Exhibit 10.18

EMPLOYMENT AGREEMENT

 

                   THIS EMPLOYMENT AGREEMENT ("Agreement"), made as of February 11, 2000, by and between Lab*One*, Inc., a Missouri corporation (hereinafter referred to as "Lab*One*") and W.Thomas Grant, II, a resident of the State of Kansas (hereinafter referred to as "Officer");

W I T N E S S E T H:

                   WHEREAS, Lab*One* desires Officer to continue to manage the operations, financial affairs and strategic direction of Lab*One*, serving as its Chairman of the Board,President and Chief Executive Officer; and

                   WHEREAS, it is the intention and desire of the parties to enter into a formal agreement whereby two principal purposes will be served, to wit:

                   A.           Lab*One* will have the benefit of the substantial expertise of Officer for at least the period covered by this Agreement; and

                   B.           Officer will manage and be responsible for the operations, financial affairs and strategic direction of Lab*One* during the termhereinafter defined and will be motivated by the compensation as set forth herein;

                   NOW, THEREFORE, in consideration of the continuation of employment of officer with Lab*One* for the term of this Agreement and of the mutual promises, covenants, representationsand warranties contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

SECTION 1.

EMPLOYMENT AND TERM

                   1.1.          Employment. Lab*One* hereby employs Officer and Officer hereby accepts such employment and agrees to perform the duties describedin Section 2 of this Agreement.

                   1.2.          Term.

                                   (a)         Base Term. The term of employment shall commence on February 11, 2000 and shallcontinue for a period of two years therefrom (the "Base Term"), or until terminated as otherwise provided herein.

                                   (b)         Termination Subsequent to Change in Control. Notwithstanding any other provisionof this Agreement to the contrary, in the event that (i) a change of control of Lab*One* shall occur at any time during which Officer is in the full-time employment of Lab*One* or its successor and (ii) within one (1) year after such a change in control, Officer's employment with Lab*One* or its successor isterminated by Lab*One* or its successor for any reason other than permanent disability, death or normal retirement, or is voluntarily terminated by Officer for any reason at his sole discretion, Lab*One* will promptly pay to officer as termination compensationthe lump sum amount described below.

The lump sum compensation payable shall be equal to three (3) times the average annual compensation includable in Officer's gross income for the most recent five (5) taxable years ending before the date of the change in control. If Officer has been anemployee of Lab*One* for less than 5 years, Officer's lump sum payment shall be equal to 3 times the average annual compensation includable in Officer's gross income based on the portion of the 5 year period during which officer performed services for Lab*One* . To the extent that any amount required to be paid hereunder would constitute an "excess parachute payment" within the meaning of Section 28OG(b) of the Internal Revenue Code of 1986, that excess amount need not be paid.

For purposes of this Section 1.2(b), a "change of control" shall be deemed to have taken place if there shall have occurred (i) the sale or other disposition resulting in the transfer of legal or beneficial ownership of, or the right to vote,more than fifty percent (50%) of the outstanding capital stock of Lab*One*to one or more third-party purchasers, except in connection with an underwritten public offering of the common stock of Lab*One*, (ii) a merger or consolidation of Lab*One* with or into any entity, or (iii) a sale or othertransfer of substantially all of the assets of Lab*One* to any person or entity.

In the event of termination of employment under the circumstances described above, Lab*One* shall pay to Officer the installments of his base salary through the date of termination of employment, any annual incentive bonus for the previous yearif such has been approved but not paid and the lump sum amount as termination compensation described above, and any remaining term of this Agreement shall be cancelled. Such payments to Officer and the arrangements provided for by any stock option orother agreement between Lab*One* and Officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entire obligation of Lab*One* to Officer with respect to such termination, and will also constitute full settlement of any claim underlaw or in equity that Officer might otherwise assert against Lab*One* or any of its employees on account of such termination.

                                   (c)         Annual Extension. Commencing on February 11, 2001 (the "Extension Date") and oneach succeeding anniversary of such Extension Date, unless Lab*One* notifies Officer in accordance with the immediately following sentence that Officer's employment under this Agreement will not be extended, this Agreement and Officer's employment under this Agreement shall automatically and without furtheraction be extended for one (1) year from such Extension Date or anniversary thereof on the same terms and conditions as are set forth herein. If Lab*One* elects not to extend Officer's employment under this Agreement as provided in the preceding sentence, it shall do so by notifying officer in writing at least sixty (60) days prior to the Extension Date or the applicable anniversary thereof. If Lab*One* elects not to extend Officer's employment under this Agreement as provided above, such election shall be treated as a termination of officer without cause within the meaning of Section 9.1(e) of this Agreement and Lab*One* shall pay toofficer, in addition to any other sums which may be due to Officer, the lump sum severance payment provided for in Section 9.1(e).

