Exhibit 10.19


 


February 26, 2009


 


Dr. Michael Pellini

[address redacted]


 


Dear Mike:


 


Clarient Inc. (the “Company”) is pleased to enter into
this letter agreement (the “Letter Agreement”) with you (the “Executive”) which
will address the terms of Executive’s employment with the Company.  The Company considers it essential to the
best interests of its stockholders to attract and foster the continuous
employment of key management personnel of the Company and the arrangements
described in this Letter Agreement are intended to address that goal.


 


1.               Duties.  Executive
will continue to serve as President and Chief Operating Officer of the Company
and will report directly to the Chief Executive Officer of the Company. This
Letter Agreement amends restates and supersedes in its entirety the employment
letter agreement dated, April 24, 2008 between Executive and the Company.


 


2.               Term.  
Notwithstanding anything to the contrary, Executive’s employment
relationship with the Company is employment “at will”.  As a result, Executive’s employment may be
terminated by the Company or by Executive at any time (subject to the notice
provision below), in each case without any liability or obligation, except as
set forth in this Letter Agreement.  If
Executive terminates his employment, he shall give the Company written notice
of such termination not less than thirty (30) days prior to the effective date
of such termination.  In light of the
severance benefits provided for in Section 6, the Company will have no
obligation to give Executive prior notice of any such termination by the
Company (whether or not such termination is without cause).


 


3.               Compensation.


 


a.               Base Salary. 
During the term of Executive’s employment, Executive will receive a base
salary of $325,000 per annum, payable in biweekly increments, subject to annual
salary and performance review and potential salary increase (but not
reductions) at the sole discretion of the Company.


 


b.              Bonus.  Executive
will be eligible for a performance-based bonus as a participant in the
Company’s Management Incentive Plan (“MIP”) (target incentives as determined by
the Compensation Committee of the Company’s Board of Directors) with an annual
target payment of 65% of base salary, pro-rated for the number of months of
services in any given year.  The
potential exists to receive as much as twice this figure based on achievement
of Company and personal objectives.  Any
bonus that becomes payable under this subsection (b) shall be paid in
accordance with the Company’s past practices under the MIP, but in no event
after the later of (i) the 15th day of the third month following
Executive’s first taxable year in which such bonus is no longer subject to a
substantial risk of forfeiture, and (ii) the 15th day of the third month
following the first taxable year of the Company in which such bonus is no
longer subject to a substantial risk of forfeiture, as determined in accordance
with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and any Treasury Regulations and other guidance issued there
under.  For the avoidance of doubt, for
purposes of calculating any bonus that may become payable to Executive under
the MIP in respect of calendar year 2008 (if any), Executives salary shall be
deemed as $283,250.00.


 


1

















 


4.               Option Grant. 
As part of this Letter Agreement, the Company’s Board of Directors has
approved a recommendation which was presented by the Company’s Compensation
Committee on February 24, 2009, that Executive will be granted a stock
option for 350,000 shares of Common Stock of the Company.  Subject to Executive’s continued employment
with the Company through each such date, the option shall vest as to 25% of the
shares on the first anniversary of the date of grant and the remaining 75% of
the shares in equal monthly installments on each monthly anniversary of the
date of grant thereafter, such that all shares subject to the option shall be
vested (subject to continued employment) as of the fourth anniversary of the date
of grant, except as otherwise provided in Section 6(b) below;
provided that if a Change of Control occurs during the term of employment, then
the option shall vest as to all shares that remain unvested immediately prior
to the consummation of such Change of Control. The option will be granted under
the Company’s 2007 Incentive Award Plan (the “Option Plan”) and be subject to
the same terms and conditions as are set forth in the standard form stock
option agreement currently in use under the Option Plan (including such terms
and conditions as are incorporated therein from the Option Plan itself), except
to the extent provided otherwise in this Agreement.  The option will have an exercise price per
share of $1.70, equal to the last sale price of the Company’s Common Stock on
February 24, 2009, the date the option was approved by the Board of
Directors, and will expire on the tenth anniversary of the date of grant
(subject to earlier termination in accordance with the terms of the Option Plan
and standard form of stock option agreement thereunder).  Additional equity grants may be awarded by
action of the Company’s Board of Directors or a duly authorized committee of
the Board, and if made, will be made in a manner commensurate with senior
executives, the terms and conditions of which shall be as determined under the
Company’s Option Plan and by the Company’s Board of Directors.


