Exhibit 10.1


    
      

    

    Exhibit
      10.1

     

    LICENSE
      AGREEMENT

     

    THIS
      AGREEMENT
      (the
“Agreement”),
      effective this 31st
      day of
July,
      2007 (the “Effective
      Date”),
      between
      Health Discovery Corporation, a corporation of the State of Georgia, U.S.A.,
      with its principal place of business at 2 East Bryan Street, Suite # 601,
      Savannah, Georgia, hereinafter referred to as “HDC”,

     

    and

     

    CLARIENT,
      INC., a corporation of
      the
      State of
      Delaware, U.S.A., with its principal place of business at 31
      Columbia,
      Aliso Viejo, CA 92656,
      hereinafter referred to as “CLARIENT.”

     

    W
      I T N E
      S S E T H, That:

     

    WHEREAS,
      HDC has certain patent rights and technology covering genomic biomarkers related
      to prostate cancer; and

     

    WHEREAS,
      CLARIENT desires to obtain the right to use such patent rights and technology
      on
      the terms set forth hereinbelow.

     

    NOW,
      THEREFORE, in consideration of the promises and the mutual covenants herein
      contained, and other good and valuable consideration, the receipt and
      sufficiency of
      which
      are hereby
      acknowledged
      by the parties,
      and
      intending to be legally bound,
      the
      parties agree as follows:

     

    ARTICLE
      I.    DEFINITIONS

     

    As
      used
      in this Agreement the following terms, whether singular or plural, shall have
      the following meanings:

     

    A.    “Affiliate”
      shall mean any corporation
      or other entity
      that
      controls, is controlled by or is under common control with a party. A
      corporation or other entity shall be regarded as in control of another
      corporation or entity if it owns or directly controls more than fifty percent
      (50%) of the voting stock or other ownership interests
      of the
      other corporation or entity, or if it possesses
      the
      power to direct or cause the direction of the management and policies of the
      corporation or other entity or the power to elect or appoint more than fifty
      percent (50%) of the members of the governing body of the corporation or other
      entity.

     

    B.    “CLARIENT
      Net Proceeds” shall mean the reimbursement received by CLARIENT or Affiliates of
      CLARIENT from a third party customer pursuant to the sale, use or other transfer
      of a Licensed Product
      which
      generates a reported result (each, a “Test”). 

     

    C.    "Field
      of
      Use" shall mean diagnostic tests using gene biomarkers for differentiating
      clinically significant prostate cancer from other prostate conditions using
      biopsied prostate tissue. 

     

    D.    “HDC
      Net
      Proceeds” shall mean the gross receipts received by HDC or Affiliates of HDC
      from a third party licensee pursuant to a Test of a Licensed Product which
      generates a reported result, less the following actual and customary deductions:
      (i) cost of goods sold; (ii) cash, trade or quantity discounts; (iii) sales,
      use, tariff, import/export duties or other excise taxes imposed on particular
      sales; (iv) transportation charges or allowances; (v) or credits to customers
      because of rejections or returns.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    E.    "License"
      shall mean the license granted pursuant to Article II of this
      Agreement.

     

    F.    “Licensed
      Technology” shall mean, collectively, Licensed Know-How, Licensed Patents, and
      Licensed Products.

     

    G.    "Licensed
      Patents" shall mean the
      patents
      and
      pending
      patent
      applications in existence as of the Effective Date and listed in Attachment
      A,
      and any divisions, continuations and continuations-in-part or reissues
      or reexaminations of any patent or pending patent application identified herein
      (the “Existing
      Patents”),
      and
      any patents issuing from the Existing Patents and their
      foreign
      equivalents and
      any
      of the patent or patent applications to which any of the Existing Patents
      directly or indirectly claims priority, or forms a basis for priority, to the
      extent that such patents or patent applications not listed in Attachment A
      have
      claims that cover the Field of Use. 

     

    H.    “Licensed
      Product” shall mean a product, including
      Licensed Know-How, diagnostic kits, research reagents, proprietary compositions,
      substances, methods, documentation,
      services
      or a part thereof, the manufacture, use, sale, offer to sell, importation,
      distribution, or transfer of which 

     

    1.    is
      covered in whole or in part by one or more valid and unexpired claims of a
      granted Licensed Patent in the country in which the Licensed Product is made,
      used, imported, distributed or sold; or

     

    2.    is
      covered in whole or in part by any un-cancelled claim being prosecuted in a
      pending application for a Licensed Patent in the country in which the Licensed
      Product is made, used, distributed or sold.

     

    Licensed
      Product is covered by a valid and unexpired claim of a Licensed Patent if in
      the
      course of manufacture, use, importation, distribution or sale, it would, in
      the
      absence of this Agreement, infringe one or more claims of the Licensed Patent
      which is not cancelled and has not been held invalid by a court from which
      no
      appeal can be taken or has been taken in the time permitted for
      appeal.

     

    I.    “Licensed
      Know-How” shall mean the four (4) biomarkers identified in Attachment B and an
      algorithm developed by HDC that produces predictive results based upon measured
      gene expression for the four (4) biomarkers.

     

    J.    “Licensed
      Territory” shall mean worldwide.

     

    K.    "Effective
      Date" shall mean the date indicated above as the effective date of this
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II.    GRANT
      OF LICENSE

     

    A.    Grant
      of License.

     

    1.    As
      of the
      Effective Date of this Agreement, HDC hereby grants to CLARIENT an exclusive
      license, subject
      to Article II. A.3., with the right to grant sublicenses to Affiliates, and,
      upon prior approval by HDC, to third parties under the Licensed Technology
      to
      import, make, have made, use and sell any Licensed Product in the Field of
      Use
      within the Licensed
      Territory.
      For
      purposes of clarity, the above grant shall include the right for Clarient to
      incorporate the output and results from the Licensed Product into other tests
      or
      algorithms. 

