Exhibit 10.55

 

PROFESSIONAL SERVICES AGREEMENT

 

by and between

 

CLARIENT DIAGNOSTIC SERVICES, INC. (“Lab”)

 

and

 

CLARIENT PATHOLOGY SERVICES, INC. (“Group”)

 

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PROFESSIONAL SERVICES AGREEMENT

 

This PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is entered into as of
July 1, 2008 (the “Execution Date”), by and between CLARIENT DIAGNOSTIC
SERVICES, INC., a Delaware corporation (“Lab”), and CLARIENT PATHOLOGY SERVICES,
INC., a California professional corporation (“Group”).  Lab and Group are
sometimes referred to in this Agreement as a “Party” or, collectively, as the
“Parties.”

 

RECITALS

 

A.            Group provides medical services including, without limitation, the
professional component of specialty pathology services and related activities.

 

B.            Lab is a clinical laboratory licensed under the Federal Clinical
Laboratory Improvement Amendments of 1988 and by the State of California, and
desires to access the Services in connection with its provision of the technical
component of certain specialty pathology services.

 

C.            Group is a professional corporation organized under the laws of
the State of California, consisting of employees and contractors (collectively,
“Group Physicians” and each, a “Group Physician”), each of whom is a physician
duly licensed and qualified to practice medicine in the State of California. 
Each Group Physician is board certified for the practice of medicine in the
specialty of pathology (the “Specialty”).

 

D.            Clarient, Inc., the sole shareholder of Lab, (the “Manager”), and
Group have entered into a Management Services Agreement, dated as of July 1,
2008 (the “MSA”), and Manager has agreed to perform management services under
the MSA in consideration of Group providing Services (as defined below) under
this Agreement.

 

E.             Lab and Group desire that Group provides professional Specialty
procedures, on the terms and conditions described herein.

 

AGREEMENT

 

THE PARTIES AGREE AS FOLLOWS:

 

ARTICLE I.
GROUP’S OBLIGATIONS

 

1.1          Professional Services.  Group shall provide the professional
services set forth in Exhibit 1.1 (the “Professional Services”), upon the terms
and subject to the conditions set forth in this Agreement.

 

1.2          Additional Services.  Group shall provide to Lab those additional
services set forth in Exhibit 1.2 (the “Additional Services”), upon the terms
and subject to the conditions

 

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set forth in this Agreement.  The Professional Services and the Additional
Services are sometimes referred to collectively in this Agreement as the
“Services.”

 

1.3          Qualifications.  Each Group Physician shall be duly licensed and
qualified to practice medicine in the State of California.  Each Group Physician
shall be board certified in the Specialty.  A Group Physician shall, when
applicable, initiate the process of becoming board certified no later than the
Effective Date or the date on which the Group Physician joined Group, whichever
is the later to occur.  The Group Physician shall actively and diligently pursue
completion of this process throughout the term of this Agreement and exercise
his or her best efforts to complete this process and become board certified at
the earliest date reasonably possible.  Group hereby represents that all Group
Physicians providing Professional Services as of the Effective Date of this
Agreement are board certified.

 

1.4          Lab Staffing.  Group shall ensure staffing of the Lab by qualified
Group Physicians at the minimum staffing levels and in accordance with the
staffing patterns set forth in Exhibit 1.4.  Group shall adjust such staffing
levels and/or staffing patterns, as requested by Lab from time to time, after
consultation with Group, to be reasonably necessary and appropriate for the
provision of the Professional Services and the operation of the Lab.

 

1.5          Performance Standards.  Group and each Group Physician shall, as
applicable

 

(A)           COMPLY WITH ALL POLICIES, RULES AND REGULATIONS OF LAB;

 

(B)           PARTICIPATE IN CONTINUING EDUCATION AS NECESSARY TO MAINTAIN
LICENSURE, PROFESSIONAL COMPETENCE AND SKILLS COMMENSURATE WITH THE STANDARDS OF
THE MEDICAL COMMUNITY AND AS OTHERWISE REQUIRED BY THE MEDICAL PROFESSION; AND

 

(C)           COMPLY WITH ALL APPLICABLE STANDARDS AND RECOMMENDATIONS OF THE
JOINT COMMISSION OR OTHER APPLICABLE ACCREDITATION AND REGULATORY BODIES.