 


5.               Fringe Benefits.


 


a.               Executive will be paid a car allowance at
the rate of $600 per month.


 


b.              Executive is eligible for group life and
accidental death and dismemberment insurance in an amount equal to one times
the Executive’s annual base salary not to exceed $600,000 (assuming that
Executive meets normal insurability requirements).  If insurability requirements cannot be met,
the maximum amount of group life insurance benefit is $225,000.  Executive will be offered the opportunity to
purchase voluntary life insurance for himself and his spouse and children, if
applicable; and otherwise be eligible to participate in all other benefits
programs offered generally by the Company to its other executives, including
medical, dental, and vision insurance, short and long term disability
insurance, 401(k) Plan, flexible spending account (Section 125) plan
and employee assistance program.


 


c.               Executive will also be entitled
twenty-five (25) days of vacation per annum which will accrue at the rate of
7.70 hours per pay period. Executive may not accrue more than forty (40) hours
above his eligible vacation allowance per year. 
All vacation accrued will carry over year to year; however, the point at
which the total number of vacation hours accrued exceeds the maximum allowable,
no additional accruals will be earned until the amount is reduced below the
maximum.


 


2

















 


d.              Executive shall be covered by the
Company’s directors and officers liability insurance policies and
indemnification policies on the same terms and conditions as apply to the
Company’s other senior executives.  This
provision shall survive termination of this Agreement and shall not be covered
by the release contemplated by Section 6(d).


 


e.               Executive shall receive a monthly housing
allowance of $8,000 plus other duplicate expenses (not to exceed a total annual
expense, pro rated for partial years, of $100,000) through August 31,
2009; provided that such allowance shall be “grossed up” as necessary such
that, after payment of all taxes on such allowance (and any taxes payable on
any such gross-up payments), Executive still receives a total allowance of
$8,000 per month (plus the full value of other duplicate expenses within the
limits of this Section 5(e)); further provided that (i) if
Executive’s employment is terminated by the Company without cause (as defined
below) prior to April 1, 2009, then the Company shall continue to pay the
allowance contemplated by this Section 5(e) until July 1, 2009
or (ii) if Executive’s employment is terminated by the Company without
cause after April 1, 2009 but before August 31, 2009, then the
Company shall continue to pay the allowance contemplated by this
Section 5(e) until the earlier of (A) three (3) months from
the date of termination and (B) August 31, 2009, in each case to the
extent of Executive’s actual housing expenses in California that Executive is not
able to mitigate (e.g. if Executive is unable to terminate Executive’s home
lease and continues to owe lease payments to the landlord there under.


 


f.                 Relocation Expenses.  The Company will reimburse Executive for the
following expenses, fully grossed-up for federal and state income taxes:  (1) the usual and customary real estate
fees incurred by Executive on the sale of Executive’s home in Pennsylvania
(ii) expenses incurred by Executive in moving his household goods from
Pennsylvania to Southern California. If the Executive voluntarily terminate his
employment within the first twelve months after the relocation expense is paid,
Executive shall be required to repay the amount on a prorated basis, less 1/12th of such expenses for each month of his employment
until the first anniversary date.  Loss
on Sale Provision: up to $150,000 ($100,000 for actual loss on sale and $50,000
for gross up of expenses) with the following stipulation: if Executive
voluntarily leaves the Company within the first year, Executive is required to
pay back 100% of the loss on sale payout. 
If the Executive voluntarily leaves the Company after the first
anniversary of this Agreement, the payback amount will be prorated monthly down
to zero at the end of year three.


