EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of September 1, 2000 by
and between Specialty Laboratories, Inc., a California Company (the "Company"),
and Xxxxxx X. Xxxxxxx, Ph.D. ("Executive"), and is effective upon approval of
the Compensation Committee of The Board of Directors.
1. DUTIES AND RESPONSIBILITIES.
A. Executive shall serve as the Company's Vice President, Laboratory
Operations or such other title or position as may be designated from time to
time by the Company's Chief Executive Officer. Executive shall report to and
perform the duties and responsibilities assigned to him by the Company's
President, or such other person as may be designated by the Company's Board Of
Directors.
B. Executive agrees to devote his full time and attention to the
Company, to use his best efforts to advance the business and welfare of the
Company, to render his services under this Agreement fully, faithfully,
diligently, competently and to the best of his ability, and not to engage in any
other employment activities.
C. Executive shall be based at the Company's office located in Santa
Monica, California, but Executive shall be required to travel to other
geographic locations in connection with the performance of his Executive duties.
2. PERIOD OF EMPLOYMENT.
A. Executive's employment with the Company shall be governed by the
provisions of this Agreement for the period commencing September 1, 2000 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. 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 initial Base Salary shall be One Hundred Seventy Five
Thousand, Fifty Three Dollars ($175,053) per year payable in accordance with the
Company's standard payroll schedule. Executive's compensation shall be subject
to periodic review by the Company, and may be increased or decreased in the
Company's discretion.
B. For each fiscal year during the Employment Period, Executive shall
be eligible for an incentive bonus in the Company's sole discretion. For each
full fiscal year of employment, Executive shall be eligible for an incentive
bonus of up to forty (40%) of his annual base salary and his performance
objectives shall be set such that 100% completion of his objectives shall
entitle him to at least seventy-five percent (75%) of the bonus (or thirty
percent (30%) of his annual base salary) ("the Incentive Bonus"). During the
first year of employment, Executive shall be eligible for a pro rata portion of
the incentive bonus. The bonus amount will
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be based on the following factors: (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 bonus amount is intended to reward contribution to the Company's performance
over an entire fiscal year, and on the basis of continuing, cumulative
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 45
days after the close of the Company's fiscal year. Bonus determinations will be
made in the Company's sole discretion.
C. The Company shall deduct and withhold from the compensation payable
to Executive hereunder 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.
Separate from this Agreement and pursuant and subject to the terms and
conditions of the Company's Stock Option Plan and Stock Option Agreement,
Executive has been granted options to purchase Eighty Four Thousand Five Hundred
Seventy Three (84,573) shares of the Company's common stock, which options vest
over time. Any further options will be made pursuant and subject to the terms
and conditions of the Company's Stock Option Plan and Stock Option Agreement.
5. EXPENSE REIMBURSEMENT.
In addition to the compensation specified in Paragraph 3, Executive
shall be entitled, in accordance with the 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 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, 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. Please refer to the Company's Employee
Handbook and Summary Plan Descriptions for further information concerning these
benefits.
B. Executive shall earn vacation time during the Employment Period at
the rate of three weeks per year. Vacation shall accrue and be taken pursuant to
the Company's vacation benefit policy set forth in the Company's Employee
Handbook.
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7. SEVERANCE PAY FOR EXERCISE OF THE AT-WILL CLAUSE.
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 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.
Should the Company terminate Executive's employment for Cause, as
defined below, the Company shall have no obligation to Executive under this
Agreement other than for accrued but unpaid salary and vacation as of the date
of termination. Should the Company terminate Executive's employment other than
for Cause during the first three years of this Agreement, the Company shall have
no further obligation under this Agreement, except that the Company will
continue to pay Executive's base salary, (less, if applicable, any long-term
disability payments) for a one year period following termination of Executive's
employment on the normal payroll dates.
8. CAUSE.
For purposes of this Agreement, "Cause" shall mean a reasonable belief
by the Board of Directors that Executive has engaged in any one of the
following: (i) financial dishonesty, including, without limitation,
misappropriation of 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)
refusal to comply with reasonable directives of the Executive's immediate
supervisor or Board of Directors; (iii) negligence or reckless or willful
misconduct in the performance of Executive's duties; (iv) failure to perform, or
continuing neglect in the performance of, duties assigned to Executive; (v)
misconduct which has a materially adverse effect upon the Company's business or
reputation; (vi) the conviction of, or plea of nolo contendre to, any felony or
a misdemeanor involving moral turpitude or fraud; (vii) the material breach of
any provision of this Agreement; (viii) violation of Company policies including,
without limitation, the Company's policies on equal employment opportunity and
prohibition of unlawful harassment; (ix) death of the Executive; or (x) a
disability which continues for a period in excess of 365 days. A termination as
a result of a Change in Control shall not constitute cause.
9. CHANGE IN CONTROL.
For purposes of this Agreement, "Change In Control" shall mean any of
the following transactions 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
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(ii) any stockholder-approved transfer or 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 0000 Xxx) 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.
In no event, however, shall a Change in Control be deemed to occur in
connection with any public offering of the Common Stock.
10. RESTRICTIVE COVENANTS.
During the Employment Period:
(i) Executive shall devote Executive's full time and energy
solely and exclusively to the performance of Executive's duties
described herein, except during periods of illness or vacation
periods.
(ii) Executive shall not directly or indirectly provide
services to or through any person, firm or other entity except the
Company, unless otherwise authorized by the Board in writing.
(iii) Executive shall not render any services of any kind or
character for Executive's own account or for any other person, firm or
entity without first obtaining the Company's written consent.
Executive, however, shall have the right to perform such incidental services as
are necessary in connection with (a) Executive's private passive investments,
but only if Executive is not obligated or required to (and shall not in fact)
devote any managerial efforts which interfere with the services required to be
performed by him, or (b) Executive's charitable or community activities, or
participation in trade or professional organizations, but only if such
incidental services do not interfere with the performance of Executive's
services to the Company.
11. NON-COMPETITION DURING THE EMPLOYMENT PERIOD.
Executive acknowledges and agrees that given the extent and nature of
the confidential and proprietary information he will obtain during the course of
his employment with the Company, it would be inevitable that such confidential
information would be disclosed or utilized by the Executive should he 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, during any period for which Executive is receiving payments from
the Company, either as wages or as a severance benefit, including but not
limited to severance
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pay pursuant to paragraph 7, Executive shall not, 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 or connected in any manner with, any enterprise
which is engaged in any business competitive with or similar to that of the
Company; provided, however, that such restriction 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 which is not, at the time of such investment, engaged in a business
competitive with the Company's business.
12. NON-SOLICITATION.
During the Employment Period and for one (1) year following
termination of Executive's employment, 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.
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 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 precedent to Executive's employment with the Company,
Executive will execute the Company's standard Confidential Information and
Assignment of Inventions Agreement attached hereto as Exhibit A. 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 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, 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,
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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.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
To Executive:
Xxxxxx X. Xxxxxxx, Ph.D.
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 paragraph.
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
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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.
Executive and the Company shall separately execute an Arbitration
Agreement in the form attached hereto as Exhibit B which, among other things
shall provide for arbitration of all claims which arise out of Executive's
employment under the terms of this Agreement. This Arbitration Agreement will
survive the termination of Executive's employment with the company.
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.
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By: Xxxxx X. Xxxxx M.D., Ph.D.
Title: Chairman and CEO
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Xxxxxx X. Xxxxxxx, Ph.D.
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