Exhibit 10.34
Execution Copy
Amended and Restated Employment Agreement
Between
Kenneth W. Freeman
&
Quest Diagnostics Incorporated
Dated as of January 1, 2003
TABLE OF CONTENTS
Page
1. Employment..........................................................................................2
2. Employment Term.....................................................................................3
3. Duties..............................................................................................3
4. Place of Performance................................................................................4
5. Cash Compensation...................................................................................4
(a) Base Salary...................................................................................4
(b) Annual Bonus..................................................................................4
(c) Deferral......................................................................................5
(d) Incentive Award Modifications.................................................................5
6. Equity Awards.......................................................................................6
7. Employee Benefits...................................................................................8
(a) General Provisions............................................................................8
(b) Transferred Executive Supplemental Retirement Plan............................................9
(c) Participation in Supplemental Deferred Compensation Plan.....................................15
(d) Vacation and Sick Leave......................................................................15
8. Applicable Taxes...................................................................................16
9. Miscellaneous Benefits.............................................................................16
(a) Business Travel and Expenses.................................................................16
(b) Executive Driver.............................................................................16
(c) Use of Aircraft..............................................................................16
(d) Non-Exclusivity..............................................................................17
10. Termination of Employment..........................................................................17
(a) Termination by the Company for Cause.........................................................17
(b) Termination by the Company for Excessive Absenteeism.........................................18
(c) Death........................................................................................19
(d) Termination by the Executive for Good Reason.................................................19
(e) Other Terminations...........................................................................20
(f) Notice of Termination........................................................................21
11. Compensation upon Termination or During Disability.................................................21
(a) Disability Period............................................................................21
(b) Death........................................................................................21
(c) Absence From Work............................................................................22
(d) Termination for Cause; Termination by the Executive other than for Good Reason...............23
(e) All Other Terminations.......................................................................24
(f) Change in Control............................................................................28
12. Non-Solicitation and Non-Competition...............................................................31
(a) Term of Non-Compete..........................................................................31
(b) Term of Non-Solicitation of Customers........................................................32
(c) Term of Non-Solicitation of Employees........................................................32
(d) Definitions Applicable to Section 12.........................................................32
(e) Expedited Arbitration Applicable to Section 12...............................................33
(f) Exclusive Property...........................................................................33
(g) Remedies.....................................................................................34
13. Arbitration........................................................................................35
14. Confidentiality....................................................................................36
15. Other Matters......................................................................................37
(a) Entire Agreement.............................................................................37
(b) Assignment...................................................................................37
ii
(c) Notices......................................................................................37
(d) Amendment/Waiver.............................................................................38
(e) Applicable Law...............................................................................38
(f) Severability.................................................................................38
(g) Successor in Interest........................................................................38
(h) No Mitigation................................................................................39
16. Indemnification....................................................................................39
17. Authority..........................................................................................39
iii
Execution Copy
Amended and Restated Employment Agreement
Between
Kenneth W. Freeman
&
Quest Diagnostics Incorporated
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is entered
into as of January 1, 2003 (the "Effective Date"), between QUEST DIAGNOSTICS
INCORPORATED (the "Company"), a Delaware corporation having its principal place
of business at One Malcolm Avenue, Teterboro, NJ 07608, and KENNETH W. FREEMAN
(the "Executive").
WHEREAS, Executive has been heretofore employed by the Company as Chairman
and Chief Executive Officer; and
WHEREAS, the Company considers the services of the Executive to be unique
and essential to the success of the Company's business; and
WHEREAS the Company and the Executive had previously entered into
employment agreements, the term of the last of which is to expire as of December
31, 2002, and the parties desire that the Executive continue as Chairman and
Chief Executive Officer of the Company; and
WHEREAS, the Company and the Executive now wish to enter into an omnibus
amendment of the current agreement of employment on the terms and conditions set
forth herein,
and which shall constitute the sole and exclusive agreement relating to the
employment of Executive by the Company.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, terms and conditions set forth herein, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed between the Company and the Executive that his existing
agreement shall be amended and modified in its entirety as follows:
1. Employment. The Company shall continue to employ the Executive in a
full-time capacity in the position set forth in this paragraph, and the
Executive shall continue to accept such employment upon the terms and
conditions set forth herein. Such employment shall be in the capacity of
Chief Executive Officer of the Company, and as a Director and Chairman of
the Board of Directors of the Company (the "Board") reporting directly to
the Board; provided that if during the Employment Term the Executive and
Board agree in writing that as a matter of corporate governance or
otherwise, it would be in the best interests of the Company for there to be
a separate Chairman of the Board and Chief Executive Officer, the Executive
may relinquish the position of Chief Executive Officer and shall continue
to serve solely as Chairman of the Board and as a Director of the Company
for (i) one year from the date the position of Chief Executive Officer is
relinquished ("CEO Relinquishment Date"), or (ii) until December 31, 2005,
whichever occurs first, and the Employment Term (as hereinafter defined)
shall be deemed to have terminated as of such date. Subject to the
provisions of the immediately preceding sentence, the Company shall use its
best efforts to cause the Executive to be nominated as a Director of the
Company and shall use its best efforts to cause the Executive to be elected
to the Board and as Chairman for the duration of the Employment Term.
2
2. Employment Term. Unless earlier terminated pursuant to Section 10 hereof,
and subject to Section 1, the term of Executive's employment under this
Agreement shall commence as of the Effective Date of this Agreement and
continue until December 31, 2005 (the "Employment Term").
3. Duties. During the Employment Term, the Executive shall, subject to the
supervising powers of the Board, have those powers and duties consistent
with his position as Chief Executive Officer and Chairman (or as Chairman
only, as the case may be), which powers as Chief Executive Officer shall in
all cases include, without limitation, the power of supervision and control
over, and responsibility for, the general management and operations of the
Company. Executive agrees to devote substantially all his working time and
attention to the business of the Company, provided that in the event he
becomes Chairman solely, the Executive shall devote the same full time,
attention, diligence and care to the business and affairs of the Company as
he did while Chief Executive Officer and Chairman prior to the CEO
Relinquishment Date. The Executive shall not, without the prior written
consent of the Company's Board of Directors, be directly or indirectly
engaged in any other trade, business or occupation for compensation
requiring his personal services during the Employment Term. Nothing in this
Agreement shall preclude the Executive from (i) engaging in charitable and
community activities or (ii) from managing his personal investments, or
(iii) serving as a member of the board of directors of an unaffiliated
company not in competition with the Company, subject, however, in each case
mentioned in Sections 3(i) and (iii) above, to written approval by the
Company's Board of Directors.
