Exhibit
10.27    January 28, 2003   Thomas E. England, Ph.D. 133 Fleet Street Marina Del Rey, CA 90292  Dear Tom:  This letter agreement confirms our discussions regarding your continued
employment with Specialty Laboratories, Inc. (the Company or Specialty), and fully sets forth the terms of your continued employment with
Specialty.  For the period of December 31, 2002 through no later than April 30,
2003, your employment with the Company will continue as Vice-President,
Laboratory Operations, with the same salary, benefits, stock option vesting,
and other terms of your employment existing as of December 30, 2002, unless you
are notified prior to April 30, 2003 that the Company has elected to transition
your position, as described more fully below.  Because the Company is currently searching for a successor for your
current position, once the Company has identified such a successor, you have
agreed to step aside and transition to another role at the Company.  Accordingly, if prior to April 30, 2003 the
Company notifies you that it desires to transition your current position, you
agree that the following terms and conditions will govern your employment from
that time onward:  Position:
  Director, Research & Development; General
  Manager, Clinical TrialsReports To:
  Douglas Harrington, M.D.Location:
  2211 Michigan Avenue, Santa Monica, California 90404Base Salary:
  $160,000 annually (or $6,153.85 bi-weekly), plus a
  car allowance of $4,800 annually (or $184.61 bi-weekly).Incentive
  Compensation:
  You will continue to be eligible to participate in
  the Companys Management Incentive Compensation Program for 2003 and
  successive years of employment. 
  Earned bonuses are paid within 90 days of the close of the fiscal
  year.  You will eligible for a discretionary
  bonus of 25% of your base salary based on both Company and individual
  performance.  This amount will apply
  for the entire year in 2003, and you will not be eligible for a prorated
  amount of any prior bonus offered to you previously.  
   Stock Options:
  Your previously granted stock options will continue
  vesting during your employment under the schedule and terms identified in the
  individual grants.Medical/Dental/Vision
  Plans:
  You and your dependents will continue to be eligible for
  Company-sponsored medical, dental and vision plans during your employment.Section 125 Plan:
  The Company provides a Section 125 Plan, which
  includes pre-tax flexible spending accounts for medical and/or dependent care
  reimbursements.Vacation:
  You will be entitled to accrue vacation at the rate
  of six (6) weeks per year. This may be carried over from year to year.401(k):
  You will continue to be eligible for the Company
  401(k).  The Company makes a matching
  contribution of 50% of the first 6% of your pay contributed to the Plan,
  within IRS limits.Life Insurance:
  The Company provides life insurance equal to one
  times your annual base salary to a maximum of $300,000.Long-Term
  Disability:
  You will continue to be covered under the Companys
  Long Term Disability Plan.  While it is contemplated that your role in the position of Director,
Research & Development and General Manager, Clinical Trials will continue
for a 20-month period, there can be no guarantee that your services will be
needed for that full period.  Your
employment at Specialty,
including in your role as Vice-President, Laboratory Operations prior to
any position transition, as well as Director, Research & Development and
General Manager, Clinical Trials, is specifically recognized as an at will
relationship and may be terminated by either party at any time for any
reason.  In addition, employment is
contingent upon providing evidence as necessary of your legal right to work in
the United States.  In the event that you are involuntarily terminated without cause at any
time after execution of this agreement, or if you voluntarily resign at any
time after January 31, 2005 (i.e., following the 20-month period described
above), you will be eligible for severance pay in an amount equal to six (6)
months of your base salary (paid bi-weekly), contingent on your signing a
Separation Agreement and Release of All Claims (the general form of which is
attached hereto as Exhibit A).  Also attached at Exhibit B hereto is a Mutual Agreement to Arbitrate
Claims.  Please review, sign one copy,
and return to the Human Resources department along with your acceptance of this
agreement.  