 


g.              Payment of the monthly allowances
described above in (a) and (e) of this Section 5 shall be paid
on a monthly basis.  Without limiting the
Company’s obligation pursuant to the preceding sentence, in no event shall the
monthly allowances described above in (a) and (e) be made later than
December 31 of the year following the year in which the expense was
incurred.  The allowance paid to
Executive in one year shall not affect the allowance paid to Executive in any
subsequent year and shall not be subject to liquidation in favor of any other
benefit.


 


6.               Severance Payments.  
Subject to the provisions of subsection (d) and Section 11  below and the other terms and conditions
of this Letter Agreement, in the event Executive has incurred a Separation from
Service (within the meaning of Section 409A(a)(2)(A)(i) of the Code,
and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”)
by reason of a termination of Executive’s employment: (i) by the Company
without “cause”, (ii) by Executive for “good reason” within twelve months
after a Change of Control, or (iii) by Executive as a result of
Executive’s death or disability (any of the foregoing being a “Severance
Termination”), the Company will provide Executive the benefits described in
this Section 6, which shall be the only severance benefits or other
payments with respect to Executive’s employment with the Company to which
Executive shall be entitled.  Without
limiting the generality of the foregoing, these benefits are in lieu of all
salary and bonuses (except for salary and bonuses for periods ending on the
date of termination as provided in Section 8 below), accrued vacation and
other rights Executive may have against the Company or its affiliates.


 


3

















 


a.               If a Severance Termination occurs,
Executive will receive payment of an amount equal to eighteen (18) months of
his base salary in effect at the time of the Severance Termination.


 


b.              Upon a Severance Termination, Executive
will be able to exercise any options which have become vested and exercisable
on or before the termination date and until the earlier of (i) the first
anniversary of the date of termination or (ii) the expiration date of the
option.  In addition, in the event that
Executive remains employed by the Company through April 24, 2009 or
experiences a Severance Termination prior to such date and, in either case,
within one year following the date of termination of Executive’s employment,
either (A) a Change of Control occurs, or (B) (1) the Company
enters into a definitive agreement pursuant to which, if consummated, a Change
of Control would occur, and (2) no later than eighteen months following
the date of termination or a Change of Control occurs, then, in any such case,
any options, to the extent not vested as of the date of such termination, shall
become fully vested and exercisable immediately prior to the occurrence of any
such Change of Control (unless any such termination of employment was a
termination for “cause”, in which case the acceleration of vesting contemplated
by this sentence shall not apply).


 


c.               Upon a Severance Termination, Executive
will receive continued coverage under the Company’s medical and health plans in
accordance with COBRA rules and regulations following the termination date
(including any period as may be required by law), provided that coverage will
end if Executive obtains comparable coverage from a subsequent employer or
otherwise ceases to be eligible for COBRA benefits.  If Executive chooses such continuation health
insurance coverage, Executive will only pay the amount paid by Executive during
his employment and the Company will subsidize the remaining costs which are
normally the responsibility of the former employee for eighteen months or until
Executive obtains insurance through another employer, whichever occurs sooner.
Thereafter, Executive shall be solely responsible for paying the premiums for
COBRA continuation coverage. If Executive ceases to be eligible for COBRA
because the Company does not pay the premiums for its existing or group
insurance policy or the Company ceases to have a group healthcare plan, the
Company will pay Executive, for any portion of the period referred to above
during which Executive’s COBRA eligibility ceases for such reasons, the amount of
the premium it would have had to pay for Executive’s coverage under the then
existing, or if none, the most recently existing, healthcare insurance
policy.  Executive should consult with
the Company’s Manager of Human Resources concerning the process for assuming
ownership of and continued premium payments for any life insurance policy.  Executive will be reimbursed in accordance
with Company policies promptly for all of Executive’s reasonable and necessary
business expenses incurred on behalf of the Company prior to Executive’s
termination date.  Without limiting the
Company’s obligation under the preceding sentence, the reimbursement of any
expense under this subsection (c) shall be made no later than December 31
of the year following the year in which the expense was incurred.  The amount of expenses reimbursed in one year
shall not affect the amount eligible for reimbursement in any subsequent year.