3
4. Place of Performance. The principal place of employment of the Executive
shall be at the Company's principal executive offices in Teterboro, New
Jersey; Lyndhurst, New Jersey; or New York, New York.
5. Cash Compensation. Executive shall be compensated for services rendered
during the Employment Term as follows:
(a) Base Salary. Executive shall be compensated at an annual base salary
of no less than $1,100,000 (one million one hundred thousand dollars)
(the base salary, at the rate in effect from time to time, is
hereinafter referred to as the "Base Salary"). The Company's Board of
Directors, or a committee thereof, may review and may, if appropriate,
at its discretion, increase this annual Base Salary during the
Employment Term consistent with Company practices and policies, to
reflect (among other factors) increases generally granted to other
senior executives of the Company and Executive's performance. The Base
Salary shall be payable in equal bi-weekly installments.
(b) Annual Bonus. In addition to the Base Salary provided for in Section 5
(a) above, the Company will provide annual cash bonus awards to
Executive under its Management Incentive Plan (MIP) in accordance with
the plan and any financial performance targets thereunder ("Annual
Bonus"). During the Employment Term, Executive's target incentive
opportunity under the Company's MIP will be no less than 140% of Base
Salary as in effect at the time such target incentive opportunity is
established, provided that in the event the Executive becomes Chairman
solely, the Executive shall be entitled to (i) a pro rata portion of
the Annual Bonus for that portion of the calendar year period for
which he served as Chief Executive
4
Officer (based on days served) immediately prior to the CEO
Relinquishment Date and (ii) an additional Annual Bonus with respect
to his service period following the CEO Relinquishment Date, provided
(A) he is then still in the employ of the Company (x) one year from
the CEO Relinquishment Date, or (y) December 31, 2005, whichever
occurs first or (B) such payment is otherwise due the Executive
pursuant to Section 11(e)(v) hereof, provided further, that if the
Executive serves as Chairman solely for less than twelve (12) months
because his employment is terminated by the Company for Cause or by
the Executive without Good Reason, the Executive shall have no right
to any part of the Annual Bonus payable with respect to service after
the CEO Relinquishment Date.
(c) Deferral. Pursuant to the terms of the Company's Supplemental Deferred
Compensation Plan ("SDCP"), the Executive may elect to defer from
payments of Base Salary and Annual Bonus and any other eligible
compensation such amounts as provided for under the SDCP.
(d) Incentive Award Modifications. Any equity and option awards made to
the Executive on or prior to the Effective Date and any equity and
option awards that may be made to the Executive during the Employment
Term, to the extent permitted by law, shall be subject to, and shall
benefit from, any favorable amendments or revisions to the terms and
conditions of any of the Company's Incentive Compensation Programs
(including, without limitation, any action resulting in extended
exercise periods) that may be implemented on or after the Effective
Date.
5
6. Equity Awards.
(a) On or about the February 13, 2003 meeting of the Board, the Executive
shall be awarded options to purchase a total of 700,000 (seven hundred
thousand) shares of the Company's common stock (the "Option Shares")
at an exercise price equal to the average of the quoted high and low
price per share of such common stock on the date of the award (the
"Option Grant"). The Option Grant shall vest as to 1/36th thereof as
of the Effective Date and 1/36th thereof monthly on the first day of
each and every month thereafter commencing February 1, 2003 unless
subject to accelerated vesting under this Agreement, provided, that in
the event the Executive becomes Chairman solely, the vesting schedule
as set forth above shall be deemed modified and further monthly
vesting shall cease and 12/36th of the Option Grant (or the remaining
portion of the Option Grant which has not yet vested if less than 12
months remain in the Employment Term) shall only vest if (A) the
Executive is then still in the employ of the Company (x) twelve months
from the CEO Relinquishment Date, or (y) December 31, 2005, whichever
occurs first, or (B) the provisions of Section 11(e)(v) apply;
provided further, that if Executive is Chairman solely for less than
twelve (12) months because his employment is terminated by the Company
for Cause or by the Executive without Good Reason, the Executive shall
have no right to any part of the Option Grant which accrues after the
CEO Relinquishment Date. Except as otherwise provided for in this
Agreement, vested Option Shares may not be exercised prior to December
31, 2006 or after December 31, 2012, and, unless otherwise provided
for herein, shall be governed by the terms of a stock option agreement
approved
6
by the Board, acting through its Compensation Committee consistent
with this Agreement.
(b) On or about the February 13, 2003 meeting of the Board, the Executive
shall be granted 100,000 shares of restricted stock ("Restricted
Stock") in the Company. The Restricted Stock shall vest as to 1/36th
thereof as of the Effective Date and 1/36th thereof monthly on the
first day of each and every month thereafter commencing February 1,
2003, unless subject to accelerated vesting under this Agreement;
provided, that in the event the Executive becomes Chairman solely, the
vesting schedule as set forth above shall be deemed modified and
further monthly vesting shall cease and 12/36th of the Restricted
Stock (or the remaining portion of the Restricted Stock which has not
yet vested if less than twelve (12) months remain in the Employment
Term) shall only vest if (A) the Executive is then still in the employ
of the Company (x) twelve (12) months from the CEO Relinquishment
Date, or (y) December 31, 2005, whichever occurs first or (B) the
provisions of Section 11(e)(v) apply; provided, further, that if
Executive is Chairman solely, for less than twelve (12) months because
his employment is terminated by the Company for Cause or by the
Executive without Good Reason, the Executive shall have no right to
any part of the Restricted Stock which accrues after the CEO
Relinquishment Date.
(c) Executive may be awarded additional compensation (such as stock
options, shares of incentive stock, or shares of restricted stock) at
the discretion of the Board (or any committee thereof) pursuant to the
present or any future incentive compensation or long-term compensation
program established for the senior
7
officers of the Company (collectively the "Incentive Compensation
Programs"), in an appropriate manner as determined in the sole
discretion of the Board (or any committee thereof) for the position
occupied by Executive and his performance therein relative to other
Company senior executives and consistent with Company pay practices.
Compensation granted under such plans will be subject to the actual
provisions and conditions applicable to such plans.
(d) The Executive agrees that he shall not (i) sell, transfer or otherwise
dispose of any Option Shares or Restricted Stock or any interest
therein other than in compliance with the Company's 1999 Employee
Equity Participation Program, the Non-Qualified Stock Option Agreement
between the Company and Executive relating to such Option Shares
and/or Restricted Stock, and the Company's Policy for Purchasing and
Selling Securities, (ii) enter into any transaction that is expected
to result in a financial benefit arising from a decline in the value
of the Company's stock or (iii) enter into any hedging transactions,
including, but not limited to the use of financial derivatives, short
sales or any other similar transactions, without the prior written
consent of the Board of Directors, in each case with respect to
Subsections (i), (ii) and (iii) until the Option Shares or Restricted
Stock are vested to the fullest extent provided for under this
Agreement, and all restrictions against exercise have expired or been
terminated.