SECTION 2.

DUTIES

                   2.1.         General Duties. Officer shall serve Lab*One* in the capacities of Chairman of the Board of Directors, President and Chief ExecutiveOfficer. Officer shall be responsible for performing the duties generally required of such positions and such other duties in relation to Lab*One* consistent with Officer's positions as shall from time to time be assigned to Officer by the Board of Directors.

                   2.2.          Full Time. During the term hereof, Officer agrees to devote his full time, attention and skill to the performance of his duties.

                   2.3.         Best Efforts. Officer agrees that he will at all times faithfully, industriously and to the best of his ability, experience and talents,perform all of the duties that may be required of and from him as described above.

                   2.4.         Indemnification and D & O Insurance. Lab*One* shall provide to Officer coverage under Lab*One*'s director and officerliability insurance and indemnification By-laws, as fully and to the same extent as the same are provided to similar executive officers of Lab*One*.

SECTION 3.

BASE SALARY

                   3.1.         Annual Base Salary. Lab*One* shall pay officer, and Officer shall accept from Lab*One* in full payment for Officer's full timeservices hereunder, compensation at the rate of Two Hundred Forty-Nine Thousand ($249,000) per annum, payable monthly in periodic equal installments during the year. Such salary shall be reviewed from time to time, but not less often than annually, by theBoard of Directors of Lab*One* and will be subject to such increases, but not decreases, as the Board of Directors of Lab*One* may determine, having due regard for the efforts of Officer and the results, both financial and otherwise, of Lab*One*'s operations duringOfficer's tenure.

                   3.2.         Reimbursement of Expenses. Lab*One* shall reimburse Officer for such reasonable out-of-pocket expenses as are incurred by Officer inorder to render the services contemplated hereunder.

                   3.3.         Tax Withholdings. Lab*One* shall deduct from the compensation payable to Officer all federal, state, and local income tax, socialsecurity, FICA, FUTA and other withholdings as required by law.

SECTION 4.

BONUSES AND FRINGE BENEFITS

                   4.1.         Annual Incentive Bonus. During the term hereof, Officer shall be eligible to receive an annual incentive bonus based upon the performanceof Lab*One* in relation to predetermined financial goals established by the Compensation Committee of the Board of Directors of Lab*One*. Bonuses for less than a full year of service may be granted at the discretion of the Compensation Committee.

                   4.2.         Other Fringe Benefits. Officer shall be entitled to an annual vacation consistent with Lab*One*'s vacation policies for similarexecutive officers and to participate in such fringe benefit programs as Lab*One* may make available from time to time to similar executive officers, which shall include reasonable hospital and major medical insurance coverage, long term disability and life insurance in amounts and on terms no less favorable than thoseprovided to similar executive officers of Lab*One*.

SECTION 5.

NON-COMPETITION

                   5.1.         Restrictive Covenants. In consideration for Officer's employment with Lab*One*and in further consideration for the compensationprovided to officer in Sections 3 and 4 hereof, Officer agrees that during the term of his employment pursuant to this Agreement, and for a period of two (2) years after the termination for any reason of his employment pursuant to this Agreement, he willnot, without the prior written consent of Lab*One*, directly or indirectly, individually or in concert with others, or through the medium of any other corporation, partnership, syndicate, association, joint venture, or other entity or as an employee, officer, director, agent, consultant oraffiliate, compete with Lab*One*, within the hereinafter described region in (i) the urine or blood chemistry testing or analysis business for the insurance industry, or (ii) the urine or blood chemistry container or other supply business for the insurance industry,or (iii) the clinical laboratory testing or substance abuse testing businesses, or (iv) any other business engaged in by Lab*One* as of the date of the termination of Officer's employment with Lab*One*, and Officer will not solicit or accept any such business described in any of subparts (i) through (iv) above and which competes with Lab*One* from any customerwho is served by Lab*One* as of the date of the termination of Officer's employment pursuant hereto, or cause or induce any present or future employee of Lab*One* to leave the employ of Lab*One* to accept employment with Officer or with any such entity orperson. The region referred to above shall consist of any territory in which Lab*One* or any of its representatives or agents, as of the date of the termination of Officer's employment pursuant hereto, provides, sells, offers for sale or solicits the sale of urine or blood chemistry testing or analysis, or urine or bloodchemistry containers or other supplies related thereto, or clinical laboratory or substance abuse testing, or other services or products. Lab*One* and Officer agree that in the event that any provision of this Section 5.1 is void or constitutes an unreasonable restriction against Officer, such provision shall not be rendered void, but shall apply with respect to such time or territory orto such other extent as may constitute a reasonable restriction under the circumstances. The foregoing provisions shall not prohibit Officer from owning not more than 3% of the total shares of all classes of stock outstanding of any publicly held company.

