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|LABORATORY CORP OF AMERICA HOLDINGS filed this Form 8-K on 06/05/2019|
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 2019
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Exact Name of Registrant as Specified in Charter)
Registrants telephone number, including area code
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
On June 5, 2019, Laboratory Corporation of America® Holdings (LabCorp) announced that David P. King, Chairman, President and Chief Executive Officer, notified the Board of Directors (the Board) on June 4, 2019, that he will retire as President and Chief Executive Officer of LabCorp on October 31, 2019. Mr. King will continue to serve on the Board and remain an employee of LabCorp as Executive Chairman until no later than December 31, 2020, and as a Senior Advisor to the LabCorp Chief Executive Officer through at least December 31, 2020.
On June 4, 2019, the Board appointed Adam H. Schechter to succeed Mr. King as President and Chief Executive Officer effective November 1, 2019 (the Effective Date). Mr. Schechter has served as a member of LabCorps Board since April 1, 2013, and as LabCorps Lead Independent Director since January 2, 2019. While Mr. Schechter will continue to serve on the Board, effective June 4, 2019, he ceased to serve as the Lead Independent Director and as a member of the Compensation and Quality and Compliance Committees of the Board. The Board expects to choose one of its members to be the Lead Independent Director at a later date.
Biographical Information Regarding Mr. Schechter
Mr. Schechter, 55, has served as special advisor to the Chief Executive Officer of Merck & Co., Inc. (Merck) since January 2019. Prior to that role, Mr. Schechter was an Executive Vice President of Merck and President of Mercks Global Human Health division, which includes the companys global pharmaceuticals and vaccines business, from 2010 to 2018. He was also a member of Mercks executive committee and pharmaceutical and vaccines operating committee. Prior to becoming President, Global Human Health, Mr. Schechter served as President of the global pharmaceutical business from 2007 to 2010. Mr. Schechter is Chairman of the Board for Water.org.
Employment Agreement with Mr. Schechter
In connection with Mr. Schechters appointment, LabCorp entered into an employment agreement (the Employment Agreement) with Mr. Schechter. The term of employment under the Employment Agreement commences November 1, 2019, and continues until November 1, 2022. The Employment Agreement will automatically renew on each annual anniversary thereafter unless terminated in writing at least 180 days prior to the applicable renewal date.
Mr. Schechters annual base salary under the Employment Agreement will be $1,250,000. Future base salary increases will be reviewed at least annually by the Compensation Committee of the Board. On the Effective Date, Mr. Schechter will receive a grant of time-vesting stock options with an aggregate grant-date fair value of $1,000,000, restricted stock units with an aggregate grant date fair value of $1,000,000, and premium priced stock options with an exercise price equivalent to 115% of the fair market value of a share of LabCorp Common Stock on the Effective Date and with an aggregate grant-date fair value of $2,000,000 (the Sign-On Equity Grants). The Sign-On Equity Grants will vest in equal installments on each of the first through third anniversaries of the Effective Date. In the event of a termination of Mr. Schechters employment by LabCorp without Cause, by Mr. Schechter for Good Reason or due to death or Disability (each as defined in the Employment Agreement), the Sign-On Equity Grants will accelerate in full on the termination date. Mr. Schechter will also be eligible to receive an annual bonus pursuant to LabCorps Management Incentive Bonus Plan with an annual target of 150% of his base salary, with
achievement to be based on specific performance objectives determined by the Compensation Committee of the Board. For 2019, Mr. Schechter will be eligible for a pro-rated bonus, based on the number of days of employment in 2019. During 2020, on the date that annual equity grants are awarded to other LabCorp executives, Mr. Schechter will receive equity awards having a grant date fair value of not less than $9,400,000, and with the terms and conditions that apply to other LabCorp executives. The equity and non-equity incentives for Mr. Schechter will be subject to LabCorps incentive compensation recoupment policy, and Mr. Schechter will be subject to stock ownership guidelines under LabCorps executive stock ownership program, each of which are described in LabCorps proxy statement for its 2019 Annual Meeting of Shareholders.
Mr. Schechter will be entitled to participate in all employee benefit plans, practices, and programs that are generally made available to senior executives of LabCorp. Mr. Schechter will also be entitled to certain security, financial planning, and wellness perquisites, including use of a private aircraft for nonbusiness purposes in an amount not exceeding $150,000 per calendar year, as well as other fringe benefits and perquisites available to LabCorp executives generally. In addition, Mr. Schechter will receive reimbursement for commuting costs of up to $350,000 annually during the first three years of Mr. Schechters employment.
In the event that Mr. Schechters employment is terminated by LabCorp without Cause or by Mr. Schechter with Good Reason (each as defined in the Employment Agreement), Mr. Schechter will be entitled to (i) any accrued and unused vacation through the date of termination, (ii) certain accrued benefits including all deferred and unpaid compensation and any unpaid amounts or benefits under applicable LabCorp benefit plans, (iii) any earned but unpaid annual incentive bonus for a previous completed performance period, and (iv) severance benefits, subject to the execution of a severance agreement, that include (a) an amount equal to the product of two (or three if the termination occurs within 36 months following a Change in Control), multiplied by the sum of (1) Mr. Schechters base salary plus (2) the dollar amount of his last three incentive bonuses divided by three, 50% of which shall be paid within 30 days following the execution of a severance agreement and 50% paid within 30 days of the one-year anniversary of the execution of a severance agreement, (b) reimbursement for COBRA continuation coverage for up to 18 months following the termination date, (c) the earned annual incentive bonus for the year in which termination occurs, prorated by the number of days employed, and (d) vesting of any unvested portion of the Sign-On Equity Awards.
Mr. Schechter will be subject to indefinite confidentiality and non-disparagement restrictions and 12-month post-termination non-competition and non-solicitation covenants.
The foregoing description of the Employment Agreement is qualified in its entirety by reference to the Employment Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Term Sheet with Mr. King
In connection with Mr. Kings retirement and to receive the benefit of his continued services after he retires as President and Chief Executive Officer, on June 4, 2019, LabCorp and Mr. King entered into a term sheet outlining the principal terms of and conditions of the transition, which is expected to be replaced and superseded by a formal transition agreement (the Term Sheet). Pursuant to the terms of the Term Sheet, Mr. King will: (i) retire from the positions of President and Chief Executive Officer effective no later than October 31, 2019; (ii) continue to serve on the Board as Executive Chairman from November 1, 2019 until a date mutually agreed with the Board and no later than December 31, 2020; and (iii) thereafter serve as Senior Advisor to the LabCorp Chief Executive Officer until at least December 31, 2020.
Pursuant to the terms of the Term Sheet, Mr. Kings current annual base salary of $1,200,000, subject to any ordinary course increases by the Compensation Committee, will continue until December 31, 2019, after which he will be entitled to a base salary of $1,000,000 per year for the period beginning January 1, 2020 during which he serves as Executive Chairman or Senior Advisor. Mr. King will continue to be eligible to receive an annual bonus pursuant to LabCorps Management Incentive Bonus Plan for fiscal year 2019 with an annual target of 150% of his 2019 base salary, with achievement to be based on specific performance objectives determined by the Compensation Committee of the Board. For fiscal year 2020, Mr. King will not be eligible to receive an annual bonus pursuant to LabCorps Management Incentive Bonus Plan.
In accordance with the terms of the Term Sheet, all of Mr. Kings equity awards outstanding as of June 4, 2019, will be subject to LabCorps Senior Executive Transition Policy and will continue to be eligible for vesting, exercisable, payable or eligible for the termination of restrictions, as applicable, on the same terms and conditions as if Mr. King were to remain employed by the Company during the original exercise or vesting period, subject to modifications if necessary to comply with applicable law. On January 1, 2020, Mr. King will be eligible to receive a grant of restricted stock units with an aggregate grant date fair value of $6,500,000 and a one-year vesting period, which shall similarly be subject to LabCorps Senior Executive Transition Policy.
Mr. King will continue to receive the perquisites he currently receives and will remain eligible to participate generally in the employee benefit plans in which he currently participates through the period he serves as Senior Advisor. Mr. King will be subject to indefinite confidentiality and non-disparagement restrictions, two-year post-termination non-competition and non-solicitation covenants, and three-year standstill covenants under the Term Sheet.
Item 7.01. Regulation FD Disclosure.
A copy of the press release announcing the executive transition is attached to this Current Report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (Agreement) is entered into as of the 4th day of June, 2019, by and among Laboratory Corporation of America Holdings, a Delaware corporation (the Company) and Adam H. Schechter, an individual (the Executive).
WHEREAS, the Company desires to employ the Executive as the President and Chief Executive Officer of the Company;
WHEREAS, the Executive desires to accept such employment as the President and Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:
1. Employment Agreement. On the terms and conditions set forth in this Agreement, the Company agrees to employ the Executive and the Executive agrees to be employed by the Company for the Employment Period set forth in Section 2 and in the positions and with the duties set forth in Section 3.
