Exhibit 10.1

 

AMENDED AND RESTATED PROFESSIONAL SERVICES AGREEMENT

 

by and between

 

CLARIENT DIAGNOSTIC SERVICES, INC.,

 

CLARIENT, INC.

 

and

 

CLARIENT PATHOLOGY SERVICES, INC.

 

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AMENDED AND RESTATED PROFESSIONAL SERVICES AGREEMENT

 

This AMENDED AND RESTATED PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is
entered into as of September 1, 2009 (the “Execution Date”), by and between
CLARIENT DIAGNOSTIC SERVICES, INC., a Delaware corporation (“Lab”), CLARIENT,
INC., a Delaware corporation (“Clarient”), and CLARIENT PATHOLOGY SERVICES,
INC., a California professional corporation (“Group”).  Lab, Clarient and Group
are sometimes referred to in this Agreement as a “Party” or, collectively, as
the “Parties.”

 

RECITALS

 

A.            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”).  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. 
Clarient is the sole shareholder of Lab.

 

C.            Group and Lab are parties to a Professional Services Agreement,
dated as of July 1, 2008 (the “Original PSA”), pursuant to which Group provides
certain professional services to Lab, and Clarient and Group are parties to a
Management Services Agreement, dated as of July 1, 2008 (the “Original MSA”),
pursuant to which Manager provides certain administrative services to Group.

 

D.            Group, Clarient and Lab desire to amend and restate the Original
PSA as set forth herein in order to, among other things, adjust the
consideration payable to Group so that such consideration reflects the fair
value of the professional services provided to Lab by Group and incorporate the
provisions of the Original MSA relating to Clarient’s obligation to provide
certain administrative services to Group.  Concurrently herewith, Clarient and
Group are terminating the Original MSA.

 

AGREEMENT

 

THE PARTIES AGREE AS FOLLOWS:

 

ARTICLE I.

GROUP’S OBLIGATIONS TO LAB

 

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 SET FORTH IN THIS
AGREEMENT.  THE PROFESSIONAL SERVICES AND THE ADDITIONAL SERVICES ARE SOMETIMES
REFERRED TO COLLECTIVELY IN THIS AGREEMENT AS THE “SERVICES.”

 

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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 DATE OF THIS AGREEMENT 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 DATE OF THIS AGREEMENT ARE BOARD CERTIFIED.

 

1.4                               STAFFING.  GROUP SHALL ENSURE STAFFING BY SUCH
QUALIFIED GROUP PHYSICIANS AS DETERMINED NECESSARY BY GROUP, IN ITS SOLE
REASONABLE DISCRETION, TO PROVIDE THE SERVICES.  THE PARTIES SHALL ADJUST THE
PROFESSIONAL SERVICES FEE TO REFLECT ANY CHANGES IN STAFFING LEVELS OF GROUP
PHYSICIANS.  GROUP SHALL CONSIDER ADJUSTMENTS TO STAFFING LEVELS AND/OR STAFFING
PATTERNS, AS REQUESTED BY LAB FROM TIME TO TIME, BUT THE FINAL AUTHORITY WITH
RESPECT TO ALL STAFFING LEVELS AND STAFFING PATTERNS SHALL BE MADE SOLELY BY
GROUP IN ITS REASONABLE DISCRETION.

 

1.5                               PERFORMANCE STANDARDS.  GROUP AND EACH GROUP
PHYSICIAN SHALL, AS APPLICABLE

 

(A)                                  COMPLY WITH ALL POLICIES, RULES AND
REGULATIONS OF LAB TO THE EXTENT THAT THESE DO NO INTERFERE WITH THE MEDICAL
DECISION-MAKING PROCESSES OF GROUP AND EACH GROUP PHYSICIAN;

 

(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.

 

1.8                               SOLE AUTHORITY TO PROVIDE THE SERVICES. 
NOTWITHSTANDING ANY PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, GROUP AND THE
GROUP PHYSICIANS, ALL OF WHOM ARE LICENSED PHYSICIANS, SHALL HAVE THE SOLE AND
EXCLUSIVE AUTHORITY AND CONTROL OVER ALL ASPECTS OF THE SERVICES AND ANY OTHER
MEDICAL OR HEALTHCARE SERVICES THAT MAY BE PERFORMED BY GROUP AND THAT ARE
REQUIRED BY APPLICABLE LAWS OR GOVERNMENT REGULATIONS TO BE PERFORMED OR MADE BY
A LICENSED PHYSICIAN.  ANY DELEGATION OF AUTHORITY TO CLARIENT PURSUANT TO THIS
AGREEMENT, OR OTHERWISE, THAT WOULD REQUIRE OR PERMIT CLARIENT TO ENGAGE IN THE
PRACTICE OF MEDICINE IN ANY JURISDICTION SHALL BE PROHIBITED AND DEEMED
INEFFECTIVE, AND GROUP AND THE GROUP PHYSICIANS SHALL HAVE THE SOLE AUTHORITY
WITH RESPECT TO SUCH MATTERS.  THE PARTIES FURTHER ACKNOWLEDGE AND AGREE THAT
THE TERMS OF ANY PAYOR AGREEMENTS OR OTHER SERVICES AGREEMENTS ENTERED INTO BY
LAB OR CLARIENT THAT AFFECT THE MEDICAL DECISION-MAKING PROCESSES OR THE
PRACTICE OF MEDICINE BY GROUP OR ANY GROUP PHYSICIANS SHALL BE SUBJECT TO THE
REVIEW AND FINAL

 

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APPROVAL OF GROUP.  GROUP SHALL BE SOLELY RESPONSIBLE FOR ALL STAFFING LEVELS
AND/OR STAFFING PATTERNS OF GROUP PHYSICIANS.

 

ARTICLE II.

LAB’S OBLIGATIONS

 

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 PROVISION BY LAB OF ITS OWN TECHNICAL COMPONENT SERVICES AND THE
COST-EFFICIENT OPERATION OF LAB.  LAB SHALL, AFTER CONSULTATION WITH GROUP, HAVE
SOLE DISCRETION WITH REGARD TO SELECTION AND RETENTION OF THESE PERSONNEL WHO
PROVIDE LAB’S TECHNICAL COMPONENT AND TO DETERMINE LEVELS OF STAFFING.  TO THE
EXTENT THAT ALLIED HEALTH STAFF ARE REQUIRED BY GROUP TO ASSIST IN THE PROVISION
OF GROUP’S PROFESSIONAL MEDICAL SERVICES, LAB SHALL PROVIDE SUCH STAFF AT THE
DIRECTION OF GROUP AND GROUP SHALL HAVE THE AUTHORITY SET FORTH IN
SECTION 3.1(F) WITH RESPECT TO SUCH STAFF. CONTROL AND DIRECTION OF ALL
PERSONNEL (WHETHER LAB’S OWN PERSONNEL OR GROUP’S PERSONNEL) FOR MEDICAL MATTERS
SHALL REST WITH GROUP.

