Document:

Exhibit
10.43

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into as of April 12, 2004 by and between Specialty
Laboratories, Inc., a California corporation (the “Company”), and Kevin R.
Sayer (“Executive”), and is effective upon execution by the Executive and
approval by the Compensation Committee of the Company’s Board of Directors (the
“Compensation Committee”).

 

1.                                       Duties
and Responsibilities.

 

A.                                   Executive
shall serve as the Company’s Executive Vice-President & Chief Financial
Officer or such other title or position as may be designated from time to time
by the Board of Directors.

 

B.                                     Executive
agrees to devote his/her full time and attention to the Company, to use his/her
best efforts to advance the business and welfare of the Company, to render
his/her services under this Agreement fully, faithfully, diligently,
competently and to the best of his/her ability, and not to engage in any other
employment activities to the extent such other employment interferes with the
Company’s business or the performance of the Executive’s duties hereunder.

 

C.                                     Executive
shall be based at the Company’s office located in Santa Monica, California
(which the Company may move to Valencia, California), but Executive may be
required to travel to other geographic locations in connection with the
performance of his/her Executive duties.

 

2.                                       Period
of Employment.

 

Executive’s employment
with the Company shall be governed by the provisions of this Agreement for the
period commencing April 12, 2004 and continuing until this Agreement
terminates pursuant to written notification by either the Company or Executive,
which notification may occur at any time for any reason or no reason.  The period during which the Executive
provides services to the Company pursuant to this Agreement shall be referenced
in this Agreement as the “Employment Period.”

 

3.                                       Cash
Compensation.

 

A.                                   Executive’s
base salary shall be payable in accordance with the Company’s standard payroll
schedule (“Base Salary”). 
Executive’s compensation shall be subject to periodic review by the
Company, and may be increased or decreased in the Company’s discretion with
approval of the Compensation Committee.

 

B.                                     For
each fiscal year during the Employment Period, Executive shall be eligible for
an incentive bonus in the Company’s sole discretion (“Incentive Bonus”).  For each full fiscal year of employment
during the Employment Period, Executive shall be eligible for an Incentive
Bonus, targeted at forty-five percent (45%) of his/her annual base salary.  The Incentive Bonus amount will be based on
a number of factors, including but not limited to:  (1)

 

 

the financial performance
of the Company as determined and measured by the Company’s Board of Directors,
and (2) Executive’s achievement of management targets and goals as set by the
Company.  The Incentive Bonus amount is
intended to reward contribution to the Company’s performance over an entire
fiscal year, and to encourage continuing contribution, and consequently will be
paid only if Executive is employed and in good standing at the time of bonus
payments, which generally occurs within ninety (90) days after the close of the
Company’s fiscal year.  Determination of
the amount of Incentive Bonus, or whether any Incentive Bonus shall be paid,
will be made in the Company’s sole discretion.

 

C.                                     The
Company shall deduct and withhold from the compensation payable to Executive
hereunder, including the Incentive Bonus (if any), any and all applicable
Federal, state and local income and employment withholding taxes and any other
amounts required or authorized by Executive to be deducted or withheld by the
Company under applicable statutes, regulations, ordinances or orders governing
or requiring the withholding or deduction of amounts otherwise payable as compensation
or wages to employees.

 

4.                                       Equity
Participation. 

 

Pursuant to the Company’s
2000 Stock Incentive Plan, Executive may have previously been granted a
specific number of options to purchase shares of the Company’s common stock
(the “Options”), with certain vesting schedules and exercise prices, and except
as specifically detailed herein, such grants remain in effect and are not
affected by this Agreement.

 

5.                                       Expense
Reimbursement.

 

In addition to the
compensation specified in Section 3, Executive shall be entitled, in
accordance with the Company’s reimbursement policies in effect from time to
time, to receive reimbursement from the Company for reasonable business
expenses incurred by Executive in the performance of his/her duties hereunder,
provided Executive furnishes the Company with vouchers, receipts and other
details of such expenses in the form required by the Company sufficient to
substantiate a deduction for such business expenses under all applicable rules
and regulations of Federal and state taxing authorities.

 

6.                                       Fringe
Benefits.

 

A.                                   Executive
shall, throughout the Employment Period (after any applicable waiting period
for new employees as specified in Company policies), be eligible to participate
in all group term life insurance plans, group health plans, accidental death
and dismemberment plans and short-term disability programs and other Executive
perquisites which are made available to the Company’s Executives and for which
Executive qualifies.  The Company’s
Employee Handbook, copies of which Executive acknowledges were provided to
Executive by Company, set forth further information concerning these benefits.

 

B.                                     Executive
shall earn vacation time during the Employment Period at the rate of three (3)
weeks per year. Vacation shall accrue and be taken pursuant to the Company’s
vacation benefit policy set forth in the Company’s Employee/Team Member
Handbook, up to a maximum accrual of 160 hours, or four (4) weeks, of unused
vacation time.  Once this maximum

 

 

accrual is reached, the accrual
will stop until Executive reduces the vacation balance by taking vacation time.

 

7.                                       Severance
Pay for Exercise of the At-Will Clause.

 

A.                                   Notwithstanding
any of the provisions of this Agreement, Executive’s employment with the
Company is “at will”, which means that it is not for a specific term and may be
terminated by either the Company or Executive at any time, for any reason or no
reason, without advance notice. 
Similarly the Company may change the terms and conditions of Executive’s
employment at any time, for any reason, without advance notice.

 

B.                                     Should
the Company terminate Executive’s employment for Cause (as defined in
Section 9 below), or should Executive voluntarily resign (other than a
resignation for Good Reason (as defined in Section 8 below)), the Company
shall have no obligation to Executive under this Agreement other than for
accrued but unpaid salary and vacation time as of the date of termination.

 

C.                                     If
the Company terminates Executive’s employment other than for Cause, or if Executive
resigns for Good Reason, the Company shall pay to Executive (in either a lump
sum or on a bi-weekly basis, at the sole discretion of the Company) severance
pay in the amount equivalent to twelve (12) months of Executive’s Base Salary
immediately preceding such termination of Executive’s employment, and
Company shall also make a lump sum payment to Executive of an amount equivalent
to the payments necessary for continuation of Executive’s health benefits for twelve (12) months under COBRA (such payments
collectively “Severance Compensation”). 
Any election of coverage under COBRA will be at Executive’s sole
discretion and expense.  Executive must
comply with the terms and conditions of COBRA to establish and maintain
eligibility.  In the event the provisions
of this Section 7(C) are implemented, upon the payment of the Severance
Compensation and any accrued but unpaid salary and vacation time as of
the date of termination have been paid to Executive, the Company shall have no
further obligation to Executive under this Agreement.  The Company shall not
provide nor reimburse Executive for any supplemental insurance products,
including life insurance.