2. Term. The initial term of employment under this Agreement shall be for a period beginning on November 1, 2019 (the Effective Date) and ending on the third anniversary thereof, unless sooner terminated as hereinafter set forth; provided that, on the third anniversary of the Effective Date and on each annual anniversary thereafter (such date and each annual anniversary thereof, a Renewal Date), the Agreement shall be deemed to be automatically extended upon the same terms and conditions (except for such terms and conditions that expire prior to any extension period), for successive periods of one year, unless the Company or the Executive provides written notice of its intention not to extend the term of the Agreement at least 180 days prior to the applicable Renewal Date. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the Term or the Employment Period. Any termination of the Executives employment upon the expiration of the Term following notice by the Company to Executive that the Term shall not be renewed shall constitute a termination by the Company without Cause or constitute Good Reason (each as defined below). For the avoidance of doubt, the Executives employment shall terminate upon the expiration of the Term following notice by either the Company or the Executive, unless the parties shall at such time otherwise agree in writing.
3. Position and Duties.
(a) Executive Positions. During the Employment Period, the Executive shall serve as the President and Chief Executive Officer of the Company with his primary office location in Burlington, North Carolina. In such capacities, the Executive shall report to the Companys Board of Directors (the Board) and perform the duties and responsibilities as the Board may from time to time determine to assign to the Executive. The Executives employment shall be subject to the policies maintained and established by the Company, as the same may be
amended from time to time. The Executive acknowledges and agrees that the Executive owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests of the Company and to do no act that would intentionally injure the business, interests, or reputation of the Company or its subsidiaries and affiliates. In keeping with these duties, the Executive shall make full disclosure to the Board of all business opportunities pertaining to the business of the Company and shall not appropriate for the Executives own benefit business opportunities that fall within the scope of the businesses conducted by the Company. The Executive shall also devote the Executives reasonable best efforts and full business time to the performance of the Executives duties hereunder and the advancement of the business and affairs of the Company. Subject to the prior written approval of the Board, the Executive may serve on boards of directors of other publicly traded and private companies. The Executive has previously disclosed to the Board, and the Board hereby approves, those boards of directors on which he serves as of the date of this Agreement.
(b) The Executive shall continue as a member of the Board of the Company as of the Effective Date and serve in this capacity without additional compensation (including additional compensation in the form of any retainer for the quarter in which the Effective Date occurs), and in advance of the expiration of each term as a director, in due course, and, subject to the annual approval of the Nominating and Corporate Governance Committee of the Board in accordance with its duties and responsibilities, shall be nominated for re-election to the Board so long as he is then serving as Chief Executive Officer of the Company and is eligible to be a member of the Board under applicable law or rules of the national securities exchange on which the Companys common stock is then listed, if any. It is the expectation of the Board that, subject to his qualification, Executive be named as Chairman of the Board not earlier than the Effective Date and not later than December 31, 2020, or any earlier date on which the Board Chairman on the date hereof ceases to be Chairman. The Executives continued membership on the Board shall be subject to election in accordance with the by-laws of the Company and applicable law, and shall not be considered a condition to Executives performance of his obligations hereunder, nor shall failure to be elected to the Board be considered a diminution of Executives duties or responsibilities, pursuant to Section 6(y)(iii) below, provided Executive has been nominated for re-election to the Board. The Executive also agrees to serve without additional compensation, if elected or appointed thereto, as a director or member of any of the Companys subsidiaries or affiliates and in one or more executive offices of any of the Companys subsidiaries or affiliates.
(c) Executive acknowledges that Executive shall be subject to and must comply with the Companys policy with respect to ownership of Company common stock as it may be in effect from time to time.
4. Compensation and Benefits.
(a) Base Salary. Commencing on the Effective Date, the Company shall pay to the Executive a base salary at the initial rate of $1,250,000 per calendar year (the Base Salary), prorated for any partial year of employment. The Base Salary shall be reviewed for increase by the Compensation Committee of the Board (the Compensation Committee) no less frequently than annually during the customary annual review period for other senior executives
and may be increased in the discretion of the Compensation Committee. Any such increase in Base Salary shall constitute the Base Salary for purposes of this Agreement. The Base Salary shall be paid in substantially equal installments in accordance with the Companys regular payroll procedures and policies in effect from time to time. The Executives Base Salary may not be decreased during the Employment Period other than pursuant to a like proportionate reduction of base salaries of other senior executives of the Company.
(b) Sign-On Equity Grant. On the Effective Date, the Executive shall be granted equity awards under the Companys 2016 Omnibus Incentive Plan (the Omnibus Plan) with an aggregate grant date fair value of $4,000,000 (the Sign-On Equity Grants). The Sign-On Equity Grants will be comprised of (1) time-vesting stock options with an aggregate grant date fair value of $1,000,000, which are eligible to vest in equal installments on each of the first through third anniversaries of the Effective Date and which will be granted with an exercise price that is equal to the Fair Market Value, as defined in the Omnibus Plan, of a share of the Companys common stock on the Effective Date, and have a ten (10)-year term (subject to earlier termination as provided in the applicable award agreements following termination of employment), (2) time-vesting restricted stock units with an aggregate grant date fair value of $1,000,000, which are eligible to vest and be settled in shares of common stock of the Company in equal installments on each of the first through third anniversaries of the Effective Date, and (3) time-vesting premium priced stock options with an aggregate grant date fair value of $2,000,000 (with the assumption of a 6-year expected life, historical volatility calculated over the expected life, risk-free interest rate from zero coupon treasury rates matched to the expected life, and dividend yield of the common stock, if any), which are eligible to vest in equal installments on each of the first through third anniversaries of the Effective Date and which will be granted with an exercise price that is 115% of the Fair Market Value of a share of the Companys common stock on the Effective Date, and have a ten (10)-year term (subject to earlier termination as provided in the applicable award agreements following termination of employment). Any unvested portion of the Sign-On Equity Grants will become fully vested upon a termination of the Executives employment by the Company without Cause, termination by the Executive for Good Reason or due to the Executives death or Disability. The Sign-On Equity Grants shall be subject to the terms and conditions of the Omnibus Plan and forms of award agreements attached hereto as Exhibit A-1, A-2 and A-3.
(c) Annual Bonus. For each calendar year that ends during the Employment Period, the Executive shall be eligible to receive an annual bonus pursuant to the Companys Management Incentive Bonus Plan or any successor plan that is in effect from time to time (any such bonus, the Incentive Bonus). The Executives target Incentive Bonus amount for a particular calendar year of the Company shall equal one hundred and fifty percent (150%) of the Executives Base Salary for that calendar year (the Target Bonus Amount); provided that the Executives actual Incentive Bonus amount for a particular calendar year shall be determined by the Compensation Committee in its sole and unfettered discretion taking into account performance objectives (which shall include corporate and individual objectives) established with respect to that particular calendar year by the Compensation Committee, and may be more or less than the Target Bonus Amount. The Target Bonus Amount shall be reviewed for increase by the Compensation Committee no less frequently than annually during the customary annual review period for other senior executives and may be increased in the discretion of the
Compensation Committee. Any such increase in the Target Bonus Amount shall constitute the Target Bonus Amount for purposes of this Agreement. For the calendar year 2019, the Executives Target Bonus Amount shall be pro-rated (calculated as the Target Bonus Amount for the entire 2019 calendar year multiplied by a fraction the numerator of which is equal to the number of days the Executive was employed as an employee in the 2019 calendar year and the denominator of which is 365. Except as otherwise set forth herein, the Executive must be actively employed by the Company throughout the applicable bonus measurement period and shall not have given notice of termination (other than for Good Reason (as set forth below), or been given notice by the Company of the termination of this Agreement for Cause (as set forth below) where such breach giving rise to Cause or Good Reason is not cured, at any time during the applicable bonus measurement period to be eligible to receive the Incentive Bonus.
(d) Annual Equity Grants. On the date that annual grants are awarded to other executives during 2020, the Executive shall be granted equity awards under the Companys Omnibus Plan having a grant date fair value of not less than $9,400,000. Thereafter, the Executive shall be eligible to receive annual grants under the Companys Omnibus Plan, or any successor thereto, with the annual grant amount to be determined annually by the Compensation Committee. Any such annual equity grants, including the grant to be awarded in 2020 above, shall be in such mix of grant types and subject to the terms and conditions set forth in the Companys forms of grant agreements that apply to other executives of the Company, except as specifically provided herein. For the avoidance of doubt, for purposes of determining the Executives eligibility for vesting of all awards and exercise of stock options due to retirement or early retirement as provided in the form equity award agreements (on the date hereof described as Retirement at Age 65 Plus 5 and Separation due Retirement at Age 55 (Rule of 70)), the Executive shall be credited with Service (as defined therein) for all service as a member of the Board prior to the Effective Date.
(e) Employee Benefits; Perquisites.
(i) During the Employment Period, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company, as in effect from time to time, that are generally made available to senior executives of the Company. The Company reserves the right to amend, modify or cancel any employee benefit plans, practices and programs, and any fringe benefits and perquisites, as applicable to executives of the Company generally (and, accordingly, other than as provided at Section 4(e)(ii) below), at any time and without the consent of the Executive.
(ii) During the Employment Period, the Executive shall also be entitled to: (a) a company car and driver for local commuting and business use in the Burlington, North Carolina area, an annual executive physical, and financial planning services, each on substantially the same basis as provided to the immediately preceding Chief Executive Officer of the Company; (b) reasonable security services, subject to the approval of the Board; and (c) use of a private aircraft for nonbusiness purposes in an amount not exceeding $150,000 per calendar year (such amount to be pro-rated for 2019), based on the Companys aggregate incremental cost calculation used for SEC proxy disclosure purposes.