 

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 AS ARE NECESSARY FOR THE PROVISION BY LAB OF ITS OWN
TECHNICAL COMPONENT SERVICES AND 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.  IN ADDITION, TO THE EXTENT THAT
EQUIPMENT AND SUPPLIES ARE REQUIRED BY GROUP TO ASSIST IN THE PROVISION OF
GROUP’S PROFESSIONAL MEDICAL SERVICES, LAB SHALL PROVIDE SUCH EQUIPMENT AND
SUPPLIES AT THE DIRECTION OF GROUP AND GROUP SHALL RETAIN THE RIGHT TO SELECT
SUCH EQUIPMENT AND SUPPLIES. LAB SHALL, AT ITS OWN EXPENSE, KEEP AND MAINTAIN
ALL 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.

ADMINISTRATIVE SERVICES

 

3.1                               CLARIENT’S OBLIGATIONS TO GROUP.

 

(A)                                  FINANCIAL MANAGEMENT SERVICES.  CLARIENT
SHALL PROVIDE FINANCIAL MANAGEMENT SERVICES NECESSARY AND APPROPRIATE FOR
GROUP’S OPERATIONS, INCLUDING ACCOUNTING, BOOKKEEPING, OPERATION AND CAPITAL
BUDGETING, TAX MATTERS, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE PROCESSING, AND
ELECTRONIC DATA PROCESSING.  ALL BUSINESS RECORDS, PAPERS AND DOCUMENTS SHALL
REMAIN THE SOLE PROPERTY OF GROUP, SHALL BE AVAILABLE FOR INSPECTION BY GROUP AT
ALL REASONABLE TIMES, AND SHALL BE DELIVERED TO GROUP UPON ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT.  CLARIENT SHALL BE ENTITLED TO RETAIN A COMPLETE
COPY OF ALL SUCH DOCUMENTS UPON ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT.

 

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(B)                                 CONTRACTING SERVICES.  IN CONSULTATION WITH
GROUP, CLARIENT SHALL NEGOTIATE THE TERMS AND CONDITIONS OF ALL BUSINESS
AGREEMENTS, INCLUDING ALL AGREEMENTS WITH LENDERS, VENDORS AND CONSULTANTS,
PROVIDED THAT GROUP SHALL RETAIN THE AUTHORITY TO EXECUTE ALL SUCH BUSINESS
AGREEMENTS.  FURTHERMORE, ANY TERMS OR PROVISIONS OF BUSINESS AGREEMENTS THAT
AFFECT THE MEDICAL DECISION-MAKING PROCESSES OR THE PRACTICE OF MEDICINE BY
GROUP OR ANY GROUP PHYSICIAN SHALL BE SUBJECT TO THE FINAL APPROVAL OF GROUP.

 

(C)                                  DAY-TO-DAY SERVICES.  CLARIENT SHALL
FURNISH OR OBTAIN ALL TELEPHONES, PAGING DEVICES, OFFICE SERVICES (INCLUDING
SECRETARIAL, DUPLICATION AND FACSIMILE SERVICES) AND ANY OTHER SERVICES OF A
SIMILAR NATURE REASONABLY NECESSARY IN CONNECTION WITH THE DAY-TO-DAY OPERATIONS
OF GROUP AFTER CONSULTATION WITH GROUP OR AS DIRECTED BY GROUP.

 

(D)                                 ATTORNEY-IN-FACT.  SUBJECT TO
SECTION 3.2(A), GROUP APPOINTS CLARIENT (AND ANY SUBCONTRACTOR DESIGNATED BY
CLARIENT) AS GROUP’S LAWFUL ATTORNEY-IN-FACT FOR THE FOLLOWING PURPOSES (AND
SHALL EXECUTE THE POWER OF ATTORNEY ATTACHED AS EXHIBIT 3.1(D)):

 

(I)                                     BILLING AND COLLECTIONS.  TO COLLECT ALL
REVENUE FROM WHATEVER SOURCE, INCLUDING ACCOUNTS RECEIVABLE, DUE TO GROUP
HEREUNDER (“COLLECTIONS”), AND TO RECEIVE ALL COLLECTIONS ON GROUP’S BEHALF AND
TO SUE FOR AND GIVE SATISFACTION FOR MONIES DUE ON ACCOUNT AND TO WITHDRAW ANY
CLAIMS, SUITS OR PROCEEDINGS PERTAINING TO OR ARISING OUT OF CLARIENT’S OR
GROUP’S RIGHT TO COLLECT SUCH ACCOUNTS;

 

(II)                                  ENDORSEMENT.  TO TAKE POSSESSION OF AND
ENDORSE IN GROUP’S NAME ANY NOTES, CHECKS, MONEY ORDERS, INSURANCE PAYMENTS AND
ANY OTHER INSTRUMENTS RECEIVED AS COLLECTIONS; AND

 

(III)                               BANKING POWERS.  TO DEPOSIT ALL COLLECTIONS
DIRECTLY INTO A BANK ACCOUNT MUTUALLY SELECTED BY CLARIENT AND GROUP.  CLARIENT
(AND ANY SUBCONTRACTOR DESIGNATED BY CLARIENT) SHALL HAVE THE RIGHT TO MAKE
WITHDRAWALS FROM SUCH ACCOUNT TO PAY ALL COSTS AND EXPENSES INCURRED IN THE
OPERATION OF GROUP AND TO FULFILL ALL OTHER TERMS OF THIS AGREEMENT.

 

(E)                                  SUPPLIES.  CLARIENT SHALL ARRANGE FOR SUCH
NON-MEDICAL SUPPLIES AS MAY BE REASONABLY NECESSARY FOR THE PROPER AND EFFICIENT
OPERATION OF THE LAB TO BE DELIVERED TO GROUP, AFTER CONSULTATION WITH GROUP.

 

(F)                                    SUPPORT PERSONNEL.  CLARIENT SHALL, IN
CONSULTATION WITH GROUP, PROVIDE TO GROUP THE SUPPORT SERVICES OF SUCH
NON-LICENSED PERSONNEL AS MAY BE REASONABLY REQUIRED TO SUPPORT GROUP’S
OPERATIONS AND TO ENABLE GROUP TO CARRY OUT AND PERFORM THE PROFESSIONAL
SERVICES (“SUPPORT PERSONNEL”).