 

1.6          Notification of Certain Events.  Group shall notify Lab in writing
within twenty-four (24) hours after Group or any Group Physician is debarred,
suspended, excluded or otherwise ineligible to participate in any federal or
state health care program.

 

1.7          Patient Reports.  Group shall prepare and deliver to Lab for
safekeeping a complete report for each patient which complies both as to form
and timeliness with the established requirements of Lab.  Group and Lab shall
cooperate mutually in the completion of claim forms as may be required by
insurance carriers or others responsible for reimbursement.

 

ARTICLE II.
DUTIES OF LAB

 

2.1          Staff.  Lab shall, at its own expense, provide the services of
licensed registered and vocational nurses, pathology technologists and other
non-physician technicians and assistants necessary for the cost-efficient
operation of Lab.  Lab shall, after consultation with Group, have sole
discretion with regard to selection and retention of these personnel and to
determine levels of staffing.  Control and direction of these personnel for
medical matters shall rest with Group.

 

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2.2          Support Services.  Lab shall, at its own expense, provide services
such as heat, water, electricity, telephone, laundry, housekeeping, and other
support services.

 

2.3          Space.  Lab shall make available for the use of Group the space
that is now or may be hereafter occupied by Lab.

 

2.4          Equipment and Supplies.  Lab shall, at its own expense, provide all
expendable and non-expendable equipment, drugs, supplies, furniture and fixtures
for the use of Group as are necessary for the cost-efficient operation of Lab. 
This equipment shall meet all electrical, engineering, and other safety
standards required by law and/or relevant Lab policies.  Lab shall, at its own
expense, keep and maintain this equipment in good order and repair and replace
this equipment or any part of it which becomes worn out or is mutually
determined to be obsolete.

 

ARTICLE III.
COMPENSATION

 

3.1          Fees.  During the term of this Agreement, on or before the
twenty-first (21st) day of each month during which Services have been rendered,
Lab shall pay Group Two Hundred and Fifty Thousand Dollars ($250,000.00) per
month.

 

3.2          Adjustment. Upon an adjustment of the staffing levels (as set forth
in Section 1.4 above), the compensation rate shall be adjusted, by mutual
agreement of the Parties.  Each year, in consideration of the expenses incurred
by Group for Services provided under this Agreement, the compensation rate shall
be adjusted, by mutual agreement of the Parties.

 

3.3          Billing for Professional Services Performed at Lab; Global
Billing.  Group acknowledges that Lab shall have the sole and exclusive right to
bill and collect for the Professional Services rendered under this Agreement. 
Lab shall bill and collect for such Professional Services and any and all
related technical services provided by Lab on a global fee basis, at its own
expense and under its own provider number.  Consequently, Group has, and shall
have, no claims as a third-party beneficiary, or otherwise, for any compensation
or other amounts from third-party payors.  Group shall seek and obtain
compensation for the performance of Professional Services only from Lab.  Group
shall not bill, assess or charge any fee, assessment or charge of any type
against any other person or entity for Professional Services provided.  Group
hereby assigns to Lab all right, title and interest in any accounts receivable
generated by the provision of Professional Services under this Agreement, to the
extent permitted by applicable law.  Accordingly, Lab shall be the sole owner of
the accounts receivable for any and all of the Professional Services performed
under this Agreement.  Group shall promptly deliver to Lab any and all
compensation, in whatever form, that is received by Group for Professional
Services performed under this Agreement.

 

ARTICLE IV.
INSURANCE AND INDEMNITY

 

4.1          Group Malpractice Liability Insurance.  Group shall obtain and
continuously maintain professional malpractice liability insurance coverage,
issued by an insurance company

 

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licensed or otherwise qualified to issue professional liability insurance
policies or coverage in the State of California, and acceptable to Lab, in the
amount of at least One Million Dollars ($1,000,000) per occurrence or claim and
Three Million Dollars ($3,000,000) in the annual aggregate for the acts and
omissions of Group and each Group Physician.  Such coverage shall provide for a
date of placement preceding or coinciding with the Effective Date of this
Agreement.