(iii) Executive acknowledges and agrees that he shall bear responsibility for any taxable income resulting from the employee benefits and perquisites set forth in this section (including reimbursement or coverage of expenses by the Company).
(f) Commuting Costs. For the first three years of the Employment Period, the Company will pay the costs of up to $350,000 per calendar year (such amount to be pro-rated for 2019 and all partial calendar years), based on the Companys aggregate incremental cost calculation used for SEC proxy disclosure purposes, associated with flights (commercial or Company arranged through NetJets or other similar provider) between the vicinity of Executives residence and Executives primary place of employment in Burlington, North Carolina. The Board may, in its discretion, increase (but, until the third anniversary of the Effective Date, may not decrease) such annual commuting cost amount. Effective as of the third anniversary of the Effective Date, the Company reserves the right to amend, modify or cancel this arrangement. Executive acknowledges and agrees that he shall bear responsibility for all other costs of commuting from his residence in Pennsylvania to Burlington, North Carolina and for any taxable income resulting from expenses (including reimbursement or coverage of expenses by the Company) associated with travel from his primary residence to his primary place of employment.
(g) Company Compensation Plans. Except as otherwise provided herein, all compensation provided to the Executive pursuant to this Section 4 shall be in accordance with the Companys compensation plans and policies.
(h) Clawback/Recoupment. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, including the Incentive Bonus, the Sign-On Equity Grants, annual equity grants, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company shall be subject to the terms of the Companys Incentive Compensation Recoupment Policy, as separately provided to Executive, and as the same may be amended from time to time.
5. Expenses. Subject to the limitation provided in Section 4(f), the Company shall reimburse the Executive for all expenses reasonably and actually incurred in accordance with policies which may be adopted from time to time by the Company promptly upon periodic presentation by the Executive of an itemized account, including reasonable substantiation, of such expenses.
6. Termination of Employment.
(a) Permitted Terminations. (x) This Agreement may be terminated by the Company prior to the Effective Date under the following circumstances: (i) the Executives death or Disability (as defined below), (ii) if an event that would constitute Cause, as defined below, had the Executive then been employed by the Company occurs, whether or not the Executive is then employed by the Company, or (iii) by the Company for any other reason. (y) The Executives employment hereunder may be terminated during the Employment Period under the following circumstances:
(i) Death. The Executives employment hereunder shall terminate upon the Executives death;
(ii) By the Company.
(A) Disability. The Company may terminate the Executives employment if the Executive is unable to perform each of the essential duties of his position by reason of a medically determinable physical or mental impairment which is potentially permanent in character or which can be expected to last for a continuous period of not less than twelve (12) months (a Disability); or
(B) Cause. The Company may terminate the Executives employment for Cause or without Cause. If the Company terminates the Executives employment without Cause, the Company shall not be required to give advance notice.
For purposes of this Agreement (including the Sign-On Equity Grants), Cause shall be limited to the following events: (i) an intentional act of fraud, embezzlement, theft, or any other material violation of law in connection with Executives duties or in the course of his employment with the Company: (ii) Executives conviction of or entering of a plea of nolo contendere to a felony; (iii) Executives alcohol intoxication on the job or current illegal drug use; (iv) Executives intentional wrongful damage to tangible assets of the Company; (v) Executives intentional wrongful disclosure of material confidential information of the Company and/or material breach of the provisions of the Companys Confidentiality/Non-Competition/Non-Solicitation Agreement or any other noncompetition or confidentiality provisions covering the activities of Executive; (vi) Executives knowing and intentional breach of any employment policy of the Company; (vii) gross neglect or gross misconduct, disloyalty, dishonesty, or breach of trust in the performance of the Executives duties that is not corrected to the Boards satisfaction within 30 days of the Executive receiving notice thereof; or (viii) Executives misconduct that causes reputational harm to the Company.
(iii) By the Executive. The Executive may terminate this Agreement for any reason prior to the Effective Date, and may terminate his employment for any reason (including Good Reason) or for no reason during the Employment Period. If the Executive terminates his employment without Good Reason, then he shall provide written notice to the Company at least thirty (30) days prior to the Date of Termination, provided that the Company may, in its sole discretion, waive the provision of all or any portion of the notice period and immediately terminate the Executive, which termination shall not be deemed a termination without Cause or constitute grounds for termination for Good Reason.
For purposes of this Agreement (including the Sign-On Equity Grants), Good Reason means, without the Executives prior written consent (i) a material reduction in the Executives Base Salary or any reduction of the Target Bonus Amount; (ii) relocation to an office location more than 75 miles from either the Executives principal office location or his principal residence as of the date of notice of relocation; (iii) the Board shall fail to appoint the Executive as Chairman of the Board on the earlier of the date on which the Board Chairman on the date hereof ceases to be the Chairman or December 31, 2020 (but not prior to the Effective Date); (iv) the Board shall fail
to re-nominate the Executive for re-election to the Board; or (v) a material diminution in title, duties, or responsibilities, including reporting responsibilities, of the Executive in his capacity as an employee (for which purpose such a material diminution shall be deemed to occur in the event of a Change in Control (as defined below) in which the Company ceases to be a publicly traded company, except in the case that the Executive is the most senior officer and a member of the board of directors of the top-most publicly traded parent company of which the Company is a subsidiary resulting from such Change in Control). Notwithstanding the foregoing, Good Reason shall not include a reduction in Base Salary where such reduction is pursuant to a like proportionate reduction of base salaries of other senior executives of the Company. Further, for the avoidance of doubt, Good Reason shall not include (i) Executives failure to be re-elected to the Board by the Companys shareholders provided the Board nominates him for re-election to the Board; or (ii) Executives ceasing to serve as the Chairman of the Board following his initial appointment as the Chairman. In order to invoke a termination for Good Reason, the Executives termination must occur within 90 days after the occurrence of the Good Reason and after the Company has received notice of the Good Reason event and failed to cure within 30 days after receiving such notice. Otherwise, such termination shall be considered voluntary termination without Good Reason.
For purposes of this Agreement, Date of Termination means (i) if this Agreement or Executives employment is terminated due to the Executives death, the date of the Executives death; (ii) if this Agreement or Executives employment is terminated because of the Executives Disability, 30 days after Notice of Termination is given by the Company; or (iii) if the Executives employment is terminated by the Company for any other reason or by the Executive pursuant to Section 6(a)(y)(iii), the date specified in the Notice of Termination. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended (the Code) and the Treasury Regulations thereunder (collectively, Section 409A), references to Executives termination of employment (and corollary terms) with the Company shall be construed to refer to Executives separation from service (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company.
(b) Termination. Any termination of this Agreement prior to the Effective Date or of Executives employment by the Company or the Executive (other than because of the Executives death) shall be communicated by a written Notice of Termination to the other party hereto in accordance with the requirements of this Agreement. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. Termination of the Executives employment shall take effect on the Date of Termination. The Executive agrees, in the event of any dispute as to whether a Disability exists, and if requested by the Company, to submit to a physical examination by a licensed physician selected by mutual consent of the Company and the Executive, the cost of such examination to be paid by the Company. The written medical opinion of such physician shall be conclusive and binding upon each of the parties hereto as to whether a Disability exists and the date when such Disability arose. This Section shall be interpreted and applied so as to comply with the provisions of the Americans with Disabilities Act (to the extent applicable) and any applicable state or local laws.
(c) Resignation of All Other Positions. Upon termination of the Executives employment for any reason, the Executive shall resign from all positions that the Executive holds as an officer or member of the Board (or a committee thereof) and as an officer or member of the board of directors (or a committee thereof) of any Company subsidiaries or affiliates.
7. Compensation Upon Termination.
(a) Death. If this Agreement or the Executives employment is terminated as a result of the Executives death, this Agreement and the Employment Period shall terminate without further notice or any action required by the Company or the Executives legal representatives. If the Date of Termination is after the Effective Date, within 30 days following the Executives death, the Company shall pay to the Executives legal representative or estate, as applicable, (i) the Executives Base Salary and accrued unused vacation due through the Date of Termination; (ii) all Accrued Benefits, if any, to which the Executive is entitled as of the Date of Termination at the time such payments are due; (iii) payment of any Incentive Bonus earned for a prior completed performance period and unpaid on the Date of Termination; and (iv) a Partial Year Bonus (defined below) in the manner provided in Section 7(d) (such amounts in clauses (i) through (iv), the Accrued Amounts). The rights of the Executives legal representative or estate, as applicable, with respect to the Executives equity or equity-related awards shall be governed by the applicable terms of the related plan or award agreement. Except as set forth herein, the Company and the Companys subsidiaries and affiliates shall have no further obligation to the Executive or his legal representatives, estate or heirs upon his death under this Agreement. For purposes of this Agreement, Accrued Benefits means (w) any compensation deferred by the Executive prior to the Date of Termination and not paid by the Company or otherwise specifically addressed by this Agreement; (x) any amounts or benefits owing to the Executive or to the Executives beneficiaries under the then applicable benefit plans of the Company; (y) any amounts owing to the Executive for reimbursement of expenses properly incurred by the Executive through the Date of Termination and which are reimbursable in accordance with Section 5; and (z) any other benefits or amounts due and owing to the Executive under the terms of any plan, program or arrangement of the Company.