7. Employee Benefits.
(a) General Provisions. Except as expressly provided in this Agreement,
Executive shall be eligible to participate in all employee benefit and
welfare plans offered by the Company to its senior executive officers
(e.g., Life Insurance, Medical &
8
Dental Insurance, Travel, Accident, STD & LTD, Flexible Spending
Accounts, Regular and Supplemental AD&D, Optional/Supplemental Life
Insurance, Profit Sharing, the 401(k) Plan and Employee Stock Purchase
Plan) (collectively referred to as the "Benefit Plans") on a basis
that is no less favorable to the Executive than that made available to
other senior executive officers of the Company provided that Executive
shall be reimbursed for the costs of his annual participation in a
comprehensive executive health assessment at a leading medical
institution of his choice.
(b) Transferred Executive Supplemental Retirement Plan.
(i) Executive will continue to be eligible to continue to participate
in the "Transferred Executive Supplemental Retirement Plan" (the
"SRP") established by the Company for certain executives of the
Company. Under the terms of such plan, Executive (or his spouse)
will be entitled to receive a nonqualified retirement benefit in
accordance with the terms and provisions of the plan, as
administered by the Board, subject to the modifications provided
for under the terms of this Agreement.
(ii) Notwithstanding any of the terms of the SRP to the contrary and
in addition to any amounts payable to Executive pursuant to
Section 11 of this Agreement, Executive shall be entitled to
receive a retirement pension benefit under this Agreement (the
"Company Non-Qualified Benefit") as provided for below. The
Company Non-Qualified Benefit shall, unless distributed in
another form as provided herein, be an entitlement to a series of
payments by the Company (such series of payments being
9
referred to hereinafter as the "Normal Form of Benefit")
consistent with the terms of the benefit provided for under the
SRP as modified by this Agreement, such payments to commence on
the later of (i) Executive's date of termination or (ii) the
Executive's 55th birthday (the later of (i) and (ii), the "SRP
Commencement Date") and shall (1) be fully equivalent in value to
the pension benefits Executive would have received under the
Corning non-qualified and qualified pension plans as in effect on
December 18, 1996 (including all across-the-board plan
improvements or benefit decreases and/or successor plans, in each
case adopted after December 18, 1996, other than as may result
from any bankruptcy, insolvency or other restructuring or
reorganization by Corning) and applicable to the class of
executives of which the Executive was a part while employed by
Corning; (2) be based on Executive's combined years of service
with the Company and Corning (but in any case, except as
otherwise specifically provided, herein, not less than 37 years
of service); (3) be computed without actuarial or other reduction
that would otherwise be applicable by reason of Executive's age
as of the SRP Commencement Date (the intent of this being to
provide a retirement benefit that has no actuarial or other
reduction because of its commencement on or after Executive's
attainment of age 55, but prior to age 60, the age at which an
unreduced retirement benefit would otherwise have been provided
to Executive under the SRP); (4) be based on all compensation
earned by Executive from Corning and Company through to the SRP
10
Commencement Date (provided that for purposes of such
computation, Executive's benefit eligible compensation shall be
the average of the three highest calendar years' annual cash
compensation (base and bonus and any other remuneration actually
taken into account under the SRP as administered by the Company
or Corning) received by the Executive prior to his termination of
employment (including any compensation (base and bonus) earned by
the Executive in any of such three calendar years and either
unpaid as of the close of such year or otherwise deferred to
subsequent years, provided that any such unpaid or deferred
compensation shall not again be taken into account in the year of
receipt)("Eligible Compensation"), and provided further that in
the case of Executive's termination as Chairman following the CEO
Relinquishment Date, the three highest calendar years may include
Eligible Compensation earned or otherwise payable to the
Executive for a calendar year in which his position as Chairman
terminates; and (5) provide the Executive with a lump sum payment
option (the "Lump Sum Option" as hereinafter defined and subject
to the terms and conditions hereinafter set forth), as an
alternative to the Normal Form of Benefit, payable as soon as
practicable following (but in no event later than forty-five (45)
days following, unless the parties mutually agree otherwise) (A)
Executive's attainment of age 55 or (B) his termination of
employment (whichever is later), which payment option may be
satisfied at the election of the Executive by means of a lump sum
cash distribution to the Executive, the distribution of an
annuity
11
contract to the Executive, or a combination of the two, where the
total out of pocket cost to the Company of such distribution is
equal to the amount that would be payable in the form of an
immediate lump sum cash payment if Executive elects the Lump Sum
Option payable in cash only (provided that in the event of a
change of control, either under this Agreement, the SRP or any
other applicable plan, the Executive shall be entitled to receive
an immediate lump sum cash payment that is the equivalent in
value to the payments that would otherwise be made to the
Executive in the Normal Form of Benefit commencing as of the SRP
Commencement Date, determined by using the methodology applicable
to the determination of the Annuity Cost, as set forth below, and
applied so as to obtain costs, determined as of the date the
immediate lump sum cash payment is to be made, of an annuity with
payments commencing as of the then applicable SRP Commencement
Date); provided that if the Executive terminates his employment
under this Agreement without Good Reason, or as a result of his
death or the Company terminates the Executive's employment under
this Agreement with Cause, then the pension benefits payable to
the Executive (or his spouse) under the SRP shall be determined
based only on actual service and Eligible Compensation through to
the Termination Date, and the deferred vested benefit payable to
the Executive (i) shall be computed on an accrued and unreduced
basis and without applying the reduction factors applicable to
deferred vested benefits under the SRP or Corning qualified plan,
and (ii) shall be
12
computed without applying the compensation and benefit limits of
Sections 401(a)(17) and 415 of the Internal Revenue Code, as
incorporated in Section 4.1(a)(7) of the SRP.
(iii) Amounts payable to the Executive in satisfaction of the Company
Non-Qualified Benefit shall be reduced by (i) any qualified plan
benefits actually received or reasonably anticipated as to be
received in the future by Executive under Corning's qualified
plan and (ii) any non-qualified retirement benefits actually
received or reasonably anticipated as to be received in the
future from Corning pursuant to any non-qualified retirement plan
of Corning (the amounts reflected in subclauses (i) and (ii)
shall be referred to collectively as the "Corning Offset
Payments"); provided that the value of the Corning Offset
Payments shall be expressed as a lump sum payment the amount of
which shall be determined by applying the same methodology and
procedures used to determine the Annuity Cost, as set forth
below.