     

    2.    Upon
      relevant
      approval
or
      clearance by
      the
      FDA of the diagnostic test for prostate cancer,
      the
      foregoing license shall become an exclusive license within the Field of Use
      in
      the Licensed Territory with respect to the commercial reference laboratory
      field
      and a nonexclusive license with respect to the academic and research
      fields.  

     

    3.    Notwithstanding
      anything herein to the contrary, in the event HDC elects to own and/or operate
      one or more laboratories (each, an “HDC Lab”), then such HDC Lab shall be able
      to utilize, or have a license under, the Licensed Technology to import, make,
      have made, use and sell Licensed Product, in the Licensed
      Territory.

     

    B.    Non-Assert
      Provision.  During
      the term of this Agreement and so long as CLARIENT is not in default with
      respect to any payment due to HDC hereunder,

     

    1.    HDC
      will
      not assert any Licensed Patent or
      Licensed Know-How to
      prevent CLARIENT
      or any
      Affiliate
      of CLARIENT
      from
      importing, using or selling any quantity of Licensed Product in the Field
      of
      Use within the Licensed Territory
      which is
      subject to CLARIENT
      Fees (as defined below);
      and

     

    2.    HDC
      will
      not assert any other patent or patent application now or hereafter controlled
      (in the sense of having the right to grant licenses or sublicenses) by HDC
      corresponding in subject matter to the Licensed Technology to prevent
CLARIENT
      or any
      Affiliate
      of CLARIENT
      from
      importing, using or selling any Licensed Product in the Field
      of
      Use within the Licensed Territory
      which is
      subject to CLARIENT
      Fees.

     

    C.    Right
      of First Refusal 

     

    If
      at any
      time HDC develops and desires to sell, transfer, assign, or license to one
      or
      more third parties, any additional biomarkers, HDC shall first offer such rights
      to CLARIENT by delivering a written notice to CLARIENT. CLARIENT shall have
      the
      right, within thirty (30) days following receipt of such written notice, to
      negotiate with HDC commercially reasonable terms to add such biomarkers to
      this
      Agreement. If the parties are unable to come to terms within said thirty
      (30)-day period, HDC shall have the right to offer such additional biomarkers
      to
      third parties. In the event a third-party expresses a willingness to accept
      HDC’s terms (license fee, royalty rate, minimum volume), HDC shall then notify
      CLARIENT of such terms and offer them to CLARIENT. CLARIENT shall then have
      fourteen (14) days to accept the terms in writing. Following delivery of such
      written acceptance to HDC, the additional biomarkers shall be deemed added
      to
      Attachment B hereto and included as part of the Licensed Products pursuant
      to
      such terms.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III.    WARRANTIES
      AND INDEMNITY

     

    A.    Limitations
      on Liability;
      Indemnity.

     

    While
      it
      is expected that information set forth in the Licensed Patents will enable
      CLARIENT to manufacture commercially acceptable Licensed Products
      on a
      commercial scale, HDC does not warrant or guarantee that such results will
      be
      obtained, and HDC shall not be liable to CLARIENT or any customer of CLARIENT
      because of any failure in the operations of CLARIENT or any customer. 
Moreover, while it is believed that the ordinary and anticipated use of
the
      Licensed
      Technology, or products made therefrom, will not result in safety or health
      hazards to workers or to purchasers of such products, HDC does not warrant
      or
      guarantee against health or safety hazards.  

     

    Consistent
      with the foregoing, each
      party shall indemnify,
      defend
      and hold
the
      other
      party harmless from any loss
      and
expenses
      (including reasonable attorneys’ fees, settlements and judgments) resulting from
      illness, injury or death to persons (including employees of HDC and CLARIENT)
      or
      loss or damage to property (including property of HDC and CLARIENT and its
      customers) or the environment incurred by HDC or a third party and resulting
      in
      any way whatever the cause may be arising out of or pertaining to the subject
      matter of this Agreement unless the same is proven
      to have
      been caused directly by
      bad
      faith, gross negligence or willful misconduct on the part of HDC or CLARIENT,
      as
      the case may be.

     

    Each
      party shall promptly notify the other party in writing of any suits, claims,
      actions, demands, complaints, lawsuits or other proceedings (each a “Claim”)
      that are brought by any third party which are subject to indemnification under
      this Agreement. The indemnifying party under this Agreement shall have the
      sole
      authority to settle any indemnified Claim without the consent of the other
      party, provided, however, that an indemnifying party shall not, without the
      written consent of the other party, as part of any settlement or compromise
      (i)
      admit to liability on the part of the other party; (ii) agree to an injunction
      against the other party; or (iii) settle any matter in a manner that separately
      apportions fault to the other party. As part of the settlement of any Claim,
      an
      indemnifying party shall obtain a full, complete and unconditional release
      from
      the claimant on utilizing attorneys of its choice, at its own
      expense.

     

    NEITHER
      PARTY SHALL IN ANY EVENT BE LIABLE FOR ANY LOSS OF PROFITS, OR FOR BUSINESS
      INTERRUPTION OR FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
      OUT
      OF OR IN CONNECTION WITH THIS AGREEMENT. NOTWITHSTANDING THE ABOVE, THIS
      PARAGRAPH SHALL NOT APPLY TO ANY LIABILITY FOR DAMAGES ARISING FROM (A) GROSS
      NEGLIGENCE OR WILLFUL MISCONDUCT; (B) BREACH OF THE OBLIGATIONS OF
      CONFIDENTIALITY UNDER ARTICLE IX OF THIS AGREEMENT; OR (C) LIABILITY FOR
      INDEMNIFICATION AGAINST THIRD-PARTY CLAIMS AS SET FORTH IN THIS ARTICLE
      III.A.