(b) Disability. If the Company terminates this Agreement prior to the Effective Date because of the Executives Disability, the Company shall have no further obligations to the Executive under this Agreement upon such termination. If the Company terminates the Executives employment during the Employment Period because of the Executives Disability pursuant to Section 6(a)(y)(ii)(A), the Company shall pay to the Executive the Accrued Amounts. The rights of the Executive with respect to the Executives equity or equity-related awards shall be governed by the applicable terms of the related plan or award agreement. Except as set forth herein, the Company shall have no further obligations to the Executive under this Agreement upon Executives termination due to Disability pursuant to Section 6(a)(y)(ii)(A).
(c) Termination by the Company for Cause or by the Executive without Good Reason. If prior to the Effective Date, either the Company terminates this Agreement pursuant to Section 6(a)(x)(ii) or the Executive terminates this Agreement pursuant to Section 6(a)(y)(iii), the Company shall have no further obligations to the Executive under this Agreement upon such termination. If during the Employment Period the Company terminates the Executives employment for Cause pursuant to Section 6(a)(y)(ii)(B) or the Executive terminates his employment without Good Reason pursuant to Section 6(a)(y)(iii), the Company shall pay to the Executive the Executives Base Salary and accrued unused vacation due through the Date of Termination and all Accrued Benefits, if any, to which the Executive is entitled as of the Date of Termination, at the time such payments are due, and the Executives rights with respect to then vested or exercisable equity or equity-related awards shall be governed by the applicable terms of the related plan or award agreements. Except as set forth herein, the Company shall have no further obligations to the Executive under this Agreement upon such termination.
(d) Termination by the Company without Cause, by the Executive with Good Reason, or termination following notice by the Company of non-renewal of the Term. If prior to the Effective Date the Company terminates this Agreement pursuant to Section 6(a)(x)(iii) or during the Employment Period the Company terminates the Executives employment other than for Cause pursuant to Section 6(a)(y)(ii)(B), the Executive terminates his employment with Good Reason pursuant to Section 6(a)(y)(iii), or the Executives employment terminates upon the expiration of the Term following a notice by the Company to not renew the Term pursuant to Section 2 (each, a Qualifying Termination), the Company shall pay to the Executive (x) the Executives Base Salary and accrued unused vacation due through the Date of Termination; (y) all Accrued Benefits, if any, to which the Executive is entitled as of the Date of Termination, in each case at the time such payments are due; and (z) payment of any Incentive Bonus earned for a previous completed performance period and unpaid on the Date of Termination. The Executive shall also be entitled to receive, subject to his execution of a Special Severance Agreement (as defined below), the following severance benefits (collectively, the Severance Benefits):
The Company shall pay the Executive the Cash Severance Benefits to which he is entitled under this Section 7(d) as follows: (a) 50 percent of the total Cash Severance Benefits due, less statutory deductions, shall be paid within 30 days following the execution of the Special Severance Agreement, but in no event shall be paid later than March 15 of the year following the year in which the Termination Date occurred; and (b) the remaining 50 percent of the total Cash Severance Benefits, less statutory deductions, shall be paid within 30 days following the one-year anniversary of the execution of the Special Severance Agreement, but only if the Executive has complied in all material respects with the terms and conditions of the Special Severance Agreement. The COBRA Continuation Benefits shall be provided on a monthly basis commencing 30 days following execution of the Special Severance Agreement.
A Partial Year Bonus is payable to the Executive for the year of the Executives employment termination in the event the Company performance criteria for payment of an Incentive Bonus are achieved as of the close of the year based on the actual performance level achieved for such year (as determined (x) treating any individual factors as fully satisfied and (y) without regard for any exercise of negative discretion unless such exercise is applicable to all similarly situated executives with like force and effect); provided, however, that if a Qualifying Termination occurs after a Change in Control, the performance criteria shall be deemed satisfied at the target level. Any such Partial Year Bonus shall equal the Executives Incentive Bonus compensation so earned multiplied by a fraction, the numerator of which is the number of days the Executive was employed by the Company in the annual or other performance period for the Incentive Bonus award in which such termination occurs and the denominator of which is the total number of days included within such annual or partial year performance period. Should any such Partial Year Bonus become payable under this Agreement, payment shall be made to the Executive at the same time as payment is made to all other participants under the Incentive Bonus compensation program following the close of the year.
(e) The Executives rights with respect to equity or equity-related awards (including as provided above for Sign-On Equity Grants) shall be governed by the applicable terms of the related plan or award agreements.
(f) Liquidated Damages. The parties acknowledge and agree that damages that will result to the Executive for termination by the Company of this Agreement under Section 6(a)(x)(iii) or the Executives employment without Cause under Section 6(a)(y)(ii)(B) or by the Executive for Good Reason under Section 6(a)(y)(iii) shall be extremely difficult or impossible to establish or prove, and agree that the Severance Benefits shall constitute liquidated damages for any such termination. The Executive agrees that, except for such other payments and benefits to which the Executive may be entitled as expressly provided by the terms of this Agreement or any other applicable benefit plan, such liquidated damages shall be in lieu of all other claims that the Executive may make by reason of any such termination of his employment and that, as a condition to receiving the Severance Benefits, the Executive will execute a release of claims and separation agreement substantially in the form of the release attached hereto as Exhibit B (the Special Severance Agreement). Within five business days of the Date of Termination, the Company shall deliver to the Executive the Special Severance Agreement for the Executive to execute. The Executive will forfeit all rights to the Severance Benefits unless, within 30 days of delivery of the Special Severance Agreement by the Company to the Executive, the Executive executes and delivers the Special Severance Agreement to the Company and the releases contained therein have become irrevocable by virtue of the expiration of the revocation period without the release having been revoked (the first such date, the Release Effective Date). In the event that the Release Effective Date could occur in one of two taxable years of the Executive, the Release Effective Date shall be deemed to occur in the earliest date in the later such taxable year as otherwise would apply thereunder. The Company and Company subsidiaries and affiliates shall have no obligation to provide the Severance Benefits prior to the Release Effective Date.
(g) Section 409A. To the extent the Executive would be subject to the additional 20% tax imposed on certain deferred compensation arrangements pursuant to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such tax and preserve to the maximum extent possible the original intent and economic benefit to the Executive and the Company, and the parties shall promptly execute any amendment reasonably necessary to implement this Section 7(g).
(i) For purposes of Section 409A, the Executives right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.
(ii) The Executive will be deemed to have a Date of Termination for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a separation from service within the meaning of Section 409A.
(iii) Notwithstanding any other provision of this Agreement to the contrary, if at the time of the Executives separation from service, (i) the Executive is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time), and (ii) the Company makes a good faith determination that an amount payable on account of such separation from service to the
Executive constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A (the Delay Period), then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it in a lump sum on the first business day after such six-month period (or upon the Executives death, if earlier), together with interest for the period of delay, compounded annually, equal to the prime rate (as published in the Wall Street Journal) in effect as of the dates the payments should otherwise have been provided. To the extent that any benefits to be provided during the Delay Period are considered deferred compensation under Section 409A provided on account of a separation from service, and such benefits are not otherwise exempt from Section 409A, the Executive shall pay the cost of such benefit during the Delay Period, and the Company shall reimburse the Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to the Executive, the Companys share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.
(iv) (A) Any amount that the Executive is entitled to be reimbursed under this Agreement will be reimbursed to the Executive as promptly as practical and in any event not later than the last day of the calendar year after the calendar year in which the expenses are incurred, (B) any right to reimbursement or in kind benefits will not be subject to liquidation or exchange for another benefit, and (C) the amount of the expenses eligible for reimbursement during any taxable year will not affect the amount of expenses eligible for reimbursement in any other taxable year.
(v) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of the Company.
8. Confidentiality, Non-Competition and Non-Solicitation Agreement. In consideration of the employment and compensation terms set forth in this Agreement, the Executive agrees to execute and be bound by the terms of the Companys Confidentiality, Non-Competition and Non-Solicitation Agreement attached as Exhibit C.
9. Parachute Limitations. Notwithstanding anything herein to the contrary, in the event that the payments or distributions to be made by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, under some other plan, agreement, or arrangement, or otherwise) (a Payment) constitute parachute payments within the meaning of Section 280G of the Code, then the Payment to the Executive shall be reduced to $1 below the safe harbor limit (as described in Section 280G(b)(2)(A)(ii) of the Code) if said reduction in Payment would result in the Executive retaining a larger amount, on an after-tax basis, taking into account the excise and income taxes imposed on the payments and benefits.
10. Indemnification. The Company shall indemnify the Executive to the maximum extent that its officers, directors and employees are entitled to indemnification pursuant to the Companys certificate of incorporation, bylaws, and any indemnification agreements then in force, subject to applicable law. The Executive shall also be covered as an insured under any contract of directors and officers liability insurance to the same extent as such contract covers members of the Board. The Executives rights under this Section 10 shall survive any termination or expiration of this Agreement and any termination of the Executives employment for all periods thereafter during which the Executive may be subject to liability for any acts or omissions occurring during his employment or service as a member of the Board that is otherwise subject to indemnification and coverage under directors and officers liability insurance.
11. Professional Fees Incurred in Negotiating the Agreement. The Company shall pay or the Executive shall be reimbursed for the Executives reasonable professional fees and costs incurred in connection with this Agreement up to a maximum of $35,000. Any payment required under this Section 11 shall be made within sixty (60) days following the Effective Date.
