostics'
regular payroll practices.
(b) Incentive Bonus Plans: The Executive will be entitled to
participate in any incentive bonus plans applicable to senior executives of
Quest Diagnostics as such plans are amended from time to time in accordance with
the terms thereof. Commencing fiscal year 2002, the Executive will be eligible
to receive an annual bonus award, in cash, with a target payout equal to forty
percent (40%) of his Salary if certain performance targets set forth by such
plans are reached.
(c) Unvested Unilab Class C3 Options: In accordance with the
terms of the Merger Agreement, the vesting for all of the Executive's
outstanding unvested Unilab Class C3 Stock Options shall be accelerated on the
Acceptance Date, and all such options shall become immediately exercisable on
such date. The Executive may elect to exercise any of his vested Unilab Class C
Stock Options in accordance with the terms and conditions set forth in Section
4.04 of the Merger Agreement.
(d) Unvested Unilab Class A Stock Options: In accordance with
the terms of the Merger Agreement, the vesting for all outstanding unvested
Unilab Class A Stock Options will be accelerated on the Acceptance Date, and all
such options shall become immediately exercisable as of such date. The Executive
may elect to exercise any of his vested Unilab Class A Stock Options in
accordance with the terms and conditions set forth in Section 4.04 of the
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Merger Agreement.
(e) Benefits and Perquisites: The Executive shall receive all
benefits and perquisites in accordance with the terms and conditions of such
benefits plans and perquisite arrangements maintained from time to time by Quest
Diagnostics. The Executive shall continue to receive an automobile allowance of
$800.00 per month through December 31, 2002.
(f) Supplemental Retirement Plans and Deferred Compensation
Plans: The Executive's participation in the Unilab Supplemental Retirement Plans
and Deferred Compensation Plans shall cease upon the Effective Date. The
Executive shall be eligible to participate in the Quest Diagnostics Supplemental
Deferred Compensation Plan (the "SDCP") in accordance with the rules and
conditions of such plan. Amounts currently accrued by the Executive in the
Unilab Supplemental Retirement Plan and Deferred Compensation Plan may be
cashed-out and/or rolled over to the SDCP (but not retained in such Unilab
plans) at the election of the Executive in accordance with the rules and
conditions of such plans.
4. CONFIDENTIAL INFORMATION: The Executive acknowledges that the
information, observations, and data obtained by him during the course of the
performance of his duties under this Agreement and the Existing Agreement
concerning the business and affairs of the Company, its subsidiaries and
affiliates (the "Company Group") are the property of the Company, including
information concerning acquisition opportunities in or reasonably related to the
Company Group's business or industry of which the Executive becomes aware prior
to or during the Term. Therefore, the Executive agrees that he will not disclose
to any unauthorized person or use for his own account any such information,
observations or data without the written consent of the Board of Directors of
Quest Diagnostics, unless and to the extent that such information, observations
or data (i) becomes generally known to and available for use by the public other
than as a result of the Executive's acts or omissions to act or (ii) was or
becomes available to the Executive on a nonconfidential basis from a source
other than the Company, provided that such source is not bound by a
confidentiality obligation to the Company. Notwithstanding anything to the
contrary set forth herein, in the event that the Executive becomes legally
compelled to disclose any of such information, observations, or data, he shall
provide the Company with prompt written notice so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. In the event that such protective order or other
remedy is not obtained, or that the Company waives compliance with provisions of
this Agreement, the Executive shall furnish only that portion of such
information, observations or data or take only such action as is legally
required by binding order and shall exercise his best efforts to obtain reliable
assurance that confidential treatment shall be accorded any such information,
observations or data so furnished. In any event, the Executive may disclose any
of such information, observations, or data to the extent necessary in connection
with any legal action he institutes to enforce the terms of this Agreement. The
Executive agrees to deliver to the Company at the Expiration Date, or at any
other time the Company may request in writing, all memoranda, notes, plans,
records, reports, and other documents (and copies thereof) relating to the
Business (as hereinafter defined) of the Company Group (including, without
limitation, all acquisitions prospects, lists and contact information) which he
may then possess or have under his control.