                   5.2.         Injunctive Relief. Lab*One* shall be entitled to appropriate injunctive relief in any court of competent jurisdiction to enforce itsrights under Sections 5, 6, 7 and 8 of this Agreement, in addition to any other rights and remedies available to Lab*One* at law or in equity, it being agreed that any violation of Sections 5, 6, 7 or 8 of this Agreement by Officer is reasonably likely to cause irreparable damage to Lab*One* which will be difficult or impossible to value in monetary damages.

                   5.3.         Charitable Activities. Nothing in this Section 5 shall be construed as preventing Officer from engaging in charitable, professional,religious or civic activities such as serving on a school board, or as a member of or officer of a professional organization, provided such activity or organization does not compete directly with Lab*One*.

SECTION 6.

CONFIDENTIAL INFORMATION

                   6.1.         Confidentiality. During the term of and at any time after the termination of this Agreement, Officer will hold in trust and confidenceand will not divulge, disclose or convey to any person, firm, corporation or other entity and will keep secret and confidential all trade secrets, proprietary information and confidential information heretofore or hereafter acquired by him concerning Lab*One* or its subsidiaries, and will not use for himself or others the same in any manner, except to the extent that such information should become no longer a trade secret, proprietary or confidential. Such trade secrets, proprietary information andconfidential information shall be deemed to include, but shall not be limited to, information, whether written or not:

                                   (a)         of a technical nature, such as but not limited to, technology, inventions, discoveries,improvements, processes, formulae, ideas, know-how, methods, compositions, computer software programs or research projects, including the identity of research organizations and researchers,

                                   (b)         of a business nature, such as but not limited to information concerning costs, profits,supplies, suppliers, marketing, sales or lists of customers, and pertaining to future developments, such as but not limited to information concerning research and development or future marketing methods.

                                   (c)         The restrictions contained above shall not apply to:

                                                 (i)         information which at the time ofdisclosure by Lab*One* to Officer is in the public domain; or

                                                 (ii)       information which at the time of disclosure byLab*One* to Officer constituted confidential information hereunder, but which thereafter becomes part of the public domain by publication or otherwise through no fault of Officer.

SECTION 7.

DEVELOPMENTS

                   7.1.         Developments. Officer will promptly disclose to Lab*One* (in form satisfactory to Lab*One*) all information, technology,inventions, discoveries, improvements, processes, formulae, ideas, know-how, methods, compositions, research projects, computer software programs and developments, whether or not patentable or copyrightable (collectively "Information"), that Officer byhimself or in conjunction with any other person or entity conceives, makes, develops or acquires during the term of this Agreement, and that:

                                   (a)         are or relate or pertain to the assets, properties, or existing or contemplated businessor research activities of Lab*One*, or

                                   (b)         are suggested by, arise out of or result from, directly or indirectly, Officer'sassociation with Lab*One*, or

                                   (c)         arise out of or result, directly or indirectly, in part or fully, from the use of Lab*One*'s time, labor, materials facilities or other resources (collectively "Developments").

Any Information fitting within any of the descriptions contained in subsections (a), (b) or (c) of this Section 7.1 that is disclosed to any other person, firm or other entity by Officer or used in any manner by Officer within one (1) year followingthe termination of this Agreement shall be presumed to have been conceived, made, developed or acquired during the term of this Agreement and, thus, to constitute a Development.

                   7.2.         Assignment to Lab*One*. Officer hereby assigns, transfers and conveys to Lab*One* all of his right, title and interest in andto any and all such Developments, which Developments shall become and remain the sole and exclusive property of Lab*One*. At any time and from time to time, upon the request of Lab*One*, Officer will execute and deliver any and all instruments, documents and papers, give evidence and do any and all other acts which, in the reasonable opinion of counsel for Lab*One*, are or may be necessary or desirable to document such transfer, or to enable Lab*One* to file and process applications for and to acquire, maintain and enforce any and all patents, trademarks, registrations or copyrights with respect to anysuch Developments, or to obtain any extension, validation, re-issue, continuance or renewal of any such patent, trademark or copyright. Lab*One* will be responsible for the preparation of any such instruments, documents and papers and for the implementation of any such proceedings and will reimburse Officer for all reasonable expenses incurred by him in compliance with the provisions ofthis paragraph.