12. Notices. All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by first-class registered or certified mail, return receipt requested, postage prepaid, delivered by overnight air courier, addressed as follows:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, North Carolina 27215
Attention: Sandra van der Vaart,
Senior Vice President, Global General Counsel
Hogan Lovells US LLP
100 International Drive, Suite 2000
Baltimore, Maryland 21202
Attention: Michael Silver
Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, confirmation of facsimile transmission or the affidavit of messenger being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.
13. Severability. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.
14. Effect on Other Agreements; Inconsistency. This Agreement (including the Exhibits hereto) and all other agreements identified hereunder constitute the entire agreement between the parties respecting the employment of the Executive and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. In the event of any inconsistency between this Agreement (and Exhibits) and any other plan, program, practice or agreement of the Company in which the Executive is a participant or a party, whether applicable on the Effective Date or at any time thereafter, this Agreement (and Exhibits) shall control unless, with the Executives prior written consent, such other plan, program or practice, or in such agreement with the Executive, specifically refers to this Agreement (or Exhibits) as not so controlling.
15. Assignment. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executives death, the personal representative or legatees or distributees of the Executives estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder, and (ii) the rights and obligations of the Company hereunder shall be assignable and may be assumed by a successor entity in connection with (a) any subsequent merger, consolidation, sale of all or substantially all of the assets or equity interests of the Company or similar transaction involving the Company or a successor entity or (b) the formation of a holding company or similar corporate reorganization approved by the Board. If the Companys rights and obligations are assigned or assumed as provided in the preceding sentence, the term Company as used herein shall refer to such successor entity.
16. Binding Effect. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives and permitted successors and assigns.
17. Amendment; Waiver. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the party against whom enforcement is sought. Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.
18. Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.
19. Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of Delaware without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Delaware. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.
20. Entire Agreement. This Agreement constitutes the entire agreement between the parties respecting the employment of the Executive, there being no representations, warranties or commitments except as set forth herein.
21. Counterparts. This Agreement may be executed in two counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.
22. Withholding. The Company may withhold from any benefit payment or any other payment or amount under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
23. Representations of the Executive. The Executive represents and warrants to the Company that (i) the Executive has furnished to the Company all agreements respecting any post-employment restrictions applicable to the Executive with his immediately preceding employer; and (ii) there are no other agreements to which the Executive is a party that conflict with the Executives acceptance of employment with the Company or would be violated or breached by Executives acceptance of employment with the Company, including any non-solicitation, non-competition or other similar covenant or agreement. The Executive agrees that the Executive will perform his duties to the Company in a manner that complies with all such agreements.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement, or have caused this Agreement to be duly executed and delivered on their behalf.
Form for AS Sign-On Option Grants Only
LABORATORY CORPORATION OF AMERICA HOLDINGS
2016 OMNIBUS INCENTIVE PLAN NON-QUALIFIED OPTION AGREEMENT
Laboratory Corporation of America Holdings, a Delaware corporation (the Company), hereby grants an option to purchase shares of its common stock, par value $0.10 per share (the Option), to the Optionee named below, subject to the vesting and other conditions set forth below. Additional terms and conditions of the grant are set forth in this cover sheet and in the attachment (together, the Agreement), and in the Companys 2016 Omnibus Incentive Plan (as amended from time to time, the Plan).
Grant Date: , 2019
Name of Optionee: Adam Schechter
Optionees Social Security Number: - -
Number of shares of Stock Covered by Option:
Option Price per share of Stock: $ . [(At least 100% of Fair Market Value)]1
The Option is subject to all of the terms and conditions described in this Agreement and in the Plan, a copy of which is also attached. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this cover sheet or Agreement should appear inconsistent.
This is not a stock certificate or a negotiable instrument.
LABORATORY CORPORATION OF AMERICA HOLDINGS
2016 OMNIBUS INCENTIVE PLAN
NON-QUALIFIED OPTION AGREEMENT
By electronically acknowledging this Agreement, you agree to all of the terms and conditions described above, in the Plan, in the Confidentiality Agreement/Non-Competition/Non-Solicitation Agreement attached hereto as Exhibit A and the Companys Insider Trading Policy attached as Exhibit B.
Form of AS Sign-On RSU Grants Only
LABORATORY CORPORATION OF AMERICA HOLDINGS
2016 OMNIBUS INCENTIVE PLAN RESTRICTED STOCK UNIT AGREEMENT
Laboratory Corporation of America Holdings, a Delaware corporation (the Company), hereby grants restricted stock units relating to its shares of common stock, par value $0.10 (the Restricted Stock Units) to the Grantee named below, subject to the vesting and other conditions set forth below. Additional terms and conditions of the grant are set forth in this cover sheet and in the attachment (collectively, the Agreement) and in the Companys 2016 Omnibus Incentive Plan (the Plan). Certain capitalized terms used but not defined in this Agreement have the meanings given such terms in the Plan.
Grant Date: , 2019
Name of Grantee: Adam Schechter
Grantees Social Security Number: - -
Number of Shares of Stock underlying Restricted Stock Units:
Purchase Price Per Share of Stock:
This grant of Restricted Stock Units is subject to all of the terms and conditions described in this Agreement and in the Plan, a copy of which is also attached. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this cover sheet or Agreement should appear inconsistent.
Company: Date: , 2019
This is not a stock certificate or a negotiable instrument.
LABORATORY CORPORATION OF AMERICA HOLDINGS
2016 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
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By electronically acknowledging this Agreement, you agree to all of the terms and conditions described above, in the Plan, in the Companys Insider Trading Policy attached as Exhibit A and in the Confidentiality Agreement/Non-Competition/Non-Solicitation Agreement attached hereto as Exhibit B.
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Premium Priced Option Agreement will be the same as Exhibit A-1 but with an exercise price that will be 115% of Fair Market Value.
Special Severance Agreement
[Date], 20[ ]
Adam H. Schechter
Re: Employment Separation Agreement and General Release
On behalf of Laboratory Corporation of America Holdings (the Company), I write to offer you (the Employee) the following Employment Separation Agreement and General Release (the Agreement).
1.0 Separation of Employment
1.1 Effective , 20 (the Separation Date), Employees employment with the Company will terminate; he shall perform no further services for the Company and his status as an employee and Officer of the Company shall cease on that date. Employee also hereby resigns from all positions that Employee holds as an officer or member of the Board of Directors of the Company (or a committee thereof) and as an officer or member of the board of directors (or a committee thereof) of any Company subsidiaries or affiliates. Employee and the Company further agree that the relationship created by this Agreement is purely contractual and that no employer-employee relationship is intended, nor shall such be inferred from the performance of obligations under this Agreement. Employee further agrees that any payments and/or benefits payable pursuant to this Agreement are contingent upon Employees execution and fulfillment of his obligations under this Agreement.
2.0 Separation Pay
2.1 In consideration for the covenants, promises and agreements herein and in particular Employees release of claims as well as covenants not to solicit, not to compete and not to disclose confidential information, the Company will pay Employee a severance in the total amount of $ less applicable taxes and withholdings, which represents [two][three] times the sum of Employees Base Salary of $ plus $ , representing the Employees Average Incentive Bonus as defined under the terms of the Executive Employment Agreement entered into as of , 2019 between Employee and the Company (the Employment Agreement). The severance shall be paid in two installments, with the first installment of $ , less taxes and withholding, made payable within 30 days following the date of this Agreement and the second installment of $ , less taxes and withholding, made payable 30 days following the one-year anniversary of date of this Agreement.
2.2 In addition to the compensation payable under Section 2.1 of the Agreement, Employee shall be eligible to receive a prorated amount equal to the earned portion of the Management Incentive Bonus (MIB) that he would have received under the LabCorp Management Incentive Bonus Plan had he remained eligible for said bonus. The additional payment shall be made at the time that bonuses are normally paid under the MIB Plan but no later than March 15, 2019.
3.1 Employee, his spouse, and his other dependent(s) may be eligible to elect continued health care coverage under the welfare plans sponsored by the Company, as provided in the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), which provides generally that certain employees and their dependents may elect to continue coverage under employer-sponsored group health plans for a period of at least eighteen (18) months under certain conditions, including payment by Employee of the Applicable Premium as defined in Section 604 of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. (ERISA). In the event Employee elects continuation of coverage under COBRA for himself and his spouse and dependents, the Company will reimburse Employee for the Applicable Premium for such coverage (medical, dental, optical and prescription coverage for Employee, his spouse and dependents) for 18 months, thereof, to the extent actually paid by the Employee.
3.2 Employee shall be eligible for such benefits under the Companys existing qualified plans as are provided under the circumstances (taking into account separation of employment as of the Separation Date) pursuant to the terms of the plan documents governing each of these plans. Except as otherwise provided herein or in the terms of any documents governing any employee benefit plan maintained by the Company, Employee will cease to be a participant in and will no longer have any coverage or entitlement to benefits, accruals, or contributions under any of the Companys employee benefit plans effective upon the separation of his employment. Employee agrees that the payments made to him by the Company pursuant to this Agreement do not constitute compensation for purposes of calculating the amount of benefits Employee may be entitled to under the terms of any pension plan or for the purposes of accruing any benefit, receiving any allocation of any contribution, or having the right to defer any income in any profit-sharing or other employee pension benefit plan, including any cash or deferred arrangement.