 

4.2          Group Certificate of Insurance.  On or before the Effective Date,
Group shall provide Lab with an original certificate evidencing professional
malpractice liability insurance coverage, and shall provide Lab with proof of
continued professional malpractice liability insurance coverage on an annual
basis (or as periodically requested by Lab) on behalf of each Group Physician. 
Group shall provide Lab with no less than thirty (30) calendar days’ prior
written notice of cancellation or any material change in such professional
malpractice liability insurance coverage.

 

4.3          Group Tail Coverage.  If Group’s professional malpractice liability
insurance is provided on a claims-made basis, upon the expiration or termination
of this Agreement for any reason, Group shall continuously maintain such
insurance or purchase from an insurance company licensed or otherwise qualified
to issue professional liability insurance policies or coverage in the State of
California, and acceptable to Lab, extended reporting period (i.e., “tail”)
coverage for the longest extended reporting period then available to ensure that
insurance coverage in the amount set forth in Section 4.1 is maintained for
claims which arise from services provided by Group or Group Physicians during
the term of this Agreement.  This Section shall survive any termination or
expiration of this Agreement.

 

4.4          Indemnification by Group.  Group and each Group Physician shall
indemnify, defend and hold harmless Lab against:  (i) any and all liability
arising out of Group’s failure to comply with the terms of this Agreement, and
any injury, loss, claims, or damages arising from the negligent operations,
acts, or omissions of Group or Group’s employees relating to or arising out of
their Services or this Agreement; and (ii) any and all costs and expenses,
including reasonable legal expenses, incurred by or on behalf of Lab in
connection with the defense of such claims.

 

4.5          Hold Harmless.  Lab shall be responsible for its own acts and
omissions and the acts and omissions of its employees and agents.  Lab shall not
be responsible for the acts and omissions of Group or Group’s employees and
agents in carrying out this Agreement.  Lab shall not be liable for any
judgment, settlement, award, fine or otherwise, which arises out of the acts and
omissions of Group, or its employees and agents, under this Agreement.  To the
extent Lab utilizes its own equipment, products, or other personal property in
the performance of its obligations under this Agreement, Lab shall ensure that
such equipment, product, or other personal property is suitable and fit for the
purpose intended by Lab, free from defects which may damage Group, and otherwise
operates in accordance with applicable government standards and safety
regulations.

 

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ARTICLE V.
RELATIONSHIP BETWEEN THE PARTIES

 

5.1          Independent Contractors.  Group and the Group Physicians are and
shall at all times be independent contractors with respect to Lab in meeting
Group’s responsibilities under this Agreement.  Nothing in this Agreement is
intended nor shall be construed to create a partnership, employer-employee or
joint venture relationship between Lab and Group or Lab and any Group Physician.

 

5.2          Limitation on Control.  Lab shall neither have nor exercise any
control or direction over Group’s or any Group Physician’s professional medical
judgment or the methods by which Group or any Group Physician performs
professional medical services; provided, however, that Group and Group
Physicians shall be subject to and shall at all times comply with the applicable
guidelines, policies and rules.

 

5.3          Practice of Medicine.  Group and Lab acknowledge that Lab is
neither authorized nor qualified to engage in any activity which may be
construed or deemed to constitute the practice of medicine.  To the extent that
any act or service required of, or reserved to, Lab in this Agreement is
construed or deemed to constitute the practice of medicine, the performance of
such act or service by Lab shall be deemed waived or unenforceable, unless this
Agreement can be amended to comply with the law, in which case the Parties shall
make such amendment.

 

5.4          Form 1099 or W-2.  If required to do so under applicable law, Lab
shall issue an Internal Revenue Service Form 1099 or Form W-2 to Group.

 

5.5          Exclusive Services.  For the term of the Agreement, all
Professional Services described in Section 1.1 shall be performed by Group
Physicians on an exclusive basis.  All professional services other than those
described in Section 1.1 shall be open services, except as otherwise determined
by Lab.

