Document:

Exhibit 10.1

 

LABORATORY CORPORATION OF AMERICA HOLDINGS

AMENDED AND RESTATED MASTER SENIOR EXECUTIVE SEVERANCE PLAN

(Effective February 10, 2009)

 

PURPOSE

 

The purpose of this Laboratory Corporation of America Holdings Amended and Restated Master Senior Executive Severance Plan (the “Plan”) is to provide severance benefits for a select group of management employees. The Plan is not intended to duplicate severance benefits provided to certain employees who have entered into individual agreements relating to employment or the termination thereof or who are entitled to receive a severance payment under the Laboratory Corporation of America Holdings Master Senior Executive Change in Control Severance Plan (“Change In Control Severance Plan”)

ARTICLE I

DEFINITIONS

When used in this Plan and initially capitalized, the following words and phrases shall have the following meanings unless the context clearly requires otherwise:

1.1       “Base Salary” shall mean, as to any Covered Employee for any period, his annual base salary rate, as of his Qualifying Termination, which is paid to him by the Company during his employment for such period, before reduction because of an election between benefits or cash provided under a plan of the Company maintained pursuant to Section 125 or 401(k) of the Internal Revenue Code of 1986, as amended, and before reduction for any other amounts contributed to any other employee benefit plan.

1.2       “Cause” shall mean, as to any Covered Employee, that such Covered Employee shall have committed prior to his termination of employment with the Company any of the following acts:

(a)       an intentional act of fraud, embezzlement, theft, or any other material violation of law in connection with his duties or in the course of his employment with the Company;

	
             
 	
            (b)
 	
            the conviction of or entering of a plea of nolo contendere to a felony;
 

	
             
 	
            (c)
 	
            alcohol intoxication on the job or current illegal drug use;
 

	
             
 	
            (d)
 	
            intentional wrongful damage to tangible assets of the Company;
 

 (e)       intentional wrongful disclosure of material confidential information of the Company and/or materially breaching the noncompetition or confidentiality provisions of the Company’s Employment Agreement and Confidentiality Statement or any other noncompetition or confidentiality provisions covering the activities of such employee;

 

(f)        knowing and intentional breach of any employment policy of the Company; or

(g)       gross neglect or misconduct, disloyalty, dishonesty, or breach of trust in the performance of the Covered Employee’s duties that is not corrected to the Board’s satisfaction within 30 days of the Covered Employee receiving notice thereof.

1.3       “Company” shall mean Laboratory Corporation of America Holdings and any successor corporation.

	
             
 	
            1.4
 	
            “Covered Employee” shall mean an employee described in Article II of the Plan.
 

1.5       “Designated Group” shall mean any one of the groups of employees designated as such on Schedule 1 attached hereto.

	
             
 	
            1.6
 	
            “Effective Date” shall mean December 31, 2008.
 

	
             
 	
            1.7
 	
            “Employer” shall mean the Company.
 

	
             
 	
            1.8
 	
            “Good Reason” shall mean:  
 

 (a)       a material reduction in the base salary or targeted bonus as a percent of a base salary without the consent of the employee;  

(b)       relocation to an office location more than 75 miles from the employee’s current office without the consent of the employee; or  

(c)       a material reduction in job responsibilities and duties or transfer to another job without the consent of the employee. 

Notwithstanding the foregoing, “Good Reason” shall not include a reduction in base salary or target bonus of the Covered Employee where such reduction is pursuant to a Company-wide reduction of base salaries and/or target bonuses.

1.9       “MIB Average Bonus” shall mean the total dollar amount of the last three MIB Bonuses paid to the Covered Employee divided by 3. If, however, the Covered Employee has received less than three MIB Bonuses during the term of the Covered Employee’s employment, then the MIB Average Bonus shall equal the total dollar amount of the MIB Bonuses paid to the Covered Employee divided by the number of MIB Bonuses received by the Covered Employee.

1.10     “MIB Bonus” shall mean the bonus paid to the Covered Employee under the Laboratory Corporation of America Holdings Management Incentive Bonus Plan. 

1.11     “Plan” shall mean the Laboratory Corporation of America Holdings Amended and Restated Master Senior Executive Severance Plan, as the same may hereafter be amended from time to time.

 

	
             
 	
            2
 

 

 

	
             
 	
            1.12
 	
            “Qualifying Termination” shall mean:
 

	
             
 	
            (a)
 	
            involuntary Termination without Cause or
 

 (b)       voluntary Termination with Good Reason; however, notwithstanding the foregoing, the voluntary Termination by the Covered Employee 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 and not a Qualifying Termination.

Notwithstanding the foregoing, “Qualifying Termination” shall not mean any Termination of an employee’s employment with the Company by reason of death, disability, or retirement of the employee. 

1.13      “Severance Pay” shall mean the sum payable as set forth in Section 3.1 of the Plan.

1.14      “Term” shall mean the period commencing on the Effective Date and ending at the time determined in accordance with Section 7.2.

1.15     “Termination” shall cover all terminations of employment referred to under this Plan and shall mean a “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) as amended.

ARTICLE II

COVERED EMPLOYEES

2.1       Status as a Covered Employee. Any management employee of the Company designated by the Board to participate in the Plan and who is at the time of a Qualifying Termination such a designated employee shall be eligible to receive the benefits described in the Plan. As of the Effective Date, those employees so designated by the Board are as set forth on the attached Schedule 1. No employee who is entitled to receive payments under (1) an individual agreement relating to benefits payable upon said employee’s termination of employment or (2) the Change in Control Severance Plan shall be a Covered Employee, even if his or her position is listed on Schedule 1. 

ARTICLE III

SEVERANCE PAY

3.1       Amount of Severance. Subject to Sections 3.2 and 3.3, upon the occurrence of a Qualifying Termination and the execution by the employee of a Special Severance Agreement in substantially the form attached as Exhibit A (such agreement to be executed within 30 days of the Qualifying Termination or within 45 days of the Qualifying Termination if necessary to comply with the requirements of the Age Discrimination in Employment Act of 1967), which will contain, among other things, noncompetition, nonsolicitation, duty of loyalty, confidentiality, and release provisions that shall apply to each severance arrangement during, and in certain instances after, the time when any severance payments are being made to each 

 

	
             
 	
            3
 

 

 

employee, the Company shall pay Severance Pay to a Covered Employee in an amount equal to the mathematical product of multiplying the factor shown on Schedule 1 for the Designated Group to which the employee belongs at the time of termination, times the sum of the Covered Employee’s Base Salary plus MIB Average Bonus. Additionally, such Covered Employee shall be entitled, for up to six months following a Qualifying Termination, to reimbursement by the Company of the Applicable Premium for the continuation of those health benefits for which he or she qualified at the time of the Qualifying Termination, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), to the extent actually paid by the Covered Employee.