 


d.              All compensation and benefits described
above in (a) through (c) of this Section 6 will be contingent upon
(i) Executive’s execution of a release of all claims against the Company
substantially in the form of Exhibit A and expiration of the seven-day
revocation period referred to in the release, and  (ii) Executive’s
not engaging in any Solicitation (as defined in Section 7 of this Letter
Agreement) during the period of his employment by the Company or the one-year
period following Executive’s termination date.


 


4

















 


e.               Subject to Section 11  below, the Company will pay Executive the
amount described in (a) above in equal bi-weekly installments for a period
of eighteen months (18) months with the first payment being payable on the date
when the seven-day revocation period referred to below with respect to the release
expires.  The Company will prepare the
final release (which will be substantially in the form attached as
Exhibit A to this Letter Agreement) and deliver it to Executive within
five business days of Executive’s termination of employment.  Executive will have twenty-one (21) days in
which to consider the release although Executive may execute it sooner.  Please note that the release has a revocation
period of seven days.


 


f.                 In this Letter Agreement, the term “cause” means (a) Executive’s failure
to adhere to any lawful written policy of the Company (unless Executive’s
failure to adhere is at the request of the Board) if Executive has been given a
reasonable opportunity to comply with such policy and cure Executive’s failure
to comply (which reasonable opportunity to cure must be granted for a period of
at least ten days and up to thirty days, if reasonable); (b) Executive’s
appropriation (or attempted appropriation) of a business opportunity of the
Company, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of the Company;
(c) Executive’s misappropriation (or attempted misappropriation) of any of
the Company’s funds or property (including without limitation trade secrets and
other intellectual property); or (d) Executive’s conviction of, or
Executive’s entering of a guilty plea or plea of no contest with respect to, a
felony or the equivalent thereof.  In
this Letter Agreement, the term “good reason”
means (i) Executive’s assignment (without Executive’s consent) to a
position, title, responsibilities, or duties of a materially lesser status or
degree of responsibility than the position, responsibilities, or duties of  President and Chief Operating Officer of
the Company or removal from his position as an executive officer of the
Company, (ii) the relocation of the Company’s offices at which Executive
is principally employed to a location which is more than thirty miles from the
location of the Company’s principal offices on the date of this Letter
Agreement, (iii) the reduction of Executive’s base salary or bonus
opportunity, except pursuant to a reduction which also applies to the Company’s
other senior executives or (iv) the requirement that Executive report to
any officer of the Company other than its Chief Executive Officer; provided,
however, that Executive must have given the written notice to the Company that
Executive believes he has the right to terminate employment for good reason,
within ninety (90) days of the initial occurrence of such event, and the
Company fails to eliminate the good reason within fifteen (15) days after
receipt of the notice.  Further,
Executive’s termination of employment must occur within 2 years from the
initial occurrence of an event that constitutes good reason.


 


g.              In this Letter Agreement, the term
“Change of Control” means (a) the issuance, sale, transfer or acquisition
of shares of capital stock of the Company (including a transfer as a result of
death, disability, operation of law, or otherwise) in a single transaction or a
group of related transactions, as a result of which any entity, person, or
group (other than Safeguard Scientifics, Inc. and/or its affiliates)
acquires the beneficial ownership of newly issued, outstanding or treasury
shares of the capital stock of the Company having 50% or more of the combined
voting power of the Company’s then outstanding securities entitled to vote for
at least a majority of the authorized number of directors of the Company or
(b) any merger,


 


5

















 


consolidation, sale of
all or substantially all the assets or other comparable transaction as a result
of which all or substantially all of the assets and business of the Company are
acquired directly or indirectly by another entity (except Safeguard
Scientifics, Inc. and/or any of its affiliates).  An “affiliate” of an entity is an entity
controlling, controlled by, or under common control with the entity specified,
directly or indirectly through one or more intermediaries.  “Group” shall have the same meaning as in
section 13(d) of the Securities Exchange Act of 1934, and “beneficial
ownership” shall have the meaning set forth in Rule 13d-3 of the
Securities and Exchange Commission adopted under the Securities Exchange Act of
1934.