 

(I)                                     HIRING AND TERMINATION.  CLARIENT SHALL,
AFTER CONSULTATION WITH GROUP, HIRE AND FIRE ALL SUPPORT PERSONNEL.  GROUP SHALL
CONSULT WITH CLARIENT CONCERNING GROUP’S RECOMMENDATIONS ON PERFORMANCE
EVALUATIONS OF SUPPORT PERSONNEL.  WHILE GROUP DOES NOT HAVE THE AUTHORITY TO
TERMINATE THE EMPLOYMENT OF SUPPORT PERSONNEL, GROUP SHALL HAVE THE RIGHT TO
REJECT AS UNSUITABLE ANY PERSONNEL FURNISHED BY CLARIENT AT ANY TIME AND FROM
TIME-TO-TIME DURING THE TERM OF THIS AGREEMENT.  SUCH REJECTION SHALL BE HONORED
BY CLARIENT SUBJECT TO GROUP’S SHOWING THAT SAID PERSONNEL ARE TECHNICALLY
UNSATISFACTORY FOR THE JOB TO WHICH SUCH PERSONNEL HAS BEEN ASSIGNED BY REASON
OF LACK OF EXPERIENCE, ABILITY OR TECHNICAL SKILL OR BY REASON OF PERSONAL
INCOMPATIBILITY WITH OTHER PERSONS WITH WHOM THE PERSONNEL ARE REQUIRED TO
WORK.  NOTWITHSTANDING ANY OF THE STATEMENTS IN THIS SECTION 3.1(F)(I), CLARIENT
SHALL HAVE THE RIGHT TO TERMINATE OR HIRE SUPPORT PERSONNEL FOR ANY REASON IT
DEEMS NECESSARY.

 

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(II)                                  COMPENSATION AND EMPLOYEE BENEFITS. 
CLARIENT SHALL, IN CONSULTATION WITH GROUP, DETERMINE AND PAY ANY COMPENSATION
PAYABLE TO SUCH SUPPORT PERSONNEL, INCLUDING SALARIES, DEFERRED COMPENSATION,
FRINGE BENEFITS, BONUSES, HEALTH INSURANCE, LONG-TERM DISABILITY AND GROUP LIFE
INSURANCE, WORKERS’ COMPENSATION INSURANCE, UNEMPLOYMENT INSURANCE, RETIREMENT
BENEFITS AND ANY OTHER BENEFITS THAT SUCH SUPPORT PERSONNEL MAY RECEIVE. 
CLARIENT SHALL BE RESPONSIBLE FOR ALL EMPLOYEE RECORD KEEPING, PAYROLL
ACCOUNTING (INCLUDING SOCIAL SECURITY AND OTHER PAYROLL TAX REPORTING), INCOME
TAX WITHHOLDING, SOCIAL SECURITY AND OTHER PAYROLL TAXES, FORMS PROCESSING,
PAYROLL AND INTERNAL REVENUE SERVICE FILINGS AND RECORDS STORAGE AND RETRIEVAL
ON BEHALF OF ALL SUPPORT PERSONNEL.

 

(III)                               SUPERVISION AND TRAINING OF SUPPORT
PERSONNEL.  CLARIENT SHALL, IN CONSULTATION WITH GROUP, MANAGE AND SUPERVISE ALL
SUPPORT PERSONNEL AND ARRANGE FOR TRAINING OF ALL SUPPORT PERSONNEL.

 

(G)                                 REPORTS.  CLARIENT SHALL PROVIDE GROUP WITH
FINANCIAL STATEMENTS RELATING TO GROUP OPERATIONS (“GROUP FINANCIAL STATEMENTS”)
ON A PERIODIC BASIS, BUT AT LEAST ANNUALLY.  GROUP SHALL, AT ITS SOLE DISCRETION
AND EXPENSE, HAVE THE RIGHT TO CONDUCT AN INDEPENDENT AUDIT OF ANY GROUP
FINANCIAL STATEMENTS, AT GROUP’S EXPENSE.

 

(H)                                 BOOKS AND RECORDS; CONFIDENTIALITY.  ALL
PATIENT REPORTS, FINANCIAL RECORDS, CORPORATE RECORDS, PERSONNEL FILES, WRITTEN
PROCEDURES AND OTHER SUCH ITEMS RELATING TO THE BUSINESS AND ACTIVITIES OF GROUP
(“GROUP RECORDS”) SHALL BE THE PROPERTY OF GROUP.  UPON ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT, CLARIENT SHALL, AT GROUP’S REQUEST, TRANSMIT, AT
GROUP’S EXPENSE, ALL GROUP RECORDS TO GROUP OR TO ANY OTHER PARTY DESIGNATED BY
GROUP.  CLARIENT SHALL HAVE A RIGHT TO COPY ALL RECORDS PRIOR TO TRANSMITTAL, AT
ITS EXPENSE, SUBJECT TO APPLICABLE LAW.  WITH RESPECT TO PATIENT REPORTS,
COPYING SHALL ONLY BE AS APPLICABLE LAW REQUIRES OR PERMITS, OR IN CONNECTION
WITH A MALPRACTICE ACTION INVOLVING CLARIENT.  CLARIENT AND GROUP SHALL COMPLY
WITH ALL APPLICABLE LAWS CONCERNING THE CONFIDENTIALITY OF ALL GROUP RECORDS. 
CLARIENT AND ITS EMPLOYEES SHALL KEEP CONFIDENTIAL ALL STATISTICAL, FINANCIAL,
AND PERSONNEL DATA RELATING TO THE BUSINESS OF GROUP AND ANY GROUP PHYSICIANS
EXCEPT FOR ANY DATA THAT BECOMES PUBLICLY AVAILABLE, OR ANY DATA TO WHICH THE
PUBLIC HAS THE LEGAL RIGHT OF ACCESS, OR THAT MAY BE RIGHTFULLY OBTAINED FROM
THIRD PARTIES.

 

(I)                                     INSURANCE.  CLARIENT SHALL ASSIST GROUP
IN OBTAINING MALPRACTICE INSURANCE COVERAGE, AS SET FORTH IN SECTION 5.1, THE
COST OF WHICH SHALL BE INCLUDED IN THE PROFESSIONAL SERVICES FEE SET FORTH IN
SECTION 4.1.

 

(J)                                     CLARIENT’S RIGHT TO SUBCONTRACT. 
CLARIENT MAY SUBCONTRACT WITH OTHER PERSONS OR ENTITIES FOR ANY OF THE SERVICES
THAT CLARIENT IS REQUIRED TO PERFORM UNDER THIS AGREEMENT.

 

(K)                                  EXCLUSIVE AUTHORITY.  CLARIENT SHALL HAVE
THE EXCLUSIVE AUTHORITY TO PERFORM ALL OF ITS DUTIES SET FORTH IN THIS
AGREEMENT, SUBJECT TO THE FINAL AUTHORITY OF GROUP WHERE SPECIFIED IN THIS
AGREEMENT.