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5. NON-COMPETE AND NON-SOLICITATION:
(a) The Executive acknowledges and agrees that this Section 5
is a necessary term and condition of his employment and continued employment and
that all payments and benefits under Section 6 of this Agreement are in
consideration for and conditioned upon his compliance with this Section 5.
(b) During his employment with the Company and for a period
ending on the second anniversary of the date of his termination of employment
for any reason, including without limitation, expiration of this Agreement (the
"Non-Compete Period"), the Executive will not provide services, in any capacity,
whether as an employee, consultant, independent contractor, or otherwise, to any
person or entity that provides products or services that compete with the
Business of the Company Group, including AmeriPath Inc., Dianon Systems, Inc.,
Dynacare Inc., Impath Inc., Laboratory Corporation of America Holdings, LabOne,
Inc., Pharmchem Laboratories Inc., Specialty Laboratories, Inc., and Urocor Inc.
and their respective successors or assigns. The term "Business" shall include
(a) clinical laboratory, pathology, toxicology, pharmaceutical testing, clinical
trials; (b) Clinical Laboratory Medical Information Services (as hereinafter
defined); (c) clinical laboratory testing kits; and (d) any other product or
service which the Company Group planned to, or did provide during the one year
period prior to the termination of the Executive's employment. "Clinical
Laboratory Medical Information Services" shall mean medical information services
that contain a substantial clinical laboratory data component.
(c) Following a written request by the Executive, the Company
shall advise him in writing no later than thirty calendar days following such
request as to whether, in the exercise of its reasonable discretion, the Company
views any proposed activity contemplated by the Executive as constituting a
competing Business.
(d) The Executive acknowledges that, in the event of the
termination of employment with the Company for any reason, the Executive shall
be able to earn a livelihood without violating the restrictions contained in
paragraph (b) above, and that the Executive is able to earn a livelihood without
violating any such restrictions.
(e) During the Non-Compete Period, the Executive shall not
directly, or indirectly through another entity or otherwise induce or attempt to
induce any employee of the Company Group to leave the employ of the Company
Group, or in any way interfere with the relationship between the Company and any
employee thereof; provided, however, that the forgoing will not prohibit a
general solicitation to the public or general advertising.
(f) During the Non-Compete Period, the Executive shall not
directly, or indirectly through another entity or otherwise induce or attempt to
induce any customer, supplier, licensee or other business relation of the
Company Group to cease doing business with the Company Group, or in any way
interfere with the relationship between any such customer, supplier, license or
business relation and the Company Group.
(g) The Executive and the Company agree not to make any
derogatory comments about the other party or any such other party's subsidiaries
or affiliates, current or
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former directors, officers or employees or take any action which a reasonable
person would expect, directly or indirectly to impair the goodwill or business
reputation or good name of the other party or any such other party's
subsidiaries or affiliates.
(h) Each covenant set forth herein shall be construed to be
separate and distinct from every other covenant set forth herein. In the event
that any court or arbitrator shall declare any of such covenants to be invalid,
then the remaining covenants and obligations shall be deemed independent,
divisible and enforceable. It is further agreed that the inclusion of the
covenants as specified in this agreement are reasonable and necessary. If any
provision of this agreement is held to be unenforceable because of the scope of
such provision, the court or arbitrator making such determination shall have the
power to modify the terms of such provision(s) and said provision shall then be
enforceable.
(i) The Executive agrees that the conduct of any activities
prohibited by this Agreement will be a breach of his business relationship with
the Company and will result in substantial irreparable injury to the Company,
and that the Company may not be adequately compensated at law for such breach.
Accordingly, the Executive consents to entry of injunctive or other appropriate
relief against him with respect to any such breach or threatened breach, without
bond or security. The Executive also agrees that he shall be enjoined from
violating the provisions of paragraphs (b), (e) and (f) above for an additional
period commensurate with the term of the breach, in the event of a determination
by a court that such provisions have been breached by the Executive.
