Exhibit 10.10
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of August 8, 2005,
by and between LabOne, Inc. a Missouri corporation (the "Company"), and MICHAEL
J. ASSELTA ("Executive").
WHEREAS, Quest Diagnostics, Inc., a Delaware corporation, ("Parent"),
Fountain, Inc., a Missouri corporation and a wholly owned subsidiary of Parent
("Purchaser") and the Company have entered into an Agreement and Plan of Merger,
dated as of August 8, 2005 (the "Merger Agreement");
WHEREAS, pursuant to the terms of the Merger Agreement, Parent and
the Company will enter into a business combination transaction pursuant to which
Purchaser will merge with and into the Company, with the Company being the
surviving corporation;
WHEREAS, Executive is currently employed by the Company, pursuant to
an Employment Agreement dated as of May 11, 2001 (the "Prior Agreement"); and
WHEREAS, subject to the consummation of the transactions contemplated
by the Merger Agreement, the Company desires to employ Executive on a full-time
basis and Executive desires to be so employed by the Company;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein (including, without limitation, the Company's employment of
Executive and the advantages and benefits thereby inuring to Executive) and for
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged by each party hereto, the parties hereby agree as
follows:
1. Effectiveness of Agreement and Employment of Executive.
1.1 Effectiveness of Agreement. This Agreement shall become
effective upon the Closing (as defined in the Merger Agreement), and Executive's
employment under this Agreement shall commence on the date of the Closing (the
"Effective Date"). In the event that the Closing does not occur, this Agreement
shall be null and void and shall have no force and effect.
1.2 Employment by the Company. The Company hereby employs Executive
as Executive Director, Merger Integration and Executive hereby accepts such
employment with the Company as of the Effective Date. Executive shall initially
report to, and perform such duties and services for the Company and its
subsidiaries and affiliates (such subsidiaries and affiliates, collectively,
"Affiliates") as may be designated from time to time by the Regional Vice
President, or such other person designated by the Company. During his
employment, Executive shall devote substantially all of his business time and
attention to his employment under this Agreement. During his employment
Executive shall be subject to all policies, practices and procedures of the
Company and the Parent as are applicable to other similarly situated Executives
as in effect from time to time. Executive acknowledges that he shall be required
to travel on business in connection with the performance of his duties
hereunder. Executive's
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principal place of employment under this Agreement will be the greater Kansas
City area and will not be changed without the Executive's consent.
2. Compensation and Benefits; Equity Awards.
2.1 (a) Salary. The Company shall pay Executive for services during
his employment under this Agreement a base salary of no less than the annual
rate of $240,000 ("Base Salary"). During the Employment Period (as defined
below), upon the commencement of each Extension Period (as defined below), if
any, the Base Salary shall be increased by 6% (as determined based on the Base
Salary in effect immediately prior to such increase). Any other increases to
Executive's Base Salary shall be determined by the Company, in its sole
discretion. Such Base Salary shall be payable in equal installments, no less
frequently than monthly, pursuant to the Company's customary payroll policies in
force at the time of payment, less any required or authorized payroll
deductions.
(b) Sign-On Bonus. As an inducement for Executive to accept continued
employment with the Company and to enter into this Agreement, Executive shall
receive a bonus (the "Sign-On Bonus") in the amount of $125,000. The Sign-On
Bonus shall be paid to Executive as soon as practicable following the Effective
Date.
(c) Additional Bonus. During the Employment Period, upon the
commencement of each Extension Period, if any, Executive shall receive an
additional bonus (the "Additional Bonus") in the amount of $25,000.