     

    B.    HDC
      Warranties.

     

    HDC
      represents and warrants that
      HDC
      has the exclusive right to license the Licensed Technology on the terms and
      conditions of this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    1.    To
      the
      best of HDC’s knowledge, Licensed Technology made, used, sold or otherwise
      disposed of pursuant to this License Agreement, is free from infringement of
      patents or any other intellectual property rights of others.  Should HDC
      receive notice of any third party claim of infringement, it shall immediately
      notify CLARIENT in writing.

     

    2.    HDC
      has
      full power and authority and has obtained all third party consents, approvals,
      assignments and/or other authorizations required to enter into this Agreement
      and to carry out its obligations hereunder.

     

    3.    Subject
      to the liens listed in ATTACHMENT C, the Licensed Patents are free and clear
      of
      all liens, claims, mortgages, security interests, or other encumbrances, and
      restrictions of others, HDC owns all right, title and interest to the Licensed
      Patents, including, without limitations, all right, title and interest to sue
      for infringement of the Licensed Patents.

     

    4.    Subject
      to Article VIII.A., HDC shall undertake all actions necessary for prosecution
      and maintenance of the Licensed Patents, including, but not limited to, payment
      of maintenance, annuity and renewal fees as required by the respective national
      patent offices that issued the patents, and payment of all attorney fees and
      costs for prosecution, maintenance, and grant of any pending patent
      applications.  

     

    5.    HDC
      has
      obtained and properly recorded previously executed assignments for the Licensed
      Patents as necessary to fully perfect its rights and title therein in accordance
      with governing law and regulations in each respective jurisdiction.

     

    6.    There
      are
      no existing contracts, agreements, commitments, proposals, offers, or rights
      with, to, or in any person to acquire any of the rights under the Licensed
      Technology which would prevent, alter or hinder the performance of the
      obligations hereunder.

     

    7.    Subject
      to Article II.A. hereof, no licenses or other rights under the Licensed
      Technology have been granted or retained by HDC, or any third party, including
      but not limited to any prior owners, or inventors as to the Field of
      Use.

     

    8.    Subject
      to Article II.A. hereof, CLARIENT will not be subject to any covenant not to
      sue
      or similar restrictions in its enforcement or enjoyment of the Licensed
      Technology.

     

    9.    None
      of
      the Licensed Patents has ever been found invalid, unpatentable, or unenforceable
      for any reason in any administrative, arbitration, judicial or other proceeding,
      and HDC does not know of and has not received any notice or information of
      any
      kind from any source suggesting that the Licensed Patents may be invalid,
      unpatentable, or unenforceable.

     

    10.    To
      the
      extent “small entity” fees were paid to the United States Patent and Trademark
      Office with respect to any Licensed Patent, such reduced fees were then
      appropriate because the payor qualified to pay “small entity” fees and
      specifically had not licensed rights in the Licensed Patent to an entity that
      was not a “small entity.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.    To
      the
      best of its knowledge, neither HDC nor its agents or representatives have
      engaged in any conduct, or omitted to perform any necessary act, the result
      of
      which would invalidate any of the Licensed Technology or hinder their
      enforcement, including, without limitation, misrepresenting HDC’s patent rights
      to a standard-setting organization.

     

    12.    None
      of
      the Licensed Patents has been or is currently involved in any reexamination,
      reissue, interference proceeding, or any similar proceeding, and no such
      proceedings are pending or threatened.

     

    13.    There
      are
      no actions, claims or proceedings threatened, pending, or in progress related
      to
      the Licensed Technology.

     

    14.    Subject
      to the liens listed in ATTACHMENT C, the Licensed Technology is free and clear
      of all liens, claims, mortgages, security interests, or other encumbrances,
      and
      restrictions of others.

     

    15.    Subject
      to notices listed in Attachment D, HDC has not put a third party on notice
      of
      actual or potential infringement of any of the Licensed Patents.  HDC has
      not initiated any enforcement action with respect to any of the Licensed
      Patents.

     

    16.    HDC
      had
      not and will not collaborate with any third-party in an attempt to invalidate
      CLARIENT’s intellectual property rights or construct any non-infringement
      defense

     

    C.    CLARIENT
      Warranties.

     

    CLARIENT
      represents and warrants:

     

    1.    CLARIENT
      will not collaborate with any third party in an attempt to invalidate Licensed
      Patents or construct any non-infringement defense.

     

    2.    To
      the
      extent CLARIENT is permitted , CLARIENT will notify HDC prior to or upon the
      sale, transfer or other disposition of all or substantially all of the assets
      of
      CLARIENT, or upon the acquisition of the outstanding capital stock of CLARIENT,
      such that any one shareholder owns in excess of 90% of the outstanding economic
      or voting interest of CLARIENT’s outstanding capital stock.

     

    ARTICLE
      IV.    PAYMENTS
      AND REPORTS

     

    A.    Fees
      Payable.

     

    1.    CLARIENT
      shall
      pay
      to HDC, in
      accordance with the payment terms set forth in Section IV.B below,
      thirty
      percent (30%) of the
      CLARIENT Net Proceeds received by CLARIENT or an Affiliate of CLARIENT with
      respect to all Tests of Licensed Products during the term of this Agreement
      (the
“CLARIENT
      Fees”). 
      

     

    2.    HDC
      shall
      pay to CLARIENT, in accordance with the payment terms set forth in Section
      IV.B
      below, fifteen percent (15%) of HDC Net Proceeds received by HDC or an Affiliate
      of HDC with respect to all Tests of Licensed Products during the term of this
      Agreement (the “HDC
      Fees”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.    Reports
      and Remittances.