(iv) The Lump Sum Option shall be available to the Executive only if
Executive provides written notice of his intent to elect the Lump
Sum Option prior to the first to occur of (A) the last day of the
calendar year prior to the calendar year in which the SRP
Commencement Date occurs or (B) the date that is six (6) months
prior to the SRP Commencement Date. The amount payable as an
immediate lump sum cash payment to the Executive as settlement in
full of his entitlement to the Lump Sum Option shall be equal to
the Annuity Cost (as that term is defined below). For
13
these purposes, the Annuity Cost shall be determined as follows:
At least sixty (60) days prior to the SRP Commencement Date, the
Company shall obtain and deliver to the Executive quotes on the
price at which an annuity is available providing for payments
commencing as of the SRP Commencement Date from seven (7)
providers from the group of Named Annuity Providers (as defined
below), the terms of each such annuity providing for payments to
the Executive and his spouse commencing as of the SRP
Commencement Date (i) that are the same as those that would
otherwise be payable by the Company under the Company
Non-Qualified Benefit in the Normal Form of Benefit (and without
giving effect to any taxes owed by the Company and Executive on
such payments, it being understood that the Executive and Company
will be responsible for the payment of their respective
applicable taxes upon actual payment to the Executive of the Lump
Sum Option and (ii) based on the Corning 75% joint and
survivorship option factors as in effect as of the Effective Date
(the "Annuity Cost Quotes"). The Named Annuity Providers are
Travelers, John Hancock, Met Life, Hartford, Principal, Pacific
Life and AIG, as long as the provider maintains a better than
"AA-" or equivalent rating (based on the providers' ability to
pay claims) from at least two of the three (or if there are only
two, both, or if there is only one, then the one) major credit
rating agencies, namely Standard and Poors, Fitch Rating Services
and Moody's Investor Services. In the event the provider does not
maintain the previously specified credit ratings, the provider
will
14
be dropped from the group of Named Annuity Providers. In the
event the group of Named Annuity Providers numbers less than
seven, the Company may designate an annuity provider which meets
the previously specified credit ratings to be added to the group
of Named Annuity Providers so that they number seven. The Annuity
Cost shall be the product of (x) 1.02 times (y) the price quote
of the Named Annuity Provider that represents the median of the
price quotes obtained from the Named Annuity Providers; provided
that in no event shall the Annuity Cost exceed the highest price
quote obtained from the Named Annuity Providers. In the event
there are no Named Annuity Providers, the Executive shall
designate an annuity provider acceptable to him and the price
quote provided by such designee shall be the Annuity Cost.
(v) The lump sum payment to the Executive in satisfaction of the Lump
Sum Option shall be subject to deduction by the Company by reason
of the Company's tax withholding obligations under applicable
federal, state or local statute.
(c) Participation in Supplemental Deferred Compensation Plan. Executive
shall be eligible to participate in the Supplemental Deferred
Compensation Plan on a basis that is no less favorable than all other
senior executive officers of the Company participating in the
Transferred Executive Supplemental Retirement Plan.
(d) Vacation and Sick Leave. Executive shall be entitled to vacation and
sick leave in accordance with the vacation and sick leave policies
adopted by the Company from time to time, provided that the Executive
shall be entitled to no less than five
15
(5) weeks of paid vacation each calendar year, provided that in no
event shall unused vacation be carried over into the next calendar
year. Any vacation shall be at such time and for such periods as shall
be mutually agreed upon between the Executive and the Company. The
Executive shall be entitled to all public holidays observed by the
Company.
8. Applicable Taxes. There shall be deducted from any compensation payments
made under this Agreement any federal, state, and local taxes or other
amounts required to be withheld under applicable law.
9. Miscellaneous Benefits. During the Employment Term, the Company shall
provide the Executive with the following additional benefits:
(a) Business Travel and Expenses. Executive shall be reimbursed by the
Company for reasonable and other business expenses, as approved by the
Company, that are incurred and accounted for in accordance with the
Company's normal practices and procedures for reimbursement of
expenses.
(b) Executive Driver. In order to ensure the accessibility and safety of
the Executive during the Employment Term, the Company will reimburse
Executive for the costs of an executive driver for business purposes
only (including transportation to and from work). The Company shall
directly cover the costs of all other business-related transportation.
(c) Use of Aircraft. In order to ensure the accessibility and safety of
the Executive during the Employment Term, the Company shall reimburse
Executive for all costs associated with the Executive's use, for
business purposes only, of aircraft in
16
accordance with the Company's policies, whether the aircraft is being
chartered or is Company-owned.
(d) Non-Exclusivity. Nothing in this Agreement shall prevent the Executive
from being entitled to receive any additional compensation or benefits
as approved by the Company's Board of Directors; provided, however,
that in no event shall the Company make any loans to Executive that
are in violation of the Sarbanes-Oxley Act of 2002, as such act may be
amended or supplemented from time to time, and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder.
10. Termination of Employment. Notwithstanding any other provisions of this
Agreement to the contrary, the employment of the Executive pursuant to this
Agreement may be terminated as follows:
(a) Termination by the Company for Cause. Executive may be terminated for
"Cause" by the Company as provided below. As used herein, the term
"Cause" shall mean (i) conviction of the Executive for a felony; or
(ii) the commission by the Executive of fraud or theft against, or
embezzlement from, the Company. For purposes of this section, no act
or failure to act on Executive's part shall be considered to be reason
for termination for Cause if done, or omitted to be done, by Executive
in good faith and with the reasonable belief that the action or
omission was in the best interests of the Company. Cause shall not
exist unless and until there shall have been delivered to the
Executive a copy of a resolution, duly adopted by the affirmative vote
of not less than two thirds of the entire membership of the Board at a
meeting of the Board held for the purpose (after no
17
less than ten (10) days' prior written notice to the Executive of such
meeting and the purpose thereof and an opportunity for him, together
with his counsel, to be heard before the Board at such meeting), of
finding that in the good faith opinion of the Board, the Executive was
guilty of the conduct set forth above in this Section 10(a) and
specifying the particulars thereof in detail. As set forth more fully
in Section 10(e) hereof, the "Date of Termination" (which shall be no
earlier than 30 days after delivery of the written notice to the
Executive) shall be the date specified in the "Notice of Termination;"
provided, however, that in the case of a termination for Cause under
clauses 10(a)(i) and 10(a)(ii) above, the Date of Termination shall be
the date of delivery of the Notice of Termination. Anything herein to
the contrary notwithstanding, if, following a termination of the
Executive's employment by the Company for Cause based upon the
conviction of the Executive for a felony, such conviction is
overturned in a final determination on appeal, the Executive shall be
entitled to the payments and the economic equivalent of the benefits
the Executive would have received if his employment had been
terminated by the Company without Cause.