(d) Special Annual Performance Bonus. For calendar years 2006, 2007
and 2008 Executive shall be eligible for a special annual performance bonus (the
"Special Annual Performance Bonus"). The Special Annual Performance Bonus
opportunity for target level performance for Executive shall be 25% of Base
Salary, based on the achievement of performance metrics (as determined by
Parent) relating to the effective integration and growth of the business for
which Executive is responsible. The Special Annual Performance Bonus shall be
prorated for any period of service less than a full calendar year during the
calendar year in which the Effective Date occurs. The Company shall pay the
Special Annual Performance Bonus, if any, to Executive on the date on which
bonuses are paid to executives generally.
(e) Quest Diagnostics, Inc., Management Incentive Plan. For each
calendar year during the Employment Period (as defined below) commencing on the
later of (i) the Effective Date and (ii) 2006, Executive shall be eligible for
an annual bonus (an "Annual Bonus") pursuant to the Quest Diagnostics, Inc.,
Senior Management Incentive Plan, as amended from time to time (the "MIP"). The
maximum Annual Bonus opportunity for Executive shall be 75% of Base Salary. The
Annual Bonus shall be prorated for any period of service less than a full
calendar year during the calendar year in which the Effective Date occurs. The
Company shall pay the Annual Bonus, if any, to Executive on the date on which
bonuses are paid to executives generally. After the Effective Date, during the
period prior to the date Executive commences participation in the MIP, Executive
shall continue to participate in the Company Management Incentive Compensation
Program in accordance with the terms and conditions of such program
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(f) Long Term Incentive Plan. For each fiscal year during the
Employment Period commencing on the later of (i) the Effective Date and (ii)
2006, Executive shall be eligible to participate in Parent's Employee Long Term
Incentive Plan, as amended from time to time (the "ELTIP"). For fiscal year 2006
the Company shall recommend to the Compensation Committee of the Board of
Directors of Parent or its designee that it approve and grant to Executive a
nonqualified option (the "Parent Option") to purchase 30,000 shares of Parent
common stock, par value $0.01 (the "Common Stock"), which amount reflects the
Common Stock as adjusted pursuant to the two for one split of the Common Stock
on June 20, 2005. The terms and conditions of the Parent Option, including,
without limitation, the vesting schedule shall be as set forth in the ELTIP and
a stock option agreement to be entered into between Parent and Executive. For
fiscal years thereafter, awards under the ELTIP, if any, shall be made at such
times as awards are made to executives generally.
(g) Parent Restricted Stock Award. The Company shall recommend to
the Compensation Committee of the Board of Directors of Parent or its designee
that it approve and grant to Executive, effective as of the Effective Date,
shares of restricted stock of Parent (the "Parent Restricted Stock") with a fair
market value (based on the closing price of the common stock of Parent on the
Effective Date) equal to $200,000. The Parent Restricted Stock shall vest and
the restrictions thereon lapse, subject to Executive's continued employment with
the Company or one of its Affiliates, in equal annual installments of 25%
commencing on the first anniversary of the date of grant. The Parent Restricted
Stock shall be granted pursuant to and subject to the terms of the ELTIP and a
restricted stock agreement to be entered into between Parent and Executive.
2.2 Benefits. During the Employment Period, Executive shall be
entitled to participate, on the same basis and at the same level as generally
available to other similarly situated executives of the Company, in any group
insurance, hospitalization, medical, health and accident, disability, fringe
benefit, deferred compensation and tax-qualified retirement plans or programs of
the Company now existing or hereafter established to the extent that he is
eligible under the general provisions thereof. Executive shall be entitled to
vacation time consistent with the Company's policies. The date or dates of such
vacations shall be selected by Executive having reasonable regard to the
business needs of the Company.
2.3 Expenses. Pursuant to the Company's customary policies in effect
at the time of payment, Executive shall be promptly reimbursed, against
presentation of vouchers or receipts therefor, for all authorized expenses
properly and reasonably incurred by Executive on behalf of the Company or any of
its Affiliates in the performance of Executive's duties hereunder.