 

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3.2                               GROUP’S RIGHTS AND OBLIGATIONS.

 

(A)                                  BILLING MATTERS.  THE PARTIES RECOGNIZE
THAT MANY PATIENTS, REFERRING CLINICIANS AND THIRD PARTY PAYORS REQUIRE OR
REQUEST THE SUBMISSION OF A SINGLE CLAIM FOR THE TECHNICAL AND PROFESSIONAL
COMPONENT OF PATHOLOGY AND LABORATORY SERVICES, WHICH TYPICALLY ARE BILLED UNDER
THE SAME CPT CODE WITH THE APPROPRIATE MODIFIER(S).  TO ACCOMMODATE SUCH
REQUIREMENTS AND REQUESTS, THE PARTIES BELIEVE THAT IT IS IMPORTANT TO SUBMIT
GLOBAL CLAIMS FOR GROUP’S PROFESSIONAL SERVICES AND LAB’S TECHNICAL COMPONENT
SERVICES.  THEREFORE, UNLESS OTHERWISE AGREED UPON BY THE PARTIES, GROUP’S
PROFESSIONAL SERVICES WILL BE BILLED ON A GLOBAL BASIS WITH LAB’S TECHNICAL
COMPONENT SERVICES.  NOTWITHSTANDING THE FOREGOING, GROUP SHALL HAVE THE RIGHT
TO APPROVE THE FEES TO BE CHARGED FOR ITS PROFESSIONAL SERVICES AND ALL PRICE
NEGOTIATIONS WITH THIRD PARTY PAYORS FOR ITS PROFESSIONAL SERVICES.

 

(B)                                 ASSISTANCE WITH COLLECTIONS.  GROUP SHALL
PROVIDE CLARIENT WITH COMPLETE AND ACCURATE CHARGE SLIPS, CLAIMS OR ENCOUNTER
REPORTS SPECIFICALLY IDENTIFYING SERVICES RENDERED, SERVICE AND DIAGNOSIS CODES
IN A FORM AND SUBSTANCE AS INDICATED BY CLARIENT FROM TIME-TO-TIME.  GROUP SHALL
ASSIST CLARIENT, UPON CLARIENT’S REQUEST, WITH ALL NECESSARY STEPS FOR CLARIENT
TO MANAGE AND ADMINISTER THE FINANCIAL ASPECTS OF THE GROUP, INCLUDING REQUIRED
ASSISTANCE TO COMPLETE COLLECTIONS.

 

(C)                                  GROUP GOVERNING DOCUMENTS.  THE FOLLOWING
GOVERNING AND OPERATIONAL DOCUMENTS  ARE DEFINED AS THE “GOVERNING DOCUMENTS”: 
GROUP’S ARTICLES OF INCORPORATION, BYLAWS AND SHAREHOLDERS’ AGREEMENTS.  GROUP
SHALL CONSISTENTLY AND UNIFORMLY UTILIZE THE GOVERNING DOCUMENTS IN THE CONDUCT
OF ITS BUSINESS AND SHALL COMPLY WITH AND REQUIRE PERFORMANCE OF ALL OF THE
PROVISIONS CONTAINED IN THE GOVERNING DOCUMENTS.  GROUP SHALL NOT REVISE, MODIFY
OR TERMINATE ANY OF THE GOVERNING DOCUMENTS, OR ENTER INTO ANY NEW AGREEMENT OR
ARRANGEMENT AFFECTING THE OWNERSHIP OR VOTING OF GROUP’S EQUITY SECURITIES OR
PARTNERSHIP INTERESTS (AS APPLICABLE) WITHOUT CLARIENT’S PRIOR WRITTEN
APPROVAL.  NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL CLARIENT’S APPROVAL
BE REQUIRED FOR ANY HIRING OR TERMINATION OF ANY PHYSICIAN OR OTHER PROFESSIONAL
PERSONNEL BY GROUP, OR ANY OTHER ISSUES RELATED TO MEDICAL DECISION-MAKING
PROCESSES OR THE PRACTICE OF MEDICINE BY GROUP OR ANY GROUP PHYSICIAN.

 

ARTICLE IV.

COMPENSATION

 

4.1                               PROFESSIONAL SERVICES FEE.  ON OR BEFORE THE
FIFTEENTH (15TH) BUSINESS DAY OF EACH CALENDAR MONTH DURING THE TERM OF THIS
AGREEMENT, CLARIENT SHALL PAY GROUP A MONTHLY FEE EQUAL TO THE AGGREGATE OF ALL
ESTIMATED SALARY AND BENEFIT EXPENSES AND ALL OTHER COSTS AND EXPENSES INCURRED
BY GROUP FOR THE PROVISION OF PROFESSIONAL SERVICES TO LAB UNDER THIS AGREEMENT
DURING THE IMMEDIATELY PRECEDING MONTH, AFTER PRESENTMENT BY GROUP TO LAB OF ALL
AVAILABLE INVOICES OR OTHER DOCUMENTATION THAT SET FORTH THE AMOUNT, NATURE AND
PURPOSE OF SUCH COSTS AND EXPENSES.

 

4.2                               MANAGEMENT FEE.  CLARIENT’S COMPENSATION FOR
ITS MANAGEMENT AND ADMINISTRATIVE SERVICES UNDER THIS AGREEMENT SHALL BE THE
DIFFERENCE BETWEEN THE ACTUAL COLLECTIONS RECEIVED FOR THE PROFESSIONAL SERVICES
AND THE PROFESSIONAL SERVICES FEE PAID TO GROUP UNDER SECTION 4.1 ABOVE.

 

4.3                               CATCH-UP AND WAIVER.  TO THE EXTENT THAT THE
ACTUAL PAYMENTS TO DATE UNDER THE ORIGINAL PSA ARE LESS THAN SHOULD HAVE BEEN
PAID AS DETERMINED PURSUANT TO THIS AGREEMENT (THE “DEFICIENCY”), (1) CLARIENT
RETROACTIVELY WAIVES THE RIGHT TO ANY COST REIMBURSEMENTS PREVIOUSLY REQUESTED
FROM GROUP, AND (2) IF SUCH WAIVER DOES NOT COVER THE ENTIRE DEFICIENCY,
CLARIENT WILL PAY AS SOON AS REASONABLY PRACTICAL AFTER COMPUTATION OF THE
DEFICIENCY ANY REMAINING AMOUNT TO GROUP.  CLARIENT HEREBY EXPRESSLY WAIVES AND
AGREES NOT TO ENFORCE GROUP’S OBLIGATION TO PAY ANY CONSIDERATION TO CLARIENT
PURSUANT TO THE TERMS OF THE ORIGINAL MSA.