(b) Termination by the Company for Excessive Absenteeism. At the sole
discretion of the Board, Executive may be terminated if the Executive
shall have been absent from his duties with the Company on a full-time
basis for one hundred and twenty (120) consecutive days, and if within
thirty (30) days after written Notice of Termination is given by the
Company to the Executive, the Executive shall not have resumed the
performance of his duties hereunder on a full-time basis. In this
event, the Date of Termination shall be thirty (30) days after Notice
of
18
Termination is given by the Company (provided that the Executive shall
not have returned to the full-time performance of his duties).
(c) Death. The Executive's employment shall terminate upon his death, and
the date of his death shall be the Date of Termination for purposes of
this Agreement.
(d) Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder for "Good Reason," provided that
the Executive shall have delivered a Notice of Termination within
ninety (90) days after the occurrence of the event of Good Reason
giving rise to such termination. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following
circumstances, without the Executive's express written consent, and
which are not remedied by the Company within thirty (30) days of
receipt of the Executive's Notice of Termination except in the event
of a Change in Control:
(i) an assignment to the Executive of any duties materially
inconsistent with his position, duties, responsibilities, and
status with the Company, or any material limitation of the powers
of the Executive not consistent with the powers of the Executive
contemplated by Section 3 hereof;
(ii) Subject to the provisions of Section 1, any failure to use best
efforts to cause the Executive to be elected to, the position(s)
specified in Section 1 of this Agreement, including, without
limitation, the failure of the Company to continue the Executive
as Chairman following the CEO Relinquishment Date, subject to
Section 1;
(iii) any change of the Executive's title(s) as specified in Section 1
of this Agreement without the Executive's consent;
19
(iv) the Company's requiring the Executive without his written consent
to be based at any office or location more than 75 miles
commuting distance from the locations referred to in Section 4 of
this Agreement;
(v) a reduction in the Executive's Base Salary or Annual Bonus target
incentive opportunity as in effect from time to time, without his
written consent;
(vi) the failure of the Company to continue in effect any material
Benefit Plan that was in effect on the Effective Date or provide
the Executive with substantially equivalent benefits, in the
aggregate, without his written consent;
(vii) any other material breach by the Company of this Agreement;
(viii) "Change in Control" as defined in Section 11(f) of this
Agreement; or
(ix) a failure of the Company to secure a written assumption by any
successor company as provided for in Section 15(g) hereof.
In the event of a termination for Good Reason, the Date of Termination shall be
the date specified in the Notice of Termination, and shall not be more than
thirty (30) days after the Notice of Termination.
(e) Other Terminations. Notwithstanding the foregoing, the Company or the
Executive may terminate the Executive's employment under this
Agreement at any time, subject to the provisions of Section 10(f)
hereof. If the Executive's employment is terminated hereunder for any
reason other than as set forth in Sections 10(a) through 10(d) hereof,
the date on which a Notice of Termination is
20
given or any later date (within 30 days) set forth in such Notice of
Termination shall be the Date of Termination.
(f) Notice of Termination. Any termination of the Executive's employment
hereunder by the Company or by the Executive shall be communicated by
written Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provisions so indicated and a date of
termination.
11. Compensation upon Termination or During Disability
(a) Disability Period. During any period during the Employment Term that
the Executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"),
the Executive shall continue to (i) receive his full Base Salary and
bonus otherwise payable for that period of the Employment Term
including the Disability Period and (ii) participate in the Benefit
Plans. Such payments made to the Executive during the Disability
Period shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under
disability benefit plans of the Company or under the Social Security
disability insurance program, where such amounts were not previously
applied to reduce any such payment.
(b) Death. If the Executive's employment hereunder is terminated as a
result of his death, then: (i) the Company shall pay the Executive's
estate or designated
21
beneficiary, as soon as practicable after the Date of Termination, a
lump sum payment equal to (1) any Base Salary installments due in the
month of death and any reimbursable expenses accrued or owing the
Executive hereunder as of the Date of Termination, (2) a pro rata
portion of any bonus owed to the Executive for that portion of the
Employment Term through to the Date of Termination, any earned and
unpaid bonus relating to services performed by the Executive in the
year preceding his death, and (3) the severance benefits set forth in
Section 11(e), and (ii) all outstanding stock options and restricted
stock (including the Restricted Stock), earned shares of incentive
stock, and other awards granted to the Executive under the Incentive
Compensation Programs shall immediately become fully vested as of the
Date of Termination and all transfer restrictions shall lapse but
continue to be subject to such exercise periods as shall be provided
for under the terms of each grant, including, without limitation, the
restrictions on the exercise of the vested Option Shares prior to
December 31, 2006 or after December 31, 2012, provided that the Board
may, upon the written request of the Executive's personal
representative, waive or modify the restrictions on the exercise of
the vested Option Shares as set forth above.
(c) Absence From Work. If the Executive's employment hereunder is
terminated pursuant to Section 10(b), then (i) the Company shall pay
the Executive, as soon as practicable after the Date of Termination
(1) any Base Salary and any reimbursable expenses accrued or owing the
Executive hereunder as of the Date of Termination, (2) a pro rata
portion of any bonus owed to the Executive for that portion of the
Employment Term through to the Date of Termination, any earned
22
and unpaid bonus relating to service performed by the Executive in the
year preceding his Date of Termination, and (3) the severance benefits
set forth in Section 11(e); and (ii) all outstanding stock options,
restricted stock (including the Restricted Stock) and Incentive Stock
awards granted to the Executive shall immediately become fully vested
as of the Date of Termination and all transfer restrictions shall
lapse but continue to be subject to such exercise periods as shall be
provided for under the terms of each grant.
(d) Termination for Cause; Termination by the Executive other than for
Good Reason. If the Executive's employment hereunder is terminated by
the Company for Cause or by the Executive (other than for Good
Reason), then (i) the Company shall pay the Executive, as soon as
practicable after the Date of Termination, any Base Salary and any
reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and (ii) the Executive shall
immediately forfeit any unvested career shares and earned but unvested
incentive stock shares. In the event of termination by the Company for
Cause, the Executive shall have the right to exercise the vested
unexercised portion of all outstanding stock option and stock awards
prior to the Date of Termination, and the unexercised portion of any
such award shall be forfeited thereafter and any restricted stock
(including the Restricted Stock) shall remain subject to the terms of
each grant. In the event of termination by the Executive other than
for Good Reason but subject to the provisions of Section 12, the
Executive shall have the right to exercise the vested unexercised
portion of all outstanding stock options and stock awards then held by
the Executive for such period following the Date of
23
Termination as shall be provided for under the terms of each grant,
and any restricted stock (including the Restricted Stock) shall remain
subject to the terms of each grant.