 

D.                                    The
Company shall deduct and withhold from the Severance Compensation any and all
applicable Federal, state and local income and employment withholding taxes and
any other amounts required or authorized by Executive to be deducted or
withheld by the Company under applicable statutes, regulations, ordinances or
orders governing or requiring the withholding or deduction of amounts otherwise
payable as compensation or wages to employees.

 

8.                                       Good
Reason.

 

For Purposes of this
Agreement, “Good Reason” shall mean any of the following events or occurrences,
provided that Executive first provides prompt written notice to Company of the
event or occurrence, and Company has not cured such event or occurrence within
fourteen (14) days of receipt of such notice:

 

 

A.                                   A
material reduction or alteration in the duties, responsibilities, status,
reporting responsibilities, title, or offices that Executive had with the
Company immediately before the reduction;

 

B.                                     A
reduction by more than 10% of the annual Base Salary that Executive was
eligible to receive from the Company and its affiliates immediately before the
reduction, or any cumulative reductions totaling more than 10% of the annual
Base Salary of Executive as the effective date of this Agreement;

 

C.                                     A
Change in Control after which the Executive is not offered the same or
equivalent position at no less than ninety percent (90%) of Executive’s Base
Salary immediately preceding such Change of Control;

 

D.                                    The
failure of any successor to the Company by merger, consolidation or acquisition
of all or substantially all of the business or assets of the Company to assume
the Company’s obligations under this Agreement; or

 

E.                                      A
material breach by the Company of its obligations under this Agreement.

 

9.                                       Cause. 

 

For purposes of this
Agreement, “Cause” shall mean a reasonable belief by the Board of Directors (or
any of the Executive’s supervisors) that Executive has engaged in any one or
more of the following:  (i) financial
dishonesty, including, without limitation, misappropriation of a material or
substantial quantity of Company funds or property, or any attempt by Executive
to secure any personal profit related to the business or business opportunities
of the Company without the informed, written approval of the Company’s Board of
Directors; (ii) gross insubordination; (iii) gross negligence or reckless or
willful misconduct in the performance of Executive’s duties; (iv) misconduct
which has a materially adverse effect upon the Company’s business or
reputation; (v) the conviction of, or plea of nolo contendre to, any felony
involving moral turpitude or fraud; (vi) the material breach of any provision
of this Agreement; (vii) a material violation of Company policies including,
without limitation, the Company’s policies on equal employment opportunity and
prohibition of unlawful harassment; or (viii) the death or Disability of the
Executive (as defined below).

 

10.                                 Failure
to Render Service.

 

In the event Executive
fails for a period of 365 calendar days during any twelve-month period, as a
result of illness, incapacity, Disability (as defined below), injury, or by
reason of any statute law, ordinance, regulation, order, judgment or decree, to
render the services contemplated by this Agreement, Company, by written notice
to Executive, may, to the extent consistent with applicable law, suspend
payment of any salary or other benefits and/or terminate Executive’s employment
without those benefits provided herein. 
For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from this duties with the Company on a full-time basis for 365
consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the

 

 

Company or its insurers
and acceptable to the Executive or his/her legal representative (such agreement
as to acceptability not to be unreasonably withheld).

 

11.                                 Special
Change In Control Provisions.

 

A.                                   For
purposes of this Agreement, “Change In Control” shall mean any of the following
transactions or events effecting a change in ownership or control of the
Company:

 

(i)                                     a merger,
consolidation or reorganization approved by the Company’s stockholders, unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor company are immediately
thereafter beneficially owned, directly or indirectly and in substantially the
same proportion, by the persons who beneficially owned the Company’s
outstanding voting securities immediately prior to such transaction, or

 

(ii)                                  any
stockholder-approved transfer or any other disposition of all or substantially
all of the Company’s assets, or

 

(iii)                               the acquisition,
directly or indirectly, by any person or related group of persons (other than
the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company), of beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities pursuant to a tender or exchange offer made directly to
the Company’s stockholders, or

 

(iv)                              a
change in the composition of the Board such that: (a) five (5) or more Board
members resign or are otherwise removed as Board members within any period of
six (6) consecutive months or less; or (b) five (5) or more Board members opt
not to stand for re-election to the Board within any period of six (6)
consecutive months or less; or (c) the authorized number of Board members is
increased or decreased by five (5) or more members within any period of six (6)
consecutive months or less; or (d) any combination of the foregoing Sections
11(A)(iv)(a-c) occurs, such that five (5) or more Board member positions are
affected by a combination of resignations/removals, the option not to stand for
re-election, or the increase/decrease of the authorized number of Board members
within any period of six (6) consecutive months or less.  As an example of the foregoing, and for
illustrative purposes only, in the event that two (2) Board members resign, one
(1) Board member opts not to stand for re-election, and the authorized number
of Board members is increased by two (2) positions, all of which occur within
any period of six (6) consecutive months or less, a Change of Control will be
deemed to have occurred.

 

B.                                     Change in
Control Acceleration. In the event of a of a Change in Control as
described in Section 11(A)(iv) herein, the Options, to the extent
outstanding at the time of such Change in Control, but not otherwise vested and
exercisable for all the shares of Common Stock subject to those Options will,
immediately and automatically as of the effective date of such Change in
Control, vest and become exercisable for all of the shares of Common Stock at

 

 

the time subject to the
Options and may be exercised for any or all of those shares as fully-vested
shares of Common Stock.  In the event of
a Change of Control other than that described in Section 11(A)(iv) herein,
the Options shall be governed by the terms of the Company’s 2000 Stock Incentive
Plan.

 

D.                                    Termination
or Resignation Following Change in Control.  Following a Change in Control, should
Executive’s employment with the Company or successor company terminate by
reason of (i) a resignation for Good Reason within twelve (12) months after a
Change in Control, or (ii) an involuntary termination of Executive’s employment
(other than a termination for Cause) within twelve (12) months after a Change
in Control (“Involuntary Termination”), Executive will become entitled to
receive the severance benefits set forth herein, provided and only if Executive executes and
delivers to the Company or successor company a general release (in form and
substance substantially similar to that in Exhibit A hereto or such other form
as mutually agreed to by Executive and Company or successor company).