	
             
 	
            3.2
 	
            Effect on Other Benefit Programs.
 

 (a)       The Severance Pay provided for hereunder is not intended to duplicate any payments to which a Covered Employee would otherwise be entitled under any individual agreement relating to employment (or the termination thereof) with the Company. Accordingly, no Severance Payment shall be payable under the Plan to any employee of the Company who is a party to such an agreement, unless such employee expressly waives his right to receive all payments and all other benefits thereunder and expressly elects to receive Severance Payments pursuant to this Plan in lieu of any payment and other consideration that would otherwise be provided to him pursuant to any such agreement.

(b)       By the acceptance of any Severance Pay under the Plan, a Covered Employee shall be deemed to waive, release, and forever discharge any and all claims to the payment of any severance benefit under any severance plan or program of the Company other than the Plan or Agreement.

3.3       Limitation on Amount of Severance Pay. Notwithstanding any other provision of this Plan, the total of the Severance Pay plus the Applicable Premiums to be paid to or on behalf of a Covered Employee shall not exceed three times the Covered Employee’s Annual Compensation during the year immediately preceding his termination of service. “Annual Compensation” means the total of all compensation, including wages, salary, and any other benefit of monetary value, whether paid in the form of cash or otherwise, that was paid as consideration for the employee’s service during the year or that would have been so paid at the employee’s usual rate of compensation if the employee had worked a full year.

3.4       No Duty to Mitigate. A Covered Employee shall not be required by reason of the Plan to mitigate damages or the amount of his Severance Pay under the Plan by seeking other employment or otherwise, nor shall the amount of such payments be reduced or adjusted by compensation earned by the Covered Employee as a result of employment after his Qualifying Termination.

 

	
             
 	
            4
 

 

 

ARTICLE IV

CESSATION OF BENEFITS

4.1       Reemployment With the Company. If an employee already has received benefits under the Plan, a Covered Employee who recommences employment with the Company shall not be entitled to any further benefits under the Plan.

4.2       Breach of the Special Severance Agreement. If an employee breaches any material term of the Special Severance Agreement, he or she shall be entitled to no further benefits under the Plan. For purposes of this section, any violation of the confidentiality, noncompetition, nonsolicitation, release, or duty of loyalty provisions shall be considered “material.”

ARTICLE V

DISTRIBUTION OF CASH PAYMENTS

5.1       Severance Pay. The Company shall pay the Covered Employee the amount to which he or she is entitled under Section 3.1 as follows: (a) 50 percent of the total Severance Pay due, less statutory deductions, shall be paid within 30 days following the execution of a Special Severance Agreement, but in no event shall be paid later than March 15 of the year following the year in which the Qualifying Termination occurred; and (b) the remaining 50 percent of Severance Pay, 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 employee has complied in all material respects with the terms and conditions of the Special Severance Agreement. Notwithstanding the foregoing, all payments due hereunder shall be
completed within 24 months of the termination of the Covered Employee’s employment, but payments shall be due hereunder only if the employee has complied in all material respects with the terms and conditions of the Special Severance Agreement. Each payment specified under this Section 5.1 shall be deemed to be separate payments.

Notwithstanding any provisions of this Plan to the contrary, if the Covered Employee is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to procedures adopted by the Company) at the time of such Covered Employee’s Qualifying Termination and if any portion of the payments or benefits to be received by the Covered Employee upon a Qualifying Termination would be considered deferred compensation under Section 409A of the Code, amounts that would otherwise be payable pursuant to this Plan during the six-month period immediately following the Covered Employee’s Qualifying Termination (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Plan (the “Delayed Benefits”) during the six-month period immediately following the Covered Employee’s Qualifying Termination (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 date of the Covered Employee’s Qualifying Termination or (ii) the Covered Employee’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Covered Employee for the after-tax cost incurred by the Covered Employee in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). 

 

	
             
 	
            5
 

 

 

With respect to any amount of expenses eligible for reimbursement under Section 3.1 and 5.1, 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 Covered Employee but in no event later than December 31 of the year following the year in which the Covered 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 Covered Employee’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

It is the intention of the parties that payments or benefits payable under this Plan 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 Plan 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.

FOR PURPOSES OF SECTION 409A OF THE CODE, A COVERED EMPLOYEE’S RIGHT TO RECEIVE ANY “INSTALLMENT” PAYMENTS PURSUANT TO THIS PLAN SHALL BE TREATED AS A RIGHT TO RECEIVE A SERIES OF SEPARATE AND DISTINCT PAYMENTS.

ARTICLE VI

ADMINISTRATION OF PLAN

6.1       In General: Delegation. The Plan shall be administered by the Board. The Board shall have sole and absolute discretion to interpret where necessary all provisions of the Plan (including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of the Plan), to determine the rights and status under the Plan of employees or other persons, to resolve questions or disputes arising under the Plan, and to make any determinations with respect to the benefits payable hereunder and the persons entitled thereto as may be necessary for the purposes of the Plan. Without limiting the generality of the foregoing, the Board is hereby granted the authority (i) to determine whether a particular termination of employment
constitutes a “Qualifying Termination,” and (ii) to determine whether a particular employee is a “Covered Employee” under the Plan.

The Board may delegate any of its administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval, and payment of Severance Pay to a named administrator or administrators. The Board’s determination of the rights of any employee hereunder shall be final and binding on all persons.

6.2       Regulations. The Board may promulgate any rules and regulations that it deems necessary to carry out the purposes of this Plan, or to interpret the terms and conditions of the Plan; provided, however, that no rule, regulation, or interpretation shall be contrary to the provisions of the Plan. The rules, regulations, and interpretations made by the Board, and any determination of entitlement to benefits hereunder, shall be final and binding on any employee or former employee of the Company.

