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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
OCTOBER 24, 1996
----------------
(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
- --------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction or File Number) Identification
organization) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
-------------------------------------------------------
(Address of principal executive offices)
910-229-1127
------------
(Registrant's telephone number, including area code)
Item 5. Other Events
As of October 24, 1996, the following is a listing of
individuals appointed as Executive Officers and members
of the management committee of the Company by the Board
of Directors:
Name Age Office
- --------------------- --- -----------------------------------
James B. Powell, M.D. 58 President and Chief Executive
Officer
Wesley R. Elingburg 40 Executive Vice President, Chief
Financial Officer and Treasurer
Larry L. Leonard (1) 55 Executive Vice President, Southwest
and West Divisions
Bradford T. Smith 43 Executive Vice President, General
Counsel, Corporate Compliance
Officer and Secretary
Stevan R. Stark (1) (2) 49 Executive Vice President, Alliances
and Sales Coordination
Ronald B. Sturgill (1) (2) 60 Executive Vice President, Human
Resources and South Atlantic Division
David C. Weavil 45 Executive Vice President and Chief
Operating Officer
William M. Meilahn (1) (2) 55 Senior Vice President, Chief
Information Officer
Mr. Haywood D. Cochrane, Jr. resigned his position as
Executive Vice President, Chief Financial Officer and
Treasurer effective October 24, 1996. In conjunction with
certain projects, Mr. Cochrane has agreed to provide
advisory services to the Company on an as needed basis
until those projects have been completed.
(1) New member of the management committee effective October 1, 1996
(2) Appointed an Executive Officer of the Company effective October 1, 1996
Effective August 12, 1996, Timothy J. Brodnik, Executive Vice
President, Sales and Marketing, John F. Markus, Executive
Vice President, Corporate Compliance, and Robert E.
Whalen, Executive Vice President, Human Resources resigned
from the Company.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(c) Exhibits
10.1 Special Severance Agreement dated June 28, 1996
between the Company and Timothy J. Brodnik.
10.2 Special Severance Agreement dated July 12, 1996
between the Company and John F. Markus.
10.3 Special Severance Agreement dated June 28, 1996
between the Company and Robert E. Whalen
10.4 Laboratory Corporation of America Holdings
Master Senior Executive Severance Plan.
SIGNATURES
Pursuant to the requirements of the
Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
------------------------------------------
(Registrant)
By: /s/ BRADFORD T. SMITH
---------------------------------
Bradford T. Smith
Executive Vice President,
General Counsel and Secretary
Date: October 24, 1996
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 Timothy J. Brodnik
("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:
a. Severance 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 Bradford T. Smith, 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/ TIMOTHY J. BRODNIK
----------------------------------
Timothy J. Brodnik
Sworn to and subscribed before me
the 8th day of August 1996.
/s/ BONNIE MARIE RATCLIFF
---------------------------------
Notary Public
My Commission Expires: 6/30/00
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ BRADFORD T. SMITH
----------------------------
Bradford T. Smith
Executive Vice President
SPECIAL SEVERANCE AGREEMENT
---------------------------
THIS AGREEMENT is made and entered into this the
12th day of July, 1996, by and between Laboratory
Corporation of America Holdings ("Company") and John
F. Markus ("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 January 1, 1991 as amended on April 1, 1991,
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:
a. Severance 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 $13,928 ("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. 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 Bradford T. Smith, 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 10th day of August, 1996, after the same was read over and
explained to me by my attorney.
/s/ JOHN F. MARKUS
------------------------------------
John F. Markus
Sworn to and subscribed before me
the 10th day of August 1996.
/s/ VALERIE MANUEL
----------------------------------
Notary Public
My Commission Expires: 8/31/98
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ BRADFORD T. SMITH
-----------------------------
Bradford T. Smith
Executive Vice President
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 Robert E. Whalen ("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:
a. Severance 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 Bradford T. Smith, 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/ ROBERT E. WHALEN
-------------------------------------
Robert E. Whalen
Sworn to and subscribed before me
the 8th day of August 1996.