   The business needs ofSpecialty require all of its employees to
be highly flexible in their ability to perform multiple tasks, and to accept
changes in scheduling and duties to reflect the needs of the Company.  The Company also retains the right to modify
or terminate any of its benefit programs at any time.  Your employment with Specialty is a full-time job, requiring your
full loyalty to the Company.  Employment
or other professional relationship with any competing entity, for yourself in
competition with Specialty is not permitted, and you should request
permission of the Chief Executive Officer before accepting any outside
employment or board membership of any kind.  I am very pleased to extend this offer to you, and I am confident that
your changing roles with Specialty to be rewarding.  As a valued member of our team, I am sure
that you will continue to find our scientific environment challenging, as well
as an opportunity for intellectual growth.  This agreement constitutes the entire understanding between you and Specialtywith respect to your
employment.  With the exception of the
Agreement with Respect to Confidential Information, Inventions and Works of
Authorship (entered into between you and Specialtyon March 31, 1997) and the Mutual Agreement to Arbitrate Claims
(attached hereto as Exhibit B), this agreement hereby supercedes all prior
agreements between you and Specialtyrelated
to your employment.  Please indicate your acceptance of this offer by signing below and
returning this letter to me.  Sincerely,  /S/ DOUGLAS S. HARRINGTON  Douglas S. Harrington, M.D. CEO   I accept your offer of employment in accordance with the terms and
conditions above:   /S/ THOMAS E. ENGLAND
  
  2-20-03Thomas E. England, Ph.D.
  
  Date   
   EXHIBIT A  SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS  This Separation Agreement and Release of All Claims
(Agreement) is voluntarily entered into by «NAME» (Employee) and Specialty
Laboratories, Inc. (Specialty
or Company) to settle fully and finally all obligations and/or differences
between them, disputed and/or undisputed, arising out of, relating to or
resulting from Employees employment with Specialty
and separation from employment. 
Employee and Specialty
agree:  1.                Employees employment with Specialty will terminate effective «TERMDATE».  On that date Employees employment with Specialty will automatically and
immediately cease for all purposes except as provided below.  Also on that date, the Company will provide
the Employee with a final paycheck which will include payment for hours worked
up through and including «TERMDATE», plus all earned and untaken vacation. 2.                As full and final settlement of
all claims, demands, damages, liabilities and/or causes of action of any kind
whatsoever, known or unknown (Claims) that employee has or may have against Specialty, its officers, directors,
shareholders, owners, parent companies, subsidiaries, affiliates, predecessors,
successors, assigns, agents, employees and representatives (Specialty, et al), and in reliance upon
Employees termination of employment, release, covenants and promises contained
herein, Specialty agrees to
provide Employee with the following upon cessation of Employees employment: Continuance of Employees
base salary at the time of termination, to be paid bi-weekly beginning the
first regular pay day following termination. 
Such payments shall be paid for 13 pay periods using the Companys
regular pay date schedule.  Such
payments will be subject to normal income tax and other withholding.  Such payments will not be made if this Agreement
is revoked by Employee in accordance with the terms hereof.  Such payments will also not be made, and
Employee will forfeit any entitlement to such Payments, if Employee breaches
this Agreement in any respect or if Employee is found to have engaged in any
act of financial dishonesty, or misconduct which has a materially adverse effect
upon the Companys business or reputation. 
In the event of such a breach, dishonesty or misconduct, Employee shall
retain the sum of $500, which the parties agree shall constitute adequate
consideration for the remainder of this Agreement.  No bonuses or other payments will be paid to Employee.  Employees participation
in any medical, dental and/or vision plans will terminate on __________.  Following ____________, Employee may elect
to continue coverage under COBRA.  Any
continuation of coverage under COBRA beyond _________will be at Employees
expense.  Employee must comply with the
terms and conditions of COBRA to maintain eligibility.  Employees coverage in
the Companys Life Insurance and Long Term Disability plans will end on
______________.  Employee acknowledges
that the amounts to be paid to him/her pursuant to this Agreement are more than
Specialty
is required to pay under its normal policies and procedures.   