     

    1.    During
      the term of this Agreement,
      CLARIENT shall report in writing to HDC within thirty (30) days after the end
      of
      each calendar quarter the quantities of each Licensed Product subject to
the
      CLARIENT Fees
      hereunder that were used or sold by CLARIENT (or
      an
      Affiliate of CLARIENT) during
      said quarter and the calculation of the CLARIENT
      Fees thereon (each, a “CLARIENT
      Report”). 
      No later than thirty (30) days following the date of each such CLARIENT
      Report,
      CLARIENT
      shall pay to HDC the total amount of the CLARIENT
      Fees indicated in such CLARIENT Report. 
      If no Licensed Product subject to fee hereunder has been used or sold by
      CLARIENT during any such period, CLARIENT shall so report in writing to HDC
      within thirty (30) days after the end of such period.  Reports, notices and
      other communications to HDC hereunder shall be sent to:

     

    Dr.
      Stephen D. Barnhill

    Chairman
      & CEO

    Health
      Discovery Corporation

    2
      East
      Bryan Street, Suite # 601

    Savannah,
      GA 31401

    


    Payments
      by CLARIENT to HDC shall be made
      by
      wire
      transfer of immediately available funds to:
      _____________________________________.

     

    During
      the term of this Agreement, HDC shall report in writing to CLARIENT within
      thirty (30) days after the end of each calendar quarter the quantities of each
      Licensed Product subject to the HDC Fees hereunder that were used or sold by
      HDC
      (or an Affiliate of HDC) or any third party who effects a Test of a Licensed
      Product under a license from HDC during said quarter and the calculation of
      the
      HDC Fees thereon (each, a “HDC
      Report”). 
      No later than thirty (30) days following the date of each such HDC Report,
      HDC
      shall pay to CLARIENT the total amount of the HDC Fees indicated in such HDC
      Report.  If no Licensed Product subject to fee hereunder has been used or
      sold by HDC during any such period, HDC shall so report in writing to CLARIENT
      within thirty (30) days after the end of such period.  Reports, notices and
      other communications to CLARIENT hereunder shall be sent to:

     

    Clarient,
      Inc.

    Attention:
      Corporate Controller

    31
      Columbia

    Aliso
      Viejo, CA 92656

     

    Payments
      by HDC to CLARIENT shall be made by wire transfer of immediately available
      funds
      to the following account:
      _________________________.

     

    C.    Taxes.

     

    1.    Insofar
      as any CLARIENT
      Fees
      due to
      HDC hereunder are subject to taxation by any country under the provisions of
      the
      tax laws of that country, then HDC shall bear such taxes and HDC hereby
      authorizes CLARIENT to withhold such taxes from the payments of
      CLARIENT Fees
      payable
      to HDC in accordance with this Agreement if CLARIENT is either required to
      do so
      under such country’s tax laws or directed to do so by any agency of such
      country’s government.  Whenever CLARIENT deducts such tax from any payments
      due to HDC, then CLARIENT shall furnish HDC with a tax certificate showing
      the
      payment of such tax to the government of such country.  In the event such
      taxes are assessed against CLARIENT by reason of its failure to withhold such
      taxes from any payments which have been paid to HDC in accordance with this
      Agreement, then HDC shall reimburse CLARIENT for such tax assessment, but not
      for any fine, penalty, fee or interest related to CLARIENT’s failure to
      withhold, pay or make
      timely
      payment of such taxes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.    Insofar
      as any HDC Fees due to CLARIENT hereunder are subject to taxation by any country
      under the provisions of the tax laws of that country, then CLARIENT shall bear
      such taxes and HDC hereby authorizes CLARIENT to withhold such taxes from the
      payments of HDC Fees payable to CLARIENT in accordance with this Agreement
      if
      HDC is either required to do so under such country’s tax laws or directed to do
      so by any agency of such country’s government.  Whenever HDC deducts such
      tax from any payments due to CLARIENT, then HDC shall furnish CLARIENT with
      a
      tax certificate showing the payment of such tax to the government of such
      country.  In the event such taxes are assessed against HDC by reason of its
      failure to withhold such taxes from any payments which have been paid to
      CLARIENT in accordance with this Agreement, then CLARIENT shall reimburse HDC
      for such tax assessment, but not for any fine, penalty, fee or interest related
      to HDC’s failure to withhold, pay or make timely payment of such
      taxes.

     

    D.    Late
      Payment.

     

    If
      any
undisputed
      sum
      of
      money owed to a
      party
      hereunder is not paid when due, and
      remains unpaid for a period of fifteen (15) days following receipt of written
      notice of such failure to pay, the unpaid undisputed
      amount
      shall bear interest at the
      rate
      of one and one-half percent (1 1⁄2%), monthly, commencing
      on the
      day payment was due, until paid. 

     

    ARTICLE
      V.    COOPERATION

     

    HDC
      shall
      assist CLARIENT and provide all necessary information requested by CLARIENT
      to
      obtain, at CLARIENT's expense, relevant approval or clearance from the Federal
      Food and Drug Administration or any other applicable federal or state regulatory
      agency whose approval is required to commercialize the Licensed
      Products..

     

    ARTICLE
      VI.    RECORDS

     

    Each
      party
      shall
      keep adequate records in sufficient detail to enable the CLARIENT
      Fees
      and
      the HDC Fees
      to be
      determined
      and
      permit said records
      to be inspected upon
      reasonable notice and
      during
      regular business hours by an independent auditor appointed by the
      party
      requesting the audit
      for this
      purpose, which
      auditor
      shall
      report to the
      parties
      only the
      amount of CLARIENT
      Fees or HDC Fees (as applicable)
      due
      hereunder.