/s/ DEBORAH STUART
-------------------------------------
Notary Public
My Commission Expires: 11/30/98
for LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ BRADFORD T. SMITH
---------------------------
Bradford T. Smith
Executive Vice President
LABORATORY CORPORATION OF AMERICA HOLDINGS
MASTER SENIOR EXECUTIVE SEVERANCE PLAN
Effective August 1, 1996
LABORATORY CORPORATION OF AMERICA HOLDINGS
MASTER SENIOR EXECUTIVE SEVERANCE PLAN
(Effective August 1, 1996)
PURPOSE
The purpose of this Laboratory Corporation of America Holdings
Master Senior Executive Severance Plan (the "Plan") is to provide
severance benefits for a select group of management employees.
The Plan is not intended to duplicate severance benefits provided
to certain employees who have entered into individual agreements
relating to employment or the termination thereof.
ARTICLE I
DEFINITIONS
When used in this Plan and initially capitalized, the following words
and phrases shall have the following meanings unless the context
clearly requires otherwise:
1.1 "Base Salary" shall mean, as to any Covered Employee for any
period, his annual base salary rate, as of his Qualifying Termination,
which is paid to him by the Company during his employment for such
period, before reduction because of an election between benefits or
cash provided under a plan of the Company maintained pursuant to
Section 125 or 401(k) of the Internal Revenue Code of 1986, as amended,
and before reduction for any other amounts contributed to any other
employee benefit plan.
1.2 "Cause" shall mean, as to any Covered Employee, that such
Covered Employee shall have committed prior to his termination of
employment with the Company any of the following acts:
(a) an intentional act of fraud, embezzlement, theft,
or any other material violation of law in connection
with his duties or in the course of his employment
with the Company;
(b) the conviction of or entering of a plea of nolo
contendere to a felony;
(c) alcohol intoxication on the job or current illegal drug
use;
(d) intentional wrongful damage to tangible assets of the
Company;
(e) intentional wrongful disclosure of material
confidential information of the Company and/or
materially breaching the noncompetition or
confidentiality provisions of the Company's Employment
Agreement and Confidentiality Statement or any other
noncompetition or confidentiality provisions covering
the activities of such employee;
(f) knowing and intentional breach of any employment
policy of the Company; or
(g) gross neglect or misconduct, disloyalty, dishonesty,
or breach of trust in the performance of the Covered
Employee's duties that is not corrected to the
Board's satisfaction within 30 days of the Covered
Employee receiving notice thereof.
1.4 "Change in Control" shall mean an event of a nature that:
(a) any "person" (as the term is defined in Sections
13(d) and 14(d) of the Securities Exchange Act of
1934, as amended ("the Exchange Act")) who is not
now presently but becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 30 percent or more of the Company's
outstanding securities except for any securities
purchased by any tax-qualified employee benefit plan
of the Company, or by Roche; or
(b) individuals who constitute the Board on the Effective
Date (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at
least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by
the Company's stockholders was approved by the
Incumbent Board, shall be for purposes of this clause
(b), considered as though he or she were a member of
the Incumbent Board; or
(c) a plan of reorganization, merger, consolidation, sale
of all or substantially all the assets of the Company
or similar transaction occurs in which the Company is
not the resulting entity, exceptif such plan, merger,
consolidation, sale or similar transaction is with
Roche; or
(d) a proxy statement soliciting proxies from shareholders
of the Company, by someone other than the current
management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of
the Company or similar transaction with one or more
corporations, except Roche, as a result of which the
outstanding shares of the class of securities not
issued by the Company shall be distributed.
1.5 "Company" shall mean Laboratory Corporation of America Holdings
and any successor corporation.
1.6 "Covered Employee" shall mean an employee described in
Article II of the Plan.
1.7 "Designated Group" shall mean any one of the groups ofemployees
designated as such on Schedule 1 attached hereto.
1.8 "Effective Date" shall mean August 1, 1996.
1.9 "Employer" shall mean the Company.
1.10 "Good Reason" shall mean:
(a) a reduction in base salary or targeted bonus as a
percent of base salary without the consent of the
employee;
(b) relocation to an office location more than 75 miles
from the employee's current office without the consent
of the employee; or
(c) a substantial reduction in job responsibilities and
duties or transfer to another job without the consent
of the employee.
Notwithstanding the foregoing, "Good Reason" shall not include a reduction
in base salary or target bonus of the Covered Employee where such
reduction is pursuant to a Company-wide reduction of base salaries and/or
target bonuses.