6. TERMINATION:
(a) Notwithstanding any provision of this Agreement to the
contrary, the Term and the employment of the Executive hereunder shall terminate
on the first to occur of the following dates:
(i) the date of the Executive's death;
(ii) the date on which the Company shall give the
Executive notice of termination on account of
Disability (as hereinafter defined);
(iii) the date on which the Company shall give the
Executive notice of termination for Cause (as
hereinafter defined);
(iv) the Expiration Date; or
(v) the date on which (A) the Company shall give the
Executive notice of termination for any reason other
than the reasons set forth in (i) through (iv),
above, or (B) the Executive terminates his employment
for Good Reason (as hereinafter defined). In the
event of the termination of the Executive's
employment pursuant to this Section 6(a)(v), the
Executive shall be entitled to receive, subject to
his execution of a general release of all claims
against the Company Group in a form as set forth in
Exhibit A hereto, as his sole and exclusive remedy,
(1) payment of his Salary for 24 months and an
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amount equal to $375,000 (paid in installments at
such times as the Executive would normally receive
payroll checks as though he remained employed through
such period) and (2) continuation of medical benefits
coverage for the Executive and any covered dependents
during such 24 month period. The Executive shall have
no obligation to mitigate damages or seek or accept
other employment as a condition to the receipt of the
foregoing payment(s).
(b) The Company shall be entitled at any time, upon notice to
the Executive, to terminate his employment hereunder on account of the
Disability of the Executive or for Cause, and, in either of such events, or in
the event that the Executive's employment hereunder shall terminate on account
of death, the Executive or his estate, conservator or designated beneficiary, as
the case may be, shall be entitled to payment of any earned or accrued but
unpaid Salary and payment for accrued and unused vacation days, through the date
of such termination and in the case of a termination of the Executive's
employment other than for Cause, any annual bonus for the completed fiscal year
prior to such termination which was earned or accrued but unpaid prior to such
termination. Following any such termination, neither the Executive nor his
estate, conservator or designated beneficiary shall be entitled to receive any
Salary or other payments or benefits provided for hereunder with respect to any
period after such termination.
(c) In the event that the Executive resigns his employment
during the period commencing on the Expiration Date and ending on the tenth
business day following the Expiration Date, the Executive shall be entitled to
receive, subject to his execution of a general release of all claims against the
Company Group in a form as set forth in Exhibit A hereto, as his sole and
exclusive remedy, payment of his Salary for 24 months and an amount equal to
$375,000 (paid in installments at such times as the Executive would normally
receive payroll checks as though he remained employed through such period).
(d) For purposes of this Agreement, "Disability" shall mean
the Executive's inability to substantially perform his duties hereunder for a
period of six months as a result of the Executive's physical or mental
condition, including, without limitation, a condition entitling him to benefits
under any sick pay or disability income policy or program of the Company. In any
such event, the Company, in its sole discretion may terminate this Agreement by
giving notice to the Executive of termination for Disability. The Executive
agrees to submit to such medical examinations as may be necessary to determine
whether a Disability exists, pursuant to such reasonable requests made by the
Company from time to time.
(e) For purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following, as reasonably determined by the Company:
(i) the willful failure or refusal by the Executive to
perform his duties hereunder;
(ii) any willful, intentional or grossly negligent act by
the Executive having the effect of materially
injuring the business or reputation of the Company
Group, and any divisions the Executive may manage;
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(iii) willful misconduct by the Executive, including
insubordination, in respect of the duties or
obligations of the Executive under this Agreement;
(iv) the Executive's conviction of a felony or misdemeanor
involving moral turpitude (including entry of a nolo
contendere plea);
(v) any misappropriation or embezzlement of the property
of the Company Group (whether or not a misdemeanor or
felony); or
(vi) a material breach of any one or more of the covenants
of this Agreement by the Executive.