   3.                In consideration of the above,
Employee and Specialty waive,
release and forever discharge each other, et al, from all Claims that Employee
or Specialty has or may have
against each other, et al, arising out of, relating to, or resulting from any
events occurring before the execution of this Agreement, including but not
limited to any Claims arising out of, relating to or resulting from Employees
employment with Specialty, the
cessation of that employment, any Claims for violation of Specialtys policies or procedures,
wrongful termination, breach of contract, breach of the covenant of good faith
and fair dealing, violation of public policy, negligent and/or intentional
infliction of emotional distress and/or stress, negligence, injury to the
psyche and/or internal organs, negligent and/or intentional misrepresentation,
fraud and/or deceit, defamation and/or invasion of privacy, any claims for
physical, mental and/or psychological injuries, attorneys fees, costs, any
Claims under the California Labor Code, the California Workers Compensation
Act, the California Fair Employment and Housing Act, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1866, the Civil Rights Act of 1991,
the Equal Pay Act, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the California Family
Rights Act, the Consolidated Omnibus Budget Reconciliation Act of 1985 and/or
the Employee Retirement Income Security Act of 1974 and/or any Claims under any
other federal, state of local law, constitution, regulation or ordinance.  Employee and Specialty further agree not to bring, continue or maintain
any legal proceedings of any nature whatsoever against each other, et al,
before any court, administrative agency, arbitrator or any other tribunal or
forum by reason of any such Claims. Specifically included in this
release are all Claims of age discrimination, whether under the Federal Age
Discrimination in Employment Act of 1967, 29 U.S.C. Section 621 et seq., the
California Fair Employment and Housing Act, California Government Code Section
12941 et seq. or any other law.  4.                This Agreement is intended to be
effective as a bar to all Claims as stated in paragraph 3.  Accordingly, Employee and Specialty hereby expressly waive all
rights and benefits conferred by Section 1542 of the California Civil Code,
which states: A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.  Employee and Specialty acknowledge that they may
hereafter discover Claims or facts in addition to or different from those which
they now know or believe to exist with respect to the subject matter of this
Agreement and which, if known or suspected this Agreement, may have materially
affected this settlement.  Nevertheless,
Employee and Specialtyhereby
waive any right, claim or cause of action that might arise as a result of such
different or additional claims or facts. 
Employee and Specialty acknowledge
that they understand the significance and consequence of such release and such
specific waiver of Section 1542.  5.                Employee acknowledges and agrees
he has signed, or concurrent with this Agreement is signing, the Agreement
with Respect to Confidential Information, Inventions and Works of Authorship
(Confidentiality Agreement), which is fully incorporated herein by this
reference.  Employee warrants and
represents he has not 
   breached any of his obligations under the Confidentiality Agreement and
agrees to abide by all promises, terms, obligations and covenants agreed to,
made and/or assumed by employee under the Confidentiality Agreement. 6.                Employee acknowledges and agrees
he will make only truthful remarks and statements about and will not disparage Specialty and/or Specialtys business operations, products,
services, practices, procedures, policies, officers, directors, shareholders,
agents, employee and representatives. 
The Company acknowledges and agrees that no member of Company senior
management will make disparaging or untrue remarks about Employee. 7.                Employee agrees that upon
termination of employment with the Company, Employee will promptly transfer to
the Company, all drawings, manuals, guides, records, notebooks, papers, writings,
computer software or programs in any form and other documents and materials,
including all copies thereof, which are in Employees possession or under
Employees control, whether or not such items were prepared by Employee, which
would not be in the possession of the Employee except for the employment of the
Employee by the Company. 8.                Employee agrees not to disclose
this Agreement or any of its terms to anyone except his attorney, or tax
advisor, if any. 9.                Specialty
expressly denies any violation of any of its policies, procedures, state or
federal laws or regulations. 