1.11 "Plan" shall mean the Laboratory Corporation of America Holdings
Master Senior Executive Severance Plan, as the same may hereafter be
amended from time to time.
1.12 "Qualifying Termination" shall mean:
(a) involuntary termination without Cause;
(b) voluntary termination with Good Reason; however,
notwithstanding the foregoing, the voluntary
termination by the Covered Employee must occur within
90 days after the occurrence of the Good Reason,
otherwise, such termination shall be considered
voluntary termination without Good Reason and not a
Qualifying Termination; or,
(c) Involuntary termination without Cause or Voluntary
Termination with Good Reason within 36 months following
a Change in Control.
Notwithstanding the foregoing, "Qualifying Termination" shall not mean
any termination of an employee's employment with the Company by reason
of death, disability, or retirement of the employee.
1.13 "Roche" shall mean Roche Holding Ltd. and any successor
corporation, and any company owned or controlled by Roche Holding Ltd.
or its successor.
1.14 "Severance Pay" shall mean the sum payable as set forth in
Section 3.1 of the Plan.
1.15 "Target Bonus" shall mean the mathematical product of multiplying
a Covered Employee's Base Salary by the percentage established as such
Covered Employee's target bonus factor under the annual incentive plan
for the period as of his Qualifying Termination. Other cash payments
or target incentives from long-term or synergy-related incentives shall
not be included in the Target Bonus.
1.16 "Term" shall mean the period commencing on the Effective Date and
ending at the time determined in accordance with Section 7.2.
ARTICLE II
COVERED EMPLOYEES
2.1 Status as a Covered Employee. Any management employee of the
Company designated by the Board to participate in the Plan and who is
at the time of a Qualifying Termination such a designated employee shall
be eligible to receive the benefits described in the Plan. As of the
Effective Date, those employees so designated by the Board are as set
forth on the attached Schedule 1.
ARTICLE III
SEVERANCE PAY
3.1 Amount of Severance. Subject to Sections 3.2 and 3.3, upon
the occurrence of a Qualifying Termination and the execution by the
employee of a Special Severance Agreement in substantially the form
attached as Exhibit A, which will contain, among other things,
noncompetition, nonsolicitation, duty of loyalty, confidentiality,
and release provisions that shall apply to each severance arrangement
during, and in certain instances after, the time when any severance
payments are being made to each employee, the Company shall pay
Severance Pay to a Covered Employee in an amount equal to the
mathematical product of multiplying the factor shown on Schedule 1 for
the Designated Group to which the employee belongs at the time of
termination, times such employee's Base Salary, plus Target Bonus.
Additionally, such Covered Employee shall be entitled, for up to six
months following a Qualifying Termination, to payment by the Company of
the Applicable Premium for the continuation of those health benefits for
which he or she qualified at the time of the Qualifying Termination,
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA).
3.2 Effect on Other Benefit Programs.
(a) The Severance Pay provided for hereunder is not intended
to duplicate any payments to which a Covered Employee
would otherwise be entitled under any individual
agreement relating to employment (or the termination
thereof) with the Company. Accordingly, no Severance
Payment shall be payable under the Plan to any employee
of the Company who is a party to such an agreement,
unless such employee 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 and other
consideration that would otherwise be provided to him
pursuant to any such agreement.
(b) By the acceptance of any Severance Pay under the Plan,
a Covered Employee shall be deemed to waive, release,
and forever discharge any and all claims to the payment
of any severance benefit under any severance plan or
program of the Company other than the Plan or Agreement.
3.3 Limitation on Amount of Severance Pay. Notwithstanding any other
provision of this Plan, the total of the Severance Pay plus the Applicable
Premiums to be paid to or on behalf of a Covered Employee shall not exceed
two times the Covered Employee's Annual Compensation during the year
immediately preceding his termination of service. "Annual Compensation"
means the total of all compensation, including wages, salary, and any other
benefit of monetary value, whether paid in the form of cash or otherwise,
that was paid as consideration for the employee's service during the year
or that would have been so paid at the employee's usual rate of
compensation if the employee had worked a full year.
3.4 No Duty to Mitigate. A Covered Employee shall not be required by
reason of the Plan to mitigate damages or the amount of his Severance Pay
under the Plan by seeking other employment or otherwise, nor shall the
amount of such payments be reduced or adjusted by compensation earned by
the Covered Employee as a result of employment after his Qualifying
Termination.