Notwithstanding the foregoing, in the event of any termination
for Cause where the underlying events and the consequences arising therefrom are
reasonably amenable to cure by the Executive, such termination shall only become
effective if the Company shall first give the Executive written notice of such
Cause, which notice shall identify in reasonable detail the manner in which the
Company believes that the Executive has not performed such duties and indicates
the steps required to cure such failure or refusal, and the Executive shall fail
within sixty business days of receipt of such notice to substantially remedy or
correct the same.
(f) For purposes of this Agreement, "Good Reason" shall mean
any of the following conditions or events which condition(s) or event(s) remain
in effect sixty days after written notice is provided by the Executive to the
Company which notice shall identify in reasonable detail such conditions or
events:
(i) a reduction in the Executive's Salary; or
(ii) the relocation of the Executive's principal place of
work more than thirty-five miles from his current
principal place of work.
7. RETURN OF COMPANY PROPERTY: The Executive agrees that following the
termination of his employment for any reason, he shall return all property of
the Company Group, and any divisions thereof he may have managed which is then
in or thereafter comes into his possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by the Company to the
Executive.
8. OWNERSHIP OF COMPANY PROPERTY, DISCOVERIES, ETC.:
(a) The Executive shall promptly disclose to the Company or
any person designated by it any and all discoveries, improvements, methods,
trade secrets, formulas, data, programs, flow charts, processes, and other
information, data, and tangible materials, whether or not subject to patent,
trademark, copyright, trade secret, or mask work protection and whether or not
reduced to practice, which are made, created, authored, conceived, or reduced to
practice by the Executive, either alone or jointly with others, during the
period of employment with the
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Company which: (i) relate to the actual or anticipated business, activities, or
research, of the Company Group or (ii) result from or are suggested by work
performed by the Executive for the Company Group (whether or not made, created,
authored, conceived or reduced to practice during normal working hours or on the
premises of the Company) or (iii) result, to any extent, from use of the
Company's premises or property (collectively, "Inventions"). The Executive
acknowledges that, as between the Executive and the Company, the Company is to
be the sole and exclusive owner of any and all such Inventions. All such
Inventions are to he considered "works made for hire", and the Executive hereby
disclaims any and all interest in any of such Inventions and waives any right of
attribution, droit morale or similar right therein.
(b) In the event that title to any of the Inventions or any
part thereof, does not, by operation of law, vest in the Company or such
Inventions are found not to be "works made for hire," the Executive, to the full
extent permitted by law, hereby irrevocably assigns to the Company, without
further consideration, all right, title and interest the Executive may acquire
throughout the universe and in perpetuity, in all such Inventions and all copies
of them, in whatever medium fixed or embodied, and in all records, notes,
reports or disks relating thereto in the Executive's possession or under his
control, including all proprietary rights therein, the right to modify and
create "derivative works" thereof and the right to register and renew the same.
(c) The Executive agrees to assist the Company, at the
Company's request, whether before or after the termination of employment and
however such termination may occur, in perfecting, registering, maintaining, and
enforcing, in any jurisdiction, the Company's rights in the Inventions by
performing all acts and executing all documents deemed necessary by the Company
including, without limitation, documents confirming the assignment of such
Inventions to the Company. The Executive will be reimbursed for all
out-of-pocket costs incurred in connection with the foregoing, and, if the
Executive's cooperation is requested by the Company after the termination of
employment, then the Company will compensate the Executive at a reasonable rate
for the time actually spent by the Executive in rendering such assistance. The
Executive hereby irrevocably appoints the Company to be his attorney-in-fact, in
his name and on his behalf to execute any document and to take any action for
the purpose of giving the Company the full benefit of the assignment provisions
set forth in paragraph (b) above.
9. PROMISSORY NOTE: The May 1, 1998 promissory note (the "Promissory
Note") payable by the Executive to Unilab in the principal amount of $150,000
and bearing no interest before May 1, 2003, shall remain outstanding and
continue to be subject to its current terms and conditions; provided, however,
that if the Executive's employment with the Company terminates for any reason
prior to the maturity date of the Promissory Note, such Promissory Note shall
become due and payable in full, and the Executive agrees that the Company may
set off the amount owing by the Executive under such Promissory Note against any
amounts due from the Company to him.