 

12.  Additional
Restrictive Covenants.

 

A.                                   Executive
acknowledges and agrees that given the extent and nature of the confidential
and proprietary information he/she will obtain during the course of his/her
employment with the Company, it would be inevitable that such confidential
information would be disclosed or utilized by the Executive should he/she
obtain employment from, or otherwise become associated with, an entity or
person that is engaged in a business or enterprise that directly competes with
the Company.  Consequently, if in any
period during which the Executive is receiving payments from the Company as a
severance benefit,  including but not limited to severance pay
pursuant to Section 7, Executive shall, without prior written consent of
the Company’s Board of Directors, directly or indirectly own, manage, operate,
join, control or participate in the ownership, management, operation or control
of, or be employed by, render service to or be connected in any manner with,
any enterprise which is engaged in any business directly competitive with that
of the Company, then Company may, in its sole discretion, permanently and/or
temporarily cancel and/or suspend any remaining severance payments to
Executive.  Cancellation or suspension
of payments to Executive under this Section 12(A) shall not be deemed a
breach of this Agreement by Company. 
The provisions of this Section 12(A) shall not apply to any passive
investment representing an interest of less than two percent (2%) of an
outstanding class of publicly-traded securities of any company or other
enterprise.

 

B.                                     During
the Employment Period, and for any additional period thereafter during
which the Executive is receiving payments from the Company as a severance
benefit, including
but not limited to severance pay pursuant to Section 7, Executive shall not encourage or solicit any of the
Company’s employees to leave the Company’s employ for any reason or interfere
in any other manner with employment relationships at the time existing between
the Company and its employees.  In
addition, Executive shall not solicit, directly or indirectly, business from
any client of the Company, induce any of the Company’s clients to terminate
their existing business relationship with the Company or interfere in any other
manner with any existing business relationship between the Company and any
client or other third party.

 

C.                                     Executive
acknowledges that monetary damages may not be sufficient to compensate the
Company for any economic loss which may be incurred by reason of his/her

 

 

breach of the foregoing
restrictive covenants.  Accordingly, in
the event of any such breach, the Company shall, in addition to the termination
of this Agreement and any remedies available to the Company at law, be entitled
to obtain equitable relief in the form of an injunction precluding Executive
from continuing such breach.

 

13.                                 Proprietary
Information.

 

As a condition of
Executive’s employment with the Company, Executive will execute (or has already
executed) the Company’s standard Confidential Information and Assignment of
Inventions Agreement.  Executive’s
obligations pursuant to the Confidential Information and Assignment of
Inventions Agreement will survive termination of Executive’s employment with
the Company.

 

14.                                 Successors
and Assigns.

 

This Agreement is
personal in its nature and the Executive shall not assign or transfer his/her
rights under this Agreement.  The
provisions of this Agreement shall inure to the benefit of, and be binding on
each successor of the Company whether by merger, consolidation, transfer of all
or substantially all assets (whether or not such transaction qualifies as a
Change in Control) or otherwise and the heirs and legal representatives of
Executive.

 

15.                                 Notices.

 

Any notices, demands or
other communications required or desired to be given by any party shall be in
writing and shall be validly given to another party if served either personally
or if deposited in the United States mail, certified or registered, postage
prepaid, return receipt requested.  If
such notice, demand or other communication shall be served personally, service
shall be conclusively deemed made at the time of such personal service.  If such notice, demand or other
communication is given by mail, such notice shall be conclusively deemed given
forty-eight (48) hours after the deposit thereof in the United States mail
addressed to the party to whom such notice, demand or other communication is to
be given as hereinafter set forth:

 

	
   

  	
  To the Company:

  
	
   

  
	
   

  	
  Human Resources
  Department

  
	
   

  	
  Specialty Laboratories,
  Inc.

  
	
   

  	
  2211 Michigan Avenue

  
	
   

  	
  Santa Monica,
  California 90404

  
			

 

To Executive at the
current address as noted in personnel file at Company.

 

Any party may change its
address for the purpose of receiving notices, demands and other communications
by providing written notice to the other party in the manner described in this
Section.

 

 

16.                                 Governing
Documents.

 

This Agreement along with
the documents expressly referenced in this Agreement constitute the entire
agreement and understanding of the Company and Executive with respect to the
terms and conditions of Executive’s employment with the Company and the payment
of severance benefits and supersedes all prior and contemporaneous written or
verbal agreements and understandings between Executive and the Company relating
to such subject matter.  This Agreement
may only be amended by written instrument signed by Executive and an authorized
officer of the Company.  Any and all
prior agreements, understandings or representations relating to the Executive’s
employment with the Company are terminated and cancelled in their entirety and
are of no further force or effect.

 

17.                                 Governing
Law.

 

The provisions of this
Agreement will be construed and interpreted under the laws of the State of
California. If any provision of this Agreement as applied to any party or to
any circumstance should be adjudged by a court of competent jurisdiction to be
void or unenforceable for any reason, the invalidity of that provision shall in
no way affect (to the maximum extent permissible by law) the application of
such provision under circumstances different from those adjudicated by the
court, the application of any other provision of this Agreement, or the
enforceability or invalidity of this Agreement as a whole.  Should any provision of this Agreement
become or be deemed invalid, illegal or unenforceable in any jurisdiction by
reason of the scope, extent or duration of its coverage, then such provision
shall be deemed amended to the extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended
without materially altering the intention of the parties, then such provision
will be stricken and the remainder of this Agreement shall continue in full
force and effect.

 

18.                                 Remedies.

 

All rights and remedies
provided pursuant to this Agreement or by law shall be cumulative, and no such
right or remedy shall be exclusive of any other.  A party may pursue any one or more rights or remedies hereunder
or may seek damages or specific performance in the event of another party’s
breach hereunder or may pursue any other remedy by law or equity, whether or
not stated in this Agreement.