(e) All Other Terminations. Executive's employment may be terminated
without Cause by the Board or by the Executive for Good Reason,
provided that in such event:
(i) Executive shall be entitled to receive three (3) years Base
Salary (at the Executive's effective annual rate on the date of
termination) to be paid in a lump-sum (net of appropriate
withholdings) within sixty (60) days of the Date of Termination;
(ii) Executive shall be entitled to receive three (3) times his
average Annual Bonus Award (including the stock and cash
components) earned during the Employment Term of this Contract
and, any earned and unpaid bonus relating to services performed
by the Executive in the year preceding his termination by the
Company without Cause or his termination for Good Reason, to be
paid in a lump sum (net of appropriate withholding) within sixty
(60) days of the Date of Termination provided that the bonus
payment pursuant to this Section 11(e)(ii) shall not duplicate
any bonus payments previously paid to the Executive;
(iii) Executive and his eligible dependents shall be entitled to
continue participation in the Company's Benefit Plans at the same
cost as other Company senior executives (to the extent allowable
in accordance with the administrative provisions of those plans
and applicable federal and state
24
law) for a period of up to three (3) years or until Executive and
his eligible dependents are eligible to be covered by a successor
employer's comparable benefit plans, whichever is sooner; and
(iv) Any restricted stock (including the Restricted Stock) or stock
options granted to the Executive at any time, which is subject to
vesting restrictions, shall become fully vested and exercisable
as of the Date of Termination, subject to the provisions of
Section 12. In addition, any restrictions on sale, transfer or
disposition of restricted stock (including the Restricted Stock)
will be lifted, provided that the restrictions on the exercise of
vested Option Shares prior to December 31, 2006 or after December
31, 2012 shall remain in effect, except in the case of the
termination of the Executive without Cause by the Board or by the
Executive for Good Reason, in which case the restriction on
exercise of vested Option Shares shall lapse on the earlier to
occur of the first anniversary of the Executive's termination
without Cause by the Board or by the Executive for Good Reason or
December 31, 2006.
(v) Notwithstanding any other provision to the contrary contained in
this Agreement:
(A) if the Executive's employment is terminated on the CEO
Relinquishment Date or during the six-month period
immediately following such date, without Cause by the Board
or by the Executive for Good Reason ("Chairman Termination
Date"), he shall be entitled to all of the
25
benefits conferred on him pursuant to Section 11(e)(i)
through (iv) above and Section 11(e)(vi) below,
(B) if the Executive's employment is terminated subsequent to
six months after the CEO Relinquishment Date without Cause
by the Board or by the Executive for Good Reason, he shall
be entitled to: (w) payment of unpaid Base Salary from the
Chairman Termination Date through (i) the first anniversary
of the CEO Relinquishment Date or (ii) until December 31,
2005, whichever occurs first; (x) payment of the Annual
Bonus that he would have been entitled to had he continued
to serve as the Chairman from the Chairman Termination Date
through (i) the first anniversary of the CEO Relinquishment
Date or (ii) until December 31, 2005, whichever occurs
first, payable in accordance with the Company's normal
practices; (y) the benefits described in Section 11(e)(iii)
from the Chairman Termination Date through (i) the first
anniversary of the CEO Relinquishment Date or (ii) until
December 31, 2005, whichever occurs first; and (z) all of
the accelerated vesting, lifting of exercise period
restrictions and other lapsing of restrictions on restricted
stock and stock options and other benefits described in
Section 11(e)(iv) except that such benefits shall not apply
to that portion of the Option Shares and
26
Restricted Stock that would not otherwise have vested
through (i) the first anniversary of the CEO Relinquishment
Date or (ii) until December 31, 2005, whichever occurs
first, assuming that the Executive had continued to serve as
Chairman throughout such period.
(vi) In the event that the Executive receives any payment or benefit
(including but not limited to the payments or benefits pursuant
to Section 11 of this Agreement (a "Payment") that is subject to
the excise tax (the "Excise Tax") under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the
Company shall pay to the Executive, as soon thereafter as
practicable, an additional amount (a "Gross-Up Payment") such
that the net amount retained by the Executive, after deduction of
any Excise Tax imposed upon the Payment and any federal, state,
and local income tax and Excise Tax imposed upon the Gross-Up
Payment, shall be equal to the Payment. The determination of
whether an Excise Tax is due in respect to any payment or
benefit, the amount of the Excise Tax and the amount of the
Gross-Up Payment shall be made by an independent auditor (the
"Auditor") jointly selected by the Company and the Executive and
paid by the Company. If the Executive and the Company cannot
agree on the firm to serve as the Auditor, then the Executive and
the Company shall each select one nationally recognized
accounting firm and those two firms shall jointly select one
nationally recognized accounting firm to serve as the Auditor.
Notwithstanding the Payment, (i) any other payments or
27
benefits received or to be received by the Executive in
connection with a Change in Control or the Executive's
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement, or agreement with the
Company, any person whose actions result in a Change in Control
or any person affiliated with the Company or such person) shall
be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G of the Code shall be treated
as subject to the Excise Tax, unless in the opinion of the tax
counsel selected by the Auditor, such other payments or benefits
(in whole or in part) do not constitute parachute payments, or
are otherwise not subject to the Excise Tax, and (ii) the
Executive shall be deemed to pay federal income tax at the
highest marginal rate applicable in the calendar year in which
the Gross-Up Payment is made, and state and local income taxes at
the highest marginal rate of taxation in the state and locality
of the Executive's residence on the Date of Termination, net of
the maximum reduction in federal income tax which could be
obtained from deduction of such state and local taxes. In the
event the actual Excise Tax or such income tax is more or less
than the amount used to calculate the Gross-Up Payment, the
Executive or the Company, as the case may be, shall pay to the
other an amount reflecting the actual Excise Tax or such income
tax.