 

	
             
 	
            6
 

 

 

6.3       Claims for Benefits and Review of Denials. A terminating Covered Employee will be considered for benefits under the Plan automatically. Any other employee of the Company who believes he is entitled to a benefit under the Plan may make a claim for such benefit by submitting a written statement to the Board of Directors setting forth the benefit to which the claimant deems himself entitled, and the factual basis for his claim.

The Board of Directors or its delegate (hereinafter “Board of Directors” for purposes of Section 6.3 only) will make a determination of whether an employee recognized by the Board of Directors as a Covered Employee is entitled to benefits under this Plan no later than the day prior to the date of such employee’s termination. The Board of Directors will act on any other application (including a claim of status as a Covered Employee made as part of a claim for benefits) or make any other determination it is requested to make under the Plan and will inform the employee of its decision within 30 days of the date the application or request is made, unless a longer time is required by special circumstances, in which event the claimant will be notified in writing of the special circumstances and of the expected decision date. The
determination will be made no later than 90 days after the date the application or request is received. If the determination is a denial of a claim, the Board of Directors will notify the claimant in writing of the denial, setting forth the specific reasons for the denial and referring specifically to the Plan provisions on which the denial is based. The notice also will contain a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary. The notice will provide appropriate information to the claimant on steps to appeal the denial. The claimant will have 60 days from the date of the notice to request review of the decision by the Board of Directors and may review pertinent documents and submit any additional information along with the request for review that he or she deems pertinent. A decision on review will be made within 60 days of receipt of the request for review, except that the
time for rendering the decision may be extended to 120 days when special circumstances make it necessary to do so, in which event the claimant will be notified in writing of the extension, informed of the special circumstances, and informed of an expected decision date. The decision on review, if it is a denial of the claim, will be in writing, will specify the provisions of the Plan on which it is based, and will set forth specific reasons for the denial.

ARTICLE VII

AMENDMENT OR TERMINATION OF PLAN

7.1       Right to Amend or Terminate. The Company reserves the right to alter, amend, or terminate the Plan at any time. Any change in the terms of the Plan (including termination of the Plan) that results from the exercise of the Company’s right to alter, amend, or terminate the Plan may be applicable to active and/or former employees, including employees who separated from service prior to the date on which the Company exercises its power to alter, amend, or terminate the Plan, provided, however, that no such change in the terms of the Plan will affect the amount of any benefit that was paid prior to the date on which such change is adopted, or any benefit promised in a Special Severance Agreement that was fully executed prior to the date on which such change is adopted. Only the Board of Directors
may exercise the Company’s reserved rights under this paragraph. No officer, employee, or representative of the Company has the authority to promise or represent that anyone’s coverage and/or benefit under the Plan is or will be exempt from the Company’s reserved right to alter, amend, or terminate the Plan at any time, unless such promise or representation is in writing and signed by hand by the President of 

 

	
             
 	
            7
 

 

 

the Company. Notwithstanding the foregoing, the Plan and a Covered Employee’s participation in the Plan shall not be terminated for 36 months following a Change in Control.

7.2       Termination. This Plan shall continue in force until such time as the Board shall terminate the Plan. Notwithstanding the foregoing, the Plan and a Covered Employee’s participation in the Plan shall not be terminated for 36 months following a Change in Control.

ARTICLE VIII

METHOD OF FUNDING

8.1       Plan is Not Funded. The Company shall pay benefits under the Plan from current operating funds. No property of the Company is or shall be, by reason of this Plan, held in trust for any employee of the Company, nor shall any person have any interest in or any lien or prior claim upon any property of the Company by reason of this Plan or the Company’s obligations to make payments hereunder.

ARTICLE IX

MISCELLANEOUS

9.1       Limitation on Rights. Neither the establishment of the Plan nor participation herein shall give any employee the right to be retained in the service of the Company or any rights to any benefits whatsoever, except to the extent specifically set forth herein.

9.2       Headings. Headings of Articles and Sections in this instrument are for convenience only and do not constitute any party of the Plan.

9.3       Gender and Number. Unless the context clearly indicates otherwise, the masculine gender when used in the Plan shall include the feminine, and the singular number shall include the plural and the plural number the singular.

9.4       Tax Withholding. The Company may withhold from any amounts payable under this Plan all federal, state, city, or other taxes as shall be required to be withheld pursuant to any law or governmental regulation or ruling.

9.5       Governing Law. The Plan shall be construed and governed in all respects in accordance with the internal substantive laws of the State of Delaware.

 

IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this document on the 10th day of February, 2009.

LABORATORY CORPORATION OF AMERICA HOLDINGS 

 

By:/s/ F. Samuel Eberts III

 

	
             
 	
            8
 

 

 

Schedule 1 to

Amended and Restated Master Senior Executive Severance Plan

 

Designated Groups, Covered Employees,

and Benefit Levels

 

	
            Designated Group
 	
            Covered Employees
 	
            Severance Benefit for all other Qualifying Terminations as a Multiple of Base Salary Plus MIB Average Bonus
 
	
            President
 	
            President
 	
            2X
 
	
            Executive Vice Presidents
 	
            All Executive Vice Presidents
 	
            2X
 
	
            Senior Vice Presidents
 	
            All Senior Vice Presidents
 	
            1X
 

 

 

 

 

 

 

Laboratory Corporation of America

 

Confidential

DATE

Employee Name and Address

	
            Re:
 	
            Employment Separation Agreement and General Release
 

Dear ___________:

I am writing on behalf of Laboratory Corporation of America Holdings (the “Company”) to offer you (the “Employee”) the following Employment Separation Agreement and General Release (the “Agreement”) in accordance with the terms of the Laboratory Corporation of America Holdings Amended and Restated Master Senior Executive Severance Plan (the “Plan”). All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. The terms and conditions of the Agreement are as follows:

	
            1.0
 	
            Termination of Employment
 

1.1       Effective __________, 200__ (the “Termination Date”), Employee shall resign his/her employment [(including his/her resignation as an Officer of the Company)] and shall perform no further services for the Company; his/her status as an employee [and Officer] of the Company shall cease on that date. 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 Employee’s execution and fulfillment of his/her obligations under this Agreement.