 


h.              Executive will not be required to
mitigate the amount of any payment provided for in this Letter Agreement by
seeking other employment or otherwise and Executive shall be entitled to
receive the severance payments provided in this Section 6 without regard
to whether Executive obtains other employment or enters into other service
relationships, provided Executive does not violate any of his obligations under
this Section 6.


 


i.                  Executive acknowledges that the
arrangements described in this Letter Agreement will be the only obligations of
the Company or its affiliates in connection with any determination by the
Company to terminate Executive’s employment with the Company.  This Letter Agreement does not terminate,
alter, or affect Executive’s rights under any plan or program of the Company in
which Executive may participate, except as explicitly set forth herein.  Executive’s participation in such plans or
programs will be governed by the terms of such plans and programs.


 


7.               Definitions of Competition and
Solicitation.


 


a.               [Intentionally Deleted].


 


b.              For purposes of Section 6(d) of
this Letter Agreement “Solicitation” shall mean (A) soliciting, enticing,
or inducing any Customer (as defined below) to become a client, customer, OEM,
distributor, or reseller of the laboratory services business of any other
person, firm or corporation with respect to products or services which are
competitive with products or services then sold or under development by the
Company’s reference laboratory services business or to cease doing business
with the Company or authorizing or knowingly approving the taking of such
actions by any other person or (B) soliciting, enticing, or inducing
directly or indirectly, or hiring any person who presently is or at any time during
the term hereof shall be an employee of the Company to become employed by any
other person, firm or corporation or to leave his or her employment with the
Company or authorizing or approving any such action by any other person or
entity.  Providing a reference for an
employee of the Company will not, however, constitute Solicitation if the
employee has decided to leave the employ of the Company, is seeking other
employment, and requests the reference.


 


c.               For purposes of this Section 7,
“Customer” means any person or entity which at the time of determination, if
made prior to termination of employment, or, after termination of employment,
at the time of such termination, shall be, or shall have been within one year
prior to such time, a client, customer, OEM, distributor, or reseller of the
Company.


 


d.              Executive acknowledges (i) that his
experience and capabilities are such that the conditions in
Section 6(d) to his receiving the severance benefits referred to in
Section 6 will not prevent him from obtaining employment or otherwise
earning a living at the same general


 


6

















 


economic benefit as
reasonably required by him without losing the severance benefits and
(ii) that he has, prior to the execution of this Letter Agreement,
reviewed this Letter Agreement with his legal counsel.  Executive acknowledges that the provisions
contained in this Section 7 and in Section 6(d) are reasonable
and necessary to protect the legitimate business interests of the Company and
that the Company would not have entered into this Letter Agreement in the
absence of such provisions.


 


8.               Other Payments in the Event of
Termination of Employment.  In the event of termination of
Executive’s employment for any reason, Executive will be entitled to receive
upon such termination payment of all accrued, unpaid salary to the date of
termination.  In addition, in the event
of termination of Executive’s employment for any reason other than by the
Company for “cause”, Executive will be entitled to receive upon such
termination a “pro rata portion” of his “bonus for the year of termination” (as
those terms are defined below).  “Pro
rata portion” means the number of days in the calendar year of termination up
to and including the date of termination divided by the total number of days in
that full calendar year.  The “bonus for
the year of termination” means the amount Executive would have been likely to
earn if he had been employed for the full year, as determined in good faith by
the Board of Directors of the Company or a committee thereof.


 


9.               Withholding; Nature of Obligations. 
The Company will withhold applicable taxes and other legally required
deductions from all payments to be made hereunder.  The Company’s obligations to make payments
under this Letter Agreement are unfunded and unsecured and will be paid out of
the general assets of the Company.


