Exhibit 10.1


 


AMENDED AND RESTATED PROFESSIONAL SERVICES AGREEMENT


 


by and between


 


CLARIENT DIAGNOSTIC SERVICES, INC.,


 


CLARIENT, INC.


 


and


 


CLARIENT PATHOLOGY SERVICES, INC.


 

















 


AMENDED AND RESTATED PROFESSIONAL SERVICES AGREEMENT


 


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


 


RECITALS


 


A.            Group is a professional corporation organized under the
laws of the State of California, consisting of employees and contractors
(collectively, “Group Physicians” and each, a “Group Physician”), each of whom is a physician duly licensed
and qualified to practice medicine in the State of California.  Each Group Physician is board certified for
the practice of medicine in the specialty of pathology (the “Specialty”).  Group
provides medical services including, without limitation, the professional
component of specialty pathology services and related activities.


 


B.            Lab is a clinical laboratory licensed under the Federal
Clinical Laboratory Improvement Amendments of 1988 and by the State of
California.  Clarient is the sole
shareholder of Lab.


 


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


 


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


 


AGREEMENT


 


THE PARTIES AGREE AS FOLLOWS:


 


ARTICLE
I.


GROUP’S OBLIGATIONS TO LAB


 


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


 


1.2                               Additional Services.  Group shall provide
to Lab those additional services set forth in Exhibit 1.2 (the “Additional Services”), upon the terms and
subject to the conditions set forth in this Agreement.  The Professional Services and the Additional
Services are sometimes referred to collectively in this Agreement as the “Services.”


 

















 


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


 


1.4                               Staffing.  Group shall ensure staffing by such qualified
Group Physicians as determined necessary by Group, in its sole reasonable
discretion, to provide the Services.  The
parties shall adjust the Professional Services Fee to reflect any changes in
staffing levels of Group Physicians. 
Group shall consider adjustments to staffing levels and/or staffing
patterns, as requested by Lab from time to time, but the final authority with
respect to all staffing levels and staffing patterns shall be made solely by
Group in its reasonable discretion.


 


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


 


(a)                                  comply with all policies, rules and regulations of Lab
to the extent that these do no interfere with the medical decision-making
processes of Group and each Group Physician;


 


(b)                                 participate in continuing education as necessary to maintain
licensure, professional competence and skills commensurate with the standards
of the medical community and as otherwise required by the medical profession;
and


 


(c)                                  comply with all applicable standards and recommendations of
The Joint Commission or other applicable accreditation and regulatory bodies.


 


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


 


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


 


1.8                               Sole Authority to Provide the Services.  Notwithstanding any
provisions of this Agreement to the contrary, Group and the Group Physicians,
all of whom are licensed physicians, shall have the sole and exclusive
authority and control over all aspects of the Services and any other medical or
healthcare services that may be performed by Group and that are required by
applicable laws or government regulations to be performed or made by a licensed
physician.  Any delegation of authority
to Clarient pursuant to this Agreement, or otherwise, that would require or permit
Clarient to engage in the practice of medicine in any jurisdiction shall be
prohibited and deemed ineffective, and Group and the Group Physicians shall
have the sole authority with respect to such matters.  The Parties further acknowledge and agree that
the terms of any payor agreements or other services agreements entered into by
Lab or Clarient that affect the medical decision-making processes or the
practice of medicine by Group or any Group Physicians shall be subject to the
review and final 


 


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approval of
Group.  Group shall be solely responsible
for all staffing levels and/or staffing patterns of Group Physicians.


 


ARTICLE
II.