 

19.                                 Arbitration.

 

A.                                   Except
as provided for in Section 12(C), and to the fullest extent allowed by
law, any controversy or claim arising out of or relating to Executive’s
employment with the Company or anything set forth herein, shall be settled by
final and binding arbitration, conducted in Los Angeles County, by an
arbitrator selected in accordance with the procedure set forth below.  Possible disputes covered by the foregoing,
include (without limitation) claims pursuant to Title VII of the Civil Rights
Act, the California Fair Employment and Housing Act and comparable statutes in
other states if applicable, the Americans with Disabilities Act,  the Age Discrimination in Employment Act,
and any other statutes relating to an employee’s relationship with his/her employer.
The Executive and the Company shall initially confer and attempt to reach
agreement on the individual to be appointed as the arbitrator.  If no agreement is reached, the Executive
and the Company shall request from the Judicial Arbitration and Mediation

 

 

Services (“JAMS”) a list
of five (5) retired judges affiliated with JAMS. The Executive and the Company
shall each alternately strike names from such list until only one (1) name
remains, and such person shall thereby be selected as the arbitrator.  Except as otherwise provided for herein,
such arbitration shall be conducted in conformity with the procedures specified
in the California Arbitration Act (Cal. C.C.P. §§ 1280 et  seq.).  The arbitrator shall allow the discovery
authorized by California Code of Civil Procedure section 1283.05 or any
other discovery required by law in arbitration proceedings.  To the extent that anything in this
Agreement conflicts with the arbitration procedures required by applicable law,
the arbitration procedures required by applicable law shall govern.  The arbitrator shall issue a written award
that sets forth the essential findings and conclusions on which the award is
based.  The arbitrator shall have the
authority to award any relief authorized by law in connection with the asserted
claims or disputes.  The arbitrator’s
award shall be subject to correction, confirmation or vacation, as provided by
any applicable law setting forth the standard of judicial review of arbitration
awards.

 

B.                                     The
Company shall bear the entire cost of (i) the arbitrator’s fee, (ii) any other
type of expense or cost that the Executive would not be required to bear if the
Executive were free to bring the dispute or claim in court and (iii) any other
expense or cost that is unique to arbitration. 
The parties intend that this section describing
arbitration shall be valid, binding, enforceable and irrevocable and shall
survive the termination of this Agreement. 
Any final decision of the arbitrator so chosen may be enforced by a
court of competent jurisdiction.  The
Executive acknowledges and agrees that he/she is waiving his/her right to a
jury trial and agrees that the decision of the arbitrator shall be final and
binding.  Each party shall pay its own
costs and attorneys’ fees, if any. 
However, if any party prevails on a statutory claim which affords the
prevailing party attorneys’ fees and costs, the Arbitrator may award reasonable
fees and costs to the prevailing party. 
Any dispute as to the reasonableness of any fee or cost shall be resolved
by the Arbitrator.

 

[THE REMINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK]

 

 

20.                                 No
Waiver.

 

The waiver by either
party of a breach of any provision of this Agreement shall not operate as or be
construed as a waiver of any later breach of that provision.

 

21.                                 Counterparts.

 

This Agreement may be
executed in more than one counterpart, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.

 

 

	
   

  	
  SPECIALTY LABORATORIES,
  INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Douglas S.
  Harrington

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Douglas S. Harrington,
  M.D.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  May 6, 2004

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kevin R. Sayer

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  May 6, 2004

  	
   

  
						

 

 

Exhibit A

Form of General Release

 

GENERAL RELEASE OF ALL CLAIMS

 

This
General Release of All Claims (“Agreement”) is voluntarily entered into by «NAME»
(“Executive”) 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 Executive’s employment with Specialty and separation from
employment.  Executive and Specialty agree:

 

1.                                                                                       Executive’s employment with Specialty will terminate/terminated
effective «TERMDATE».  On that date
Executive’s employment with Specialty
will/did automatically and immediately cease for all purposes except as
provided below.  Also on that date, the
Company will/did provide the Executive 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 Executive 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
Executive’s termination of employment, release, covenants and promises
contained herein, Specialty
agrees to provide Executive with the severance benefits provided for and
described in the Employment Agreement between Specialty and Executive
dated September 11, 2003.

 

3.                                                                                       In consideration of the above, Executive and Specialty waive, release and forever
discharge each other, et al, from all Claims that Executive 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 Executive’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.  Executive 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, Executive 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.”

 

Executive 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,
Executive and Specialty hereby
waive any right, claim or cause of action that might arise as a result of such
different or additional claims or facts. 
Executive and Specialty
acknowledge that they understand the significance and consequence of such
release and such specific waiver of Section 1542.

 

5.                                                                                       Executive acknowledges and agrees he/she 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.  Executive warrants and
represents he/she 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 Executive under the
Confidentiality Agreement.

 

6.                                                                                       Executive acknowledges and agrees he/she 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 Executive.

 

7.                                                                                       Executive agrees that upon termination of
employment with the Company, Executive 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 Executive’s possession or under Executive’s
control, whether or not such items were prepared by

 

 

Executive,
which would not be in the possession of the Executive except for the employment
of the Executive by the Company.

 

8.                                                                                       Executive 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 Executive 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 Executive under
this Agreement.  Executive acknowledges
and agrees he/she has received all wages, bonuses, commissions, compensation
remuneration, and all other moneys due him/her arising out of, relating to or
resulting from his employment with Specialty,
including but not limited to all moneys due him/her under any and all benefit
plans established and/or maintained by Specialty.

 

11.                                                                                 Executive 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 Executive’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.                                                                                 Executive fully understands, acknowledges and
agrees among the various rights and Claims he/she 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. 
Executive further understands, acknowledges and agrees that:

 

a.                                       In return for this Agreement, Executive will
receive compensation beyond that which Executive was already entitled to
receive before entering into this Agreement.

 

b.                                      Executive was given a copy of this Agreement
on
                    ,
and informed that Executive has been given forty-five (45) days within which to
consider this Agreement;

 

c.                                       Executive has carefully read and fully
understands all of the provisions of this Agreement;

 

 

d.                                      Executive is, by the execution of this
Agreement, waiving, releasing and forever discharging Specialty, et al, from all Claims that
he/she has or may have against Specialty,
et al, individually and/or collectively, including but not limited to all
Claims of age discrimination;

 

e.                                       Executive was previously advised, and is
hereby further advised, in writing to consult with an attorney before executing
this Agreement; and

 

f.                                         Executive was informed that Executive 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/her having
exercised his right of revocation; and

 

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 and the surviving provisions of the Employment
Agreement.  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 Executive 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.                                                                                 Executive acknowledges and agrees that he/she
has been advised this Agreement is a final and binding legal document, that
he/she 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/she 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.                                                                                 Executive agrees to return all Company
property, including but not limited to all computer equipment, credit cards,
telephone equipment, and dictation equipment. 
Executive also agrees to provide a final reconciliation of all cash
advances, travel advances, along with incurred authorized expenses as
substantiated by appropriate receipts. 
Executive 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 Executive’s execution of this Agreement shall
make this Agreement null and void.