 


10.         Representations and Covenants of
Executive.  Executive represents and warrants to the
Company that:  (a) he has full power
and authority to enter into this Letter Agreement and to perform his duties
hereunder, (b) the execution and delivery of this Letter Agreement and the
performance of his duties hereunder shall not result in an actual (as opposed
to merely asserted) breach of, or constitute an actual (as opposed to merely
asserted) default under, any agreement or obligation to which he may be bound
or subject, including without limitation any obligations of confidentiality,
noncompetition, nonsolicitation or use of information, (c) this Letter
Agreement represents a valid, legally binding obligation on him and is
enforceable against him in accordance with its terms except as the
enforceability of this Letter Agreement may be subject to or limited by general
principles of equity and by bankruptcy or other similar laws relating to or
affecting the rights of creditors, (d) to Executive’s knowledge, the
services contemplated by this Letter Agreement do not (i) infringe any
third party’s copyright, patent, trademark, trade secret or other proprietary
right, or (ii) violate any law, statute, ordinance or regulation, and
(e) the Executive has resigned from all positions as an employee, officer,
director or executive of prior employers. Executive covenants to the Company
that during his employment with the Company (a) he shall not
(i) intentionally use, in connection with his employment with the Company,
any confidential or proprietary information or materials belonging to any third
person or entity, or (ii) knowingly violate any law, statute, ordinance or
regulation and (b) he shall not breach (i) any agreement with any
third party to keep in confidence any confidential or proprietary information,
knowledge or data acquired prior to his execution of this Letter Agreement or
(ii) any obligations of confidentiality, noncompetition, nonsolicitation
or use of information.


 


7

















 


11.         Section 409A.


 


a.               Notwithstanding anything to the contrary
in this Letter Agreement, if at the time of Executive’s Separation from Service
with the Company, Executive is a “specified employee” as defined in
Section 409A of the Code, as determined by the Company in accordance with
Section 409A of the Code, and the deferral of the commencement of any
payments or benefits otherwise payable hereunder as a result of such Separation
from Service is necessary in order to prevent any accelerated or additional tax
under Section 409A of the Code, then the Company will defer the
commencement of the payment of any such payments or benefits hereunder (without
any reduction in the payments or benefits ultimately paid or provided to
Executive) until the date that is at least six (6) months following
Executive’s Separation from Service with the Company (or the earliest date
permitted under Section 409A of the Code), whereupon the Company will pay
Executive a lump-sum amount equal to the cumulative amounts that would have
otherwise been previously paid to Executive under this Letter Agreement during
the period in which such payments or benefits were deferred.  Thereafter, payments will resume in
accordance with this Letter Agreement.


 


b.              With respect to the provisions of this
Letter Agreement which provide for “nonqualified deferred compensation” within
the meaning of Section 409A of the Code, this Letter Agreement shall
comply with the provisions of Section 409A of the Code and the Regulations
thereunder and shall be so interpreted, construed and administered.


 


c.               In the event that following the date
hereof the Company or Executive reasonably determines that any compensation or
benefits payable under this Letter Agreement may be subject to
Section 409A of the Code, the Company and Executive shall work together to
adopt such amendments to this Letter Agreement or adopt other policies or
procedures (including amendments, policies and procedures with retroactive
effect), or take any other commercially reasonable actions necessary or
appropriate, to (i) exempt the compensation and benefits payable under
this Letter Agreement from Section 409A of the Code and/or preserve the
intended tax treatment of the compensation and benefits provided with respect
to this Letter Agreement or (ii) comply with the requirements of
Section 409A of the Code and related Department of Treasury guidance.


