Document:

Exhibit 10.58

 

	
   

  	
  July 23, 2004

  

 

Kevin Johnson

 

Re:                               Employment Severance Provisions

 

Dear
Kevin:

 

We at Specialty appreciate
the important contributions you have made and continue to make, and we
recognize the significant skills and leadership you provide to our organization
on a daily basis.

 

In order to provide you with an added level of
security while working at Specialty, and
reiterate our appreciation of your efforts, we are providing you with
additional protection provisions to the terms of your employment.  Accordingly, in the event your employment is
terminated other than for Cause (as defined below), the company will pay you
severance pay in the amount equivalent to six (6) months of your
then-current base salary.  Payment of the
severance pay will be either a lump sum or on a bi-weekly basis, in the sole
discretion of the company.  The payment
of this severance pay is expressly contingent on your executing a general
release of claims (in form and substance substantially similar to that in Exhibit A
hereto or such other form as mutually agreed to by you and the company).

 

For purposes of this offer, “Cause” shall mean a
reasonable belief by the company that you have 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 you to
secure any personal profit related to the business or business opportunities of
the company without the informed, prior written approval of the company; (ii) gross
insubordination; (iii) gross negligence or reckless or willful misconduct
in the performance of your 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; or (vi) a material violation of company policies including, without
limitation, the company’s policies on equal employment opportunity and
prohibition of unlawful harassment.

 

The company will deduct and withhold from the
severance pay any and all applicable Federal, state and local income and
employment withholding taxes, as well as any other amounts required or
authorized by you to be deducted or withheld under applicable statutes,
regulations, ordinances or orders governing or requiring the withholding or
deduction of amounts otherwise payable as compensation or wages to employees.

 

Other than as stated herein, the terms of your
employment (including all the provisions and policies set forth in the
Employee/Team Member Handbook) remain the same, and in effect (including the “at
will” nature of your employment).

 

We are hopeful that this offer will provide you with
some added security and allow you to continue your valuable contributions to Specialty.

 

If you are in agreement with the terms set forth
herein, please countersign below on or before the end of business July 31,
2004.

 

1

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nicholas R. Simmons

  	
   

  
	
   

  	
  Nicholas R. Simmons

  
	
   

  	
  Vice-President & General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kevin Johnson

  	
   

  	
   

  
	
  Kevin Johnson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  cc:       Human Resources

  
				

 

2

 

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:

 

3

 

“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.

 

4

 

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

 

5

 

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:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Kevin Johnson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALTY LABORATORIES, INC.

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
						

 

6Exhibit 10.59

 

	
   

  	
  February 21, 2005

  

 

Kevin
Johnson

 

Re:                               Incentive Arrangement

 

Dear
Kevin:

 

As you are aware, there has been considerable recent
change at Specialty, including the fantastic effort all our Team members put
forth to achieve the successful move to our new state-of-the-art Valencia
facility, and more recently, the announcement that Doug Harrington will be
stepping down at the end of March, concluding a very successful term as the
Company’s CEO.  While change can
certainly create uncertainty, it can also create great new opportunities,
including opportunities for our Company, opportunities for all members of the
Specialty Team, and very importantly, opportunities for you and your future.  Specialty’s Board of Directors and Management
recognize you as an important leader at Specialty, and we want to avoid
potential distraction for you and other key employees during this time of
change.  Therefore, an incentive
arrangement has been developed to encourage and reward your continuing
commitment to Specialty, which you have helped make a world-class laboratory.

 

We are offering you an incentive bonus of $65,000
(the “Incentive Bonus”), based on the terms specified herein.  Payment of the Incentive Bonus is contingent
upon your continued employment with Specialty through at least February 20,
2006.  If you are still employed with the
Company on February 20, 2006, and have not been terminated for Cause (as
defined in Exhibit A to this letter) prior to that date, you will receive
the Incentive Bonus (less required withholdings and deductions) in a lump
sum.  Should you resign or be terminated
for Cause prior to February 20, 2006, you will not be eligible to receive
the incentive bonus.  You were previously
offered certain severance protections by the Company if you were terminated
other than for Cause, and of course, the terms of that offer will remain in
effect throughout your employment with the Company, including following February 20,
2006.  However, should you be terminated
other than for Cause prior to February 20, 2006, you will not be eligible
to receive both payments, and thus you will receive only the greater of the two
offers (i.e., you will receive the severance protection payments, not the
Incentive Bonus).

 

Specialty’s standard policies and procedures, and
all other terms of your employment with the Company, including your “at will”
employment status, will remain in full effect. 
Please also remember that the terms of this offer are confidential and,
as with all matters relating to compensation, should not be discussed with
other employees.  If you are in agreement
with the terms herein, please countersign below indicating your acceptance.

 

With your continued dedication and leadership we
will ensure that Specialty is headed for great success in the coming months and
years, and we will continue Specialty’s long tradition of excellence in
laboratory medicine.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nicholas R. Simmons

  	
   

  
	
   

  	
  Nicholas R. Simmons

  
	
   

  	
  Vice-President & General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kevin Johnson

  	
   

  	
   

  
	
  Kevin Johnson

  	
   

  
				

 

1

 

Exhibit A

 

“Cause”
shall mean a reasonable belief by the Board of Directors or your supervisor
that you have 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 you 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 your 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; or (vi) a material violation of Company policies
including, without limitation, the Company’s policies on equal employment
opportunity and prohibition of unlawful harassment.

 

2

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