 

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4.4                               PERIODIC ADJUSTMENTS.  GROUP AND CLARIENT
SHALL REVIEW THE COMPENSATION STRUCTURE SET FORTH HEREIN NO LESS FREQUENTLY THAN
QUARTERLY AND MAY AGREE IN WRITING TO MODIFY SUCH COMPENSATION STRUCTURE FROM
TIME TO TIME.  SUCH REVIEW SHALL CONSIDER THE SCOPE OF THE OPERATIONS AND
SERVICES PROVIDED PURSUANT TO THIS AGREEMENT AT THE TIME OF THE REVIEW, CHANGES
IN THE PURCHASING POWER OF MONEY AND THE EXPENSES AND RISKS TO GROUP IN
PERFORMING ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

4.5                               RIGHT OF OFFSET.  GROUP HEREBY EXPRESSLY
AUTHORIZES CLARIENT, AT CLARIENT’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 CLARIENT 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 CLARIENT 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 CLARIENT.

 

4.6                               NO REFERRALS.  NOTHING IN THIS AGREEMENT
REQUIRES, AND THERE ARE NO UNDERSTANDINGS OR ARRANGEMENTS BETWEEN THE PARTIES
WITH RESPECT TO THE RECOMMENDATION, REFERRAL OR ANY OTHER ARRANGEMENT FOR THE
PROVISION OF ANY ITEM OR SERVICE OFFERED BY THE PARTIES OR ANY OF THEIR
RESPECTIVE AFFILIATES, AND NO COMPENSATION OR OTHER BENEFITS TO GROUP UNDER THIS
AGREEMENT REQUIRE OR ARE IN ANY WAY CONTINGENT THEREON.

 

4.7                               BILLING FOR PROFESSIONAL SERVICES PERFORMED AT
LAB; GLOBAL BILLING.  GROUP AND GROUP PHYSICIANS ACKNOWLEDGE THAT LAB SHALL HAVE
THE SOLE AND EXCLUSIVE RIGHT TO BILL AND COLLECT FOR THE PROFESSIONAL SERVICES
RENDERED UNDER THIS AGREEMENT, AND HEREBY ASSIGN THEIR RIGHT TO BILL AND COLLECT
FOR SUCH PROFESSIONAL SERVICES TO LAB.  SUBJECT TO SECTION 3.2(A), 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 CLARIENT PURSUANT TO
SECTION 4.1.  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 AND GROUP PHYSICIANS HEREBY ASSIGN 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 V.

INSURANCE AND INDEMNITY

 

5.1                               GROUP MALPRACTICE LIABILITY INSURANCE.  GROUP
SHALL OBTAIN AND CONTINUOUSLY MAINTAIN PROFESSIONAL MALPRACTICE LIABILITY
INSURANCE COVERAGE, ISSUED BY AN INSURANCE COMPANY LICENSED OR OTHERWISE
QUALIFIED TO ISSUE PROFESSIONAL LIABILITY INSURANCE POLICIES OR COVERAGE IN THE

 

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STATE OF CALIFORNIA, AND ACCEPTABLE TO CLARIENT AND 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.  CLARIENT MAY ASSIST LAB IN OBTAINING AND RENEWING
MEDICAL MALPRACTICE INSURANCE.  SUCH COVERAGE SHALL PROVIDE FOR A DATE OF
PLACEMENT PRECEDING OR COINCIDING WITH THE EFFECTIVE DATE OF THIS AGREEMENT.

 

5.2                               GROUP CERTIFICATE OF INSURANCE.  ON OR BEFORE
THE DATE OF THIS AGREEMENT, GROUP SHALL PROVIDE CLARIENT AND LAB WITH AN
ORIGINAL CERTIFICATE EVIDENCING PROFESSIONAL MALPRACTICE LIABILITY INSURANCE
COVERAGE, AND SHALL PROVIDE CLARIENT AND LAB WITH PROOF OF CONTINUED
PROFESSIONAL MALPRACTICE LIABILITY INSURANCE COVERAGE ON AN ANNUAL BASIS (OR AS
PERIODICALLY REQUESTED BY CLARIENT AND LAB) ON BEHALF OF EACH GROUP PHYSICIAN. 
GROUP SHALL PROVIDE CLARIENT AND 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.

 

5.3                               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 CLARIENT AND
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 5.1 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.

 

5.4                               INDEMNIFICATION BY GROUP.  GROUP SHALL
INDEMNIFY, DEFEND AND HOLD HARMLESS CLARIENT AND 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 THE 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.

 

5.5                               HOLD HARMLESS.  CLARIENT AND LAB SHALL BE
RESPONSIBLE FOR THEIR OWN ACTS AND OMISSIONS AND THE ACTS AND OMISSIONS OF THEIR
EMPLOYEES AND AGENTS.  NEITHER CLARIENT NOR LAB SHALL BE RESPONSIBLE FOR THE
ACTS AND OMISSIONS OF GROUP OR GROUP’S EMPLOYEES AND AGENTS IN CARRYING OUT THIS
AGREEMENT.  NEITHER CLARIENT NOR LAB SHALL 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 THAT
CLARIENT AND LAB UTILIZE THEIR OWN EQUIPMENT, PRODUCTS, OR OTHER PERSONAL
PROPERTY IN THE PERFORMANCE OF THEIR OBLIGATIONS UNDER THIS AGREEMENT, CLARIENT
AND LAB SHALL ENSURE THAT SUCH EQUIPMENT, PRODUCT, OR OTHER PERSONAL PROPERTY IS
SUITABLE AND FIT FOR THE PURPOSE INTENDED BY CLARIENT AND LAB, FREE FROM DEFECTS
WHICH MAY DAMAGE GROUP, AND OTHERWISE OPERATES IN ACCORDANCE WITH APPLICABLE
GOVERNMENT STANDARDS AND SAFETY REGULATIONS.

 

5.6                               COOPERATION BETWEEN THE PARTIES.

 

(A)                                  THE PARTIES RECOGNIZE THAT, DURING THE TERM
OF THIS AGREEMENT AND FOR A PERIOD THEREAFTER, CERTAIN RISK MANAGEMENT ISSUES,
LEGAL ISSUES, CLAIMS OR ACTIONS MAY ARISE THAT INVOLVE OR COULD POTENTIALLY
INVOLVE THE PARTIES AND THEIR RESPECTIVE EMPLOYEES AND AGENTS.  THE PARTIES
FURTHER RECOGNIZE THE IMPORTANCE OF COOPERATING WITH EACH OTHER IN GOOD FAITH
WHEN SUCH ISSUES, CLAIMS OR ACTIONS ARISE, TO THE EXTENT SUCH COOPERATION DOES
NOT VIOLATE ANY APPLICABLE LAWS, CAUSE THE BREACH OF

 

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ANY DUTIES CREATED BY ANY POLICIES OF INSURANCE OR PROGRAMS OF SELF-INSURANCE,
OR OTHERWISE COMPROMISE THE CONFIDENTIALITY OF COMMUNICATIONS OR INFORMATION
REGARDING THE ISSUES, CLAIMS OR ACTIONS.  AS SUCH, THE PARTIES HEREBY AGREE TO
COOPERATE IN GOOD FAITH, USING THEIR BEST EFFORTS, TO ADDRESS SUCH RISK
MANAGEMENT AND CLAIMS HANDLING ISSUES IN A MANNER THAT STRONGLY ENCOURAGES FULL
COOPERATION BETWEEN THE PARTIES.