     

    ARTICLE
      VII.    CURRENCY
      CONVERSION CLAUSE

     

    Fees
      shall be paid in U.S.A. dollars.  For converting into U.S.A. dollars any
      fee that accrued in another currency, there shall be used the closing buying
      rate of The Savannah Bank of Savannah, GA applicable to royalty or fee
      transactions under exchange regulations for the particular currency on the
      last
      business day for the accounting period for which payment is due.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    ARTICLE
      VIII.    PATENT
      MAINTENANCE AND PATENT INFRINGEMENT

     

    A.    Patent
      Maintenance.

     

           
      1.    HDC
      shall
      maintain the Licensed Patents, which maintenance shall include retaining one
      or
      more patent attorneys to prosecute and/or direct prosecution of a pending
      application, payment of attorney’s fees and costs for the prosecution of pending
      patent applications, payment of maintenance fees, and any other actions required
      to maintain the rights in the Licensed Patents.

     

    a.    In
      the
      event that HDC is unable or unwilling to maintain any one or more of the
      Licensed Patents, CLARIENT may pay the fees for maintaining the indicated
      patents within Licensed Patent(s) and deduct such payment from any CLARIENT
      Fees
      due under this License Agreement.  HDC shall thereupon assign the indicated
      patents to CLARIENT.  If HDC is unable or unwilling to maintain all or
      substantially all of the Licensed Patents, CLARIENT may at its option, (i)
      maintain the Licensed Patent(s) and deduct such payment from CLARIENT Fees
      due
      under this Agreement; or (ii) terminate the License Agreement upon thirty (30)
      days’ notice to HDC.  

     

    b.    HDC
      shall
      notify CLARIENT before any rights in a Licensed Patent terminate with sufficient
      time to permit CLARIENT to take action to maintain the patent, if it so
      chooses.

     

    B.    Patent
      Infringement.

     

    1.    If
      either
      party learns of a substantial infringement of any of the Licensed Patents in
      the
      Field of Use, in the Licensed
      Territory, such party shall promptly provide written notice of the infringement
      to the other party with reasonable evidence of infringement.  Neither party
      will notify a third party of infringement of any of the Licensed Patents without
      first obtaining consent of the other party, which consent will not be
      unreasonably withheld, if the infringement is within the Field of Use. 
Otherwise, HDC may act unilaterally.  

     

    a.    HDC
      will
      have the primary responsibility to enforce the Licensed Patents, including
      undertaking litigation or other enforcement action against a third party for
      infringement of the Licensed Patents. 

     

    i.    In
      the
      event HDC undertakes litigation or other enforcement action against a third
      party infringer, CLARIENT shall at HDC’s expense, for CLARIENT’s reasonable
      out-of-pocket costs, cooperate with HDC as may be required to support HDC’s
      assertions against the third party infringer in the Field of Use. 

     

    ii.    Any
      proceeds from litigation or other enforcement action will first be applied
      to
      reimburse HDC for expenses incurred in the action.  HDC may deduct an
      additional amount equal to twenty percent (20%) of the total expenses incurred
      in the action as compensation for lost time, business opportunities and other
      difficult-to-quantify losses resulting from HDC’s prosecution of the
      action.  If the infringement is in the Field of Use, remaining proceeds, if
      any, will be treated as HDC Net Proceeds and subject to the HDC Fees.


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b.    If
      HDC
      declines to undertake litigation or other enforcement action against a third
      party for infringement in the Field of Use, CLARIENT may at its option elect
      to:
      (i) enforce the Licensed Patent(s) at its own expense, and deduct such expense
      from any CLARIENT Fees due under this License Agreement; or (ii) terminate
      the
      License Agreement upon thirty (30) days’ notice to HDC.  

     

    i.    In
      the
      event CLARIENT undertakes litigation or other enforcement action against a
      third
      party infringer, HDC shall at CLARIENT’s expense, for HDC’s reasonable
      out-of-pocket costs, cooperate with CLARIENT as may be required to support
      CLARIENT’s assertions against the third party infringer. 

     

    ii.    Any
      proceeds from litigation or other enforcement action will first be applied
      to
      reimburse CLARIENT for expenses incurred in the action.  CLARIENT may
      deduct an additional amount equal to twenty percent (20%) of the total expenses
      incurred in the action as compensation for lost time, business opportunities
      and
      other difficult-to-quantify losses resulting from CLARIENT’s prosecution of the
      action.  Remaining proceeds, if any, will be treated as CLARIENT Net
      Proceeds received by CLARIENT and subject to the CLARIENT Fees.

     

    ARTICLE
      IX.    CONFIDENTIALITY

     

    The
      parties have entered into a Mutual Nondisclosure Agreement as of _________,
      200__ (the “NDA“)
      pursuant to which each of the parties agreed to preserve the confidentiality
      of
      the other party’s proprietary information.  The terms of the NDA shall
      continue to govern the parties throughout the term of this
      Agreement.

     

    ARTICLE
      X.    TERMINATION

     

    A.    Term. 
      Unless
      terminated earlier as hereinafter provided, and subject to the provisions of
      paragraph (B) of this Article, this Agreement shall terminate on the
latest
      to
      occur of (i) the fifteenth
      (15th) anniversary of its Effective Date;
      or
      (ii)
      upon the
      expiration of the last of the Licensed
      Patents.

     

    B.    Surviving
      Obligations. 
      The
      termination or
      expiration of
      this
      Agreement shall not relieve either
      party of:

     

    1.    any
      liability under
      Article IX of this Agreement
      for
      damages resulting
      from a breach of the NDA;
      or

     

    2.    its
      obligations to

     

    i.    make
      payment of CLARIENT
      Fees and/or HDC Fees (as applicable)
      pursuant
      to Article IV;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    ii.    maintain
      adequate records under Article VI;

     

    iii.    furnish
      written reports as provided in Article IV;
      and

     

    iv.    make
      payment of CLARIENT
      Fees and/or HDC Fees (as applicable)
      on any
      quantity of Licensed Product that is made prior to the Effective
      Date
      of said
      termination and sold thereafter.