Accordingly, while this Agreement resolves all issues between Employee
and Specialty relating to any
alleged violation of Specialtys
policies or procedures or any state or federal law or regulation, this
Agreement does not constitute an adjudication or finding on the merits and it
is not, and shall not be construed as, an admission by Specialty of any violation of its
policies, procedures, state or federal laws or regulations. 10.                The consideration described in
paragraph 2 above constitutes the sole and exclusive consideration provided
Employee under this Agreement.  Employee
acknowledges and agrees he has received all wages, bonuses, commissions,
compensation remuneration, and all other moneys due him arising out of,
relating to or resulting from his employment with Specialty, including but not limited to all moneys due him
under any and all benefit plans established and/or maintained by Specialty. 11.                Employee and Specialty each represent and warrant they
have not transferred or assigned to any person or entity any rights or Claims
released herein. 12.                This Agreement is binding upon
and inures to the benefits of Employees spouse, family, heirs, successors,
assigns, executors, administrators and personal representatives and is binding
upon the inures to the benefit of the successors and assigns of Specialty. 13.                Except as explicitly provided
herein, neither party will be liable to the other party for any costs or
attorneys fees, including any provided by statutes. 14.                Employee fully understands,
acknowledges and agrees among the various rights and Claims he is waiving,
releasing and forever discharging by the execution of this Agreement are all
rights and Claims arising under the Federal Age Discrimination in 
   Employment Act of 1967, 29 U.S.C. Section 621, et. seq.  Employee further understands, acknowledges
and agrees that: a)In
return for this Agreement, Employee will receive compensation beyond that which
Employee was already entitled to receive before entering into this Agreement. b)Employee
was given a copy of this Agreement on ,
2003 and informed that Employee has been given twenty-one (21) days within
which to consider this Agreement; c)Employee
has carefully read and fully understands all of the provisions of this
Agreement; d)Employee
is, by the execution of this Agreement, waiving, releasing and forever
discharging Specialty, et al,
from all Claims that he has or may have against Specialty, et al, individually and/or collectively,
including but not limited to all Claims of age discrimination; e)Employee
was previously advised, and is hereby further advised, in writing to consult
with an attorney before executing this Agreement; and f)Employee
was informed that Employee has a period of seven (7) days following the
execution of this Agreement by both parties to revoke this Agreement by
providing written notice of such revocation to Specialtys
Human Resources Department and was previously advised, and is hereby further
advised, in writing that this Agreement shall not become effective or
enforceable until this seven (7) day revocation period has expired without him
having exercised his right of revocation. 15.                This is the entire agreement
between the parties and supersedes all previous negotiations, agreements and
understandings, with the exception of the Confidentiality Agreement referenced
in Section 5 herein.  Any oral
representations regarding this Agreement shall have no force or effect.  No modifications of this Agreement can be
made except in writing signed by Employee and an authorized representative of Specialty.  If any action or other legal proceeding is brought by either
party for damages, specific performance or other injunctive relief by reason of
any asserted violation of this Agreement, the prevailing party shall be
entitled to recover its reasonable costs and attorney fees. 16.                Employee acknowledges and agrees
that he has been advised this Agreement is a final and binding legal document,
that he has had reasonable and sufficient time and opportunity to consult with
an attorney of his own choosing before signing this Agreement and that in
signing this Agreement, he has acted voluntarily of his own free will and has
not relied upon any representation made by Specialty
or any of its agents, employees or representatives regarding this Agreements
subject matter or its effect. 17.                Employee agrees to return all
Company property, including but not limited to all computer equipment, credit
cards, telephone equipment, and dictation equipment. 
   Employee also agrees to provide a final reconciliation of all cash
advances, travel advances, along with incurred authorized expenses as
substantiated by appropriate receipts. 