SECTION 8.

PROPERTY OF LAB*ONE*
                   8.1.         All correspondence, notes, recordings, documents and other materials and reproductions thereof pertaining to any aspect of the business of Lab*One* shall be the property of and shall be delivered to and retained by Lab*One* upon termination of this Agreement.

SECTION 9.

TERMINATION

                   9.1.         Termination. Officer's employment pursuant to this Agreement shall terminate upon the occurrence of any of the following events:

                                   (a)         Death. In the event that Officer dies during the term of this Agreement, Lab*One* shall pay to his executors or administrators an amount equal to the installments of his base salary payable for the month in which he dies and any annual incentive bonus for the previous year if such has been approved but not paid, and such payments,together with the arrangements provided for by any stock option or other agreement between Lab*One* and Officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entire obligation of Lab*One* to Officer and will also constitute full settlement of any claim under law or in equity that Officer'sexecutors, heirs or assigns or any other person claiming under or through him might otherwise assert against Lab*One* or any of its employees on account of his death.

                                   (b)         Disability. In the event that Officer continues unable to fully perform his dutiesand responsibilities hereunder by reason of illness, injury or mental or physical disability or incapacity for ninety (90) consecutive days, during which time he shall continue to be compensated for monthly installments of base salary and any annualincentive bonus for the previous year if such has been approved but not paid, Officer's employment pursuant to this Agreement may be terminated by Lab*One*, and such payments, together with the arrangements provided for by any stock option or other agreement between Lab*One* and Officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entireobligation of Lab*One* to Officer and will also constitute full settlement of any claim under law or in equity that Officer might otherwise assert against Lab*One* or any of its employees on account of such termination. Officer agrees, in the event of anydispute under this Section 9.1, to submit to a physical examination by a reputable licensed physician selected by Lab*One* and to accept Lab*One*'s decision based on the results thereof.

                                   (c)          Voluntary Termination.         Officer's employment maybe voluntarily terminated upon Officer giving sixty (60) days' prior written notice to Lab*One*. In the event Officer voluntarily terminates his employment, Lab*One* shall pay to Officer an amount equal to his base salary payable through the date of termination of employment and any annual incentive bonus for the previous year ifsuch has been approved but not paid, and such payments, together with the arrangements provided for by any stock option or other agreement between Lab*One* and Officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entire obligation of Lab*One* to Officer and will also constitute full settlement of any claim under law or in equity that Officermight otherwise assert against Lab*One* or any of its employees on account of his termination.

                                   (d)         Termination for Cause. Officer's employment may be terminated by Lab*One* atany time for cause. In the event that Officer is terminated by Lab*One* for cause, Lab*One* shall pay to officer his base salary which may have accrued to the date of termination and any annual incentive bonus for the previous year if such has been approved but not paid, and such payments, together with thearrangements provided for by any stock option or other agreement between Lab*One* and officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entire obligation of Lab*One* to Officer and will also constitute full settlement of any claim under law or in equity that Officermight otherwise assert against Lab*One* or any of its employees on account of his termination. Only the following actions, failures or events by or affecting Officer shall constitute "cause" for termination of Officer by Lab*One* (i) willful and continued failure by Officerto substantially perform his duties provided herein after a written demand for substantial performance is delivered to Officer by the Board of Directors of Lab*One*, which demand identifies with reasonable specificity the manner in which Officer has not substantially performed his duties, and Officer fails to comply with such demand within a reasonable time; (ii) the engagement by Officer in grossmisconduct or gross negligence materially injurious to Lab*One*; or (iii) Officer's conviction of having committed a felony. Notwithstanding the foregoing, Officer shall not be deemed to have been terminated by Lab*One* for cause unless and until there shall have been delivered to him a copy of aresolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors of Lab*One* finding that, in the good faith opinion of the Board of Directors, Lab*One* has cause for the termination of employment of Officer as set forth in any of clauses (i) through (iii) above and specifying the particulars thereof inreasonable detail. The findings of the Board of Directors shall not be binding on the arbitrators or other finders of fact in connection with any litigation or dispute arising out of this Agreement.