     

    The
      termination of this Agreement shall not terminate either
      party’s
      rights
      under Articles III
      and IX
      hereof.

     

    C.    Termination
      by CLARIENT. 
      CLARIENT
      may terminate this Agreement at any time by giving HDC at least sixty (60)
      days’
prior
      written
      notice. 

     

    D.    Termination
      by HDC.

     

    1.    In
      the
      event that any stipulation or provision of this Agreement is breached by
      CLARIENT, HDC may terminate this Agreement upon sixty (60) days’ written notice
      to CLARIENT.  However, if such breach is corrected within the sixty
      (60) day
      period, and there are no unreimbursed damages resulting from the breach, this
      Agreement and sublicenses shall continue in force.

     

    2.    HDC
      may
      terminate the license granted to CLARIENT in its entirety at any time in the
      event CLARIENT alleges in any action, directly or indirectly, that any of the
      patents within Licensed Patents is invalid.

     

    3.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      introduces a product competing with Licensed Product into the market place.
      

     

    4.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      does not exercise reasonable efforts in the sales and marketing of Licensed
      Product evidenced by the fact that Clarient cannot demonstrate any tangible
      evidence of such efforts.

     

    5.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      ceases entirely to have the ability to carry out the Test due to Clarient’s sole
      fault.

     

    HDC’s
      right to terminate CLARIENT’s license pursuant to Articles X. D. 1,3,4 and 5
      shall be subject to Article XIV.

     

    Subject
      to negotiations by the parties, the termination of CLARIENT’s license pursuant
      to Articles X. D1, 3, 4, and 5 shall be deemed to be a conversion of the
      exclusive license to a nonexclusive license; provided, however, that in the
      event a prospective third-party licensee under Licensed Technology reasonably
      requires an exclusive license and after dispute resolution as described in
      Article XIV, then CLARIENT’s license shall be terminated. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    E.    Insolvency. 
      Should
      either
      party
      (1)
      become insolvent or unable to pay its debts as they mature, or (2) make an
      assignment for the benefit of creditors, or (3) permit or procure the
      appointment of a receiver for its assets, or (4) become the subject of any
      bankruptcy, insolvency or similar proceeding, then the
      other
      party
      may at
      any time thereafter upon
      written
      notice to such
      party, and
      effective concurrent
      with the date of such notice,
      cancel
      this Agreement.

     

    F.    Effect
      of Termination and Return of Technical Information. 
      Upon termination or expiration of this Agreement, the parties shall return
      or
      destroy, at the discretion of the disclosing party, all copies of confidential
      information disclosed or provided by the other party.

     

    G.    Reversion
      of Intellectual Property Rights.  Except as otherwise specified in this
      Agreement, upon termination of this Agreement, all rights in the Licensed
      Technology and any other rights granted under this License Agreement, and any
      sublicense agreements granted by CLARIENT, including any right to sublicense
      fees, shall revert to HDC.

     

    H.    Disposition
      of Licensed Products on Hand at Termination.  Upon termination of this
      Agreement, CLARIENT shall cease its use of Licensed Technology, or any component
      thereof, provided, however, that CLARIENT shall be permitted to sell Tests
      of
      Licensed Products already made pursuant to this Agreement and pay the CLARIENT
      Fees.  

     

    ARTICLE
      XI.    ASSIGNABILITY

     

    A.    Neither
      this
      Agreement nor the rights or licenses herein granted shall
      be
      assignable or otherwise transferable by either
      party
      without
      the prior written consent of the
      other
      party; provided, however, that either party may assign this Agreement in
      connection with the transfer or sale of its business or all or substantially
      all
      of its assets or stocks or in the event of a merger, consolidation, change
      in
      control or similar corporate transaction, without such consent.
      It is
      understood by the parties that CLARIENT may not and shall not utilize this
      License Agreement or any of its rights or obligations hereunder as a collateral
      in any financial transaction. 

     

    B.    In
      the
      event an assignee of either party does not perform all of the obligations of
      such assigning party hereunder, (i) the assigning party shall remain responsible
      and liable for all unperformed obligations and (ii) the non-assigning party
      shall have the right to terminate this Agreement.

     

    ARTICLE
      XII.    APPLICABLE
      LAW

     

    This
      Agreement is acknowledged to have been made in and shall be construed in
      accordance with the laws of the State of Delaware without regard to the
      principles thereof relating to the conflict of laws, provided that all questions
      concerning the construction or effect of patent applications and patents shall
      be decided in accordance with the laws of the country in which the particular
      patent application or patent concerned has been filed or granted, as the case
      may be. Subject to Article XIV, each party hereby subjects itself to the
      jurisdiction the state and federal courts in the State of Delaware.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XIII.    FORCE
      MAJEURE

     

    Neither
      party shall be responsible to the other for delay or failure in performance
      of
      any of the obligations imposed by this Agreement, provided such delay or failure
      shall be occasioned by a cause beyond the control of and without the fault
      or
      negligence of such party,  including
      fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil,
      failure of machinery or equipment or supply of materials, discontinuity in
      the
      supply of power, court order or governmental interference, civil commotion,
      riot, war, terrorism or terroristic threats, strikes, labor disturbances,
      transportation difficulties or labor shortage.  Notwithstanding the
      aforesaid, if either party fails to a substantial extent for at least
sixty
      (60) days in fulfilling
      any of
      its obligations under this Agreement, the other party may terminate the
      Agreement.