Employee agrees that failure to return all Company property and/or
provide proper documentation to account for any outstanding travel or cash
advances within seven (7) days of Employees execution of this Agreement shall
make this Agreement null and void. 18.                For a period of one (1) year
after the execution of this Agreement by both parties, Employee shall not:  (a) directly or indirectly, on his own
behalf or on behalf of any other person or business, solicit for employment any
person employed by Specialty or
its affiliates; or (b) will not use any confidential information obtained
from or while at or Specialtyto
directly or indirectly, on his own behalf or on behalf of any other person or
business, induce, attempt to induce or knowingly encourage any Customer (as
defined below) not to do business with Specialty
or to divert any business or income from Specialtyor any of its affiliates or to stop or alter the manner in which the
Customer is then doing business with Specialty
or any of its affiliates.  Customer
shall mean any individual or business that was or is a customer or client of,
or whose business was actively solicited by, Specialty
or any of its affiliates at any time, regardless of whether such customer was
generated, in whole or in part, by Employees efforts. 19.                Employee agrees that he will
make himself available at mutually agreeable times as requested by Specialty to use his best efforts to
cooperate with Specialtyin any
litigation or government investigations or proceedings now pending or which may
later arise in which Specialty
requires or desires his cooperation as a witness or otherwise.  Specialty
will reimburse Employee for reasonable travel and other out-of-pocket expenses
incurred as a result of providing such cooperation.  It is understood that Employees availability will be for
reasonable periods of time during normal business and employment activities
elsewhere and that his availability for assistance in such litigation
activities on behalf of Specialtywill
not unreasonably interfere with his efforts to pursue such other business and
employment activities. 20.                Any dispute or controversy
between Employee, on the one hand, and Specialty,on the other hand, in any way arising out of, related to, or
connected with this Agreement or the subject matter thereof, or otherwise in
any way arising out of related to, or connected with Employees employment with
Specialty or the termination of
Employees employment with Specialty,shall
be resolved through final and binding arbitration in Los Angeles, California,
pursuant to California Civil Procedure Code §§ 1282  1284.2.  In the event of such arbitration, unless
otherwise required by law, each party shall pay its own attorneys fees and
costs and Specialty shall pay the
arbitrators fees, and any and all other administrative costs of the
arbitration.  Notwithstanding any
provision in this Section 20, neither party shall be prohibited from seeking
injunctive relief as necessary to maintain the status quo pending an
arbitration proceeding regarding the breach or threatened breach of the
Confidentiality Agreement or any other confidentiality obligations owed to the
other party.  The provisions of this
Section 20 supercede and replace in their entirety any prior arbitration
agreement(s) that may exist between Employee and Specialty. 21.If
any provision of this Agreement or the application thereof is held invalid the
invalidity shall not affect other provisions or applications of this Agreement
which can be given effect without the invalid provisions or applications and to
this end the provisions of this Agreement are declared to be severable. 
   I HAVE COMPLETELY AND CAREFULLY READ THE FOREGOING, INCLUDING THE
WAIVER AND RELEASE OF CLAIMS SET FORTH IN PARAGRAPHS 2, 3, 4, 10, 13, AND 14
ABOVE AND FULLY UNDERSTAND AND VOLUNTARILY AGREE TO ITS TERMS.   THIS AGREEMENT CONTAINS A WAIVER OF
CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT.  YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY
PRIOR TO SIGNING THIS AGREEMENT.     Dated:«NAME»SPECIALTY LABORATORIES, INC.Dated:
  
  
  By:  
   EXHIBIT B  MUTUAL AGREEMENT TO
ARBITRATE CLAIMS    Recitals  Specialty Laboratories, Inc. (the Company), and the
undersigned, Thomas
England (Employee), are entering into an
employment relationship with the expectation that it will be mutually
beneficial and satisfying to all concerned.  However, the parties recognize that differences and
disagreements from time to time do arise, either during or following
employment, and that those differences may or may not be related to the
employment.  The parties are committed
to alternative dispute resolution as a method to achieve expeditious,
economical, and impartial, just resolution of disputes, and to avoid costly
litigation.  Accordingly, the parties enter into this mutual
agreement to arbitrate claims as part of the employment relationship.  Covenants  Claims Covered by the Agreement  The Company and Employee mutually consent to the
resolution by arbitration of all claims or controversies (claims), whether or
not arising out of the employment relationship (or its termination), that the
Company may have against Employee or that Employee may have against the Company
or against its owners, employees, or agents in their capacity as such or
otherwise.  The claims covered by this
Agreement include, but are not limited to, claims for wages or other
compensation due; claims for breach of any contract or covenant (express or
implied); tort claims; claims for discrimination (including, but not limited,
to race, sex, sexual orientation, religion, national origin, ancestry, age,
marital status, or medical condition, handicap or disability); claims for
benefits (except where an employee benefit or retirement plan specifies that
its claims procedure shall culminate in an arbitration procedure different from
this one), and claims for violation of any federal, state, local, or other
governmental law, statute, regulation, or ordinance, except claims excluded
below.  Except as otherwise provided in this Agreement, both
the Company and Employee agree that neither of them shall initiate or prosecute
any lawsuit or administrative action (other than an administrative charge of
discrimination) in any way related to any claim covered by this Agreement.  