                                   (e)         Termination Without Cause. In the event that Lab*One* terminates Officer'semployment for reasons other than death, disability, or cause as listed in subsection (d)above, then in addition to any other sums to which Officer may be entitled under this Agreement, Lab*One* shall pay to Officer, on or before the last day of employment, a lump sum severance payment equal to (i) the installments of base salary due for the balance of the then current term of this Agreement, plus (ii) one hundred percent(100%) of the annual base salary payable to Officer by Lab*One* immediately prior to the termination of employment, which payments, together with the arrangements provided for by any stock option or other agreement between Lab*One* and Officer in effect at the time and by any other applicable plan of Lab*One* will constitute the entire obligation of Lab*One* to Officer and will also constitute full settlement of any claim under law or in equity that Officer might otherwise assert against Lab*One* or any of its employees on account of histermination.

SECTION 10.

SURVIVAL

                   10.1.        Notwithstanding the termination of Officer's employment pursuant to the provisions of Section 9 hereof, or the expiration of the term of thisAgreement, Officer's obligations under Sections 5, 6, 7 and 8 hereof, the provisions for injunctive relief against Officer in Sections 5.2 and 12.2 hereof and the provisions for arbitration in Section 12.1 hereof shall continue in full force and effect.Any right, power or obligation imposed or conferred upon Lab*One* or the Board of Directors of Lab*One* by the terms of this Agreement shall inure to the benefit of and be binding upon any person or entity into which Lab*One* is consolidated or merged and the Board of Directors or other governingbody of any such corporation or other entity.

SECTION 11.

ASSISTANCE IN LITIGATION

                   11.1.        Officer shall, upon reasonable notice, furnish such information and assistance to Lab*One* as may reasonably be required by Lab*One*in connection with any litigation in which Lab*One* or any of its subsidiaries or affiliates is or may become a party.

SECTION 12.

ARBITRATION

                   12.1        Methods. Except as provided in Section 12.2. below, any difference, controversy, claim or dispute between the parties arising out of thisAgreement, or the breach thereof, shall be settled by binding arbitration before a panel of three arbitrators selected as follows: each party shall select one neutral arbitrator from the American Arbitration Association's approved list of arbitrators. Thetwo arbitrators so selected by the parties shall select a third neutral arbitrator and the three so selected shall settle the dispute under the duly promulgated Commercial Arbitration Rules of the American Arbitration Association or its successor. Thearbitration shall be conducted in Lenexa, Kansas. The award of the arbitrators may be entered as a judgment in any Court in the State of Kansas or in any court having jurisdiction thereof.

                   12.2.        Injunctive Relief. Notwithstanding Section 12.1 above, Lab*One* shall be entitled to seek judicial injunctive relief to enforce itsrights under Sections 5, 6, 7 and 8 of this Agreement as provided in Section 5.2 hereof.

SECTION 13.

MISCELLANEOUS

                   13.1.        Assignment by Officer. This is a personal Agreement on the part of Officer and may not be sold, assigned, transferred or conveyed byOfficer. This Agreement may not be sold, assigned, transferred or conveyed by Lab*One* except in connection with a merger, consolidation or sale of all or substantially all of the assets of Lab*One* and then only to the successor to Lab*One*'s operations.

                   13.2.        Entire Agreement. This Agreement contains the entire agreement among the parties hereto and there are no representations, inducements,promises, agreements, arrangements, or undertakings, oral or written, among the parties as to the subject matter covered.

                   13.3.        Severability. Should any part of this Agreement be declared invalid for any reason, such invalidity shall not affect the validity of anyremaining portion hereof and such remaining portion shall continue in full force and effect as if this Agreement had been originally executed without including the invalid part.

                   13.4.        Governing Law. This Agreement and its performance shall be interpreted and construed in accordance with the laws of the State of Kansas.

                   13.5.        Titles. Titles and captions in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

                   13.6.        Amendments. No changes, alterations, modifications, additions, or qualifications to the terms of this Agreement shall be made or bebinding unless made in writing and executed by the parties in the same manner as the Agreement.

                   13.7.        No Waiver. Failure by either party to enforce any right granted by this Agreement shall not constitute a waiver of such right and waiverof any provision of this Agreement shall not constitute a waiver of any other provision.

                   13.8.        Notices. Any notice, instrument or communication required or permitted under this Agreement shall be deemed to have been effectivelygiven and made if in writing and when served by personal delivery to the party for whom it is intended, or three business days after being deposited, postage prepaid, registered or certified mail, return receipt requested, in the United States mail,addressed to the party for whom it is intended at the following addresses, or at such other addresses as the party to be notified may have designated in writing to the other:

                                                           Officer:        W.Thomas Grant, II