 

18.                                                                                 Executive agrees that he/she will make
himself available at mutually agreeable times as requested by Specialty to use his best efforts to
cooperate with Specialty in 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 Executive for reasonable travel and other out-of-pocket expenses
incurred as a result of providing such cooperation.  It is understood that Executive’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 Specialty will
not unreasonably interfere with his efforts to pursue such other business and
employment activities.

 

19.                                                                                 Any dispute or controversy between Executive,
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, 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 19, 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 19 supercede and replace in their entirety any prior arbitration
agreement(s) that may exist between Executive and Specialty.

 

20.                                                                                 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
10.33

 

Employment
Agreement

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered
into as of April 7, 2004, by and among OSA Technologies Inc., a Delaware
corporation (“New OSA” or “Employer”), Avocent Corporation, a
Delaware corporation, and Mark Lee (the “Employee”).

 

RECITALS

 

WHEREAS, Avocent Corporation and its affiliates (collectively referred
to in this Agreement as “Avocent”) are engaged in the business of
designing, manufacturing, and selling wired and wireless connectivity solutions
for enterprise data centers, service providers, and financial institutions.

 

WHEREAS, on the date of this Agreement, New OSA became
a wholly-owned subsidiary of Avocent under the terms and conditions of that
certain Agreement and Plan of Merger and Reorganization by and among Avocent
Corporation, Otter Delaware Acquisition Corp., OSA Technologies, Inc. (“Old
OSA”), and certain other parties dated March 27, 2004 (the “Acquisition
Agreement”).

 

WHEREAS, the Acquisition Agreement
provides for the merger of a wholly-owned subsidiary of Avocent Corporation
with and into Old OSA, pursuant to which Old OSA will become a wholly-owned
subsidiary of Avocent Corporation (the “First Merger”).  As
soon as practicable thereafter, the surviving corporation shall be merged with
and into a wholly-owned subsidiary (“Newco”)
of Avocent Corporation, with Newco continuing as the surviving corporation and
changing its name to OSA Technologies Inc. (referred to herein as “New OSA”  or “Employer”) (the “Second Merger”; together with the
First Merger, the “Merger”).

 

WHEREAS, Employer desires to employ the Employee and
the Employee is willing to accept such employment by Employer on the terms and
subject to the conditions set forth in this Agreement.

 

AGREEMENT

 

THE PARTIES HERETO AGREE AS FOLLOWS:

 

1.             DUTIES.  During the term of this Agreement, the
Employee agrees to be employed by Employer and to serve Avocent as its Senior
Vice President and as the President of Employer.  The Employee shall devote such of his business time, energy, and
skill to the affairs of Avocent and Employer as shall be necessary to perform
the duties of his position.  The
Employee shall report to the President and Chief Executive Officer and the
Executive Vice President of Avocent Corporation and to the Boards of Directors
of the Employer and Avocent Corporation, and at all times during the term of
this Agreement, the Employee shall have powers and duties at least commensurate
with his position as Senior Vice President of Avocent Corporation and President
of Employer.

 

 

2.             TERM OF EMPLOYMENT.

 

2.1           DEFINITIONS.  For purposes of this Agreement the following
terms shall have the following meanings:

 

(a)           “TERMINATION
FOR CAUSE” shall mean termination by the Employer or Avocent Corporation of the
Employee’s employment with the Employer or Avocent by reason of the Employee’s
willful dishonesty towards, fraud upon, or deliberate injury or attempted
injury to, the Employer or Avocent or by reason of the Employee’s willful
material breach of this Agreement which has resulted in material injury to the
Employer or Avocent.

 

(b)           “TERMINATION
OTHER THAN FOR CAUSE” shall mean termination by the Employer or Avocent
Corporation of the Employee’s employment with the Employer or Avocent (other
than in a Termination for Cause) and shall include (i) any constructive
termination of the Employee’s employment by reason of material breach of this
Agreement by the Employer or Avocent, such constructive termination to be
effective upon thirty (30) days written notice from the Employee to the
Employer of such constructive termination and (ii) any attempt to relocate
outside of the vicinity of San Jose, California:  (x) the Employee, (y) the Employee’s duties and responsibilities,
or (z) the Employer’s office at which Employee is employed.  Notwithstanding the foregoing, Employee
agrees that a change in his duties and responsibilities shall not result in a
constructive termination under this Section 2.1(b) unless such change results
in a substantial diminution of Employee’s duties and responsibilities.

 

(c)           “VOLUNTARY
TERMINATION” shall mean termination by the Employee of the Employee’s
employment with the Employer or Avocent other than (i) constructive
termination as described in subsection 2.1(b), (ii) “Termination Upon a
Change in Control” as described in Section 2.1(d), and (iii) termination
by reason of the Employee’s disability or death as described in
Sections 2.5 and 2.6.

 

(d)           “TERMINATION
UPON A CHANGE IN CONTROL” shall mean (i) a termination by the Employee of
the Employee’s employment with the Employer or Avocent within six (6) months
following any “Change in Control” or (ii) any termination by the Employer or
Avocent Corporation of the Employee’s employment with the Employer or Avocent
(other than a Termination for Cause) within eighteen (18) months following any
“Change in Control.”

 

(e)           “CHANGE
IN CONTROL” shall mean, after the date of this Agreement, any one of the
following events:

 

(i)            Any
person (other than Avocent Corporation) acquires beneficial ownership of
Employer’s, or Avocent Corporation’s securities and is or thereby becomes a
beneficial owner of securities entitling such person to exercise twenty-five
percent (25%) or more of the combined voting power of Employer’s, or Avocent
Corporation’s then outstanding stock.  For
purposes of this Agreement, “beneficial ownership” shall be determined in
accordance with Regulation 13D under the Securities Exchange Act of 1934,
or any similar successor regulation or rule; and the term “person” shall
include any natural person, corporation, partnership, trust or association, or
any group or combination thereof, whose ownership of Employer’s, or Avocent
Corporation’s securities would be required to be reported under such
Regulation 13D, or any similar successor regulation or rule.

 

2

 

(ii)           Within
any twenty-four (24) month period, the individuals who were Directors of
Avocent Corporation at the beginning of any such period, together with any
other Directors first elected as directors of Avocent Corporation pursuant to
nominations approved or ratified by at least two-thirds (2/3) of the Directors
in office immediately prior to any such election, cease to constitute a
majority of the Board of Directors of Avocent Corporation.