LAB’S
OBLIGATIONS


 


2.1                               Staff.  Lab shall, at its own expense, provide the
services of licensed registered and vocational nurses, pathology technologists
and other non-physician technicians and assistants necessary for the provision
by Lab of its own technical component services and the cost-efficient operation
of Lab.  Lab shall, after consultation
with Group, have sole discretion with regard to selection and retention of
these personnel who provide Lab’s technical component and to determine levels
of staffing.  To the extent that allied
health staff are required by Group to assist in the provision of Group’s
professional medical services, Lab shall provide such staff at the direction of
Group and Group shall have the authority set forth in Section 3.1(f) with
respect to such staff. Control and direction of all personnel (whether Lab’s
own personnel or Group’s personnel) for medical matters shall rest with Group.


 


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


 


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


 


2.4                               Equipment and Supplies.  Lab shall, at its
own expense, provide all expendable and non-expendable equipment, drugs,
supplies, furniture and fixtures as are necessary for the provision by Lab of
its own technical component services and the cost-efficient operation of
Lab.  This equipment shall meet all
electrical, engineering, and other safety standards required by law and/or
relevant Lab policies.  In addition, to the extent that equipment and supplies are required by
Group to assist in the provision of Group’s professional medical services, Lab
shall provide such equipment and supplies at the direction of Group and Group
shall retain the right to select such equipment and supplies. Lab shall, at its own expense, keep and maintain all
equipment in good order and repair and replace this equipment or any part of it
which becomes worn out or is mutually determined to be obsolete.


 


ARTICLE
III.


ADMINISTRATIVE
SERVICES


 


3.1                               Clarient’s Obligations to Group.


 


(a)                                  Financial Management Services.  Clarient shall provide financial management
services necessary and appropriate for Group’s operations, including
accounting, bookkeeping, operation and capital budgeting, tax matters, accounts
receivable and accounts payable processing, and electronic data
processing.  All business records, papers
and documents shall remain the sole property of Group, shall be available for
inspection by Group at all reasonable times, and shall be delivered to Group
upon any termination or expiration of this Agreement.  Clarient shall be entitled to retain a
complete copy of all such documents upon any termination or expiration of this
Agreement.


 


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(b)                                 Contracting Services.  In consultation with Group, Clarient shall
negotiate the terms and conditions of all business agreements, including all
agreements with lenders, vendors and consultants, provided that Group shall
retain the authority to execute all such business agreements.  Furthermore, any terms or provisions of
business agreements that affect the medical decision-making processes or the
practice of medicine by Group or any Group Physician shall be subject to the
final approval of Group.


 


(c)                                  Day-to-Day Services.  Clarient shall furnish or obtain all
telephones, paging devices, office services (including secretarial, duplication
and facsimile services) and any other services of a similar nature reasonably
necessary in connection with the day-to-day operations of Group after
consultation with Group or as directed by Group.


 


(d)                                 Attorney-in-Fact.  Subject to Section 3.2(a), Group
appoints Clarient (and any subcontractor designated by Clarient) as Group’s
lawful attorney-in-fact for the following purposes (and shall execute the power
of attorney attached as Exhibit 3.1(d)):


 


(i)                                     Billing and Collections.  To collect all
revenue from whatever source, including accounts receivable, due to Group
hereunder (“Collections”), and to
receive all Collections on Group’s behalf and to sue for and give satisfaction
for monies due on account and to withdraw any claims, suits or proceedings
pertaining to or arising out of Clarient’s or Group’s right to collect such
accounts;


 


(ii)                                  Endorsement.  To take possession of and endorse in Group’s
name any notes, checks, money orders, insurance payments and any other
instruments received as Collections; and


 


(iii)                               Banking Powers.  To deposit all
Collections directly into a bank account mutually selected by Clarient and
Group.  Clarient (and any subcontractor
designated by Clarient) shall have the right to make withdrawals from such
account to pay all costs and expenses incurred in the operation of Group and to
fulfill all other terms of this Agreement.


 


(e)                                  Supplies.  Clarient shall arrange for such non-medical
supplies as may be reasonably necessary for the proper and efficient operation
of the Lab to be delivered to Group, after consultation with Group.