ARTICLE IV
CESSATION OF BENEFITS
4.1 Reemployment With the Company. If an employee already has
received benefits under the Plan, a Covered Employee who recommences
employment with the Company shall not be entitled to any further benefits
under the Plan.
4.2 Breach of the Special Severance Agreement. If an employee
breaches any material term of the Special Severance Agreement, he or
she shall be entitled to no further benefits under the Plan. For purposes
of this section, any violation of the confidentiality, noncompetition,
nonsolicitation, release, or duty of loyalty provisions shall be
considered "material."
ARTICLE V
DISTRIBUTION OF CASH PAYMENTS
5.1 Severance Pay. The Company shall pay the Covered Employee the
amount to which he or she is entitled under Section 3.1 as follows:
(a) 50 percent of the total Severance Pay due, less statutory deductions,
shall be paid within 30 days following the execution of a Special
Severance Agreement; and (b) the remaining 50 percent of Severance Pay,
less statutory deductions, shall be paid within 30 days following the
one-year anniversary of the execution of the Special Severance Agreement,
but only if the employee has complied in all material respects with the
terms and conditions of the Special Severance Agreement. Notwithstanding
the foregoing, all payments due hereunder shall be completed within 24
months of the termination of the Covered Employee's employment, but
payments shall be due hereunder only if the employee has complied in
all material respects with the terms and conditions of the Special
Severance Agreement.
ARTICLE VI
ADMINISTRATION OF PLAN
6.1 In General: Delegation. The Plan shall be administered by the
Board. The Board shall have sole and absolute discretion to interpret
where necessary all provisions of the Plan (including, without limitation,
by supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities in, the language of the Plan), to determine
the rights and status under the Plan of employees or other persons, to
resolve questions or disputes arising under the Plan, and to make any
determinations with respect to the benefits payable hereunder and the
persons entitled thereto as may be necessary for the purposes of the Plan.
Without limiting the generality of the foregoing, the Board is hereby
granted the authority (i) to determine whether a particular termination
of employment constitutes a "Qualifying Termination," and (ii) to determine
whether a particular employee is a "Covered Employee" under the Plan.
The Board may delegate any of its administrative duties, including,
without limitation, duties with respect to the processing, review,
investigation, approval, and payment of Severance Pay to a named
administrator or administrators. The Board's determination of the rights
of any employee hereunder shall be final and binding on all persons.
6.2 Regulations. The Board may promulgate any rules and regulations
that it deems necessary to carry out the purposes of this Plan, or to
interpret the terms and conditions of the Plan; provided, however, that
no rule, regulation, or interpretation shall be contrary to the provisions
of the Plan. The rules, regulations, and interpretations made by the Board,
and any determination of entitlement to benefits hereunder, shall be
final and binding on any employee or former employee of the Company.
6.3 Claims for Benefits and Review of Denials. A terminating Covered
Employee will be considered for benefits under the Plan automatically.
Any other employee of the Company who believes he is entitled to a
benefit under the Plan may make a claim for such benefit by submitting
a written statement to the Board of Directors setting forth the benefit
to which the claimant deems himself entitled, and the factual basis for
his claim.