3. Employment Period. Executive's employment under this Agreement
shall commence as of the Effective Date, and this Agreement shall terminate on
the second anniversary thereof, unless terminated earlier or extended in
accordance with the terms of this Agreement. Executive's employment under this
Agreement may be extended for up to four successive six-month periods (each, an
"Extension Period") by mutual agreement of the parties to this Agreement. The
period commencing as of the Effective Date and ending on the second anniversary
of the Effective Date or such later date to which the term of the Executive's
employment under this Agreement shall have been extended is hereinafter referred
to as the
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"Employment Period." The term (the "Term") of this Agreement shall continue
until the end of the Employment Period. Thereafter Executive shall become an "at
will" employee of the Company. In the event Executive remains in the employ of
the Company following the Term, Executive shall continue to be eligible to
participate in the employee benefit plans and arrangements set forth in Section
2.2 of this Agreement.
4. Termination of Employment. In the event Executive's employment
with the Company is terminated for any reason during the Employment Period, the
terms and conditions of such termination shall be governed by the provisions set
forth in this Section 4.
4.1 Termination by the Company for Cause. Executive's employment
with the Company may be terminated at any time by the Company for Cause. Upon
such a termination, the Company shall have no obligation to Executive pursuant
to this Agreement other than the payment of Executive's earned and unpaid Base
Salary to the date of such termination.
For purposes of this Agreement, the term "Cause" shall mean any of the
following:
(i) Executive's willful failure to perform his duties or Executive's
bad faith in connection with the performance of his duties,
following written notice from the Chief Executive Officer of the
Parent or his designee detailing the specific acts and a 30-day
period of time to remedy such failure;
(ii) Executive engaging in any misconduct, negligence, violence or
threat of violence that is injurious to the Company or any of its
Affiliates;
(iii) Executive's material breach of a policy of the Company or any of
its Affiliates, which breach is not remedied (if susceptible to
remedy) following written notice by the Chief Executive Officer
of the Parent or his designee detailing the specific breach and a
30-day period of time to remedy such breach;
(iv) Any breach by Executive of this Agreement, which breach is not
remedied (if susceptible to remedy) following written notice by
the Chief Executive Officer of the Parent or his designee
detailing the specific breach and a 30-day period of time to
remedy such breach; or
(v) Executive's commission of a felony in respect of a dishonest or
fraudulent act or other crime of moral turpitude involving the
Company or any of its Affiliates, or which could reflect
negatively upon the Company or any of its Affiliates or otherwise
impair or impede its operations.
Should Executive's employment be terminated under the provisions of this Section
4.1, Executive shall be entitled to receive the a lump sum payment as provided
under the formula set forth in Section 4.2 LESS any actual damages incurred by
the Company as a consequence of any of the behavior constituting For Cause
(exclusive of negligence), such damages limited by the amount of value of any
unpaid amounts that would otherwise be due under this Section.
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4.2 Termination due to Death, Permanent Disability or by the Company
Without Cause. In the event that Executive's employment with the Company is
terminated due to death, Permanent Disability (as defined below) or by the
Company without Cause, in addition to the payment of Executive's earned and
unpaid Base Salary to the date of such termination, Executive shall receive a
lump sum payment in an amount equal to (X) $662,359 minus (Y) (the sum of (i)
the Sign-On Bonus payments, the Additional Bonus payments and Special Annual
Performance Bonus payments, if any, made to Executive on or prior to the date of
termination, plus (ii) the greater of the value, if any, as of (a) the date of
such termination or (b) the date of the sale of the Parent Restricted Stock
award granted to Executive pursuant to Section 2.1(f) of this Agreement which
has vested, and for which the restrictions had lapsed, as of the date of such
termination). In the event of a termination by the Company without Cause or a
termination due to Executive's Permanent Disability the payments set forth in
this Section 4.2 are subject to (i) Executive's execution and non-revocation of
a waiver and release of claims, in a form provided by the Company (the "Waiver
and Release") and (ii) his continued compliance with the Restrictive Covenant
Agreement (defined below).