 


(f)                                    Support Personnel.  Clarient shall, in consultation with Group,
provide to Group the support services of such non-licensed personnel as may be
reasonably required to support Group’s operations and to enable Group to carry
out and perform the Professional Services (“Support
Personnel”).


 


(i)                                     Hiring and Termination.  Clarient shall,
after consultation with Group, hire and fire all Support Personnel.  Group shall consult with Clarient concerning
Group’s recommendations on performance evaluations of Support Personnel.  While Group does not have the authority to
terminate the employment of Support Personnel, Group shall have the right to
reject as unsuitable any personnel furnished by Clarient at any time and from
time-to-time during the term of this Agreement. 
Such rejection shall be honored by Clarient subject to Group’s showing
that said personnel are technically unsatisfactory for the job to which such
personnel has been assigned by reason of lack of experience, ability or
technical skill or by reason of personal incompatibility with other persons with
whom the personnel are required to work. 
Notwithstanding any of the statements in this Section 3.1(f)(i),
Clarient shall have the right to terminate or hire Support Personnel for any
reason it deems necessary.


 


4

















 


(ii)                                  Compensation and Employee Benefits.  Clarient shall, in
consultation with Group, determine and pay any compensation payable to such
Support Personnel, including salaries, deferred compensation, fringe benefits,
bonuses, health insurance, long-term disability and group life insurance,
workers’ compensation insurance, unemployment insurance, retirement benefits
and any other benefits that such Support Personnel may receive.  Clarient shall be responsible for all
employee record keeping, payroll accounting (including social security and
other payroll tax reporting), income tax withholding, social security and other
payroll taxes, forms processing, payroll and Internal Revenue Service filings
and records storage and retrieval on behalf of all Support Personnel.


 


(iii)                               Supervision and Training of Support
Personnel.  Clarient shall, in consultation with Group,
manage and supervise all Support Personnel and arrange for training of all
Support Personnel.


 


(g)                                 Reports.  Clarient shall provide Group with financial
statements relating to Group operations (“Group
Financial Statements”) on a periodic basis, but at least
annually.  Group shall, at its sole
discretion and expense, have the right to conduct an independent audit of any
Group Financial Statements, at Group’s expense.


 


(h)                                 Books and Records; Confidentiality.  All patient reports,
financial records, corporate records, personnel files, written procedures and
other such items relating to the business and activities of Group (“Group Records”) shall be the property of
Group.  Upon any termination or
expiration of this Agreement, Clarient shall, at Group’s request, transmit, at
Group’s expense, all Group Records to Group or to any other party designated by
Group.  Clarient shall have a right to
copy all records prior to transmittal, at its expense, subject to applicable
law.  With respect to patient reports,
copying shall only be as applicable law requires or permits, or in connection
with a malpractice action involving Clarient. 
Clarient and Group shall comply with all applicable laws concerning the
confidentiality of all Group Records. 
Clarient and its employees shall keep confidential all statistical,
financial, and personnel data relating to the business of Group and any Group
Physicians except for any data that becomes publicly available, or any data to
which the public has the legal right of access, or that may be rightfully
obtained from third parties.


 


(i)                                     Insurance.  Clarient shall assist Group in obtaining
malpractice insurance coverage, as set forth in Section 5.1, the cost of
which shall be included in the professional services fee set forth in Section 4.1.


 


(j)                                     Clarient’s Right to Subcontract.  Clarient may
subcontract with other persons or entities for any of the services that
Clarient is required to perform under this Agreement.


 


(k)                                  Exclusive Authority.  Clarient shall have the exclusive authority
to perform all of its duties set forth in this Agreement, subject to the final
authority of Group where specified in this Agreement.


 


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3.2                               Group’s Rights and Obligations.