 

5.6          Agent of Group.  Kenneth J. Bloom, MD, FCAP, shall serve as the
Group’s sole and exclusive agent for purposes of communicating with Lab
concerning the rights of Group pursuant to this Agreement.  Group shall be bound
by all actions and agreements made by this agent.  Group may designate, from
time to time, a new agent of Group, pursuant to written notice to Lab.

 

5.7          Full-Time Service and Noncompetition.  During the term of this
Agreement, neither Group nor any Group Physician shall, without first obtaining
the prior written consent of Lab, participate as individuals, partners,
shareholders, employees, or contractors in any partnership, firm, or corporation
that owns, operates, provides services to, becomes financially interested in, or
otherwise affiliates with any person, partnership, firm, or corporation that
engages in or facilitates the performance of Professional Services at any
location other than Lab which is located within a twenty-five (25) mile radius
from Lab.  Group acknowledges that, as of the Effective Date, it does not
maintain any practice location independent of Lab and that it shall notify Lab
prior to establishing any such location.

 

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5.8          Physician Compensation Arrangements.  Group represents and warrants
to Lab that the compensation paid or to be paid by Group to any physician is and
will at all times be fair market value for services and items actually provided
by such physician, not taking into account the value or volume of referrals or
other business generated by such physician for Lab or any affiliate.  Group
further represents and warrants to Lab that Group has and will at all times
maintain a written agreement with each physician receiving compensation from
Group.

 

5.9          Merger or Sale of Group.

 

(A)   MERGER OR SALE RESTRICTIONS.  GROUP ACKNOWLEDGES THAT LAB HAS AGREED TO
ENTER INTO THIS AGREEMENT BASED UPON THE SKILLS, QUALIFICATIONS, EXPERIENCE, AND
CHARACTERISTICS OF GROUP AND THAT ANY MATERIAL CHANGE IN GROUP’S OPERATIONS,
OWNERSHIP, CONTROL OR QUALIFICATIONS MAY BE HARMFUL TO LAB’S INTERESTS UNDER
THIS AGREEMENT.  IN RECOGNITION OF LAB’S DEPENDENCE ON GROUP’S ABILITY TO
MAINTAIN ITS SKILLS, QUALIFICATIONS, EXPERIENCE, AND CHARACTERISTICS, GROUP
AGREES THAT DURING THE TERM OF THIS AGREEMENT, AND ANY EXTENSIONS THERETO, IT
SHALL NOT ENTER INTO A MERGER OR CONSOLIDATION WITH ANOTHER MEDICAL GROUP OR ANY
OTHER LEGAL ENTITY (“MERGER”) WITHOUT LAB’S PRIOR WRITTEN CONSENT.  GROUP
FURTHER AGREES THAT DURING THE TERM OF THIS AGREEMENT, AND ANY EXTENSIONS
THERETO, IT SHALL NOT ENTER INTO A SALE, CONVEYANCE, PLEDGE, EXCHANGE,
ASSIGNMENT, HYPOTHECATION, ENCUMBRANCE OR OTHER TRANSFER OF ANY EQUITY INTEREST
(INCLUDING BUT NOT LIMITED TO SHARES) OR ASSETS COMPRISING FIVE PERCENT (5%) OR
MORE OF THE EQUITY INTERESTS OR ASSETS OF THE GROUP (“SALE”) WITHOUT LAB’S PRIOR
WRITTEN CONSENT.  ANY PURPORTED MERGER OR SALE WITHOUT LAB’S WRITTEN CONSENT
SHALL BE VOID AND SHALL CONSTITUTE A BREACH OF THIS AGREEMENT.

 

(B)   CONSENT PROCEDURE.  IN CONNECTION WITH EACH CONSENT REQUESTED BY GROUP FOR
A MERGER OR SALE, GROUP SHALL SUBMIT TO LAB THE TERMS OF THE PROPOSED
TRANSACTION, THE IDENTITY OF THE PARTIES TO THE TRANSACTION, THE PROPOSED
DOCUMENTATION FOR THE TRANSACTION AND ALL OTHER INFORMATION REASONABLY REQUESTED
BY LAB CONCERNING THE PROPOSED TRANSACTION.

