Document:

Exhibit
10.32

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into as of September 11, 2003 by and between Specialty
Laboratories, Inc., a California corporation (the “Company”), and Nicholas R.
Simmons (“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 General Counsel 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 September 11, 2003 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 twenty percent
(20%) 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.

 

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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 nine (9) 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 nine (9) 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;

 

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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).

 

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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

 

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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

 

6

 

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

 

7

 

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

 

8

 

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]

 

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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:

  	
  September 12,
  2003

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Nicholas R. Simmons

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  September 16,
  2003

  	
   

  
						

 

10

 

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

 

11

 

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

 

12

 

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;

 

13

 

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

 

14

 

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:

  	
   

  	
   

  
						

 

15Exhibit
10.33

 

EMPLOYMENT AGREEMENT

 

 

This EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into as of September 11, 2003 by and between Specialty
Laboratories, Inc., a California corporation (the “Company”), and Cheryl G.
Gallarda (“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 Vice-President, Business Operations 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 September 11, 2003 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 twenty percent
(20%) 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

 

2

 

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 nine (9)
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 nine (9) 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:

 

3

 

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

 

4

 

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

 

5

 

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.

 

6

 

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.

 

7

 

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

 

8

 

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]

 

9

 

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:

  	
  September 12,
  2003

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Cheryl G. Gallarda

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  September 16,
  2003

  	
   

  
						

 

10

 

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

 

11

 

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

 

12

 

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;

 

13

 

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

 

14

 

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:

  	
   

  	
   

  
						

 

15

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