   Any reference in
this Agreement to the Company will be a reference also to all benefit plans,
the benefit plans sponsors, fiduciaries, administrators, affiliates, and all
successors and assigns of any of them.  Waiver of Rights  Employee acknowledges that by signing this Agreement,
s/he is waiving his/her right (1) to file a lawsuit in state or federal court
to adjudicate claims covered by this Agreement, (2) to have any claims covered
by this Agreement tried by a judge or jury, (3) to conduct full discovery
otherwise allowable in a civil action, and (4) to appellate review of any
decision rendered by the Arbitrator.  Employee understands that any claims covered by this
Agreement will be heard and resolved by the Arbitrator selected in accordance
with this Agreement.  Claims Not Covered by the Agreement  Claims Employee may have for workers compensation or
unemployment compensation benefits are not covered by this Agreement.  Claims by the Company for injunctive and/or other
equitable relief, including but not limited to claims for unfair competition
and/or the use and/or unauthorized disclosure of trade secrets or confidential
information, are also not covered by this Agreement.  Employee acknowledges and agrees that, as to such claims, the
Company may seek and obtain relief from a court of competent jurisdiction.  Required Notice of All Claims and Statute of
Limitations  The Company and Employee agree that the aggrieved
party must give written notice of any claim to the other party within one (1)
year of the date the aggrieved party first has knowledge, or in the exercise of
reasonable diligence, should have had knowledge, of the event giving rise to
the claim; otherwise the claim shall be void and deemed waived even if there is
a federal or state statute of limitations which would have given more time to
pursue the claim.  Written notice to the Company, or its owners,
employees, or agents, shall be sent to the Office of the Chairman at Specialty
Laboratories, Inc. at 2211 Michigan Avenue, Santa Monica, California 90404-3900
or at such other address as then shall be the principal office of the
Company.  Employee will be given written
notice at the last address recorded in the Employees personnel file maintained
by the Company.  The written notice shall identify and describe the
nature of all claims asserted and the facts upon which such claims are
based.  The notice shall be sent to the
other party by certified or registered mail, return receipt requested.  
   Representation  Any party may be represented by an attorney or other
representative selected by the party.  Discovery  Each party shall have the right to take the deposition
of one individual and any expert witness designated by another party.  Each party also shall have the right to make
requests for production of documents to any party.  The subpoena right specified below shall be applicable to
discovery pursuant to this paragraph. 
Additional discovery may be had only where the Arbitrator selected
pursuant to this Agreement so orders, upon a showing of substantial need.  Designation of Witnesses and Documents  At least thirty (30) days before the arbitration, the
parties must exchange lists of witnesses, including any expert, and copies of
all exhibits intended to be used at the arbitration.  Subpoenas  Each party shall have the right to subpoena witnesses
and documents for the arbitration.  Arbitration Procedures  The Company and Employee agree that, except as
provided in this Agreement, any arbitration shall be in accordance with the
then-current Employment Arbitration Rules of the Judicial Arbitration and
Mediation Services, Inc. (J.A.M.S.) before an arbitrator who is licensed to
practice law in the State of California or is a retired judge (the
Arbitrator).  The arbitration shall
take place in or near the city in which the Employee is or was last employed by
the Company.  The Arbitrator shall be selected as follows:  J.A.M.S. shall give the parties a list of
eleven (11) Arbitrators.  Each party may
strike all names on the list it deems unacceptable.  If only one common name
remains on the lists of all parties, that individual shall be designated as the
Arbitrator.  If more than one common
name remains on the lists of all parties, the parties shall strike names
alternately until only one remains.  The
party who did not initiate the claim shall strike first.  If no common name remains on the lists of
all parties, J.A.M.S. shall furnish an additional list or lists until an
Arbitrator is selected.  