 

5.10        Purchase Option/Obligation.

 

(A)   UPON TERMINATION OF THIS AGREEMENT BY LAB FOR ANY REASON, LAB SHALL BE
ENTITLED (BUT NOT OBLIGATED) TO PURCHASE ALL TANGIBLE OR INTANGIBLE ASSETS OF
GROUP (THE “PURCHASE OPTION”).  LAB SHALL NOTIFY GROUP OF ITS INTENTION TO
EXERCISE THE PURCHASE OPTION WITHIN THIRTY (30) DAYS AFTER THE TERMINATION OF
THIS AGREEMENT.

 

(B)   UPON TERMINATION OF THIS AGREEMENT BY GROUP FOR ANY REASON OR BY MANAGER
BECAUSE OF A BREACH BY GROUP OF THIS AGREEMENT, LAB SHALL BE ENTITLED (BUT SHALL
NOT BE OBLIGATED) TO REQUIRE GROUP TO PURCHASE ANY TANGIBLE OR INTANGIBLE ASSET
OF LAB USED SOLELY IN THE OPERATION OF GROUP (THE “PURCHASE OBLIGATION”).  LAB
SHALL NOTIFY GROUP OF ITS INTENTION TO EXERCISE THE PURCHASE OBLIGATION WITHIN
THIRTY (30) DAYS AFTER THE TERMINATION OF THIS AGREEMENT.

 

(C)   THE PURCHASE PRICE FOR ANY PURCHASE UNDER THIS SECTION 5.10 SHALL BE
DETERMINED BY AN APPRAISER SELECTED BY THE PARTIES, WHO IS AN MAI OR AN ASA
APPRAISER WITH EXPERIENCE IN VALUING ASSETS USED IN CONNECTION WITH THE
MANAGEMENT OF MEDICAL PRACTICES AND THE PROVISION OF MEDICAL SERVICES.  EACH
PARTY AGREES TO NEGOTIATE IN GOOD FAITH THE TERMS OTHER

 

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THAN THE PURCHASE PRICE OF THE SALE/PURCHASE.  THE PURCHASING PARTY SHALL OBTAIN
ANY REQUIRED FINANCING FOR SUCH PURCHASE.

 

ARTICLE VI.
TERM AND TERMINATION

 

6.1          Term.  This Agreement shall become effective on July 1, 2008 (the
“Effective Date”), and shall continue until June 30, 2018 (the “Expiration
Date”), subject to the termination provisions of this Agreement.  This Agreement
shall automatically renew for two (2) additional terms of five (5) years each,
unless either Party gives the other Party written notice of its intention not to
renew this Agreement at least thirty (30) calendar days prior to the expiration
of the then current term.

 

6.2          Termination by Lab.  Lab shall have the right to terminate this
Agreement upon the occurrence of any one or more of the following events:

 

(A)           MATERIAL BREACH OF THIS AGREEMENT BY GROUP OR ANY GROUP PHYSICIAN
WHERE THE BREACH IS NOT CURED WITHIN THIRTY (30) CALENDAR DAYS AFTER LAB GIVES
WRITTEN NOTICE OF THE BREACH TO GROUP; OR

 

(B)           NEGLECT OF PROFESSIONAL DUTY BY GROUP IN A MANNER THAT POSES AN
IMMINENT DANGER TO THE HEALTH OR SAFETY OF ANY INDIVIDUAL, OR VIOLATES LAB’S
POLICIES, RULES AND REGULATIONS.

 

6.3          Termination by Group.  Group shall have the right to terminate this
Agreement immediately upon a material breach of this Agreement by Lab where the
breach is not cured within thirty (30) calendar days after Group gives written
notice of the breach to Lab.

 

6.4          Return of Property.  Upon any termination or expiration of this
Agreement, Group shall immediately return to Lab all of Lab’s property,
including Lab’s equipment, supplies, furniture, furnishings and patient records,
which is in Group’s possession or under Group’s control.

 

ARTICLE VII.
GENERAL PROVISIONS

 

7.1          Amendment.  This Agreement may be modified or amended only by
mutual written agreement of the Parties.  Any such modification or amendment
must be in writing, dated and signed by the Parties and attached to this
Agreement.