 

(B)                                 THE PARTIES FURTHER AGREE THAT IF A
CONTROVERSY, DISPUTE, CLAIM, ACTION OR LAWSUIT (EACH, AN “ACTION”) ARISES WITH A
THIRD-PARTY WHEREIN ALL OF THE PARTIES ARE INCLUDED AS DEFENDANTS, EACH PARTY
SHALL PROMPTLY DISCLOSE TO THE OTHER PARTY IN WRITING THE EXISTENCE AND
CONTINUING STATUS OF THE ACTION AND ANY NEGOTIATIONS RELATING THERETO.  EACH
PARTY SHALL MAKE EVERY REASONABLE ATTEMPT TO INCLUDE THE OTHER PARTIES IN ANY
SETTLEMENT OFFER OR NEGOTIATIONS.  IN THE EVENT THE OTHER PARTIES ARE NOT
INCLUDED IN THE SETTLEMENT, THE SETTLING PARTY SHALL IMMEDIATELY DISCLOSE TO THE
OTHER PARTIES IN WRITING THE ACCEPTANCE OF ANY SETTLEMENT AND TERMS RELATING
THERETO.

 

ARTICLE VI.

RELATIONSHIP BETWEEN THE PARTIES

 

6.1                               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.  CLARIENT IS AND
SHALL AT ALL TIMES BE AN INDEPENDENT CONTRACTOR WITH RESPECT TO GROUP IN MEETING
CLARIENT’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, CLARIENT AND GROUP, LAB AND
ANY GROUP PHYSICIAN, OR CLARIENT AND ANY GROUP PHYSICIAN.

 

6.2                               LIMITATION ON CONTROL.  NEITHER CLARIENT NOR
LAB SHALL HAVE OR 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.

 

6.3                               PRACTICE OF MEDICINE.  THE PARTIES ACKNOWLEDGE
THAT NEITHER CLARIENT NOR LAB IS AUTHORIZED OR 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 OR CLARIENT IN THIS AGREEMENT IS CONSTRUED OR DEEMED TO CONSTITUTE THE
PRACTICE OF MEDICINE, THE PERFORMANCE OF SUCH ACT OR SERVICE BY LAB OR CLARIENT
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.

 

6.4                               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.

 

6.5                               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.

 

6.6                               AGENT OF GROUP.  KENNETH J. BLOOM, M.D.,
F.C.A.P., OR HIS NAMED DESIGNEE(S), SHALL SERVE AS 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(S) OF
GROUP, PURSUANT TO WRITTEN NOTICE TO LAB.

 

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6.7                               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 DATE OF THIS
AGREEMENT, IT DOES NOT MAINTAIN ANY PRACTICE LOCATION INDEPENDENT OF LAB AND
THAT IT SHALL NOTIFY LAB AND OBTAIN ITS WRITTEN CONSENT PRIOR TO ESTABLISHING
ANY SUCH LOCATION.

 

6.8                               PHYSICIAN COMPENSATION ARRANGEMENTS.  GROUP
REPRESENTS AND WARRANTS TO LAB THAT THE COMPENSATION PAID OR TO BE PAID BY GROUP
TO ANY GROUP PHYSICIAN IS AND WILL AT ALL TIMES WILL BE THE FAIR MARKET VALUE
FOR SERVICES AND ITEMS ACTUALLY PROVIDED BY SUCH GROUP PHYSICIAN, NOT TAKING
INTO ACCOUNT THE VALUE OR VOLUME OF REFERRALS OR OTHER BUSINESS GENERATED BY
SUCH GROUP 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 GROUP PHYSICIAN RECEIVING COMPENSATION FROM GROUP.

 

6.9                               MERGER OR SALE OF GROUP.

 

(A)                                  MERGER OR SALE RESTRICTIONS.  GROUP
ACKNOWLEDGES THAT CLARIENT AND LAB HAVE 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 THE INTERESTS OF CLARIENT AND LAB UNDER THIS
AGREEMENT.  IN RECOGNITION OF CLARIENT’S AND 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 AT LEAST ONE HUNDRED TWENTY (120) DAYS
PRIOR WRITTEN NOTICE TO CLARIENT AND LAB.  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 AT LEAST ONE HUNDRED TWENTY (120) DAYS PRIOR WRITTEN
NOTICE TO CLARIENT AND LAB.  ANY PURPORTED MERGER OR SALE WITHOUT SUCH PRIOR
WRITTEN CONSENT SHALL BE VOID AND SHALL CONSTITUTE A BREACH OF THIS AGREEMENT.

 

(B)                                 CONSENT TO ASSIGNMENT OF AGREEMENT.  IN
CONNECTION WITH EACH NOTICE PROVIDED BY GROUP WITH RESPECT TO A MERGER OR SALE,
GROUP SHALL SUBMIT TO CLARIENT AND LAB THE TERMS OF THE PROPOSED TRANSACTION,
THE IDENTITY OF THE PARTIES TO THE TRANSACTION, AND ALL OTHER INFORMATION
REASONABLY REQUESTED BY CLARIENT AND LAB CONCERNING THE PROPOSED TRANSACTION. 
CLARIENT AND LAB SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT UPON SIXTY
(60) DAYS PRIOR WRITTEN NOTICE AFTER RECEIPT OF SUCH NOTICE, WITHOUT FURTHER
LIABILITY TO GROUP EXCEPT FOR THE PAYMENT OF AMOUNTS DUE UNDER SECTION 3.1.

 

6.10                        NON-COMPETE.  THROUGHOUT THE TERM OF THIS AGREEMENT,
GROUP SHALL NOT ITSELF PROVIDE ADMINISTRATIVE SERVICES THAT ARE SUBSTANTIALLY
SIMILAR TO SERVICES PROVIDED BY CLARIENT OR ANY OF THE SERVICES PROVIDED BY
CLARIENT TO OTHER PARTIES.  IN ADDITION, GROUP SHALL NOT SECURE THE
ADMINISTRATIVE SERVICES OF ANY OTHER PROVIDER.

 

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ARTICLE VII.