3.3 Employee also understands that his grants of performance shares, restricted stock units and stock options are governed by the terms and conditions of the Companys 2016 Omnibus Incentive Plan and applicable grant agreements and that this Agreement does not in any modify, change, alter or amend the terms and conditions of those grants.
3.4 Employee shall submit for reimbursement any and all unpaid business expenses to the Company within 30 days of the Separation Date. The Company will reimburse said expenses provided that they are consistent with, and reimbursable under, the Companys travel and entertainment expense policy. The Company will not be responsible for reimbursing the Employee for any business expenses incurred during employment but submitted after said 30-day period.
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3.5 This Agreement shall never be construed as an admission by the Company of any liability, wrongdoing or responsibility on its part or on the part of any other person or entity described in Section 4.1 of this Agreement. The Company expressly denies any such liability, wrongdoing or responsibility.
4.1 Employee, on behalf of himself and his heirs, assigns, transferees and representatives, hereby releases and forever discharges the Company, and its predecessors, successors, parents, subsidiaries, affiliates, assigns, representatives and agents, as well as all of their present and former directors, officers, employees, agents, shareholders, representatives, attorneys and insurers (collectively, the Releasees), from any and all claims, causes of actions, demands, damages or liability of any nature whatsoever, known or unknown, which Employee has or may have which arise out of his employment or cessation of employment with the Company, or which concern or relate in any way to any acts or omissions done or occurring prior to and including the date of this Agreement, including, but not limited to, claims arising under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.; the Equal Pay Act , 29 U.S.C. § 206(a) and interpretive regulations; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; 42 U.S.C. § 1981 et seq.; the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.; the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq.; the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; any and all claims for wrongful termination and/or retaliation; claims for breach of contract, express or implied; claims for breach of the covenant of good faith and fair dealing; claims for compensation, including but not limited to wages, bonuses, or commissions except as otherwise contained herein; claims for benefits or fringe benefits, including, but not limited to, claims for severance pay and/or termination pay, except as otherwise contained herein; claims for, or relating to stock or stock options (except that nothing in this Agreement shall prohibit Employee from exercising any vested stock options or affect Employees claims to vested benefits in the Companys Employees Retirement Savings Plan, Deferred Compensation Plan, Employee Stock Purchase Plan, or Cash Balance Retirement Plan, in accordance with the terms of the applicable stock option agreement(s) and applicable plan documents); claims for unaccrued vacation pay; claims arising in tort, including, but not limited to, claims for invasion of privacy, intentional infliction of emotional distress and defamation; claims for quantum meruit and/or unjust enrichment; and any and all other claims arising under any other federal, state, local or foreign laws, as well as any and all other common law legal or equitable claims.
4.2 Employee represents that he has not initiated any action or charge against any of the Releasees with any Federal, State or local court or administrative agency. If such an action or charge has been filed by Employee, or on Employees behalf, he will use his best efforts to cause it immediately to be withdrawn and dismissed with prejudice. Failure to cause the withdrawal and dismissal with prejudice of any action or charge shall render this Agreement null and void, and any consideration paid hereunder shall be repaid immediately by the Employee upon receipt of such notice.
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4.3 Employee further agrees that he will not institute any lawsuits, either individually or as a class representative or member, against any of the Releasees as to any matter based upon, arising from or relating to his employment relationship with the Company, from the beginning of time to the date of execution of this Agreement. Employee knowingly and intentionally waives any rights to any additional recovery that might be sought on his behalf by any other person, entity, local, state or federal government or agency thereof, including specifically and without limitation, the North Carolina Department of Labor, the United States Department of Labor, or the Equal Employment Opportunity Commission.
4.4 Employee is hereby advised that: (i) he should consult with an attorney (at his own expense) prior to executing this Agreement; (ii) he is waiving, among other things, any age discrimination claims under the Age Discrimination in Employment Act, provided, however, he is not waiving any claims that may arise after the date this Agreement is executed; (iii) he has twenty-one (21) days within which to consider the execution of this Agreement, before signing it; and (iv) for a period of seven (7) days following the execution of this Agreement, he may revoke this Agreement by delivering written notice (by the close of business on the seventh day) to the Company in accordance with Section 10.7 herein.
4.5 Notwithstanding the provisions of Section 4.1, said release does not apply to any and all statutory or other claims (a) that are prohibited from waiver by Federal, State or local law, (b) for enforcement of any covenant under this Agreement, (c) for any claim for any vested, accrued benefits to which Employee is (or becomes) otherwise entitled pursuant to the terms and conditions of any of the benefit plans in which Employee participated prior to the Separation Date (but not any incentive or severance plans excepted as provided in Section 2 or 3, above): (d) for unemployment insurance benefits; or (e) for indemnification under applicable statutory, or common law or any insurance, charter, or bylaws of the Company or any of its affiliates, including under the Employment Agreement, it being understood and agreed that this Agreement does not create or expand upon any such rights, (if any) to indemnification.
4.6 It is specifically understood and agreed that the payments set forth above in Sections 2.0 and 3.0 (including the sub-parts thereto), and each of them, are good and adequate consideration to support the waivers, releases and obligations contained herein, including, without limitation, Sections 5.0, 6.0, 7.0, and 8.0, and their respective sub-parts, and that all of the payments set forth Sections 2.0 and 3.0 (including the sub-parts thereto) are of value in addition to anything to which Employee already was entitled prior to the execution of this Agreement.
5.1 The parties acknowledge that during the course of Employees employment with the Company, he was given access, on a confidential basis, to Confidential Information which the Company has for years collected, developed, and/or discovered through a significant amount of effort and at great expense. The parties acknowledge that the Confidential Information of the Company is not generally known or easily obtained in the Companys trade, industry, business, or otherwise and that maintaining the secrecy of the Confidential Information is extremely important to the Companys ability to compete with its competitors.
5.2 Employee agrees that for a period of seven (7) years from the date of this Agreement, Employee shall not, without the prior written consent of the Company, divulge to any third party
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or use for his own benefit, or for any purpose other than the exclusive benefit of the Company, any Confidential Information of the Company; provided however, that nothing herein contained shall restrict Employees ability to make such disclosures as such disclosures may be required by law; and further providing that nothing herein contained shall restrict Employee from divulging information that is readily available to the general public as long as such information did not become available to the general public as a direct or indirect result of Employees breach of this section of this Agreement.
5.3 The term Confidential Information in this Agreement shall mean information that is not readily and easily available to the public or to persons in the same business, trade, or industry of the Company, and that concerns the Companys prices, pricing methods, costs, profits, profit margins, suppliers, methods, procedures, processes or combinations or applications thereof developed in, by, or for the Companys business, research and development projects, data, business strategies, marketing strategies, sales techniques, customer lists, customer information, or any other information concerning the Company or its business that is not readily and easily available to the public or to those persons in the same business, trade, or industry of the Company. The term customer information as used in this Agreement shall mean information that is not readily and easily available to the public or to those persons in the same business, trade, or industry and that concerns the course of dealing between the Company and its customers or potential customers solicited by the Company, customer preferences, particular contracts or locations of customers, negotiations with customers, and any other information concerning customers obtained by the Company that is not readily and easily available to the public or to those in the business, trade, or industry of the Company.
5.4 Employee acknowledges that all information, the disclosure of which is prohibited hereby, is of a confidential and proprietary character and of great value to the Company, and upon the execution of this Agreement (or as soon thereafter as is reasonably practicable), Employee shall forthwith deliver up to the Company all records, memoranda, data, and documents of any description that refer to or relate in any way to such information and shall return to the Company any of its equipment and property which may then be in Employees possession or under Employees personal control.
5.5 Employee hereby agrees that any failure to fully and completely comply with this provision shall entitle the Company to seek damages for a demonstrated breach of the confidentiality provision, to include recoupment of monies paid hereunder.
5.6 Notwithstanding the restrictions set forth in Section 5.0 and its subparts, Employee may disclose information protected under Section 5.0 and its subparts if and only if such is (i) lawfully required by any government agency; (ii) otherwise required to be disclosed by law (including legally required financial reporting) and/or by court order; (iii) necessary in any legal proceeding in order to enforce any provision of this Agreement or (iv) made to the Securities Exchange Commission regarding security law issues. Employee further agrees that he will notify the Company in writing within five (5) calendar days of the receipt of any subpoena, court order, administrative order or other legal process requiring disclosure of information subject to Section 5.0 and sub-parts thereto. Employee may also disclose the contents of Section 6.0 and its sub-parts and only those contents to any subsequent and/or prospective employer.
