SEVERANCE AGREEMENT

	This Severance Agreement ("Agreement") is made and entered into effective the 1st day of September, 2001 by and between **LAB*ONE*, INC**. ("Lab*One*") and **THOMAS J. HESPE** ("Employee");
	**WITNESSETH**:

	**WHEREAS**, Lab*One* and Employee entered into an Employment Agreement, dated March 5, 2001 ("Employment Agreement"); and 

	**WHEREAS**, Lab*One* and Employee have agreed to the termination of Employee's employment; and

	**WHEREAS**, Lab*One* and Employee desire to enter into agreements with respect to such termination and to their relationship prior to and after Employee's termination;

	**NOW, THEREFORE**, in consideration of the promises herein contained, the parties hereto agree as follows:

	1.	Effective Date of Termination.  The effective time and date of Employee's termination shall be midnight, August 31, 2002, or earlier in accordance with the provisions of paragraph 9 hereof ("Termination Date").

	2.	Resignation of Offices; Duties and Responsibilities.  Employee resigns all offices held by Employee with Lab*One* and its affiliates effective immediately.  From September 1, 2001 through December 2, 2001 ("Initial Term"), Employee shall use his best efforts to effect a smooth transition of his prior duties and responsibilities for Lab*One* to Jim Mussatto (and others designated by Lab*One*), to retain and preserve for Lab*One* its relationships with employees, customers, contractors and others having existing or prospective relationships with Lab*One*, and to protect and maintain the business and goodwill Lab*One* now enjoys.  From December 3, 2001 through the Termination Date ("Final Term"), Employee shall be available at reasonable times, at the request of Lab*One*, to assist Lab*One* in the retention of its relationships with customers and others having existing relationships with Lab*One*.  During both the Initial Term and the Final Term, Employee shall not engage in any behavior or act or omit to act in any manner which has or tends to have the effect of:  (a) disparaging Lab*One*, its affiliates or their management to their employees or any third party, (b) promoting a negative image of management of Lab*One* or its affiliates or the prospects of Lab*One* or its affiliates, or (c) maligning the officers, directors, tactics or strategies of Lab*One*.  

	3.	Extent of Continuation of Employment Agreement.
		(a)	In general.  Except as otherwise provided herein, the Employment Agreement is hereby terminated and is of no further force or effect.

		(b)	Compensation.  Employee's compensation as described in paragraph 4 of the Employment Agreement shall continue during the Initial Term.  Thereafter, Employee shall be paid monthly compensation of $1,044.21 payable on the 15th day of each month during the Final Term.

		(c)	Noncompetition and Nonsolicitation.  Employee acknowledges his continuing obligations pursuant to paragraph 8 of the Employment Agreement and agrees to fulfill the requirements of said paragraph 8 of the Employment Agreement for a period of two (2) years following the Termination Date; provided, however, that Employee acknowledges that Lab*One* currently is engaged in performing substance abuse testing for employment purposes and that the restrictive covenants set forth in paragraph 8 of the Employment Agreement shall apply to that business in addition to the clinical and insurance laboratory testing businesses.

		(d)	Confidentiality, Developments and Property.  Employee acknowledges his continuing obligations pursuant to paragraph 7 of the Employment Agreement and agrees to continue hereafter to fulfill the requirements of said paragraph 7 of the Employment Agreement.  Employee hereby represents and warrants that he has fully complied with paragraph 6 of the Employment Agreement.  To the extent Employee may have not already done so, he hereby: (i) assigns, transfers and conveys all of his right, title and interest in and to any and all Developments (as defined in paragraph 5 of the Employment Agreement) to Lab*One*, which Developments shall become and remain the sole and exclusive property of Lab*One*; and (ii) except the laptop computer and cell phone presently used by Employee (which he may keep as his own), immediately upon the request of Lab*One* shall return to Lab*One* all of its property in his possession, including (but not limited to) computers and other equipment, credit and debit cards, phones, files, correspondence, notes, recordings, marketing and other brochures, client information and other original materials and copies thereof, in whatever format, pertaining to any aspect of the business of Lab*One*.  In addition, any information stored or contained in computers or computer equipment, or accessible thereby, which is owned by or pertains to Lab*One* or its affiliates shall be returned to Lab*One* and all disks, back-ups or copies thereof in the possession of Employee shall be returned to Lab*One*.

		(e)	Judicial Relief.  Lab*One* and Employee agree that the provisions of paragraph 9 of the Employment Agreement continue in full force and effect and are not terminated by this Agreement.

	4.	Effect of Agreement on Rights Under Certain Plans.  This Agreement shall not alter any right Employee has as of the Termination Date as a terminated employee under Lab*One*'s Long-Term Incentive Plans, Profit Sharing 401(K) Plan, Employees' Money Purchase Pension Plan or Medical Benefits Plan.  Payments made to Employee pursuant to paragraphs 7 and 8 hereof shall not be considered compensation for purposes of the Employees' Money Purchase Pension Plan and the Profit Sharing 401(K) Plan.  

	5.	Communications.  Employee agrees that he shall not hereafter voluntarily say, write or do anything inconsistent with the terms of this Agreement which has an adverse effect on the business, affairs, reputation or interests of Lab*One* or its affiliates.  Employee acknowledges that he has been privy to attorney-client communications concerning Lab*One*'s business and legal affairs.  Employee agrees never to voluntarily disclose to anyone any advice, recommendation or work product of any of Lab*One*'s attorneys without having first received a writing from Lab*One* authorizing any such disclosure.  Employee further agrees to give Lab*One* prompt written notice in order to permit Lab*One* to seek injunctive relief to protect its interests in the event of any attempt by a third party to require any communication, disclosure or act by Employee which Employee is prohibited by the foregoing from making or doing voluntarily.

	6.	Release.  Employee hereby releases and discharges Lab*One*, its parent and subsidiaries, and their respective officers, directors, agents, employees, representatives, successors and assigns, from and against any and all demands, claims, causes of actions, sums due (except for those provided herein), damages, costs and expenses, related to or arising out of the Employment Agreement, Employee's employment, and any act or omission of Lab*One*, its subsidiaries and other affiliates, or their respective officers, directors, agents, employees or representatives which has occurred as of the Termination Date, INCLUDING WITHOUT LIMITATION THOSE ARISING UNDER THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT, AS AMENDED, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED, and all state statutes and regulations prohibiting discrimination, whether such demands, claims or causes of action are presently known or unknown.

	7.	Payments to Employee.  Subject to any applicable withholding, Lab*One* agrees to pay to Employee by check on the following dates the sums set forth below:
        Date                                                                                                 Payment(a)One payment on December 1, 200116,667(b)  Eight payments commencing January 1, 2002,  and