	
            2.0
 	
            Separation Pay
 

2.1       In consideration for the covenants, promises and agreements herein and in particular Employee’s 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, representing a payment of ___ times the sum of Employee’s current base salary of ___________ plus the Employee’s MIB Average Bonus of ____________. The Company will remit a payment of $__________, less applicable taxes and
withholdings, within 30 days following the Effective Date of this Agreement, but in no event later than March 15 of the year following the year in which the Termination Date occurred. The Company will remit another payment of $___________, less applicable taxes and withholdings, within 30 days following the one-year anniversary of the Effective Date of this Agreement. 

 

 

EXHIBIT A – SAMPLE AGREEMENT

 

 

 

 

 

2.2       The Company shall not be responsible for making any payment under this Section 2.0 and its sub-parts if Employee has not complied in all material respects with the terms and conditions of this Agreement.

	
            3.0
 	
            Continuation of Benefits
 

3.1       In addition to the consideration contained in Section s 2.0 and 3.0 (including the sub-parts thereto), Employee, his/her spouse, and his/her other dependent(s) may be eligible to elect continued health care coverage under the group medical and dental 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/herself and his/her spouse and dependents, the Company will reimburse Employee for the applicable premium for such coverage (medical, dental, optical and prescription coverage for spouse and dependants) for the six (6) months, thereof, to the extent actually paid by the Employee.

3.2       Employee shall be eligible for such benefits under the Company’s existing qualified plans as are provided under the circumstances (taking into account termination of employment as of the Termination 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 Company’s employee benefit plans effective upon the termination of his/her employment. Employee agrees that the payments made to him/her 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.

	
            4.0
 	
            Compromise
 

4.1       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 5.1 of this Agreement. The Company expressly denies any such liability, wrongdoing or responsibility.

	
            5.0
 	
            Release
 

5.1       Employee, on behalf of himself/herself and his/her 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/her 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.; the Lilly Ledbetter Fair Pay Act; 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 Employee’s claims to vested benefits in the Company’s 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.

5.2       Employee is hereby advised in accordance with the Older Workers’ Benefit Protection Act (the “OWBPA”) that:  (i) he/she should consult with an attorney (at his/her own expense) prior to executing this Agreement; (ii) he/she is waiving, among other things, any age discrimination claims under the Age Discrimination in Employment Act, provided, however, he/she is not waiving any claims that may arise after the date this Agreement is executed; (iii) he/she 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/she may revoke this Agreement by delivering written notice (by the close of business on the seventh day) to the Company in accordance with Section 12.7 herein.

5.3       Notwithstanding the provisions of Section 5.1, said release does not apply to any and all statutory or other claims that are prohibited from waiver by Federal, State or local law.

5.4       Employee represents that he/she 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 Employee’s behalf, he/she will use his/her 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.

 

 

 

5.5        Employee further agrees that he/she 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/her 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/her 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.

5.6       The parties agree that the Company has no prior legal obligation to make the additional payments set forth above in Sections 2.0 and 3.0 (including the sub-parts thereto) and that it has been exchanged for the promises of Employee stated in this Agreement. It is specifically understood and agreed that the additional payments, and each of them, are good and adequate consideration to support the waivers, releases and obligations contained herein, including, without limitation, Sections 6.0, 7.0, 8.0, and 9.0 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.

	
            6.0
 	
            Confidentiality
 

6.1       Employee understands and agrees that all discussions, negotiations and correspondence relating to this Agreement are strictly confidential and that this confidentiality provision is a material term of this Agreement. Accordingly, Employee agrees not to disclose to anyone (other than counsel, accountants, immediate family members) such information unless such disclosure 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; or (iii) necessary in any legal proceeding in order to enforce any provision of this Agreement.

6.2       The parties acknowledge that during the course of Employee’s employment with the Company, he/she 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 Company’s trade, industry, business, or otherwise and that maintaining the secrecy of the Confidential Information is extremely important to the Company’s ability to compete with its competitors.

6.3       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 or use for his/her 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 Employee’s 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 Employee’s breach of this section of this Agreement.

 

 

 

6.4       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 Company’s prices, pricing methods, costs, profits, profit margins, suppliers, methods, procedures, processes or combinations or applications thereof developed in, by, or for the Company’s 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.

6.5       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. Notwithstanding this Section, Employee may disclose the contents of Section 7.0 and its sub-parts to any subsequent employer.

6.6       Employee further agrees that he/she 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 6.0 and sub-parts thereto.

	
            7.0
 	
            Non-Solicitation/Non-Compete
 

7.1       For a period of [twelve (12)][eighteen (18)] [twenty-four (24)] months following the termination of Employee’s employment for any reason (the “Restriction Period”), Employee shall not, within the Prohibited Territory, become employed by, retained by or provide services to any person (including on Employee’s on behalf), business, partnership, or other entity that competes with the Company’s Business if and only if the employment, retention or services provided would require the Employee to perform the same or substantially similar duties and responsibilities typically performed by a Senior Vice President, Executive Vice President or Chief Executive Officer of the Company. Employee acknowledges that this Section contains reasonable limitations as to time, geographic area, and scope of
activities to be restricted and that such promises do not impose a greater restraint on Employee than is necessary to protect the Company’s goodwill, investment in the Employee’s training, access to confidential, proprietary, and/or trade secrets of the Company, and other legitimate business interests of the Company. “Company’s Business” means the provision of clinical medical testing, esoteric medical testing, anatomic pathology testing, occupational testing, DNA testing and analysis, clinical trials and other commercial medical testing product or service offered by the Company. “Prohibited Territory” means the United States.

7.2       For a period of [twelve (12)] [eighteen (18)] [twenty-four (24)] months following the termination of Employee’s employment for any reason, Employee will not solicit or attempt to solicit, 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 Company’s 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 the Employee had contact during the last twenty-four (24) months of Employee’s employment with the Company or who were known by Employee to be customers or prospects, or representatives of the same, of the Company. The parties agree and affirm that their intention with respect to Section 7.2 of this Agreement is that Employee’s activities be limited only for a [twelve (12)] [eighteen (18)] [twenty-four (24)] month period after termination of Employee’s employment with Company for any reason. The
provisions calling for a “look back” of twenty four calendar months prior to the Termination 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.

7.3       For a period of [twelve (12)] [eighteen (18)] [twenty-four (24)] months following the termination of Employee’s employment for any reason, 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 LabCorp to work for or provide services to Employee and/or any other person or entity that either (i) directly provides products or services that compete with the Company’s Business in the Restricted Territory or (ii) supplies, services, advises or consults with a person, trade or business that directly provides products or services that compete with the Company’s Business in the Restricted Territory.