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6.1 For a period of twenty-four (24) months following the separation of Employees employment for any reason (the Restriction Period), Employee shall not become an owner in, shareholder with more than a 2% equity interest in, investor in, or an employee, contractor, consultant, advisor, representative, officer, director, or agent of, a trade or business that offers products and services that are the same or substantially similar to the products and services provided by the Company in any geographic market in which the Company conducts business (Competitor); provided, however, that the duties and responsibilities of said employment or engagement as an owner in, shareholder with more than 2% equity interest in, investor in, contractor, consultant, advisor, representative, officer, director or agent are (i) the same, similar, or substantially related to your current duties and responsibilities or duties or responsibilities performed by Employee while employed by the Company at any time during a six (6) month period prior to Employees separation of employment and (ii) related to or concerning the Competitors business activities in the Restricted Territory. The parties agree and affirm that their intention with respect to Paragraph 6.1 is that Employees activities shall be limited only for the twenty-four (24) month period after the separation of employment for any reason. The provisions calling for a look back of six (6) calendar months prior to the separation of employment are intended solely as a means of identifying the duties and responsibilities that will define the restricted activities covered by Paragraph 6.1 and are not intended to nor shall they, under any circumstances, be construed to define the length or term of any such restriction. For purposes of Paragraph 6.1, the term Restricted Territory means the geographic area that is part of your current duties and responsibilities or the geographic area that was part of your duties and responsibilities within a period of six (6) month period prior to the date of your termination of employment. If a court of competent jurisdiction determines that the Restricted Territory as defined herein is too restrictive, then the parties agree that said court may reduce or limit the Restricted Territory to the largest acceptable area so as to enable the enforcement of Paragraph 6.1.
6.2 For a period of twenty-four (24) months following the Separation Date, Employee will not, either directly or indirectly, or on behalf of any person, business, partnership, or other entity, call upon, contact, or solicit any customer or customer prospect of the Company, or any representative of the same, with a view toward the sale or providing of any service or product competitive with the Companys Business; provided, however, the restrictions set forth in this Section shall apply only to customers or prospects of the Company, or representatives of the same, with which during the past 12 month period the Employee had contact or about whom Employee received Confidential Information as part of his duties and responsibilities while employed with the Company within the 12 month period prior to his separation of employment. The parties agree and affirm that their intention with respect to Section 6.2 of this Agreement is that Employees activities be limited only for a twenty-four (24) month period after the Separation Date for any reason. The provisions calling for a look back of 12 calendar months prior to the Separation Date are intended solely as a means of identifying the clients to which such restrictions apply and are not intended to nor shall they, under any circumstances, be construed to define the length or term of any such restriction.
6.3 For a period of twenty-four (24) months following the Separation Date, Employee shall not directly or indirectly through a subordinate, co-worker, peer, or any other person or entity contact, solicit, encourage or induce any officer, director or employee of the Company to work for or provide services to Employee and/or any other person or entity.
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6.4 Employee acknowledges and agrees that the foregoing restrictions are necessary for the reasonable and proper protection of the Company; are reasonable in respect to subject matter, length of time, geographic scope, customer scope, and scope of activity to be restrained; and are not unduly harsh and oppressive so as to deprive Employee of his livelihood or to unduly restrict Employees opportunity to earn a living after separation of Employees employment with the Company. Employee further acknowledges and agrees that if any restrictions set forth in this Section are found by any court of competent jurisdiction to be unenforceable or otherwise against public policy, the restriction shall be interpreted to extend only over the maximum period of time or other restriction as to which it would otherwise be enforceable.
6.5 Employee acknowledges and agrees that because the violation, breach, or threatened breach of this Section and its sub-parts would result in immediate and irreparable injury to the Company, the Company shall be entitled, without limitation of remedy, to (a) temporary and permanent injunctive and other equitable relief restraining Employee from activities constituting a violation, breach or threatened breach of this Section and its sub-parts to the fullest extent allowed by law; (b) all such other remedies available at law or in equity, including without limitation the recovery of damages, reasonable attorneys fees and costs; and (c) withhold any further rights, payments or benefits under this Agreement which become due and owing after the occurrence of said violation, breach, or threatened breach, including, without limitation, any rights or claims under Sections 2.0 and 3.0 and the sub-parts thereto.
7.0 Return of Company Property
7.1 Employee agrees that within 10 days after execution of this Agreement, he will return any and all Company documents and any copies thereof, in any form whatsoever, including computer records or files, containing secret, confidential and/or proprietary information or ideas, and any other Company property (including, but not limited to, any cell phones, pagers and/or computer equipment) in Employees possession or control, except that Employee may keep possession, custody and control of his currently issued Company laptop.
8.0 Duty to Cooperate and of Loyalty/Nondisparagement
8.1 Without limitation as to time, Employee agrees to cooperate and make all reasonable and lawful efforts to assist the Company in addressing any issues which may arise concerning any matter with which he was involved during his employment with the Company, including, but not limited to cooperating in any litigation arising therefrom. The Company shall reimburse Employee at a fair and reasonable rate for services provided by the Employee to the Company in connection with services provided under this provision.
8.2 Employee will not (except as required by law) communicate to anyone, whether by word or deed, whether directly or indirectly through an intermediary, and whether expressly or by suggestion or innuendo, any statement, whether characterized as one of fact or opinion, that is intended to cause or that reasonably would be expected to cause any person to whom it is communicated to have (1) a lowered opinion of the Company or any affiliates, including a
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lowered opinion of any products manufactured, sold or used by, or services offered or rendered by the Company or its affiliates; and (2) a lowered opinion of the Companys creditworthiness or business prospects. Employees obligations in this regard extends to the reputation of the Company and any of its officers and directors.
9.0 Section 409A of the Code
9.1 Notwithstanding any provisions of this Agreement to the contrary, if the Employee is a specified employee (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the Code) and determined pursuant to procedures adopted by the Company) at the Separation Date and if any portion of the payments or benefits to be received by the Employee would be considered deferred compensation under Section 409A of the Code, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employees Separation Date (the Delayed Payments) and benefits that would otherwise be provided pursuant to this Agreement (the Delayed Benefits) during the six-month period immediately following the Employees Separation Date (such period, the Delay Period) shall instead be paid or made available on the earlier of (i) the first business day of the seventh (7th) month following the Separation Date or (ii) the Employees death (the applicable date, the Permissible Payment Date). The Company shall also reimburse the Employee for the after-tax cost incurred by the Employee in independently obtaining any Delayed Benefits (the Additional Delayed Payments).
9.2 With respect to any amount of expenses eligible for reimbursement under Sections 3.1, 3.3 and 9.1, such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Employee but in no event later than December 31 of the year following the year in which the Employee incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Employees right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.
9.3 It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code. To the extent such potential payments or benefits could become subject to such Section, the Company may amend this Agreement with the goal of giving the Covered Employee the economic benefits described herein in a manner that does not result in such tax being imposed.
9.4 For purposes of Section 409A of the Code, an Employees right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.
10.1 This Agreement is binding on, and shall inure to the benefit of, the Parties hereto and their heirs, representatives, transferees, principals, executors, administrators, predecessors,
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successors, parents, subsidiaries, affiliates, assigns, agents, directors, officers and employees. In the event that Employee dies before payment of all amounts described in this Agreement is made, and the Agreement has been executed and not revoked, the Company agrees to pay unpaid amounts to Employees estate.
10.2 This Agreement constitutes the complete agreement between, and contains all of the promises and undertakings by the Parties. Employee agrees that the only considerations for signing this Agreement are the terms stated herein above and that no other representations, promises, or assurances of any kind have been made to him by the Company, its attorneys, or any other person as an inducement to sign this Agreement. Any and all prior agreements, representations, negotiations and understandings among the Parties, oral or written, express or implied, with respect to the subject matter hereof are hereby superseded and merged herein, except to the extent provided in Section 10 of the Employment Agreement, and provided that this Agreement supplements and does not amend, alter, void, replace, or otherwise override any confidentiality, non-solicitation, non-compete agreement executed by Employee that is part of any equity award agreement executed by the Employee. To be clear and to avoid any doubt, the parties expressly agree that any confidentiality, non-solicitation, non-compete agreement executed by Employee that is part of any equity award agreement executed by the Employee remains in full force and effect and is not modified in any way by this Agreement.
10.3 This Agreement may not be revised or modified without the mutual written consent of the Parties.
10.4 The Parties acknowledge and agree that they have each had sufficient time to consider this Agreement and consult with legal counsel of their choosing concerning its meaning prior to entering into this Agreement. In entering into this Agreement, no Party has relied on any representations or warranties of any other Party other than the representations or warranties expressly set forth in this Agreement. Employee acknowledges that he has read this Agreement and that he possesses sufficient education and experience to fully understand the terms of this Agreement as it has been written, the legal and binding effect of this Agreement, and the exchange of benefits and payments for promises hereunder, and that he has had a full opportunity to discuss or ask questions about all such terms.
10.5 Except as otherwise provided in this Section, if any provision of this Agreement shall be determined to be invalid or unenforceable by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of said provision or the remaining provisions of this Agreement; provided that, if any provision contained in this Agreement shall be adjudicated to be invalid or unenforceable because such provision is held to be excessively broad as to duration, geographic scope, activity or subject, such provision shall be deemed amended by limiting and reducing it so as to be valid and enforceable to the maximum extent compatible with the applicable laws of such jurisdiction, and such amendment only to apply with respect to the operation of such provision in the applicable jurisdiction in which the adjudication is made. If Section 6.0 or any of its sub-parts of this Agreement is deemed invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, this entire Agreement shall be null and void, and any consideration paid hereunder shall be repaid immediately by Employee upon receipt of notice thereof.