 

(iii)          Avocent Corporation’s stockholders approve:

 

(1)           any
consolidation or merger of Avocent Corporation in which Avocent Corporation is
not the continuing or surviving corporation or pursuant to which shares of
Avocent Corporation common stock would be converted into cash, securities or
other property, other than a merger or consolidation of Avocent Corporation in
which the holders of Avocent Corporation’s common stock immediately prior to
the merger or consolidation have substantially the same proportionate ownership
and voting control of the surviving corporation immediately after the merger or
consolidation; or

 

(2)           any
sale, lease, exchange, liquidation or other transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of Avocent
Corporation.

 

Notwithstanding subparagraphs (e)(iii)(1) and
(e)(iii)(2) above, the term “Change in Control” shall not include (i) a
consolidation, merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of Avocent Corporation is
owned, directly or indirectly, by a holding company, and the holders of Avocent
Corporation’s common stock immediately prior to the transaction have
substantially the same proportionate ownership and voting control of such
holding company after such transaction or (ii) any transaction contemplated by
or described in the Acquisition Agreement and/or resulting from the closing of
the transactions described in the Acquisition Agreement including, without
limitation, the Merger.

 

2.2           BASIC
TERM.  The term of employment of the
Employee by the Employer shall be for the period beginning on the date of this
Agreement, and ending on December 31, 2007, unless terminated earlier pursuant
to this Section 2.  At any time before
December 31, 2007, the Employer and the Employee may by mutual written
agreement extend the Employee’s employment under the terms of this Agreement
for such additional periods as they may agree.

 

2.3           TERMINATION
FOR CAUSE.  Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and
shall be effected by thirty (30) days written notification to the Employee from
the Boards of Directors of Employer and Avocent Corporation stating the reason
for termination.  Upon Termination For
Cause, the Employee immediately shall be paid all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Employer
or Avocent in which the Employee is a participant to the full extent of the
Employee’s rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but the Employee shall not be paid
any other compensation or reimbursement of any kind, including without
limitation, severance compensation.

 

3

 

2.4           TERMINATION
OTHER THAN FOR CAUSE.  Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination.  Upon any Termination
Other Than For Cause, the Employee shall immediately be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation,
if any (other than pension plan or profit sharing plan benefits which will be
paid in accordance with the applicable plan), any benefits under any plans of
Employer or Avocent in which the Employee is a participant to the full extent
of the Employee’s rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, and all severance
compensation provided in Section 4.2, but no other compensation or
reimbursement of any kind.

 

2.5           TERMINATION
BY REASON OF DISABILITY.  If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board
of Directors of Avocent Corporation, has failed to perform his duties under
this Agreement on account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than six (6) consecutive
months, the Employer shall have the right to terminate the Employee’s
employment hereunder by delivery of written notice to the Employee at any time
after such six month period and payment to the Employee of all accrued salary,
bonus compensation to the extent earned, additional bonus compensation in an
amount equal to the average annual bonus earned by the Employee after the
Merger as an employee of Avocent Corporation and its affiliates in the two (2)
years (or such lesser period following the Merger) immediately preceding the
date of termination, vested deferred compensation, if any (other than pension
plan or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Employer or Avocent in which
the Employee is a participant to the full extent of the Employee’s rights under
such plans (including having the vesting of any awards granted to the Employee
under any Avocent stock option plans fully accelerated), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, with the exception
of medical and dental benefits which shall continue through the expiration of
this Agreement, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance
compensation.

 

2.6           TERMINATION
BY REASON OF DEATH.  In the event of the
Employee’s death during the term of this Agreement, the Employee’s employment
shall be deemed to have terminated as of the last day of the month during which
his death occurs and the Employer shall pay to his estate or such beneficiaries
as the Employee may from time to time designate all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Employer
or Avocent in which the Employee is a participant to the full extent of the
Employee’s rights under such plans (including having the vesting of any awards
granted to the Employee under any Avocent stock option plans fully
accelerated), accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, but the Employee’s estate shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
severance compensation.

 

2.7           VOLUNTARY
TERMINATION.  Notwithstanding anything
else in this Agreement, the Employee may effect a Voluntary Termination at any
time upon giving thirty (30)

 

4

 

days
written notice to the Employer of such termination.  In the event of a Voluntary Termination, the Employer shall
immediately pay all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Employer or Avocent in which the Employee is a
participant to the full extent of the Employee’s rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind, including
without limitation, severance compensation.

 

2.8           TERMINATION
UPON A CHANGE IN CONTROL.  In the event
of a Termination Upon a Change in Control, the Employee shall immediately be
paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation, if any (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Employer or Avocent in which the Employee is a
participant to the full extent of the Employee’s rights under such plans (including
having the vesting of any awards granted to the Employee under any Avocent
stock option plans fully accelerated), accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, and all severance compensation
provided in Section 4.1, but no other compensation or reimbursement of any
kind.

 

3.             SALARY, BENEFITS AND
BONUS COMPENSATION.

 

3.1           BASE
SALARY.  Effective on the date of the
Merger, as payment for the services to be rendered by the Employee as provided
in Section 1 and subject to the terms and conditions of Section 2,
the Employer agrees to pay to the Employee a “Base Salary” at the rate of
$190,000 per annum, payable in equal bi-weekly installments.  The Base Salary for each calendar year (or
proration thereof) beginning April 7, 2004  shall be determined by the Board of
Directors of Avocent Corporation upon a recommendation of the Compensation Committee of Avocent
Corporation (the “Compensation Committee”), which shall authorize an
increase in the Employee’s Base Salary in an amount which, at a minimum, shall
be equal to the cumulative cost-of-living increment on the Base Salary as
reported in the “Consumer Price Index
for All Urban Consumers (CPI-U), All Items Index, for San Jose, CA” published
by the U.S. Department of Labor (using January 1, 2003, as the base date for
computation prorated for any partial year).  The
Employee’s Base Salary shall be reviewed annually by the Board of Directors and
the Compensation Committee of Avocent Corporation.

 

3.2           BONUSES.  The Employee shall be eligible to receive a
bonus for each calendar year (or portion thereof) during the term of this
Agreement and any extensions thereof, with the actual amount of any such bonus
to be determined in the sole discretion of the Board of Directors of Avocent
Corporation based upon its evaluation of the Employee’s performance during such
year.  All such bonuses shall be payable
during the last month of the fiscal year or within forty-five (45) days after
the end of the fiscal year to which such bonus relates.  All such bonuses shall be reviewed annually
by the Compensation Committee of
Avocent Corporation.