7.4       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/her livelihood or to unduly restrict Employee’s opportunity to earn a living after termination of Employee’s employment with the Company. Employee further acknowledges and agrees that if any restrictions set forth in Section 7.0 and its subparts 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.

	
            8.0
 	
            Return of Company Property
 

8.1       Employee agrees that he/she will immediately 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 Employee’s possession or control.

	
            9.0
 	
            Duty to Cooperate and of Loyalty/Nondisparagement
 

9.1       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/she was involved during his/her 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.

9.2       Employee will not (except as required by law) communicate to anyone, whether by word or deed, whether directly or through any intermediary, and whether expressly or by suggestion or innuendo, any statement, whether characterized as one of fact or of 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 lowered opinion of any products manufactured, sold, or used by, or any services offered or rendered by the Company or its affiliates; and/or (2) a lowered opinion of the Company’s creditworthiness or business prospects. Employee’s obligation in this regard extends to the reputation of the Company and any other person or entity described in Section 5.1 of this Agreement.

	
            10.0
 	
            Section 409A of the Code  
 

10.1     Notwithstanding any provisions of this Agreement to the contrary, no amounts shall be paid hereunder unless the Employee’s termination is a Qualifying Termination.

10.2     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 time of such Employee’s Qualifying Termination and if any portion of the payments or benefits to be received by the Employee upon a Qualifying Termination would be considered deferred compensation under Section 409A of the Code, amounts that would otherwise be payable pursuant to the Plan and this Agreement during the six-month period immediately following the Employee’s Qualifying Termination (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to the Plan and this Agreement (the
“Delayed Benefits”) during the six-month period immediately following the Employee’s Qualifying Termination (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 Termination Date or (ii) the Employee’s 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”).

10.3     With respect to any amount of expenses eligible for reimbursement under Sections 3.1 and 10.2, 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 Employee’s right to reimbursement or in-kind benefits be subject to
liquidation or exchange for another benefit.

 

 

 

10.4     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.

10.5     For purposes of Section 409A of the Code, an Employee’s 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.

	
            11.0
 	
            Miscellaneous
 

11.1     This Agreement is binding on, and shall inure to the benefit of, the Parties hereto and their heirs, representatives, transferees, principals, executors, administrators, predecessors, successors, parents, subsidiaries, affiliates, assigns, agents, directors, officers and employees.

11.2     The Plan is incorporated herein by reference. 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/her 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.

11.3     This Agreement may not be revised or modified without the mutual written consent of the Parties.

11.4     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/she has read this Agreement and that he/she 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/she has had a full opportunity to discuss or ask questions about all such terms.

11.5     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 7.0 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.

11.6     Employee agrees that because he/she has rendered services of a special, unique, and extraordinary character, damages may not be an adequate or reasonable remedy for breach of his/her 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) withholding of 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. Employee agrees that the issuance of the injunction described in this Section may be without the posting of any bond or other security by the Company.

11.7     Such notice and any other notices required under this Agreement shall be served upon the Company via telecopier and U.S. Mail as follows:

If to the Company:

 

Laboratory Corporation of America Holdings

531 S. Spring Street

Burlington, NC  27215

Telephone No.:  (336) 436-4226

Telecopier No.:  (336) 436-4177

Attention:  General Counsel

With a copy to:

 

Laboratory Corporation of America Holdings

531 S. Spring Street

Burlington, NC  27215

Attention:  Director of HR Compliance

If to the Employee:

 

__________________

__________________

__________________

 

 

 

11.8     This Agreement shall be construed in accordance with and governed by the laws, except choice of law provisions, of the State of North Carolina and shall govern to the exclusion of the laws of any other forum including but not limited to the laws of the State of California. The parties further agree that any action, special proceeding or other proceeding with respect to this Agreement shall be brought exclusively in the federal or state courts of the State of North Carolina. Employee and Company irrevocably consent to the jurisdiction of the Federal and State courts of North Carolina and that Employee hereby consents and submits to personal jurisdiction in the State of North Carolina. 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/she has breached this Agreement, the Company may initiate a lawsuit against him/her in North Carolina and that Employee will be required to travel to and defend himself/herself in North Carolina.

11.9     The Effective Date of this Agreement shall be either (a) the Termination Date or (b) the day after expiration of the seven (7) day revocation period set forth in Section 5.2 of this 

Agreement, whichever date is later.

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.

Sincerely,

 

David P. King

President and Chief Executive Officer

 

Agreed to and accepted:

 

	
            _____________________________
 	
            Dated: __________________Exhibit 10.2

LABORATORY CORPORATION OF AMERICA HOLDINGS

MASTER SENIOR EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

(Effective February 10, 2009)

PURPOSE

The purpose of this Laboratory Corporation of America Holdings Master Senior Executive Severance Change In Control Plan (the “Plan”) is to provide severance benefits for a select group of management employees in the event that there is a Change in Control of Laboratory Corporation of America Holdings (“LabCorp”). The Plan is not intended to duplicate severance benefits provided to certain employees who have entered into individual agreements relating to employment or the termination thereof or are receiving benefits under the Laboratory Corporation of America Holdings Amended and Restated Master Senior Executive Severance Plan

ARTICLE I

DEFINITIONS

When used in this Plan and initially capitalized, the following words and phrases shall have the following meanings unless the context clearly requires otherwise:

1.1       “Base Salary” shall mean, as to any Covered Employee for any period, his annual base salary rate, as of his Qualifying Termination, which is paid to him by the Company during his employment for such period, before reduction because of an election between benefits or cash provided under a plan of the Company maintained pursuant to Section 125 or 401(k) of the Internal Revenue Code of 1986, as amended, and before reduction for any other amounts contributed to any other employee benefit plan.