   The Arbitrator shall
apply the substantive law (and the law of remedies, if applicable) of the State
of California, or federal law, or both, as applicable to the claim(s)
asserted.  The California Rules of
Evidence shall apply.  The Arbitrator,
and not any federal, state, or local court or agency, shall have exclusive
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to any
claim that all or any part of this Agreement is void or voidable.  The arbitration shall be final and binding
upon the parties.  The Arbitrator shall have jurisdiction to hear and
rule on pre-hearing disputes and is authorized to hold pre-hearing conferences
by telephone or in person as the Arbitrator deems necessary.  The Arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party
and shall apply the standards governing such motions under the Federal Rules of
Civil Procedure.  Either party, at its expense, may arrange for and pay
the cost of a court reporter to provide a stenographic record of proceedings.  Either party, upon request at the close of hearing,
shall be given leave to file a post-hearing brief.  The time for filing such a brief shall be set by the Arbitrator.  The Arbitrator shall render an award and opinion in
the form typically rendered in labor arbitrations.  Arbitration Fees and Costs  The Company and Employee shall equally share the fees
and costs of the Arbitrator.  Each party
will deposit funds or post other appropriate security for its share of the Arbitrators
fee, in an amount and manner determined by the Arbitrator, ten (10) days before
the first day of hearing.  Each party
shall pay for its own costs and attorneys fees, if any.  However, if any party prevails on a
statutory claim which affords the prevailing party costs and/or attorneys
fees, or if there is a written agreement providing for an award of costs and/or
attorneys fees other than this Agreement, the Arbitrator may award costs and
reasonable attorneys fees to the prevailing party.  Enforcement and Judicial Review  Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this Agreement and to
enforce an arbitration award.  A party
opposing enforcement of an award may not do so in an enforcement proceeding,
but must bring a separate action in any court of competent jurisdiction to set
aside the award, where the standard of review will be the same  
   as that applied by an appellate court reviewing a decision of a trial
court sitting without a jury.  Interstate Commerce  Employee acknowledges and agrees that the Company is
engaged in transactions involving interstate commerce and that the employment
relationship involves such commerce.  Affiliates  This Agreement shall also apply to any employment of
Employee by any parent, subsidiary, or affiliate of Specialty Laboratories,
Inc.  Requirements for Modification or Revocation  This Agreement to arbitrate shall survive the
termination of Employees employment. 
It can only be revoked or modified by a writing signed by the parties,
which specifically states an intent to revoke or modify this Agreement.  Sole and Entire Agreement  This is the complete agreement of the parties on the
subject of arbitration of disputes, except for any arbitration agreement in
connection with any retirement or benefit plan.  This Agreement supersedes any prior or contemporaneous oral or
written understanding on the subject. 
All understandings and agreements between the Company and Employee that
relate to the subjects covered in this Agreement are contained in it.  No party is relying on any representations,
oral or written, on the subject of the effect, enforceability or meaning of
this Agreement, except as specifically set forth in this Agreement.  Construction  This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of California.  If any provision of this Agreement is
adjudged to be void or otherwise unenforceable, in whole or in part. Such adjudication
shall not affect the validity of the remainder of the Agreement.  Consideration  The promises by the Company and Employee to arbitrate
differences, rather than litigate them before courts or other bodies, provide
consideration for each other.  In
addition, the Companys hiring of Employee provides further consideration for
this Agreement.  
   Not an Employment Agreement  This Agreement is not, and shall not be construed to
create, any contract of employment, express or implied, nor does this Agreement
in any way alter the at-will status of Employees employment.  Voluntary Agreement  Employee acknowledges that s/he has had adequate time
to review and understand this Agreement, that s/he has carefully read this
Agreement, that s/he understands its terms, and that s/he is entering into this
Agreement voluntarily and not in reliance on any promises or representations by
the Company other that those contained in this Agreement itself.  Employee further acknowledges that s/he has been given
the opportunity to discuss this Agreement with legal counsel of Employees
choice.   /S/ THOMAS E. ENGLANDSignature of EmployeeThomas EnglandPrint Name of EmployeeFebruary 20, 2003DateSPECIALTY LABORATORIES, INC./S/ NICHOLAS R. SIMMONSSignature of Authorized Company RepresentativeGeneral CounselTitle of Representative2/20/03Date