(f) Change in Control. For purposes of this Agreement, "Change in Control"
of the Company shall be deemed to have occurred if:
28
(i) the Company's shareholders approve any transaction that is
contemplated to result in a "Qualifying Merger or Consolidation,"
sale or disposition of all or substantially all of the Company's
assets or a plan of partial or complete liquidation, share
exchange, amalgamation, recapitalization or similar transaction
and such transaction is completed substantially in accordance
with the terms approved by the shareholders; provided that
notwithstanding anything to the contrary, in this subsection
(f)(i), no such merger, consolidation or sale shall be deemed to
constitute a "Change in Control" if such transaction or series of
transactions required the Executive to be identified in any
United States securities law filing as a person or a member of
any group acquiring , holding or disposing of beneficial
ownership of the Company's securities and/or assets and effecting
a "Change in Control" as defined in this subclause (f)(i); or
(ii) during any period of not more than two (2) consecutive years (not
including any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute the
Board of Directors of the Company, and any new director (other
than a director designated by a "person" (as hereinabove defined)
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this
Section) whose election was approved by Executive or whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the
beginning of the period or whose
29
election or nomination for election was previously so approved
(including approval by Executive), cease for any reason to
constitute at least a majority thereof; or
(iii) the acquisition of any third-party of stock constituting at
least 51% of all outstanding shares of stock of the Company and
that is not part of a Qualifying Merger or Consolidation (a
"Share Acquisition") and subsequent to such acquisition either
(i) the Company is no longer a public company for U.S. securities
law purposes, or (ii) there is a material diminution of the
Executive's position or any other breach of this Agreement by the
Company or event giving rise to a Good Reason termination by the
Executive.
(iv) For purposes of this Section (f), "Qualifying Merger or
Consolidation" shall mean any of the following: (1) any merger or
consolidation between the Company and any entity in which the
surviving entity (whether or not the Company) is not a publicly
traded entity and the Executive is not CEO and Chairman of the
publicly traded parent (if any) of the surviving entity, or (2)
any merger or consolidation between the Company and any entity in
which the surviving entity (whether or not the Company) is
publicly traded and the Executive is not CEO and Chairman of such
surviving entity, in each case so long as the Executive was CEO
and Chairman immediately prior to the merger or consolidation
described in subclauses (1) and (2) above, and provided further
that if under this Agreement the Executive is no longer serving
as the CEO immediately prior to such
30
merger or consolidation there must also have occurred following
the consummation of such transaction, or within six (6) months
thereafter, a material diminution of the Executive's position or
any other breach of this Agreement by the Company or event giving
rise to a Good Reason termination by the Executive.
12. Non-Solicitation and Non-Competition
(a) Term of Non-Compete. During his employment with the Company and for a
period of (1) one year from the date of the Executive's termination of
employment for any reason, the Executive will not provide services, in
any capacity, whether as an employee, consultant, independent
contractor, or otherwise, to any person or entity that provides
products or services that compete with the Business of the Company,
including but not limited to: Laboratory Corporation of America
Holdings, Inc.; Mayo Laboratory; ARUP; LabOne; Dianon Systems;
Specialty Labs Inc.; IMPATH Inc.; Ameripath; and Esoterix; or their
successors or assigns, except that after the termination of
Executive's employment this restriction shall only apply to North
America. If so requested in writing by Executive, the Company shall
advise the Executive promptly in writing in advance (but in no case
later than 30 calendar days) as to whether, in the exercise of its
reasonable judgment, the Company views any proposed activity
contemplated by the Executive as constituting a competing "Business,"
provided that nothing herein shall prevent the Executive from, after
the termination of his employment, being a passive owner of not more
than three percent (3%) of the outstanding stock of any class of a
corporation that is publicly traded.
31
(b) Term of Non-Solicitation of Customers. For a period of one (1) year
following the termination of the Executive's employment for any
reason, the Executive will not directly or indirectly solicit the
Business of any customer of the Company during the one (1) year period
prior to the termination of the employment relationship with the
Company for any purpose other than to obtain, maintain and/or service
the customer's Business for the Company.
(c) Term of Non-Solicitation of Employees. For a period of one (1) year
following the termination of the Executive's employment for any
reason, the Executive agrees not to, directly or indirectly, recruit,
solicit or hire any employees of the Company to work for the Executive
or any other person or entity.
(d) Definitions Applicable to Section 12. As used in this Section, the
following terms shall have their respective definitions:
(i) "Business" shall include (A) clinical laboratory, pathology,
toxicology, pharmaceutical testing, clinical trials, (B) Clinical
Laboratory Medical Information Services, (C) clinical laboratory
testing kits; and (D) any other product or service which the
Company planned, provided or discussed during the (1) one year
period prior to the termination of Executive's employment.
(ii) "Clinical Laboratory Medical Information Services" shall mean
medical information services which contain a substantial clinical
laboratory data component.
(iii) "Indirectly solicit" shall include, but are not to be limited
to, providing Company's proprietary information to another
individual, or entity,
32
allowing the use of Executive's name by any company (or any
employees of any other company) other than the Company, in the
solicitation of the Business of Company's customers.
(e) Expedited Arbitration Applicable to Section 12. In the event there is
a dispute under this Section, the parties agree to hold an expedited
hearing in the City of New York, New York, before an arbitrator under
American Arbitration Association Rules.
(f) Exclusive Property. Executive confirms that all confidential
information is and shall remain the exclusive property of the Company.
All business records, papers and documents kept or made by Executive
relating to the business of the Company, its affiliates and
subsidiaries (other than his personal records) shall be and remain the
property of the Company. Upon the termination of his employment with
the Company or upon the request of the Company at any time, Executive
shall promptly deliver to the Company, and shall not without the
consent of the Board retain copies of, any written materials not
previously made available to the public, or records and documents made
by Executive in his possession concerning the business or affairs of
the Company or any of its affiliates or subsidiaries (other than his
personal records); provided, however, that subsequent to any such
termination, the Company shall provide Executive with copies (the cost
of which shall be borne by Executive) of any documents that are
requested by Executive and that Executive has determined in good faith
are (i) required to establish a defense to a claim that Executive has
not complied with his
33
duties hereunder or (ii) necessary to Executive in order to comply
with applicable law.
(g) Remedies.
(i) Injunctive Relief. Without intending to limit the remedies
available to the Company, Executive acknowledges that a breach of
any of the covenants contained in this Section 12 may result in
material irreparable injury to the Company or its affiliates or
subsidiaries for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited by
this Section 12 or such other relief as may be required to
specifically enforce any of the covenants in this Section 12.
Executive hereby agrees that the Company shall not be required to
post any bond or other security in connection with any such
equitable relief. Without intending to limit the remedies
available to Executive, Executive shall be entitled to seek
specific performance of the Company's obligations under this
Agreement.
(ii) Additional Remedy. In the event of an arbitrator's determination
that Executive has breached any of the covenants contained in
this Section 12 during his employment or within one year after
termination thereof for any reason, then (1) all of Executive's
outstanding stock options shall immediately terminate as of the
date of the breach and (2) any gains
34
realized by Executive from exercising all or a portion of any stock
options within three months prior to his termination of employment or
anytime after his termination of employment, shall be paid by
Executive to the Company. The amount of the realized gains shall be
the difference between the exercise price and the fair market value of
the stock on the day each option is exercised and the Executive agrees
to pay immediately said amounts to the Company. The Company shall
cooperate with the Executive in filing amended tax returns required as
a result of the exercise by the Company of its rights pursuant to this
subclause (ii). Executive agrees to pay immediately the unpaid balance
to the Company. Executive may be released from his obligations
hereunder only if the Board (or its duly appointed agent) determines
in its sole discretion that such action is in the best interests of
the Company.