1.2       “Cause” shall mean, as to any Covered Employee, that such Covered Employee shall have committed prior to his termination of employment with the Company any of the following acts:

(a)       an intentional act of fraud, embezzlement, theft, or any other material violation of law in connection with his duties or in the course of his employment with the Company;

	
             
 	
            (b)
 	
            the conviction of or entering of a plea of nolo contendere to a felony;
 

	
             
 	
            (c)
 	
            alcohol intoxication on the job or current illegal drug use;
 

	
             
 	
            (d)
 	
            intentional wrongful damage to tangible assets of the Company;
 

 (e)       intentional wrongful disclosure of material confidential information of the Company and/or materially breaching the noncompetition or confidentiality provisions of 

 

the Company’s Employment Agreement and Confidentiality Statement or any other noncompetition or confidentiality provisions covering the activities of such employee;

(f)        knowing and intentional breach of any employment policy of the Company; or

(g)       gross neglect or misconduct, disloyalty, dishonesty, or breach of trust in the performance of the Covered Employee’s duties that is not corrected to the Board’s satisfaction within 30 days of the Covered Employee receiving notice thereof.

	
             
 	
            1.3
 	
            “Change in Control” shall mean an event of a nature that:
 

 (a)       any “person” (as the term is defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”)) who is not now presently but becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40percent or more of the Company’s outstanding securities except for any securities purchased by any tax-qualified employee benefit plan of the Company; or

(b)       individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (including any such directors whose election was so approved), or whose nomination for election by the Company’s stockholders was approved by the Incumbent Board (including such directors whose election was so approved), shall be for purposes of this clause (b), considered as though he or she were a member of the Incumbent Board; or

(c)       a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Company or similar transaction occurs in which the Company is not the resulting entity.

1.4       1.4        “Company” shall mean Laboratory Corporation of America Holdings and any successor corporation.

	
             
 	
            1.5
 	
            “Covered Employee” shall mean an employee described in Article II of the Plan.
 

1.6       “Designated Group” shall mean any one of the groups of employees designated as such on Schedule 1 attached hereto.

	
             
 	
            1.7
 	
            “Effective Date” shall mean February 10, 2009.
 

	
             
 	
            1.8
 	
            “Employer” shall mean the Company.
 

	
             
 	
            1.9
 	
            “Good Reason” shall mean:  
 

 

	
             
 	
            2
 

 

 

(a)       a material reduction in the base salary or targeted bonus as a percent of a base salary without the consent of the employee;  

(b)       relocation to an office location more than 75 miles from the employee’s current office without the consent of the employee; or  

(c)       a material reduction in job responsibilities and duties or transfer to another job without the consent of the employee. 

Notwithstanding the foregoing, “Good Reason” shall not include a reduction in base salary or target bonus of the Covered Employee where such reduction is pursuant to a Company-wide reduction of base salaries and/or target bonuses.

1.10     “Plan” shall mean the Laboratory Corporation of America Holdings Master Senior Executive Change in Control Severance Plan, as the same may hereafter be amended from time to time.

	
             
 	
            1.11
 	
            “Qualifying Termination” shall mean:
 

 (a)       involuntary Termination without Cause within 36 months following a Change in Control; or 

voluntary Termination with Good Reason within 36 months following a Change in Control; however, notwithstanding the foregoing, the voluntary Termination by the Covered Employee 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 and not a Qualifying Termination.

Notwithstanding the foregoing, “Qualifying Termination” shall not mean any Termination of an employee’s employment with the Company by reason of death, disability, or retirement of the employee. 

1.12     “Severance Pay” shall mean the sum payable as set forth in Section 3.1 of the Plan. 

1.13      “MIB Average Bonus” shall mean the total dollar amount of the last three MIB Bonuses paid to the Covered Employee divided by 3. If, however, the Covered Employee has received less than three MIB Bonuses during the term of the Covered Employee’s employment, then the MIB Average Bonus shall equal the total dollar amount of the MIB Bonuses paid to the Covered Employee divided by the number of MIB Bonuses received by the Covered Employee.

1.14     “MIB Bonus” shall mean the bonus paid to the Covered Employee under the Laboratory Corporation of America Holdings Management Incentive Bonus Plan.  

1.15     “Term” shall mean the period commencing on the Effective Date and ending at the time determined in accordance with Section 7.2.

 

	
             
 	
            3
 

 

 

1.16     “Termination” shall cover all terminations of employment referred to under this Plan and shall mean a “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) as amended.

ARTICLE II

COVERED EMPLOYEES

2.1       Status as a Covered Employee. Any management employee of the Company designated by the Board to participate in the Plan and who is at the time of a Qualifying Termination such a designated employee shall be eligible to receive the benefits described in the Plan. As of the Effective Date, those employees so designated by the Board are as set forth on the attached Schedule 1. No employee who is entitled to receive payments under (1) an individual agreement relating to benefits payable upon said employee’s termination of employment, or (2) the Amended and Restated Master Senior Executive Severance Plan, shall be a Covered Employee, even if his or her position is listed on Schedule 1. 

ARTICLE III

SEVERANCE PAY

3.1       Amount of Severance. Subject to Sections 3.2 and 3.3, upon the occurrence of a Qualifying Termination and the execution by the employee of a Special Severance Agreement in substantially the form attached as Exhibit A (such agreement to be executed within 30 days of the Qualifying Termination or within 45 days of the Qualifying Termination if necessary to comply with the requirements of the Age Discrimination in Employment Act of 1967), which will contain, among other things, noncompetition, nonsolicitation, duty of loyalty, confidentiality, and release provisions that shall apply to each severance arrangement during, and in certain instances after, the time when any severance payments are being made to each employee, the Company shall pay Severance Pay to a Covered Employee in an amount equal
to the mathematical product of multiplying the factor shown on Schedule 1 for the Designated Group to which the employee belongs at the time of termination, times the sum of the Covered Employee’s Base Salary plus MIB Average Bonus. Additionally, such Covered Employee shall be entitled, for up to six months following a Qualifying Termination, to reimbursement by the Company of the Applicable Premium for the continuation of those health benefits for which he or she qualified at the time of the Qualifying Termination, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), to the extent actually paid by the Covered Employee.

	
             
 	
            3.2
 	
            Effect on Other Benefit Programs.
 

 (a)       The Severance Pay provided for hereunder is not intended to duplicate any payments to which a Covered Employee would otherwise be entitled under any individual agreement relating to employment (or the termination thereof) with the Company. Accordingly, no Severance Payment shall be payable under the Plan to any employee of the Company who is a party to such an agreement, unless such employee expressly waives his right to receive all payments and all other benefits thereunder and expressly elects to receive Severance Payments pursuant to this Plan in lieu of any 

 

	
             
 	
            4
 

 

 

payment and other consideration that would otherwise be provided to him pursuant to any such agreement.