TERM AND TERMINATION

 

7.1                               TERM.  THIS AGREEMENT SHALL COMMENCE ON THE
DATE HEREOF AND SHALL CONTINUE IN EFFECT UNTIL SEPTEMBER 1, 2014 (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 ANY PARTY GIVES THE OTHER PARTIES 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.

 

7.2                               TERMINATION BY CLARIENT OR LAB.  EITHER
CLARIENT OR LAB SHALL HAVE THE RIGHT TO IMMEDIATELY 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 EITHER CLARIENT OR LAB GIVES WRITTEN NOTICE OF THE BREACH TO GROUP;

 

(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 EITHER CLARIENT’S OR LAB’S POLICIES, RULES AND REGULATIONS; OR

 

(C)                                  TERMINATION OF THE EMPLOYMENT OF KENNETH J.
BLOOM, M.D. AS GROUP’S CHIEF MEDICAL DIRECTOR FOR ANY REASON WHATSOEVER.

 

7.3                               TERMINATION BY GROUP.  GROUP SHALL HAVE THE
RIGHT TO TERMINATE THIS AGREEMENT IMMEDIATELY UPON A MATERIAL BREACH OF THIS
AGREEMENT BY CLARIENT OR LAB WHERE THE BREACH IS NOT CURED WITHIN THIRTY (30)
CALENDAR DAYS AFTER GROUP GIVES WRITTEN NOTICE OF THE BREACH TO CLARIENT OR LAB.

 

7.4                               RIGHTS UPON TERMINATION.  UPON ANY TERMINATION
OR EXPIRATION OF THIS AGREEMENT AS SET FORTH IN SECTION 7.1, ALL RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL CEASE EXCEPT THOSE RIGHTS AND OBLIGATIONS THAT
HAVE ACCRUED OR EXPRESSLY SURVIVE SUCH TERMINATION OR EXPIRATION.

 

7.5                               RETURN OF PROPERTY.  UPON ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT, GROUP SHALL IMMEDIATELY RETURN TO CLARIENT AND LAB
ALL PROPERTY OF CLARIENT AND LAB, INCLUDING EQUIPMENT, SUPPLIES, FURNITURE,
FURNISHINGS AND PATIENT RECORDS, WHICH IS IN GROUP’S POSSESSION OR UNDER GROUP’S
CONTROL, IN GOOD CONDITION, NORMAL WEAR AND TEAR EXCEPTED, FREE AND CLEAR OF ANY
LIEN, SECURITY INTEREST, CLAIM OR ENCUMBRANCE OF ANY KIND, UNLESS PREVIOUSLY
AGREED TO IN WRITING BY CLARIENT AND LAB.

 

ARTICLE VIII.

TRADE SECRETS, TRADENAMES AND SERVICE MARKS

 

8.1                               TRADE SECRETS.  DURING THE TERM OF THIS
AGREEMENT, GROUP AND GROUP PHYSICIANS WILL HAVE ACCESS TO AND BECOME ACQUAINTED
WITH CONFIDENTIAL INFORMATION AND TRADE SECRETS OF CLARIENT AND LAB, INCLUDING
INFORMATION AND DATA RELATING TO PAYOR CONTRACTS AND ACCOUNTS, CLIENTS,
PATIENTS, PATENT

 

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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 CLARIENT AND LAB AND USED IN
THE COURSE OF THE RESPECTIVE BUSINESSES OF CLARIENT AND LAB, AND SHALL BE
PROPRIETARY INFORMATION PROTECTED UNDER THE UNIFORM TRADE SECRETS ACT.  GROUP
SHALL NOT, AND SHALL CAUSE GROUP PHYSICIANS NOT TO, 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 MEETING GROUP’S OBLIGATIONS 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.

 

8.2                               TRADENAMES AND SERVICE MARKS.  CLARIENT AND
LAB MAY ADOPT ONE OR MORE TRADENAMES OR SERVICE MARKS.  GROUP AUTHORIZES
CLARIENT AND LAB TO ASSOCIATE SUCH TRADENAMES OR SERVICE MARKS WITH GROUP’S NAME
ON ANY CORRESPONDENCE OR OTHER PUBLIC OR PRIVATE COMMUNICATION OR ADVERTISEMENT,
AND GROUP AGREES THAT CLARIENT AND LAB MAY UTILIZE SUCH TRADENAMES AND SERVICE
MARKS WITH OTHER PHYSICIANS WHO ARE EMPLOYED BY OR CONTRACT WITH GROUP TO
PROVIDE MEDICAL SERVICES.  DURING THE TERM OF THIS AGREEMENT, GROUP SHALL NOT,
ABSENT THE PRIOR WRITTEN CONSENT OF CLARIENT AND LAB, USE SUCH TRADENAMES OR
SERVICE MARKS.  GROUP FURTHER AGREES THAT UPON ANY TERMINATION OR EXPIRATION OF
THIS AGREEMENT, GROUP SHALL NOT USE SUCH TRADENAMES OR SERVICE MARKS OR CONTEST
THE SOLE AND EXCLUSIVE OWNERSHIP OF CLARIENT AND LAB AND RIGHT TO THE USE OF
SUCH TRADENAMES OR SERVICE MARKS.

 

8.3                               INJUNCTIVE RELIEF.  GROUP ACKNOWLEDGES THAT
ANY VIOLATION OF THE PROVISIONS OF THIS ARTICLE WILL CAUSE CLARIENT AND LAB
IRREPARABLE INJURY.  ACCORDINGLY, CLARIENT AND LAB MAY ENFORCE SUCH PROVISIONS
BY SEEKING INJUNCTIVE OR OTHER EQUITABLE RELIEF IN ADDITION TO ANY OTHER
REMEDIES AVAILABLE AT LAW.  IF A COURT OF COMPETENT JURISDICTION DECLARES ANY OF
THE PROVISION OF THIS ARTICLE TO BE TOO BROAD TO BE SPECIFICALLY ENFORCED, SUCH
PROVISIONS SHALL BE ENFORCED TO THE MAXIMUM EXTENT PERMITTED BY LAW.

 

ARTICLE IX.