 

3.3           ADDITIONAL
BENEFITS.  During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:

 

(a)           THE
EMPLOYEE BENEFITS.  The Employee shall
be eligible to participate in such of Avocent’s benefits and deferred
compensation plans as are now generally

 

5

 

available
or later made generally available to executive officers or Avocent, including,
without limitation, stock option plans, Section 401(k) plan, profit sharing
plans, deferred compensation plan, annual physical examinations, dental and
medical plans, personal catastrophe and disability insurance, retirement plans
and supplementary executive retirement plans, if any.  For purposes of establishing the length of service under any
benefit plans or programs of Avocent, the Employee’s employment with the
Employer (or any successor) will be deemed to have commenced on the date that
Employee first commenced employment with Old OSA, which was August 1, 2000.

 

(b)           VACATION.  The Employee shall be entitled to vacation
in accordance with the Avocent Corporation’s vacation policy but in no event
less than three (3) weeks during each year of this Agreement.

 

(c)           LIFE
INSURANCE.  For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to three times the Employee’s Base Salary.  Such policy shall be owned by the Employee
or by any person or entity with an insurable interest in the life of the
Employee.

 

(d)           REIMBURSEMENT
FOR EXPENSES.  During the term of this
Agreement, the Employer or Avocent Corporation shall reimburse the Employee for
reasonable and properly documented out-of-pocket business and/or entertainment
expenses incurred by the Employee in connection with his duties under this
Agreement in accordance with Avocent’s standard reimbursement policies.

 

4.             SEVERANCE
COMPENSATION.

 

4.1           SEVERANCE
COMPENSATION IN THE EVENT OF A TERMINATION UPON A CHANGE IN CONTROL.  In the event of a Termination Upon a Change
in Control, the Employee shall be paid as severance compensation his Base
Salary (at the rate payable at the time of such termination) for a period of
twelve (12) months from the date of such Termination Upon a Change in Control,
on the dates specified in Section 3.1, and the Employee shall also be paid
an amount equal to the average annual bonus earned by the Employee after the
Merger as an employee of Avocent Corporation and its affiliates in the two (2)
years (or such lesser period following the Merger) immediately preceding the
date of termination.  Notwithstanding
anything in this Section 4.1 to the contrary, the Employee may in the
Employee’s sole discretion, by delivery of a notice to the Employer within
thirty (30) days following a Termination Upon a Change in Control, elect to
receive from the Employer a lump sum severance payment by bank cashier’s check
equal to the present value of the flow of cash payments that would otherwise be
paid to the Employee pursuant to this Section 4.1.  Such present value shall be determined as of
the date of delivery of the notice of election by the Employee and shall be
based on a discount rate equal to the interest rate of 90-day U.S.
Treasury bills, as reported in The Wall Street Journal (or similar
publication), on the date of delivery of the election notice.  If the Employee elects to receive a lump sum
severance payment, Avocent Corporation shall cause the Employer to make such
payment to the Employee within ten (10) days following the date on which the
Employee notifies the Employer of the Employee’s election.  The Employee shall also be entitled to have
the vesting of any awards granted to the Employee under any Avocent stock
option plans fully accelerated.  The
Employee shall be provided with medical plan benefits under any health plans of
Avocent or Employer in which the Employee is a participant to the full extent
of the Employee’s rights under such plans for a period of

 

6

 

twelve
(12) months from the date of such Termination Upon a Change in Control (even if
Employee elects to receive a lump sum severance payment).

 

4.2           SEVERANCE
COMPENSATION IN THE EVENT OF A TERMINATION OTHER THAN FOR CAUSE.  In the event of a Termination Other Than for
Cause, the Employee shall be paid as severance compensation his Base Salary (at
the rate payable at the time of such termination) for a period of twelve (12)
months from the date of such termination, on the dates specified in
Section 3.1, and Employee shall also be paid an amount equal to the
average annual bonus earned by the Employee after the Merger as an employee of
Avocent Corporation and its affiliates in the two (2) years (or such lesser
period following the Merger) immediately preceding the date of
termination.  Notwithstanding anything
in this Section 4.2 to the contrary, the Employee may in the Employee’s
sole discretion, by delivery of a notice to the Employer within thirty (30)
days following a Termination Other Than for Cause, elect to receive from the
Employer a lump sum severance payment by bank cashier’s check equal to the
present value of the flow of cash payments that would otherwise be paid to the
Employee pursuant to this Section 4.2. 
Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be based on a discount rate equal
to the interest rate on 90-day U.S. Treasury bills, as reported in The Wall
Street Journal (or similar publication), on the date of delivery of
the election notice.  If the Employee
elects to receive a lump sum severance payment, Avocent Corporation shall cause
the Employer to make such payment to the Employee within ten (10) days
following the date on which the Employee notifies the Employer of the
Employee’s election.  The Employee shall
also be entitled to have the vesting of any awards granted to the Employee
under any Avocent stock option plans fully accelerated. The Employee shall be provided
with medical plan benefits under any health plans of Avocent or Employer in
which the Employee is a participant to the full extent of the Employee’s rights
under such plans for a period of twelve (12) months from the date of such
Termination Other Than for Cause (even if Employee elects to receive a lump sum
severance payment).

 

4.3           NO
SEVERANCE COMPENSATION UNDER OTHER TERMINATION.  In the event of a Voluntary Termination, Termination For Cause,
termination by reason of the Employee’s disability pursuant to Section 2.5,
termination by reason of the Employee’s death pursuant to Section 2.6, the
Employee or his estate shall not be paid any severance compensation.

 

5.             NON-COMPETITION
OBLIGATIONS.  Unless waived or reduced
by the Employer or Avocent, during the term of this Agreement and (i) for a period of twenty-four (24) months after the termination of
this Agreement for any reason that occurs prior to the fifth (5th)
anniversary of the Merger, or (ii) for a period of twelve (12) months
after termination of this Agreement for any reason that occurs subsequent to
the fifth (5th) anniversary of the Merger, the Employee will
not, without the Employer’s and Avocent Corporation’s prior written consent,
directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada, Europe, or Asia which is substantially similar to or in direct
competition with any of the business activities of or services provided by the
Employer or Avocent at such time. 
Notwithstanding the foregoing, the ownership by the Employee of not more
than five percent (5%) of the shares of stock of any corporation having a class
of equity securities actively traded on a national securities exchange or on
The Nasdaq Stock Market shall not be deemed, in and of itself, to violate the
prohibitions of this Section 5.