The Board of Directors or its delegate (hereinafter "Board of
Directors") will make a determination of whether an employee recognized
by the Board of Directors as a Covered Employee is entitled to benefits
under this Plan no later than the day prior to the date of such employee's
termination. The Board of Directors will act on any other application
(including a claim of status as a Covered Employee made as part of a claim
for benefits) or make any other determination it is requested to make
under the Plan and will inform the employee of its decision within 30 days
of the date the application or request is made, unless a longer time is
required by special circumstances, in which event the claimant will be
notified in writing of the special circumstances and of the expected
decision date. The determination will be made no later than 90 days after
the date the application or request is received. If the determination is a
denial of a claim, the Board of Directors will notify the claimant in
writing of the denial, setting forth the specific reasons for the denial
and referring specifically to the Plan provisions on which the denial is
based. The notice also will contain a description of any additional
material or information necessary for the claimant to perfect the claim
and an explanation of why such material is necessary. The notice will
provide appropriate information to the claimant on steps to appeal the
denial. The claimant will have 60 days from the date of the notice to
request review of the decision by the Board of Directors and may review
pertinent documents and submit any additional information along with the
request for review that he or she deems pertinent. A decision on review
will be made within 60 days of receipt of the request for review, except
that the time for rendering the decision may be extended to 120 days when
special circumstances make it necessary to do so, in which event the
claimant will be notified in writing of the extension, informed of the
special circumstances, and informed of an expected decision date. The
decision on review, if it is a denial of the claim, will be in writing,
will specify the provisions of the Plan on which it is based, and will
set forth specific reasons for the denial.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
7.1 Right to Amend or Terminate. The Company reserves the right to
alter, amend, or terminate the Plan at any time. Any change in the terms
of the Plan (including termination of the Plan) that results from the
exercise of the Company's right to alter, amend, or terminate the Plan
may be applicable to active and/or former employees, including employees
who separated from service prior to the date on which the Company exercises
its power to alter, amend, or terminate the Plan, provided, however, that
no such change in the terms of the Plan will affect the amount of any
benefit that was paid prior to the date on which such change is adopted,
or any benefit promised in a Special Severance Agreement that was fully
executed prior to the date on which such change is adopted. Only the Board
of Directors may exercise the Company's reserved rights under this
paragraph. No officer, employee, or representative of the Company has the
authority to promise or represent that anyone's coverage and/or benefit
under the Plan is or will be exempt from the Company's reserved right
to alter, amend, or terminate the Plan at any time, unless such promise
or representation is in writing and signed by hand by the President of
the Company. Notwithstanding the foregoing, the Plan and a Covered
Employee's participation in the Plan shall not be terminated for 36 months
following a Change in Control.
7.2 Termination. This Plan shall continue in force until such time
as the Board shall terminate the Plan. Notwithstanding the foregoing,
the Plan and a Covered Employee's participation in the Plan shall not
be terminated for 36 months following a Change in Control.
ARTICLE VIII
METHOD OF FUNDING
8.1 Plan is Not Funded. The Company shall pay benefits under the Plan
from current operating funds. No property of the Company is or shall be,
by reason of this Plan, held in trust for any employee of the Company,
nor shall any person have any interest in or any lien or prior claim upon
any property of the Company by reason of this Plan or the Company's
obligations to make payments hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Limitation on Rights. Neither the establishment of the Plan nor
participation herein shall give any employee the right to be retained in
the service of the Company or any rights to any benefits whatsoever,
except to the extent specifically set forth herein.
9.2 Headings. Headings of Articles and Sections in this instrument
are for convenience only and do not constitute any party of the Plan.
9.3 Gender and Number. Unless the context clearly indicates otherwise,
the masculine gender when used in the Plan shall include the feminine, and
the singular number shall include the plural and the plural number the
singular.
9.4 Tax Withholding. The Company may withhold from any amounts
payable under this Plan all federal, state, city, or other taxes as shall
be required to be withheld pursuant to any law or governmental regulation
or ruling.
9.5 Governing Law. The Plan shall be construed and governed in all
respects in accordance with the internal substantive laws of the State of
Delaware.
EXECUTED at Burlington N.C. as of August 1st ,1996.
--------------- ----------
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ JAMES B. POWELL
------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------
Schedule 1 to
Master Senior Executive Severance Plan
Designated Groups, Covered Employees,
and Benefit Levels
Severance Benefit as a
Multiple of Base
Salary Plus Target
Designated Group Covered Employees Bonus (1)
- --------------------------------------------------------------------------
President President 2X
Executive Vice Presidents All Executive Vice Presidents 2X
Senior Vice Presidents All Senior Vice Presidents 1X
- --------------------------------
(1) Subject to the limitation contained in Section 3.3.
Exhibit A to
Master Senior Executive Severance Plan
SPECIAL SEVERANCE AGREEMENT
---------------------------
THIS AGREEMENT is made and entered into this the ______ day of
______________, 199_, by and between Laboratory Corporation of America
Holdings ("Company") and _____________________ ("Employee").