13. Arbitration. In the event of any difference of opinion or dispute between
the Executive and the Company with respect to the construction or
interpretation of this Agreement or the alleged breach thereof, which
cannot be settled amicably by agreement of the parties, then such dispute
shall be submitted to and determined by arbitration by a single arbiter in
the city of New York, New York in accordance with the rules then in effect
of the Commercial Arbitration Panel of the American Arbitration Association
(the "AAA"), and judgment upon the award rendered shall be final, binding
and conclusive upon the parties and may be entered in the highest court,
state or federal, having jurisdiction. The costs of the arbitration shall
be borne as determined by the arbitrator; provided, however, that the
reasonable expenses of the prevailing party, as determined by the
arbitrator (including,
35
without limitation, fees and expenses payable to the AAA and the
arbitrator, fees and expenses payable to witnesses, including expert
witnesses, reasonable fees and expenses payable to attorneys and other
professionals, reasonable expenses of the prevailing party in attending the
hearing, reasonable costs in connection with obtaining and presenting
evidence and reasonable costs of the transcription of the proceedings), as
determined by the arbitrator, shall be reimbursed to the prevailing party
by the other party.
14. Confidentiality. During the Employment Term, and except as otherwise
required by law, the Executive shall not disclose or make accessible to any
business, person or entity, or make use of (other than in the course of the
business of the Company) any trade secrets, proprietary knowledge or
confidential information, which he shall have obtained during his
employment by the Company and which shall not be generally known to or
recognized by the general public. All information regarding or relating to
any aspect of either the Company's business, including but not limited to
that relating to existing or contemplated business plans, activities or
procedures, current or prospective clients, current or prospective
contracts or other business arrangements, current or prospective products,
facilities and methods, manuals, intellectual property, price lists,
financial information (including the revenues, costs, or profits associated
with any of the Company's products or services), or any other information
acquired because of the Executive's employment by the Company, shall be
conclusively presumed to be confidential; provided, however, that
Confidential Information shall not include any information known generally
to the public (other than as a result of unauthorized disclosure by or at
the direction of the Executive) or any specific information or type of
information generally not considered information disclosed by the Company
or any
36
officer thereof to a third party without restrictions on the disclosure of
such information. The Executive's obligations under this Section 14 shall
be in addition to any other confidentiality or nondisclosure obligations of
the Executive of the Company at law or under any other agreements.
15. Other Matters.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive relating to the subject matter
hereof, and supersedes any previous agreements, commitments and
understandings, written or oral, with respect to the matters provided
herein. As used in this Agreement, terms such as "herein," "hereof,"
"hereto" and similar language shall be construed to refer to this
entire instrument and not merely the paragraph or sentence in which
they appear, unless so limited by express language.
(b) Assignment. Except as set forth below, this Agreement and the rights
and obligations contained herein shall not be assignable or otherwise
transferable by either party to this Agreement without the prior
written consent of the other party to this Agreement. Notwithstanding
the foregoing, any amounts owing to the Executive upon his death shall
inure to the benefit of his heirs, legatees, personal representatives,
executor or administrator.
(c) Notices. Any and all notices provided for under this Agreement shall
be in writing and hand delivered or sent by first class registered or
certified mail, postage prepaid, return receipt requested, addressed
to the Executive at his residence or to the Company at its usual place
of business, and all such notices
37
shall be deemed effective at the time of delivery or at the time
delivery is refused by the addressee upon presentation.
(d) Amendment/Waiver. No provision of this Agreement may be amended,
waived, modified, extended or discharged unless such amendment,
waiver, extension or discharge is agreed to in writing signed by both
the Company and the Executive.
(e) Applicable Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed, interpreted, and enforced in
accordance with the laws of the State of New York (applicable to
contracts to be performed wholly within such State).
(f) Severability. The Executive hereby expressly agrees that all of the
covenants in this Agreement are reasonable and necessary in order to
protect the Company and its business. If any provision or any part of
any provision of this Agreement shall be invalid or unenforceable
under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability and shall not affect in
any way the validity or enforceability of the remaining provisions of
this Agreement, or the remaining parts of such provision.
(g) Successor in Interest. In the event the Company merges or consolidates
with or into any other corporation or corporations, or sells or
otherwise transfers substantially all of its assets to another
corporation or other entity, the provisions of this Agreement shall be
binding upon and inure to the benefit of the entity surviving or
resulting from the merger or consolidation or to which the assets are
sold or transferred and, prior to the consummation of any such event,
the Company shall obtain the express written assumption of this
Agreement by the
38
other entity (other than in the case of a merger after which the
Company is the surviving entity). All references herein to the Company
refer with equal force and effect to any corporate or other successor
of the entity that acquires directly or indirectly by merger,
consolidation, purchase or otherwise, all or substantially all of the
assets of the Company.
(h) No Mitigation. The Executive shall not be required to mitigate amounts
payable pursuant to Section 11 hereof by seeking other employment or
otherwise.
16. Indemnification. The Company shall indemnify the Executive to the full
extent permitted by law and the By-laws of the Company for all expenses,
costs, liabilities and legal fees (collectively, "Damages") that the
Executive may incur in the discharge of all his duties hereunder,
including, without limitation, the right to be paid in advance by the
Company for his expenses in defending a civil or criminal action,
proceeding or investigation prior to the final disposition thereof. During
the time that Executive serves as an officer or Director of the Company,
the Executive shall be insured under the Company's Directors' and Officers'
Liability Insurance Policy as in effect from time to time. Notwithstanding
any other provision of this Agreement to the contrary, any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 16.
17. Authority. The execution, delivery and performance of this Agreement has
been duly authorized by the Company and this Agreement represents the
valid, legal and binding obligation of the Company, enforceable against the
Company according to its terms.
[signature page to follow]
39
[Amended and Restated Employment Agreement Signature Page]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its own behalf and has caused its corporate seal to be affixed, and the
Executive has executed this Agreement on his own behalf intending to be legally
bound, as of the date first written above.
QUEST DIAGNOSTICS INCORPORATED
By:
----------------------------
(Duly Authorized)
ATTEST:
Secretary
EXECUTIVE
-------------------------------
Kenneth W. Freeman
Dated: As of January 1, 2003
40