GENERAL PROVISIONS

 

9.1                               DISPUTE RESOLUTION.  IN THE EVENT ANY DISPUTE
ARISES BETWEEN THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY
DISPUTE REGARDING THE ENFORCEABILITY OR THE CONSTRUCTION OF ANY OF THE TERMS OR
PROVISIONS OF THIS AGREEMENT, OR WITH RESPECT TO THE RIGHTS, DUTIES OR
OBLIGATIONS OF ANY PARTY HEREUNDER OR OVER THE EXISTENCE OF A BREACH, ACTUAL OR
ALLEGED, OF THIS AGREEMENT BY ANY PARTY, THEN, THE PARTIES SHALL ENDEAVOR IN
GOOD FAITH TO RESOLVE SUCH DISPUTE BY GOOD FAITH NEGOTIATIONS AND, IF AN
AGREEMENT IS REACHED, THE PARTIES SHALL IMPLEMENT SUCH AGREEMENT PROMPTLY.  IF,
ON THE OTHER HAND, THE PARTIES ARE UNABLE TO REACH SUCH A RESOLUTION WITHIN A
PERIOD OF THIRTY (30) DAYS FROM THE COMMENCEMENT OF SUCH NEGOTIATIONS, ANY PARTY
MAY, AT ITS OPTION, SUBMIT THE DISPUTE TO BINDING ARBITRATION TO BE CONDUCTED BY
J.A.M.S. IN ACCORDANCE WITH ITS RULES AND PROCEDURES, IN ORANGE COUNTY,
CALIFORNIA, AND THE OTHER PARTY OR PARTIES TO SUCH DISPUTE SHALL BE OBLIGATED TO
PARTICIPATE THEREIN.  EACH PARTY SHALL PAY ITS OWN COSTS AND EXPENSES (INCLUDING
THE FEES AND DISBURSEMENTS OF ITS ATTORNEYS, ACCOUNTANTS, EXPERTS OR OTHER
ADVISORS) INCURRED IN CONNECTION WITH SUCH ARBITRATION, EXCEPT THAT THE FEES AND
EXPENSES OF THE ARBITRATOR SHALL BE SHARED EQUALLY BY THE PARTIES.  THE PARTIES
COVENANT AND AGREE THAT THEY WILL PARTICIPATE IN THE ARBITRATION IN GOOD FAITH. 
ANY PARTY UNSUCCESSFULLY REFUSING TO COMPLY WITH AN ORDER OF THE ARBITRATOR
SHALL BE LIABLE FOR COSTS AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY
THE OTHER PARTIES IN ENFORCING THE AWARD.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, THIS SECTION SHALL NOT APPLY TO ANY
REQUEST BY ANY PARTY TO THIS AGREEMENT FOR TEMPORARY, PRELIMINARY OR PERMANENT
INJUNCTIVE RELIEF OR OTHER FORMS OF EQUITABLE RELIEF.

 

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9.2                               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.

 

9.3                               ASSIGNMENT.  EXCEPT FOR ASSIGNMENT BY CLARIENT
OR LAB TO AN ENTITY OWNED, CONTROLLED BY, OR UNDER COMMON CONTROL WITH CLARIENT
OR LAB, NO PARTY MAY ASSIGN ANY INTEREST OR OBLIGATION UNDER THIS AGREEMENT
WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES.  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.

 

9.4                               ATTORNEYS’ FEES.  IF A PARTY BRINGS AN ACTION
FOR ANY RELIEF OR COLLECTION AGAINST ANOTHER PARTY, DECLARATORY OR OTHERWISE,
ARISING OUT OF THE ARRANGEMENTS DESCRIBED IN THIS AGREEMENT, THE LOSING PARTY
SHALL PAY TO THE PREVAILING PARTY A REASONABLE SUM FOR ATTORNEYS’ FEES 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.

 

9.5                               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 CLARIENT AND LAB OR ANY LAWS THAT PERTAIN TO THE
CORPORATE PRACTICE OF MEDICINE DOCTRINE.

 

9.6                               CONFIDENTIALITY.  NO 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 PARTIES, UNLESS
AND ONLY TO THE EXTENT SUCH DISCLOSURE IS REQUIRED BY LAW.

 

9.7                               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.

 

9.8                               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.

 

9.9                               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.

 

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9.10                        FORCE MAJEURE.  NO 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.

 

9.11                        GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

 

9.12                        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.

 

9.13                        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.

 

9.14                        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.

 

9.15                        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 Clarient or Lab, addressed to:

 

Clarient, Inc.

31 Columbia

Aliso Viejo, CA  92656

Attention:  Chief Financial Officer

 

If to Group, addressed to:

 

Clarient Pathology Services, Inc.

31 Columbia

Aliso Viejo, CA  92656

Attention:  Kenneth J. Bloom, M.D., F.C.A.P.

 

9.16                        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.

 

9.17                        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.

 

14

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9.18                        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.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

15

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The Parties have executed this Agreement on the date first set forth above.

 

 

LAB

 

 

 

CLARIENT DIAGNOSTIC SERVICES, INC., a

 

Delaware corporation

 

 

 

 

 

 

 

By:

 

Its:

 

 

 

 

 

CLARIENT

 

 

 

CLARIENT, INC., a

 

Delaware corporation

 

 

 

 

 

 

 

By:

 

Its:

 

 

 

GROUP

 

 

 

CLARIENT PATHOLOGY SERVICES, INC.,

 

a California professional corporation

 

 

 

 

 

 

 

By:

Kenneth J. Bloom, MD, FCAP,

 

Its:

President

 

16

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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 3.1(d)

 

POWER OF ATTORNEY

 

BY THIS POWER OF ATTORNEY (this “Power of Attorney”), executed as of
September 1, 2009, CLARIENT PATHOLOGY SERVICES, INC., a California professional
corporation (“Group”) appoints CLARIENT, INC., a Delaware corporation
(“Clarient”), as Group’s attorney-in-fact to perform the following acts in
Group’s name and place:

 

1.                                       To take all steps necessary and
appropriate to collect all claims for payment for professional services rendered
by Group;

 

2.                                       To endorse all checks made payable to
Group in connection with the professional services rendered by Group; and

 

3.                                       To negotiate the terms of business
agreements on Group’s behalf, provided that Group shall retain the authority to
execute all such business agreements.  Furthermore, any terms of business
agreements that affect the medical decision-making processes or the practice of
medicine shall be subject to the final approval of Group.

 

By this Power of Attorney, Group also grants Clarient full authority to perform
any act necessary and appropriate to the exercise of the foregoing purposes and
to accomplish those purposes set forth in the Amended and Restated Professional
Services Agreement (the “Agreement”) between Group and Clarient dated as of the
date of this Power of Attorney, and ratifies every act that Clarient may
lawfully perform by virtue of this Power of Attorney.

 

This Power of Attorney shall be effective as of the Effective Date of the
Agreement and shall terminate upon the expiration or termination of the
Agreement.

 

By this Power of Attorney, Group grants Clarient the authority to determine, in
Clarient’s sole discretion, the time, manner and purpose for which any power
conferred upon Clarient in this Power of Attorney shall be exercised, as well as
the conditions, provisions and covenants of any instruments which may be
executed by Clarient pursuant to this Power of Attorney.

 

 

GROUP

 

 

 

 

 

Kenneth J. Bloom, M.D., F.C.A.P.

 

President

 

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