WHEREAS Employee and the Company agree that effective ___________,
199_ ("the effective date"), the employment relationship between them will
terminate [has terminated];
AND, WHEREAS the Board of Directors of the Company has approved
the adoption of the "Laboratory Corporation of America Holdings Master
Senior Executive Severance Plan Effective August 1, 1996" ("the SES Plan");
AND, WHEREAS Employee is a "Covered Employee" within the meaning
of Article 2.1 of the SES Plan;
[AND, WHEREAS Employee and _____________________________ (to
which the Company is a successor) previously had entered into an agreement
dated _________________ ("the Employment Agreement"), a copy of which
is attached hereto as Exhibit A solely for identification purposes, which
agreement is an "individual agreement relating to employment (or the
termination thereof)" within the meaning of that phrase in Section 3.2(a)
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. 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:
a. Severance Pay. The Company shall pay to Employee,
in two installments (which will be as nearly equal as
practicable), one of which shall be paid within 30 days of
Employee's execution of this Agreement, and the other of which
shall be paid within the first to occur of (1) one year and 30
days of Employee's execution of this Agreement, or (2) the day
immediately prior to the end of the 24 months following the
Employee's termination of employment, an amount equal to
[twice] his Base Pay (as defined herein), plus a Target Bonus
(as defined herein). For purposes of this Agreement, "Base Pay"
shall mean Employee's annual base salary, as of the Effective
Date, 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
Employee's Base Pay, multiplied by the percentage of Base Pay
established as Employee's target bonus percentage under the
[exact name of annual incentive plan]. Other cash payments or
target incentives from long-term or synergy-related incentives
shall not be included in the Target Bonus. The foregoing amount
shall be reduced as necessary so that the total payable shall
not exceed twice the Employee's annual compensation (as defined
in DOL Reg. 2510.3-2(b)(2)(i)) for the year prior to the year
in which the Employee's employment terminated. Employee and
Company agree that the total of [twice] Employee's Base Pay,
plus [twice] Employee's Target Bonus, is equal to
$___________________, and therefore (taking into account the
foregoing limitation) that the gross payment due Employee on
each of the two payment dates referred to above is equal to
$___________________. It is understood and agreed that the
actual payments made to Employee hereunder will be net ofall
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.
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 six months thereof.
c. Normal Plan Benefits. Employee shall be eligible
for such benefits under the [exact name of plans] as are
provided under the circumstances (taking into account
termination of employment as of the effective date) 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 for 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.
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 customers and the relationships and goodwill with
its customers are among the Company's most valuable assets.
ii. Employee acknowledges that as [title] 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 damageif Employee obtains
employment with or provides services to a company 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
any other corporation, firm, or business engaged in the
same or a similar competitive business with the Company
(or with any of its affiliates to which Employee has been
assigned or for which Employee had rendered substantial
services) in any geographical areas in which the Company
or any of such affiliates are then so engaged, provided
that Employee's ownership, directly or indirectly, of not
more than one 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.
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 the Employee's employment with the Company or
its predecessors (including specifically [exact names of
predecessors]) 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 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.
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 creditworthiness or business
prospects.
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 that 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 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
that refer to or relate in any way to such information and
shall return to the Company any of its equipment and
property which may then be in Employee's possession or
under Employee's personal control. 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 Employee's immediate family, his
attorneys, accountants, and other professional advisors,
or a prospective employer, except as otherwise required
by law.
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 Employee of the provisions of this Agreement, the Company shall be
entitled to an injunction restraining Employee from violating the terms
hereof, or from rendering services to any person, firm, corporation,
association, or other entity to which any confidential information, trade
secrets, or proprietary materials of the Company have been disclosed or
are threatened to be disclosed, or for which 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
Employee. Employee agrees that the issuance of the injunction described
in this paragraph 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 that all 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 _______________________ 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 considerations 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 modified,
changed, or otherwise altered 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 ______ day of _______________, 199_, after the same was read over
and explained to me by my attorney.
----------------------------
[name]
Sworn to and subscribed before me
the day of , 199__.
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- ----------------------------------
Notary Public
My Commission Expires: ___________
LABORATORY CORPORATION
OF AMERICA HOLDINGS
By:
--------------------------
Its:
--------------------------
STATE OF
------------------------
COUNTY OF
------------------------
The foregoing instrument was personally acknowledged
before me on _______________________, 1996, as
__________________________________ of
Laboratory Corporation of America Holdings, on
behalf of the Corporation
___________________________________________
[name]