For purposes of this Agreement, the term "Permanent Disability" shall
mean: (i) Executive shall become ill, mentally or physically disabled, or
otherwise incapacitated so as to be unable regularly to perform the duties of
his position for a period in excess of 90 consecutive days or more than 180 days
in any consecutive 12-month period, or (ii) a qualified independent physician
determines that Executive is mentally or physically disabled so as to be unable
to regularly perform the duties of his position and such condition is expected
to be of a permanent duration.
4.3 Resignation by Executive. On or following the second anniversary
of the Effective Date Executive may voluntarily resign from his employment with
the Company, provided that Executive shall provide the Company with 60 days'
advance written notice (which notice requirement may be waived, in whole or in
part, by the Company in its sole discretion) of his intent to resign. Upon such
resignation, in addition to the payment of Executive's earned but unpaid Base
Salary to the effective date of such resignation, subject to (i) Executive's
execution and non-revocation of the Waiver and Release and (ii) his continued
compliance with the Restrictive Covenant Agreement (defined below), Executive
shall receive a lump sum payment in an amount equal to (X) $662,359 minus (Y)
(the sum of (i) the Sign-On Bonus payments, the Additional Bonus payments and
Special Annual Performance Bonus payments, if any, made to Executive on or prior
to the date of termination, plus (ii) the greater of the value, if any, as of
(a) the date of such termination or (b) the date of the sale of the Parent
Restricted Stock award granted to Executive pursuant to Section 2.1(f) of this
Agreement which has vested, and for which the restrictions had lapsed, as of the
date of such termination).
4.4 Limitation on Payments. Notwithstanding anything in this
Agreement to the contrary, in the event it shall be determined that any payment
or distribution or benefit received or to be received by Executive pursuant to
the terms of this Agreement or any other payment or distribution or benefit made
or provided by the Company or any of its Affiliates, to or for the benefit of
Executive (whether pursuant to this Agreement or otherwise) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and, but for this Section 4.4, would be
subject to the excise tax imposed by Section 4999 of the Code, the Company shall
reduce the aggregate amount of such payments and benefits such that the present
value thereof (as determined under the Code and the
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applicable regulations) is equal to 2.99 times the Employee's "base amount" as
defined in Section 280G(b)(3) of the Code.
4.5 Section 409A. Notwithstanding anything in the foregoing to the
contrary, any lump sum payment forth in Section 4 of this Agreement shall be
deferred for six months and one day following termination (i) if necessary to
comply with Section 409A of the Code or (ii) in the event such payment, as
determined in the sole discretion of the Company, could cause Executive to be
subject to interest and penalties under Section 409A of the Code.
5. Restrictive Covenants. Executive agrees that the effectiveness of this
Agreement is contingent upon his execution of, and delivery to the Company of, a
restrictive covenant agreement (the "Restrictive Covenant Agreement"), which
shall include provisions relating to non-competition, non-solicitation of
employees and customers, non-disclosure and confidentially. The Restrictive
Covenant Agreement shall be in substantially the same form provided by Quest
Diagnostics, Inc., to its employees generally.
6. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement or otherwise in connection with Executive's employment by
the Company that cannot be mutually resolved by the parties to this Agreement
and their respective advisors and representatives shall be settled exclusively
by arbitration in Illinois and in accordance with the rules of the American
Arbitration Association before one arbitrator of exemplary qualifications and
stature, who shall be selected jointly by an individual to be designated by the
Company and an individual to be selected by Executive, or if such two
individuals cannot agree on the selection of the arbitrator, who shall be
selected by the American Arbitration Association.
7. Notices. Any notice or communication given by either party hereto to
the other shall be in writing and personally delivered or mailed by registered
or certified mail, return receipt requested, postage prepaid, to the following
addresses:
if to the Company:
Quest Diagnostics, Inc.