 


12.         Miscellaneous. 
This Letter Agreement will inure to the benefit of Executive’s personal
representatives, executors, and heirs. 
In the event Executive dies while any amount payable under this Letter
Agreement remains unpaid, all such amounts will be paid to the parties legally
entitled thereto in accordance with the terms and conditions of this Letter
Agreement.  No term or condition set
forth in this Letter Agreement may be modified, waived, or discharged unless
such waiver, modification, or discharge is agreed to in writing and signed by Executive
and an officer of the Company authorized to sign such writing by the Board of
Directors of the Company or an authorized committee thereof.  This Letter Agreement will be construed and
enforced in accordance with the laws of the State of California without regard
to the conflicts of laws of any state. 
Any controversy or claim arising out of or relating to this Letter
Agreement, or the breach thereof, will be settled by arbitration in Los Angeles
or Orange County, California in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association,
using one arbitrator, and judgment upon the award rendered by the arbitrator
may be entered in any court of competent jurisdiction.


 


8

















 


13.         Limit on Payments by the Company. 
Executive shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any payment received
hereunder, including, without limitation, any excise tax imposed by
Section 4999 of the Code; provided, however, that any payment or benefit
received or to be received by Executive in connection with a Change of Control
or the termination of Executive’s employment (whether payable pursuant to the
terms of this Letter Agreement (“Contract Payments”) or any other plan,
arrangements or agreement with the Company or any affiliate (collectively with
the Contract Payments, the “Total Payments”) shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code but only if, by reason of such reduction, the
net after-tax benefit received by Executive shall exceed the net after-tax
benefit received by Executive if no such reduction was made.  For purposes of this Section 13, “net
after-tax benefit” shall mean (i) the total of all payments and the value
of all benefits which Executive receives or is then entitled to receive from
the Company that would constitute “parachute payments” within the meaning of
Section 280G of the Code, less (ii) the amount of all federal, state
and local income taxes payable with respect to the foregoing calculated at the
maximum marginal income tax rate for each year in which the foregoing shall be
paid to Executive (based on the rate in effect for such year as set forth in
the Code as in effect at the time of the first payment of the foregoing), less
(iii) the amount of excise taxes imposed with respect to the payments and
benefits described in (i) above by Section 4999 of the Code.  The foregoing determination shall be made by
a nationally recognized accounting firm (the “Accounting Firm”) selected by the
Company and reasonably acceptable to Executive (which may be, but will not be
required to be, the Company’s independent auditors).  The Accounting Firm shall submit its
determination and detailed supporting calculations to both Executive and the
Company within fifteen (15) days after receipt of a notice from either the Company
or Executive that Executive may receive payments which may be “parachute
payments.”  If the Accounting Firm
determines that such reduction is required by this Section 13, Executive,
in Executive’s sole and absolute discretion, may determine which Total Payments
shall be reduced to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code, and the
Company shall pay such reduced amount to Executive.  If the Accounting Firm determines that no
reduction is necessary under this Section 13, it will, at the same time as
it makes such determination, furnish Executive and the Company an opinion that
Executive shall not be liable for any excise tax under Section 4999 of the
Code.  Executive and the Company shall
each provide the Accounting Firm access to and copies of any books, records,
and documents in the possession of Executive or the Company, as the case may
be, reasonably requested by the Accounting Firm, and otherwise cooperate with
the Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by this Section 13.  The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations contemplated
by this Section 13 shall be borne by the Company.


 


9

















 


If this Letter Agreement sets forth our agreement on
the subject matter hereof, kindly sign and return to us the enclosed copy of
this letter which will then constitute our legally binding agreement on this
subject and supersedes any prior discussions or agreements on this subject,
including without limitation, that certain Services Agreement, dated
October 1, 2007 between Executive, the Company and Safeguard
Scientifics, Inc. (the “Prior Agreement”), and the parties hereto
expressly acknowledge and agree that nothing herein shall violate or be
construed as a violation of any provision of the Prior Agreement, including
without limitation, Section 7(b) thereof.


 


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  Clarient, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald Andrews

  
	
   

  	
  By: Ronald Andrews

  
	
   

  	
  Title: CEO

  



 


I agree to the terms and conditions of this Letter
Agreement


 


	
  /s/ Michael Pellini

  	
   

  
	
  Michael Pellini

  	
   

  



 


10