10. PARACHUTE PAYMENT ADJUSTMENTS: In the event that any payments due
pursuant to this Agreement constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") (as
determined by Quest Diagnostic's outside auditors on the time such payment is
due) and, but for this Section 10, would be subject to the excise tax imposed by
Section 4999 of the Code, the Company shall reduce the aggregate
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amount of such payments such that the present value thereof (as determined under
the Code and the applicable regulations) is equal to 2.99 times the Executive's
"base amount" as defined in Section 280G(b)(3) of the Code. The parties hereto
acknowledge and agree that, assuming the Executive performs his obligations
hereunder, they currently believe that the consideration payable hereunder
should be "reasonable compensation" and should not constitute "parachute
payments" within the meanings of such terms for the purpose of the application
of Sections 280G and 4999 of the Code and income tax regulations thereunder.
11. COMPANY POLICIES: The Executive agrees that he will adhere to the
Company policies as in effect from time to time, including without limitation,
policies relating to the pre-clearance of transactions, "window periods" and any
other applicable federal and state laws.
12. SURVIVAL: This Agreement (except for the provisions of Section 3)
shall survive the termination of the Executive's employment with the Company and
shall remain in full force and effect after such termination.
13. ENTIRE AGREEMENT: This Agreement sets forth the entire agreement
between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and nature
between them and neither party shall be bound by any term or condition other
than as expressly set forth or provided for in this Agreement. This Agreement
may not be changed or modified except by an agreement in writing, signed by the
parties hereto.
14. WAIVER: The failure of either party to this Agreement to enforce
any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by either
party hereto of any breach or default by the other party of any term or
provision of this Agreement shall not operate as a waiver of any other breach or
default.
15. SEVERABILITY: In the event that any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more of
the provisions contained in this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.
16. NOTICES: Any notice given hereunder shall be in writing and shall
be deemed to have been given when delivered by messenger or courier service
(against appropriate receipt), or mailed by registered or certified mail (return
receipt requested), addressed as follows:
If to the Company:
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With a copy to:
If to the Executive:
17. DISPUTE RESOLUTION: Any dispute, controversy or claim arising
between the parties relating to this Agreement, or otherwise relating in any way
to the Executive's employment with the Company (whether such dispute arises
under any federal, state or local statute or regulation, or at common law),
shall be resolved by final and binding arbitration before a single arbitrator.
The arbitrator shall be selected in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association pertaining at the time
the dispute arises. In such arbitration proceedings, the arbitrator shall have
the discretion, to be exercised in accordance with applicable law, to allocate
among the parties the arbitrator's fees, tribunal and other administrative and
litigation costs and, to the prevailing party, attorney's fees. The award of the
arbitrator may be confirmed before and entered as a judgment of any court having
jurisdiction of the parties. This arbitration provision shall not apply with
respect to any application by the Company for injunctive relief under Section 5
of this Agreement.
18. GOVERNING LAW: The Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of law rules.
19. DESCRIPTIVE HEADINGS: The paragraph headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
20. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.
21. SUCCESSORS AND ASSIGNS: Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be enforceable by the Executive and
the Company and their respective successors and assigns, provided that the
Executive's rights and obligations under this Agreement shall not be assignable
and the Company may assign any or all of its rights to any parent or affiliated
entity.
22. WITHHOLDING: All amounts payable hereunder shall be subject to
applicable required withholding of income, employment and payroll taxes.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
THE EXECUTIVE
/s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx
UNILAB CORPORATION
By: /s/ Xxxxx Xxx
------------------------------------
Name: Xxxxx Xxx
Title: Executive Vice President,
Secretary and General Counsel
QUEST DIAGNOSTICS INCORPORATED
By: /s/ Xxx X. Xxxxxxxxxx
------------------------------------
Name: Xxx X. Xxxxxxxxxx Xx.
Title: Vice President and Secretary
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