 

7

 

6.             MISCELLANEOUS.

 

6.1           PAYMENT
OBLIGATIONS.  If litigation after a
Change in Control shall be brought to enforce or interpret any provision
contained herein, the Employer and Avocent Corporation, to the extent permitted
by applicable law and the Employer’s and Avocent Corporation’s Certificate of
Incorporation and Bylaws, each hereby indemnifies the Employee for the
Employee’s reasonable attorneys’ fees and disbursements incurred in such
litigation.

 

6.2           GUARANTEE.  Avocent Corporation hereby unconditionally
and irrevocably guarantees all payment obligations of the Employer under this
Agreement, including, without limitation, the Employer’s obligations under
Sections 2, 3, 4, and 6 hereof.

 

6.3           WITHHOLDINGS.  All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local, and other
withholdings and similar taxes and payments required by applicable law.

 

6.4           WAIVER.  The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.

 

6.5           ENTIRE
AGREEMENT; MODIFICATIONS.  Except as
otherwise provided herein, this Agreement represents the entire understanding
among the parties with respect to the subject matter hereof, and this Agreement
supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral with respect to the subject matter hereof
including without limitation, the employment agreement between Employee and Old
OSA dated                             
and any understandings, agreements or obligations respecting any past or future
compensation, bonuses, reimbursements or other payments to the Employee from
the Employer or Avocent Corporation. 
All modifications to the Agreement must be in writing and signed by the
party against whom enforcement of such modification is sought.

 

6.6           NOTICES.  All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to
the respective persons named below:

 

If to Employer/Avocent:                     Avocent
Corporation

4991 Corporate Drive

Huntsville, AL 35805

Attn:               Executive Vice
President

Copy to:         General Counsel

 

If to the Employee:                               Mark
Lee

2001 Gateway Place

Suite 520W

San Jose, California 95110-1065

 

8

 

Any party may change such party’s address for notices
by notice duly given pursuant to this Section 6.6.

 

6.7           HEADINGS.  The Section headings herein are intended for
reference and shall not by themselves determine the construction or
interpretation of this Agreement.

 

6.8           GOVERNING
LAW; VENUE.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.  The Employee, the Employer,
and Avocent Corporation each hereby expressly consents to the exclusive venue
of the state and federal courts located in San Jose, California, for any
lawsuit arising from or relating to this Agreement.

 

6.9           ARBITRATION.  Any controversy or claim arising out of or
relating to this Agreement, or breach thereof, shall be settled by arbitration
in San Jose, California, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.  There shall be three (3) arbitrators, one
(1) to be chosen directly by each party at will, and the third arbitrator to be
selected by the two (2) arbitrators so chosen. 
To the extent permitted by the Rules of the American Arbitration
Association, the selected arbitrators may grant equitable relief.  Each party shall pay the fees of the
arbitrator selected by him and of his own attorneys, and the expenses of his
witnesses and all other expenses connected with the presentation of his
case.  The cost of the arbitration
including the cost of the record or transcripts thereof, if any, administrative
fees, and all other fees and costs shall be borne equally by the parties.

 

6.10         SEVERABILITY.  If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.

 

6.11         SURVIVAL
OF EMPLOYER’S OBLIGATIONS.  The Employer’s
and Avocent Corporation’s obligations hereunder shall not be terminated by
reason of any liquidation, dissolution, bankruptcy, cessation of business, or
similar event relating to the Employer or Avocent Corporation.  This Agreement shall not be terminated by
any merger or consolidation or other reorganization of the Employer or Avocent
Corporation.  In the event any such
merger, consolidation or reorganization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon and inure to the benefit of the surviving or resulting
corporation or person.  This Agreement
shall be binding upon and inure to the benefit of the executors, administrators,
heirs, successors and assigns of the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be assignable either by the
Employer (except to an affiliate of the Employer (including Avocent
Corporation) in which event the Employer shall remain liable if the affiliate
fails to meet any obligations to make payments or provide benefits or
otherwise) or by the Employee.

 

6.12         COUNTERPARTS.  This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the
same Agreement.

 

6.13         INDEMNIFICATION.  In addition to any rights to indemnification
to which the Employee is entitled to under the Employer’s or Avocent
Corporation’s Certificate of Incorporation and Bylaws, the Employer and Avocent
Corporation shall indemnify the Employee at all times during and after the term
of this Agreement to the maximum extent permitted under the 

 

9

 

corporation
laws of the State of Delaware and any other applicable state law, and shall pay
the Employee’s expenses in defending any civil or criminal action, suit, or
proceeding in advance of the final disposition of such action, suit, or
proceeding, to the maximum extent permitted under such applicable state laws.

 

6.14         INDEMNIFICATION
FOR SECTION 4999 EXCISE TAXES.  In the
event that it shall be determined that any payment or other benefit paid by the
Employer or Avocent Corporation to or for the benefit of the Employee under
this Agreement or otherwise, but determined without regard to any additional
payments required under this Amendment (the “Payments”) would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise
Tax”), then the Employer and Avocent Corporation shall indemnify the
Employee for such Excise Tax in accordance with the following:

 

(a)           The
Employee shall be entitled to receive an additional payment from the Employer
and/or Avocent Corporation equal to (i) one hundred percent (100%) of any
Excise Tax actually paid or finally or payable by the Employee in connection
with the Payments, plus (ii) an additional payment in such amount that after
all taxes, interest and penalties incurred in connection with all payments
under this Section 2(a), the Employee retains an amount equal to one hundred percent
(100%) of the Excise Tax.

 

(b)           All
determinations required to be made under this Section shall be made by the
Avocent Corporation’s primary independent public accounting firm, or any other
nationally recognized accounting firm reasonably acceptable to the Avocent
Corporation and the Employee (the “Accounting Firm”).  Avocent Corporation shall cause the
Accounting Firm to provide detailed supporting calculations of its
determinations to the Employer and the Employee.  All fees and expenses of the Accounting Firm shall be borne
solely by the Employer.  For purposes of
making the calculations required by this Section, the Accounting Firm may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Internal Revenue Code, provided the Accounting
Firm’s determinations must be made with substantial authority (within the
meaning of Section 6662 of the Internal Revenue Code). The payments to which
the Employee is entitled pursuant to this Section shall be paid by the Employer
and/or Avocent Corporation to the Employee in cash and in full not later than
thirty (30) calendar days following the date the Employee becomes subject to the
Excise Tax.

 

10

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.

 

	
   

  	
  OSA TECHNOLOGIES INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Cooper

  
	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVOCENT
  CORPORATION:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Cooper

  
	
   

  	
  Its:

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/ Mark Lee

  
	
   

  	
  Mark Lee

  
				

 

11

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