 

7.2          Assignment.  Except for assignment by Lab to an entity owned,
controlled by, or under common control with Lab, neither Party may assign any
interest or obligation under this Agreement without the other Party’s prior
written consent.  Subject to the foregoing, this Agreement shall be binding on
and shall inure to the benefit of the Parties and their respective successors
and assigns.

 

7.3          Attorneys’ Fees.  If either Party brings an action for any relief
or collection against the other Party, declaratory or otherwise, arising out of
the arrangement described in this Agreement, the losing Party shall pay to the
prevailing Party a reasonable sum for attorneys’ fees

 

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and costs actually incurred in bringing such action, including without
limitation fees incurred in arbitration, at trial, on appeal and on any review
therefrom, all of which shall be deemed to have accrued upon the commencement of
such action and shall be paid whether or not such action is prosecuted to
judgment.  Any judgment or order entered in such action shall contain a specific
provision providing for the recovery of attorneys’ fees and costs incurred in
enforcing such judgment.  For the purpose of this Section, attorneys’ fees shall
include fees incurred in connection with discovery, post judgment motions,
contempt proceedings, garnishment and levy.

 

7.4          Compliance with Laws.  The Parties shall comply with all applicable
laws, ordinances, codes and regulations of federal, state and local governments,
applicable to the performance of this Agreement including without limitation
laws that require Group to disclose any economic interest or relationship with
Lab.

 

7.5          Confidentiality.  Neither Party shall disclose any of the terms of
this Agreement to any person or entity (other than its attorneys or accountants)
without the prior written consent of the other Party, unless and only to the
extent such disclosure is required by law.

 

7.6          Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

 

7.7          Entire Agreement.  This Agreement is the entire understanding and
agreement of the Parties regarding its subject matter, and supersedes any prior
oral or written agreements, representations, understandings or discussions
between the Parties.  No other understanding between the Parties shall be
binding on them unless set forth in writing, signed and attached to this
Agreement.

 

7.8          Exhibits.  The attached exhibits, together with all documents
incorporated by reference in the exhibits, form an integral part of this
Agreement and are incorporated into this Agreement wherever reference is made to
them to the same extent as if they were set out in full at the point at which
such reference is made.

 

7.9          Force Majeure.  Neither Party shall be liable for nonperformance or
defective or late performance of any of its obligations under this Agreement to
the extent and for such periods of time as such nonperformance, defective
performance or late performance is due to reasons outside such Party’s control,
including acts of God, war (declared or undeclared), action of any governmental
authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear
incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, or
strikes.

 

7.10        Governing Law.  This Agreement shall be construed in accordance with
and governed by the laws of the State of California.

 

7.11        Headings.  The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

 

7.12        Meaning of Certain Words.  Wherever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns shall include the
plural and vice versa.

 

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7.13        No Third-Party Beneficiary Rights.  The Parties do not intend to
confer, and this Agreement shall not be construed to confer, any rights or
benefits to any person, firm, group, corporation or entity other than the
Parties.

 

7.14        Notices.  All notices or communications required or permitted under
this Agreement shall be given in writing and delivered personally or sent by
United States registered or certified mail with postage prepaid and return
receipt requested or by overnight delivery service (e.g., Federal Express,
DHL).  Notice shall be deemed given when sent, if sent as specified in this
Section, or otherwise deemed given when received.  In each case, notice shall be
delivered or sent to:

 

If to Lab, addressed to:

 

Clarient Diagnostic Services, Inc.

31 Columbia
Aliso Viejo, CA 92656

Attention:  Senior Vice President & Chief Financial Officer

 

If to Group, addressed to:

 

Clarient Pathology Services, Inc.

31 Columbia
Aliso Viejo, CA 92656

Attention:  Kenneth J. Bloom, MD, FCAP

 

7.15        Participation in Federal and State Programs.  Group hereby
represents that neither it nor any Group Physician is debarred, suspended,
excluded or otherwise ineligible to participate in any federal or state health
care program.