     

    ARTICLE
      XIV.    DISPUTE
      RESOLUTION

     

    In
      the
      event that a dispute arises between the parties, the following procedures shall
      be followed:

     

    A.    Negotiations.
      In
      the
      event that any dispute may arise, the parties shall first seek to resolve any
      disputes by negotiation among senior executives who have authority to settle
      the
      controversy, as follows:

     

    1.    Notification.
      When
      a
      party believes there is a dispute relating to the Agreement, the party will
      give
      the other party written notice of the dispute.

     

    2.    Meeting
      Among Senior Executives.
      The
      senior executives shall meet at a mutually acceptable time and place within
      thirty (30) days after the date of the notice to exchange relevant information
      and to attempt to resolve the dispute.  

     

    3.    Confidentiality.
      All
      negotiations are confidential and shall be treated as compromise and settlement
      negotiations under the United States Federal Rules of Evidence.

     

    B.    Mediation.
      If
      the
      dispute has not been resolved within thirty (30) days after the date of the
      notice of a dispute, or if the party receiving such notice fails or refuses
      to
      meet within such time period, either party may initiate mediation of the dispute
      by sending the other party a written request that the dispute be mediated. 
The party receiving such a written request will promptly respond to the
      requesting party so that all parties can jointly select a neutral and impartial
      mediator and schedule the mediation session.  The parties shall mediate the
      dispute before a neutral, third-party mediator within thirty (30) days after
      the
      date of the written request for mediation.

     

    C.    Litigation.
      Any
      controversy or claim arising out of or relating to this Agreement, or the breach
      thereof, and not settled as described in Article XIV (A) or (B), may be settled
      by litigation in the courts of the State of Delaware.

     

    D.    Miscellaneous.
      Each
      party shall bear its own costs related to any proceeding described in this
      Article XIV.  Nothing provided herein shall prevent a party from seeking
      equitable or injunctive relief.

     

    ARTICLE
      XV.    ADJUDICATION
      OF LICENSED PATENTS

     

    Should
      any Licensed Patents be declared invalid or limited in scope by a final decision
      (from which no appeal is or can be taken) of a court or other tribunal of
      competent jurisdiction in the country in which said patent was granted in an
      action or proceeding initiated by a third party, then the construction placed
      upon the patent by said court or other tribunal shall be followed by the parties
      hereto from and after the date of entry of the decree of said court or tribunal
      and fees shall thereafter be payable to HDC only in accordance with such
      construction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XVI.    MISCELLANEOUS
      PROVISIONS

     

    A.    Nothing
      herein shall be construed to indicate that this Agreement is an employment,
      partnership or other joint venture agreement, it being fully understood that
      each party is acting as an independent contractor as its own agent and assumes
      full responsibility for its own account and for all of its actions
      hereunder.  Further, each of HDC and CLARIENT acknowledges that this
      Agreement does not constitute HDC as the agent or legal representative of
      CLARIENT, or constitute CLARIENT as the agent or legal representative of
      HDC.  Each of HDC and CLARIENT further acknowledges that neither party is
      authorized to create any obligation on behalf of the other.

     

    B.    Each
      of
HDC
      and
      CLARIENT
      has all
      necessary corporate power to enter into and perform its obligations under this
      Agreement and has taken all necessary corporate action under its respective
      certificates of incorporation and by-laws to authorize the execution and
      consummation of this Agreement.

     

    C.    HDC
      shall
      not be required to grant any additional right with respect to the Licensed
      Technology or furnish information as to which HDC will incur financial or other
      liability to a third party, and no information shall be required to be furnished
      over governmental prohibition or objection.

     

    D.    The
      use
      and disclosure of technical information acquired pursuant to this Agreement
      and
      the exercise of the rights granted by this Agreement shall be subject to the
      export, assets and financial control regulations of the United States of America
      including restrictions under regulations of the United States that may be
      applicable to direct or indirect reexportation of such technical information
      or
      of equipment, Licensed Products or services directly produced by use of such
      technical information.

     

    E.    No
      license or right is granted by implication or otherwise with respect to any
      patent application, patent, trademark or copyright except as specifically set
      forth herein.  No right is granted by either
      party to this
      Agreement to use any registered or unregistered trademark or trade name of
      the
      other
      party.
      

     

    F.    The
      rights and remedies provided in this Agreement are cumulative and not exclusive
      of any rights or remedies provided by law or in equity.

     

    G.    This
      Agreement embodies the entire understanding of the parties and shall supersede
      all previous communications, representations, undertakings or agreements,
      between them, either verbal or written, relating to the subject matter
      hereof. 
      This Agreement may be amended, or any term hereof modified, only by a written
      instrument duly executed by each of the parties hereto. 

     

    H.    This
      Agreement shall be binding upon and inure to the benefit of the successors,
      permitted assignees and personal representatives of the parties.

     

    I.    The
      waiver by either party of a default or breach of any provision of this Agreement
      by the other party shall not operate or be construed as a continuous waiver
      of
      any subsequent default or breach. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    J.    If
      any
      portion of this Agreement shall be found to be illegal or unenforceable, such
      provision shall be changed and interpreted by limiting and reducing its effect
      so as to be enforceable to the full extent compatible with respect to applicable
      law.  The illegality or unenforceability of any one clause shall in no way
      impair the legality or enforceability of any other clause in this
      Agreement.

     

    K.    The
      captions to the several Articles and Sections hereof are not part of the
      Agreement but merely guides or labels to assist in locating and reading the
      several Articles and Sections hereof.  Any reference in this Agreement to
      an Article, Exhibit, Schedule, Attachment or Section shall, unless specifically
      provided, be to an Article, Exhibit, Schedule, Attachment or Section of this
      Agreement.

     

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

     

    M.    Except
      as
      specifically set forth herein, none of the provisions of this Agreement shall
      be
      for the benefit of or enforceable by any third party, including, without
      limitation, any creditor of either party hereto.