1290 Wall Street West
Lyndhurst, New Jersey 07071
Facsimile No: (201) 559-2255
Attention: General Counsel
With a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Facsimile No: (212) 848-7179
Attention:Doreen E. Lilienfeld, Esq.
if to Executive:
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MICHAEL J. ASSELTA
at the last known address on file with the Company.
Any notice shall be deemed given when actually delivered to such
address, or two days after such notice has been mailed or sent by a recognized
courier company, whichever comes earliest. Any person entitled to receive notice
may designate in writing, by notice to the other, such other address to which
notices to such person shall thereafter be sent.
8. Miscellaneous.
8.1 (a) Representations and Covenants. In order to induce the Company
to enter into this Agreement, Executive makes the following representations and
covenants to the Company and acknowledges that the Company is relying upon such
representations and covenants:
(b) No Agreements. No agreements or obligations exist to which
Executive is a party or otherwise bound, in writing or otherwise, that in any
way interfere with, impede or preclude him from fulfilling all of the terms and
conditions of this Agreement.
(c) Disclosure of Information. Executive, during his employment,
shall use his best efforts to disclose to the Chief Executive Officer and
General Counsel of Parent in writing or by other effective method any bona fide
information known by him and which he reasonably believes is not known to the
Chief Executive Officer and General Counsel of Parent, and which he reasonably
believes would have any material negative impact on the Company or any of its
Affiliates.
8.2 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of their subject matter and supersede
upon their effectiveness all other prior agreements and understandings
(including, without limitation, the Prior Agreement) between the parties with
respect to such subject matter. This Agreement shall also supersede the Merger
Agreement to the extent of any inconsistencies thereto.
8.3 Amendment; Waiver. This Agreement may not be amended,
supplemented, canceled or discharged, except by written instrument executed by
the party against whom enforcement is sought. No failure to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof. No waiver of any breach of any provision of this Agreement shall
be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision. Notwithstanding the foregoing, the Company shall, in its
sole discretion, amend this Agreement to the extent necessary or desirable to
ensure that this Agreement complies with Section 409A of the Code and that any
payments or benefits under this Agreement are not subject to interest and
penalties under Section 409A of the Code.
8.4 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business and properties. The Company may assign its rights
and obligations under this Agreement to any of its Affiliates without the
consent of Executive. Executive's rights or obligations under this Agreement may
not be assigned by Executive.
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8.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
8.6 Governing Law; Interpretation. This agreement and the terms
of Executive's employment will be governed by the laws of New York.
8.7 Further Assurances. Each of the parties agrees to execute,
acknowledge, deliver and perform, and cause to be executed, acknowledged,
delivered and performed, at any time and from time to time, as the case may be,
all such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably necessary to carry out the
provisions or intent of this Agreement.
8.8 Severability. The parties have carefully reviewed the provisions
of this Agreement, and agree that they are fair and equitable. However, in light
of the possibility of differing interpretations of law and changes in
circumstances, the parties agree that if any one or more of the provisions of
this Agreement shall be determined by a court of competent jurisdiction or an
arbitrator to be invalid, void or unenforceable, the remainder of the provisions
of this Agreement shall, to the extent permitted by law, remain in full force
and effect and shall in no way be affected, impaired or invalidated. Moreover,
if any of the provisions contained in this Agreement are determined by a court
of competent jurisdiction or arbitrator to be excessively broad as to duration,
activity, geographic application or subject, it shall be construed, by limiting
or reducing it to the extent legally permitted, so as to be enforceable to the
extent compatible with then applicable law.
8.9 Withholding Taxes. All payments hereunder shall be subject to any
and all applicable federal, state, local and foreign withholding taxes.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LABONE, INC.
By: /s/ W. Thomas Grant, II
---------------------------------------
Name: W. Thomas Grant, II
Title: Chief Executive Officer
EXECUTIVE
/s/ Michael J. Asselta
-----------------------------------------
MICHAEL J. ASSELTA
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