 

7.16        Right of Offset.  Group hereby expressly authorizes Lab, at Lab’s
sole discretion, to the fullest extent allowed by applicable law, at any time
and from time to time, to set off and/or withhold from Group’s compensation
payable pursuant to this Agreement, any sum or sums necessary to satisfy all or
any portion of any outstanding and delinquent obligation owed by Group to Lab
from any other financial arrangement Group may have with Lab, its subsidiaries
or Affiliates, or for any other services or space or equipment rental Lab, its
subsidiaries or Affiliates, may provide or have provided to Group.  Without
limiting the generality of the foregoing, this provision is intended to permit
Lab to apply any compensation payable to Group for services rendered pursuant to
this Agreement to any outstanding loan or rental obligations owed by Group to
Lab.

 

7.17        Severability.  If any provision of this Agreement is determined to
be illegal or unenforceable, that provision shall be severed from this
Agreement, and such severance shall have no effect upon the enforceability of
the remainder of this Agreement.

 

7.18        Trade Secrets.  During the term of this Agreement, Group will have
access to and become acquainted with confidential information and trade secrets
of Lab, including

 

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information and data relating to payor contracts and accounts, clients,
patients, patient groups, patient lists, billing practices and procedures,
business techniques and methods, strategic plans, operations and related data
(collectively, “Trade Secrets”).  All Trade Secrets are the property of Lab and
used in the course of Lab’s business, and shall be proprietary information
protected under the Uniform Trade Secrets Act.  Group shall not disclose to any
person or entity, directly or indirectly, either during the term of this
Agreement or at any time thereafter, any Trade Secrets, or use any Trade Secrets
other than in the course of providing the Services under this Agreement.  All
documents that Group prepares, or Trade Secrets that might be given to Group in
the course of providing the Services under this Agreement, are the exclusive
property of Lab, and, without the prior written consent of Lab, shall not be
removed from Lab’s premises.

 

7.19        Waiver.  No delay or failure to require performance of any provision
of this Agreement shall constitute a waiver of that provision as to that or any
other instance.  Any waiver granted by a Party must be in writing to be
effective, and shall apply solely to the specific instance expressly stated.

 

[signature page follows]

 

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The Parties have executed this Agreement on the Execution Date.

 

 

LAB

 

 

 

CLARIENT DIAGNOSTIC SERVICES, INC., a
Delaware corporation

 

 

 

 

 

/s/ Raymond Land

 

By:

Raymond Land

 

Its

Chief Financial Officer and Secretary

 

 

 

 

 

 

 

GROUP

 

 

 

CLARIENT PATHOLOGY SERVICES, INC.,

 

a California professional corporation

 

 

 

 

 

/s/ Kenneth J. Bloom

 

Kenneth J. Bloom, MD, FCAP,

 

President

 

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Exhibit 1.1

 

PROFESSIONAL SERVICES TO BE PROVIDED BY GROUP

 

Group shall perform Specialty services and provide appropriate reports and
laboratory interpretative services as required by Lab.  At a minimum, Lab shall
require Group to provide, and Group shall provide, all Professional Services,
including interpretative services, to permit Lab to bill globally for the
services that Lab currently furnishes and will furnish during the term of this
Agreement.  Group shall ensure that the Professional Services are performed in a
timely manner, as set forth in applicable laws and regulations and any
third-party payor program in which Lab participates.

 

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Exhibit 1.2

 

ADDITIONAL SERVICES TO BE PROVIDED BY GROUP

 

Group shall:

 

(a)                                  participate in risk management, quality
assurance and peer review programs, as reasonably requested by Lab;

 

(b)                                 assist Lab management with all preparation
for, and conduct of, any inspections and on-site surveys of Lab conducted by
governmental agencies or accrediting organizations;

 

(e)                                  cooperate with Lab in all litigation
matters affecting Group or Lab, consistent with advice from Group’s legal
counsel; and

 

(f)            cooperate and comply with Lab’s policies and procedures which are
pertinent to patient relations, quality assurance, scheduling, billing,
collections and other administrative matters and cooperate with Lab’s efforts to
bill and collect fees for services rendered to Lab’s patients.  All business
transactions related to the Services provided by Group, such as enrollment,
verification and billings, shall be conducted by and in the name of Lab.

 

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Exhibit 1.4

 

STAFFING PATTERN

 

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