     

    N.    Any
      written notice required under this Agreement shall be sent to the respective
      addresses for the parties set forth in the introductory paragraphs of this
      Agreement via first class mail and shall be deemed effective five (5) business
      days after the mailing date thereof.  Any written notice provided by
      certified mail, courier, facsimile or overnight delivery service with tracking
      capabilities shall be deemed effective when acknowledged by an official receipt
      or express acknowledgement of receipt.

     

    O.    Neither
      party shall make any public disclosure of, or otherwise disclose to any person
      (other than its officers, employees, accountants, attorneys and agents whose
      duties require them to have access to such information), including but not
      limited to press releases, the existence or terms of this Agreement without
      the
      other party’s prior written consent, unless such disclosure is required by law
      (including securities laws, rules and regulations as well as the rules of any
      exchange on which either of the parties is publicly traded).  In the event
      such disclosure is required by law, the parties shall agree on the language
      of
      such disclosure.  Any disclosure by a party to its officers, employees,
      accountants, attorneys, and/or agents shall be subject to the confidentiality
      restrictions of this Agreement.

     

    P.    Notwithstanding
      anything contained in this Agreement to the contrary, the obligations of the
      parties with respect to the consummation of the transactions contemplated by
      this Agreement, shall be subject to all laws of any government having
      jurisdiction over the parties and this transaction, and to orders, regulations,
      directions or requests of any such government.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


     

    IN
      WITNESS WHEREOF, the parties have caused
      this
      Agreement to
      be
      executed by their duly authorized representatives as of
      the
      Effective Date.

     

    
      	 	
              HEALTH
                DISCOVERY CORPORATION

               

            
	 	
               

              By:       
                /s/
                Stephen D. Barnhill, M.D.

              Name:  
                Stephen
                D. Barnhill, M.D.

              Title:     Chairman
                & CEO

              Date:    
                July
                31, 2007

            
	 	
               

              CLARIENT,
                INC.

               

            
	 	
               

              By:       
                /s/
                Ron Andrews

              Name:  
                Ron
                Andrews

              Title:     President
                & CEO

              Date:    
                July
                30, 2007

            


    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    ATTACHMENT
      A

     

     

    Licensed
      Patents

     

     

    
      	 	 	 
	
              Country/
                Region

               

            	
              Patent/Publication/
                Application No.

               

            	
              Description

               

            
	
              U.S.

               

            	
              7,117,188

               

            	
              Method
                of Identifying Patterns in 

              Biological
                Systems and Uses Thereof 

               

            
	
              U.S.

               

            	
              2007/0092917

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              U.S.

               

            	
              60/880,070

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Cancer

               

            
	
              Australia

               

            	
              2002253879

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Canada

               

            	
              2,435,254

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Europe

               

            	
              1459235

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Japan

               

            	
              2002-560076

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            


    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    ATTACHMENT
      B

    


     

    Licensed
      Biomarkers

     

     

    

      
        	
                Num

                 

              	
                Archival
                  Unigene ID

                 

              	
                Current
                  Unigene ID

                 

              	
                Symbol

                 

              	
                Affy
                  probe

                 

              	
                Pathway

                 

              	
                Target
                  Description

                 

              
	
                12337

                 

              	
                Hs.7780

                 

              	
                Hs.480311

                 

              	
                DKFZp564

                 

              	
                212412_at

                 

              	
                Unknown

                 

              	
                Consensus
                  includes gb:AV715767 /FEA=

                EST
                  /DB_XREF=gi:10797284 /DB_XREF=est:AV715767 /CLONE=

                DCBATH02
                  /UG=Hs.7780 Homo sapiens mRNA; cDNA DKFZp564A072 (from clone
                  DKFZp564A072)

                 

              
	
                9373

                 

              	
                Hs.21293

                 

              	
                Hs.492859

                 

              	
                UAP1/AGX-1

                 

              	
                209340_at

                 

              	
                Aminosugar
                  metabolism

                 

              	
                gb:S73498.1
                  /DEF=Homo sapiens AgX-1 antigen mRNA; complete cds. /FEA=

                mRNA
                  /PROD=AgX-1 antigen /DB_XREF=

                gi:688010
                  /UG=Hs.21293 UDP-N-acteylglucosamine pyrophosphorylase 1 /FL=gb:AB011004.1
                  gb:NM_003115.1 gb:S73498.1

                 

              
	
                876

                 

              	
                Hs.79037

                 

              	
                Hs.476231

                 

              	
                HSPD1

                 

              	
                200807_s_at

                 

              	
                Mitochondrial
                  control of apoptosis

                 

              	
                gb:NM_002156.1
                  /DEF=Homo sapiens heat shock 60kD protein 1 (chaperonin) (HSPD1);
                  mRNA.
                  /FEA=

                mRNA
                  /GEN=HSPD1 /PROD=heat shock 60kD protein 1 (chaperonin)
                  /DB_XREF=gi:4504520 /UG=Hs.79037 heat shock 60kD protein 1 (chaperonin)
                  /FL=gb:BC002676.1 gb:BC003030.1 gb:M34664.1 gb:M22382.1
                  gb:NM_002156.1

                 

              
	
                1961

                 

              	 	
                Hs.75432

                 

              	
                IMPDH2

                 

              	
                201892_s_at

                 

              	
                de
                  novo guanine nucleotide biosynthesis

                 

              	
                gb:NM_000884.1
                  /DEF=Homo sapiens IMP (inosine monophosphate) dehydrogenase 2 (IMPDH2);
                  mRNA.  /FEA=mRNA /GEN=IMPDH2 /PROD=IMP (inosine monophosphate)
                  dehydrogenase 2 /DB_XREF=gi:4504688 /UG=Hs.75432 IMP (inosine
                  monophosphate) dehydrogenase 2 /FL=gb:J04208.1 gb:NM_000884.1