(b)       By the acceptance of any Severance Pay under the Plan, a Covered Employee shall be deemed to waive, release, and forever discharge any and all claims to the payment of any severance benefit under any severance plan or program of the Company other than the Plan or Agreement.

3.3       Limitation on Amount of Severance Pay. Notwithstanding any other provision of this Plan, the total of the Severance Pay plus the Applicable Premiums to be paid to or on behalf of a Covered Employee shall not exceed three times the Covered Employee’s Annual Compensation during the year immediately preceding his termination of service. “Annual Compensation” means the total of all compensation, including wages, salary, and any other benefit of monetary value, whether paid in the form of cash or otherwise, that was paid as consideration for the employee’s service during the year or that would have been so paid at the employee’s usual rate of compensation if the employee had worked a full year.

3.4       No Duty to Mitigate. A Covered Employee shall not be required by reason of the Plan to mitigate damages or the amount of his Severance Pay under the Plan by seeking other employment or otherwise, nor shall the amount of such payments be reduced or adjusted by compensation earned by the Covered Employee as a result of employment after his Qualifying Termination.

ARTICLE IV

CESSATION OF BENEFITS

4.1       Reemployment With the Company. If an employee already has received benefits under the Plan, a Covered Employee who recommences employment with the Company shall not be entitled to any further benefits under the Plan.

4.2       Breach of the Special Severance Agreement. If an employee breaches any material term of the Special Severance Agreement, he or she shall be entitled to no further benefits under the Plan. For purposes of this section, any violation of the confidentiality, noncompetition, nonsolicitation, release, or duty of loyalty provisions shall be considered “material.”

ARTICLE V

DISTRIBUTION OF CASH PAYMENTS

5.1       Severance Pay. The Company shall pay the Covered Employee the amount to which he or she is entitled under Section 3.1 as follows: (a) 50 percent of the total Severance Pay due, less statutory deductions, shall be paid within 30 days following the execution of a Special Severance Agreement, but in no event shall be paid later than March 15 of the year following the year in which the Qualifying Termination occurred; and (b) the remaining 50 percent of Severance Pay, 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 employee has complied in all material respects with the terms and conditions of the Special Severance Agreement. Notwithstanding the foregoing, all payments due hereunder shall be completed 

 

	
             
 	
            5
 

 

 

within 24 months of the termination of the Covered Employee’s employment, but payments shall be due hereunder only if the employee has complied in all material respects with the terms and conditions of the Special Severance Agreement. Each payment specified under this Section 5.1 shall be deemed to be separate payments.

Notwithstanding any provisions of this Plan to the contrary, if the Covered Employee is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to procedures adopted by the Company) at the time of such Covered Employee’s Qualifying Termination and if any portion of the payments or benefits to be received by the Covered Employee upon a Qualifying Termination would be considered deferred compensation under Section 409A of the Code, amounts that would otherwise be payable pursuant to this Plan during the six-month period immediately following the Covered Employee’s Qualifying Termination (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Plan (the “Delayed Benefits”) during the six-month period immediately following the Covered Employee’s Qualifying Termination (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 date of the Covered Employee’s Qualifying Termination or (ii) the Covered Employee’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Covered Employee for the after-tax cost incurred by the Covered Employee in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). 

With respect to any amount of expenses eligible for reimbursement under Section 3.1 and 5.1, 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 Covered Employee but in no event later than December 31 of the year following the year in which the Covered 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 Covered Employee’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

It is the intention of the parties that payments or benefits payable under this Plan 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 Plan 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.

For purposes of Section 409A of the Code, a Covered Employee’s right to receive any “installment” payments pursuant to this Plan shall be treated as a right to receive a series of separate and distinct payments.

5.2       Gross-Up for Excise Tax. In the event that the Covered Employee becomes entitled to payment hereunder pursuant to Section 3.1, if such Covered Employee will be subject to excise tax (the “Excise Tax”) under Section 4999 of the Code, the Company shall pay to such Covered Employee as additional Severance Pay an amount (the “Gross-Up Payment”) which, after payment by such Covered Employee of all taxes (including any federal, state and local 

 

	
             
 	
            6
 

 

 

income tax and excise tax upon the payment
provided for by this Section 5.2) allows the Covered Employee to retain an amount of the
Gross-Up Payment equal to the Excise Tax. For purposes of determining whether a Covered
Employee will be subject to the Excise Tax and the amount of such Excise Tax, (i) any
other payments or benefits received or to be received by such Covered Employee in
connection with a Change in Control of the Company or the Covered Employee’s
termination of employment (whether pursuant to the terms of any other plan, arrangement or
agreement with the Company, any entity whose actions result in a Change in Control of the
Company or any entity affiliated with the Company or such entity) shall be treated as
“parachute payments” within the meaning of Section 280G(b)(2) of the Code, and
all “excess parachute payments” within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company’s independent auditors and reasonably acceptable to the
Covered Employee such other payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, or such
excess parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, or
are otherwise not subject to the Excise Tax, (ii) the amount of payments treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount of payments
or benefits conferred on such Covered Employees by reason of the Change of Control or (B)
the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (i), above), and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Company’s independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. In
the event that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder, the Covered Employee shall repay to the Company, at the time that
the amount of such reduction in Excise Tax is finally determined, the portion of Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax deduction) plus
interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by the Covered Employee with respect to such excess) at the time that
the amount of such excess finally is determined. The Covered Employee and the Company each
shall reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence of liability for Excise Tax. The Gross-Up
Payment shall be reduced by the amount of any other such gross-up payment made to the
Covered Employee pursuant to a separate agreement or provision of any award which would be
included in the calculation of “parachute payments” described above, to avoid
the duplication of any gross-up payments. Any Gross-Up payment made by the Company shall
be paid to the Covered Employee no later than the end of the Covered Employee’s
taxable year following the Covered Employee’s taxable year in which he or she remits
the taxes to the taxing authority.