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10.6 Employee agrees that because he has rendered services of a special, unique, and extraordinary character, damages may not be an adequate or reasonable remedy for breach of his obligations under this Agreement. Accordingly, in the event of a breach or threatened breach by Employee of the provisions of this Agreement, the Company shall be entitled to (a) an injunction restraining Employee from violating the terms hereof, or from rendering services to any person, firm, corporation, association, or other entity to which any confidential information, trade secrets, or proprietary materials of the Company have been disclosed or are threatened to be disclosed, or for which Employee is working or rendering services, or threatens to work or render services (b) all such other remedies available at law or in equity, including without limitation the recovery of damages, reasonable attorneys fees and costs, and (c) withhold any further payments under this Agreement which become due and owing after the occurrence of said violation, breach or threatened breach. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach of this Agreement, including the right to terminate any payments to Employee pursuant to this Agreement or the recovery of damages from Employee.
10.7 Such notice and any other notices required under this Agreement shall be served upon the Company by certified mail, return receipt requested, or by expressed delivery by a nationally recognized delivery service company such as Federal Express as follows:
If to the Company:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Telephone No.: (336) 436-5021
Telecopier No.: (336) 436-4177
Attention: Senior Vice President, General Counsel
With a copy to:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Attention: Senior Vice President, Global General Counsel
If to the Employee:
At last address shown on payroll records of the Company
10.8 Consistent with the requirements of this Section, each party shall notify the other party of any change of address for the receipt of a notice under this Agreement.
10.9 This Agreement shall be construed in accordance with and governed by the laws, except choice of law provisions, of the State of Delaware and shall govern to the exclusion of the laws of any other forum. The parties further agree that any action, special proceeding or other
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proceeding with respect to this Agreement shall be brought exclusively in the federal or state courts of the State of Delaware. Employee and Company irrevocably consent to the jurisdiction of the Federal and State courts of Delaware and that Employee hereby consents and submits to personal jurisdiction in the State of Delaware. Employee and Company irrevocably waive any objection, including an objection or defense based on lack of personal jurisdiction, improper venue or forum non-conveniens which either may now or hereafter have to the bringing of any action or proceeding in connection with this Agreement. Employee acknowledges and recognizes that in the event that he has breached this Agreement, the Company may initiate a lawsuit against him in North Carolina, that Employee waives his right to have that lawsuit be brought in a court located closer to where he may reside, and that Employee will be required to travel to and defend himself in Delaware.
10.10 The Effective Date of this Agreement shall be either (a) the Separation Date or (b) the day after expiration of the seven (7) day revocation period set forth in Section 4.4 of this Agreement, whichever date is later.
10.11 If you agree with the foregoing, please sign below and return two (2) originals to me. You should retain one (1) original copy of this Agreement for your records.
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Confidentiality, Non-Competition and Non-Solicitation Agreement
During the course of your employment with Laboratory Corporation of America Holdings (LabCorp) or its subsidiaries, divisions, or affiliates, you will have access to, or will acquire, highly confidential information and trade secrets concerning LabCorps and the Employer Companys business, including, but not limited to, customer lists, pricing, methods of pricing, marketing practices, advertising strategy, methods of operation and the needs and requirements of Employer Companys and/or LabCorps customers. In addition, you will receive from LabCorp or Employer Company and/or be exposed to LabCorps or the Employer Companys valuable technical and marketing information that will materially aid you in the performance of your duties on behalf of the Employer Company, and assist you and/or the Employer Company in furthering the Employer Companys business interests, including establishing and retaining the Employer Companys customers. The support furnished to you by the Employer Company will enable you to increase the value of the Employer Companys goodwill with the Employer Companys customers, which is a valuable asset of the Employer Company.
As indicated by the foregoing, the services you will be performing for the Employer Company will be of a special, unique and extraordinary nature. Accordingly, in consideration of LabCorp extending to you, as applicable, certain incentive compensation, as set forth in the Agreement(s) to which this Exhibit is made a part thereof and which governs the grant of said benefits, any and all of which benefits otherwise would not be provided to you absent your agreement to be bound by the terms of this Confidentiality/Non-Competition/Non-Solicitation Agreement (Restrictive Covenant Agreement), you agree that:
Senior Vice President, Global General Counsel
Laboratory Corporation of America Holdings
531 South Spring Street
Burlington, North Carolina 27215
and, if to you, notice shall be sent to your last known mailing address on record at the Employer Company. You have an obligation to ensure that the Employer Companys records contain your most recent address.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement, or have caused this Agreement to be duly executed and delivered on their behalf.
FOR IMMEDIATE RELEASE
Media: Pattie Kushner 336-436-8263
Investors: Clarissa Willett 336-436-5076
LABCORP ANNOUNCES NEW LEADERSHIP ROLES
BURLINGTON, N.C., June 5, 2019 LabCorp® (NYSE: LH), a leading global life sciences company that is deeply integrated in guiding patient care, today announced that David P. King, its chairman, president and CEO, will become executive chairman of the board of directors on Nov. 1, retiring Oct. 31 as president and CEO. Adam H. Schechter, current lead independent director of LabCorps board and former Merck executive vice president and president of global human health, will become president and CEO on Nov. 1. The board expects to choose one of its members to be lead independent director at a later date.
I am immensely proud of what we have achieved during my nearly two decades at LabCorp, including almost 13 years as CEO, King said. I have been privileged to lead an outstanding executive team and nearly 61,000 mission-driven colleagues around the world, whose dedication to improving health and improving lives has made LabCorp a global leader in healthcare. To build on that momentum, the board of directors and I have been engaged for the last several years in a planning process designed to secure the best possible successor to take LabCorp to the next level of achievement. Adams experience in global healthcare, demonstrated leadership capabilities and strategic contributions as a board member position him perfectly to succeed me as CEO. He knows our industry, our company, and our strategy, and is uniquely suited to continue to build on the power of our combined organization.
Schechter has served as a LabCorp director since April 1, 2013, becoming the companys lead independent director in January of this year. He had a long and distinguished career at Merck, where, among other accomplishments, he focused on ensuring that Mercks medicines and vaccines were available to people around the world; led a large global organization across the spectrum of commercial operations; transformed Mercks commercial model; and led the integration of Merck and Schering-Plough. Schechter was a member of Mercks executive committee and held a number of professional, managerial, and executive roles with the company. Prior to his most recent role as president of global human health, Mercks global pharmaceuticals and vaccines business, Schechter served as president of the global pharmaceutical business from 2007 to 2010. Before that, he led Mercks U.S. pharmaceutical business. He began his career with Merck in 1988 as a sales representative.
I am honored to succeed Dave, who is a visionary and highly respected leader, Schechter said. I am deeply committed to continuing the companys noble mission and I look forward to strengthening our leadership position in global life sciences as we execute our strategy. On behalf of the board, I would like to thank Dave for his remarkable legacy that includes leading LabCorps transformation from a pure-play U.S. testing laboratory into a leading global life sciences company. Dave positioned the company as a market leader in both laboratory testing and global drug development, led the company to strong growth over the past decade while navigating significant changes in government healthcare reimbursement policy, and spearheaded the forward-thinking acquisition and integration of Covance. Dave and his leadership team built an outstanding foundation for LabCorps continued success and we are deeply grateful.
Under Kings leadership, LabCorp has tripled in size through a combination of organic growth and strategic acquisitions. The company does business in more than 100 countries, with nearly 61,000 employees and revenue of more than $11 billion in 2018. During Kings tenure, LabCorp entered the Fortune 500, was named to Fortunes List of Worlds Most Admired Companies and Forbes ranking of The Worlds Most Innovative Companies, and earned the designation as a Best Place to Work for LGBTQ Equality by the Human Rights Campaign Foundation. Prior to becoming CEO on Jan. 1, 2007, King served as LabCorps executive vice president and chief operating officer and as executive vice president of strategic planning and corporate development. King joined LabCorp as senior vice president, general counsel, and chief compliance officer in 2001 after serving for several years as the companys principal outside legal counsel.
LabCorp (NYSE: LH), an S&P 500 company, is a leading global life sciences company that is deeply integrated in guiding patient care, providing comprehensive clinical laboratory and end-to-end drug development services. With a mission to improve health and improve lives, LabCorp delivers world-class diagnostic solutions, brings innovative medicines to patients faster, and uses technology to improve the delivery of care. LabCorp reported revenue of more than $11 billion in 2018. To learn more about LabCorp, visit www.LabCorp.com, and to learn more about Covance Drug Development, visit www.Covance.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including but not limited to statements with respect to the Companys leadership, future operations and opportunities. Each of the forward-looking statements is subject to change based on various important factors, many of which are beyond the Companys control, including without limitation, the performance of employees and executives, the willingness of employees and executives to remain employed, competitive actions and other unforeseen changes and general uncertainties in the marketplace, changes in government regulations, including healthcare reform, customer purchasing decisions, including changes in payer regulations or policies, other adverse actions of governmental and third-party payers, changes in testing guidelines or recommendations, the effect of public opinion on the Companys reputation, adverse results in material litigation matters, failure to maintain or develop customer relationships, our ability to develop or acquire new products and adapt to technological changes, failure in information technology, systems or data security, adverse weather conditions, and employee relations. These factors, in some cases, have affected and in the future (together with other factors) could affect the Companys ability to implement
the Companys business strategy and actual results could differ materially from those suggested by these forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. The Company has no obligation to provide any updates to these forward-looking statements even if its expectations change. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Further information on potential factors, risks and uncertainties that could affect operating and financial results is included in the Companys most recent Annual Report on Form 10-K and subsequent Forms 10-Q, including in each case under the heading RISK FACTORS, and in the Companys other filings with the SEC.
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