ARTICLE VI

ADMINISTRATION OF PLAN

6.1       In General: Delegation. The Plan shall be administered by the Board. The Board shall have sole and absolute discretion to interpret where necessary all provisions of the Plan 

 

	
             
 	
            7
 

 

 

(including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of the Plan), to determine the rights and status under the Plan of employees or other persons, to resolve questions or disputes arising under the Plan, and to make any determinations with respect to the benefits payable hereunder and the persons entitled thereto as may be necessary for the purposes of the Plan. Without limiting the generality of the foregoing, the Board is hereby granted the authority (i) to determine whether a particular termination of employment constitutes a “Qualifying Termination,” and (ii) to determine whether a particular employee is a “Covered Employee” under the Plan.

The Board may delegate any of its administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval, and payment of Severance Pay to a named administrator or administrators. The Board’s determination of the rights of any employee hereunder shall be final and binding on all persons.

6.2       Regulations. The Board may promulgate any rules and regulations that it deems necessary to carry out the purposes of this Plan, or to interpret the terms and conditions of the Plan; provided, however, that no rule, regulation, or interpretation shall be contrary to the provisions of the Plan. The rules, regulations, and interpretations made by the Board, and any determination of entitlement to benefits hereunder, shall be final and binding on any employee or former employee of the Company.

6.3       Claims for Benefits and Review of Denials. A terminating Covered Employee will be considered for benefits under the Plan automatically. Any other employee of the Company who believes he is entitled to a benefit under the Plan may make a claim for such benefit by submitting a written statement to the Board of Directors setting forth the benefit to which the claimant deems himself entitled, and the factual basis for his claim.

The Board of Directors or its delegate (hereinafter “Board of Directors” for purposes of Section 6.3 only) will make a determination of whether an employee recognized by the Board of Directors as a Covered Employee is entitled to benefits under this Plan no later than the day prior to the date of such employee’s termination. The Board of Directors will act on any other application (including a claim of status as a Covered Employee made as part of a claim for benefits) or make any other determination it is requested to make under the Plan and will inform the employee of its decision within 30 days of the date the application or request is made, unless a longer time is required by special circumstances, in which event the claimant will be notified in writing of the special circumstances and of the expected decision date. The
determination will be made no later than 90 days after the date the application or request is received. If the determination is a denial of a claim, the Board of Directors will notify the claimant in writing of the denial, setting forth the specific reasons for the denial and referring specifically to the Plan provisions on which the denial is based. The notice also will contain a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary. The notice will provide appropriate information to the claimant on steps to appeal the denial. The claimant will have 60 days from the date of the notice to request review of the decision by the Board of Directors and may review pertinent documents and submit any additional information along with the request for review that he or she deems pertinent. A decision on review will be made within 60 days of receipt of the request for review, except that the
time for rendering the decision may be extended to 120 days when 

 

	
             
 	
            8
 

 

 

special circumstances make it necessary to do so, in which event the claimant will be notified in writing of the extension, informed of the special circumstances, and informed of an expected decision date. The decision on review, if it is a denial of the claim, will be in writing, will specify the provisions of the Plan on which it is based, and will set forth specific reasons for the denial.

ARTICLE VII

AMENDMENT OR TERMINATION OF PLAN

7.1       Right to Amend or Terminate. The Company reserves the right to alter, amend, or terminate the Plan at any time. Any change in the terms of the Plan (including termination of the Plan) that results from the exercise of the Company’s right to alter, amend, or terminate the Plan may be applicable to active and/or former employees, including employees who separated from service prior to the date on which the Company exercises its power to alter, amend, or terminate the Plan, provided, however, that no such change in the terms of the Plan will affect the amount of any benefit that was paid prior to the date on which such change is adopted, or any benefit promised in a Special Severance Agreement that was fully executed prior to the date on which such change is adopted. Only the Board of Directors
may exercise the Company’s reserved rights under this paragraph. No officer, employee, or representative of the Company has the authority to promise or represent that anyone’s coverage and/or benefit under the Plan is or will be exempt from the Company’s reserved right to alter, amend, or terminate the Plan at any time, unless such promise or representation is in writing and signed by hand by the President of the Company. Notwithstanding the foregoing, the Plan and a Covered Employee’s participation in the Plan shall not be terminated for 36 months following a Change in Control.

7.2       Termination. This Plan shall continue in force until such time as the Board shall terminate the Plan. Notwithstanding the foregoing, the Plan and a Covered Employee’s participation in the Plan shall not be terminated for 36 months following a Change in Control.

ARTICLE VIII

METHOD OF FUNDING

8.1       Plan is Not Funded. The Company shall pay benefits under the Plan from current operating funds. No property of the Company is or shall be, by reason of this Plan, held in trust for any employee of the Company, nor shall any person have any interest in or any lien or prior claim upon any property of the Company by reason of this Plan or the Company’s obligations to make payments hereunder.

ARTICLE IX

MISCELLANEOUS

9.1       Limitation on Rights. Neither the establishment of the Plan nor participation herein shall give any employee the right to be retained in the service of the Company or any rights to any benefits whatsoever, except to the extent specifically set forth herein.

9.2       Headings. Headings of Articles and Sections in this instrument are for convenience only and do not constitute any party of the Plan.

 

	
             
 	
            9
 

 

 

9.3       Gender and Number. Unless the context clearly indicates otherwise, the masculine gender when used in the Plan shall include the feminine, and the singular number shall include the plural and the plural number the singular.

9.4       Tax Withholding. The Company may withhold from any amounts payable under this Plan all federal, state, city, or other taxes as shall be required to be withheld pursuant to any law or governmental regulation or ruling.

Governing Law. The Plan shall be construed and governed in all respects in accordance with the internal substantive laws of the State of Delaware.

 

IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this document on the 10th day of February, 2009.

LABORATORY CORPORATION OF AMERICA HOLDINGS 

 

By: /s/ F. Samuel Eberts III

 

	
             
 	
            10
 

 

 

Schedule 1 to

Amended and Restated Master Senior Executive Severance Plan

 

Designated Groups, Covered Employees,

and Benefit Levels

 

	
            Designated Group
 	
            Covered Employees
 	
            Severance Benefit for Change In Control Event as a Multiple of Base Salary Plus MIB Average Bonus
 
	
            President
 	
            President
 	
            3X
 
	
            Executive Vice Presidents
 	
            All Executive Vice Presidents
 	
            2X
 
	
            Senior Vice Presidents
 	
            All Senior Vice Presidents
 	
            1X

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]