 


(a)                                  Billing Matters.  The parties recognize that many patients,
referring clinicians and third party payors require or request the submission
of a single claim for the technical and professional component of pathology and
laboratory services, which typically are billed under the same CPT code with
the appropriate modifier(s).  To
accommodate such requirements and requests, the parties believe that it is
important to submit global claims for Group’s Professional Services and Lab’s
technical component services.  Therefore,
unless otherwise agreed upon by the parties, Group’s Professional Services will
be billed on a global basis with Lab’s technical component services.  Notwithstanding the foregoing, Group shall
have the right to approve the fees to be charged for its Professional Services
and all price negotiations with third party payors for its Professional
Services.


 


(b)                                 Assistance with Collections.  Group shall provide Clarient with complete
and accurate charge slips, claims or encounter reports specifically identifying
services rendered, service and diagnosis codes in a form and substance as
indicated by Clarient from time-to-time. 
Group shall assist Clarient, upon Clarient’s request, with all necessary
steps for Clarient to manage and administer the financial aspects of the Group,
including required assistance to complete Collections.


 


(c)                                  Group Governing Documents.  The following governing and operational
documents  are defined as the “Governing Documents”:  Group’s articles of incorporation, bylaws and
shareholders’ agreements.  Group shall
consistently and uniformly utilize the Governing Documents in the conduct of
its business and shall comply with and require performance of all of the
provisions contained in the Governing Documents.  Group shall not revise, modify or terminate
any of the Governing Documents, or enter into any new agreement or arrangement
affecting the ownership or voting of Group’s equity securities or partnership
interests (as applicable) without Clarient’s prior written approval.  Notwithstanding the foregoing, in no event
shall Clarient’s approval be required for any hiring or termination of any
physician or other professional personnel by Group, or any other issues related
to medical decision-making processes or the practice of medicine by Group or
any Group Physician.


 


ARTICLE
IV.


COMPENSATION


 


4.1                               Professional Services Fee.  On or before the
fifteenth (15th) business day of each calendar month during the term of this
Agreement, Clarient shall pay Group a monthly fee equal to the aggregate of all
estimated salary and benefit expenses and all other costs and expenses incurred
by Group for the provision of Professional Services to Lab under this Agreement
during the immediately preceding month, after presentment by Group to Lab of
all available invoices or other documentation that set forth the amount, nature
and purpose of such costs and expenses.


 


4.2                               Management Fee.  Clarient’s
compensation for its management and administrative services under this
Agreement shall be the difference between the actual collections received for
the Professional Services and the Professional Services Fee paid to Group under
Section 4.1 above.


 


4.3                               Catch-Up and Waiver.  To the extent that
the actual payments to date under the Original PSA are less than should have
been paid as determined pursuant to this Agreement (the “Deficiency”), (1) Clarient
retroactively waives the right to any cost reimbursements previously requested
from Group, and (2) if such waiver does not cover the entire Deficiency,
Clarient will pay as soon as reasonably practical after computation of the
Deficiency any remaining amount to Group. 
Clarient hereby expressly waives and agrees not to enforce Group’s
obligation to pay any consideration to Clarient pursuant to the terms of the
Original MSA.


 


6

















 


4.4                               Periodic Adjustments.  Group and Clarient
shall review the compensation structure set forth herein no less frequently
than quarterly and may agree in writing to modify such compensation structure
from time to time.  Such review shall
consider the scope of the operations and services provided pursuant to this
Agreement at the time of the review, changes in the purchasing power of money
and the expenses and risks to Group in performing its obligations under this
Agreement.


 


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


 


4.6                               No Referrals.  Nothing in this Agreement
requires, and there are no understandings or arrangements between the Parties
with respect to the recommendation, referral or any other arrangement for the
provision of any item or service offered by the Parties or any of their
respective affiliates, and no compensation or other benefits to Group under
this Agreement require or are in any way contingent thereon.


 


4.7                               Billing for Professional Services Performed
at Lab; Global Billing.  Group and Group Physicians acknowledge that
Lab shall have the sole and exclusive right to bill and collect for the
Professional Services rendered under this Agreement, and hereby assign their
right to bill and collect for such Professional Services to Lab.  Subject to Section 3.2(a), Lab shall
bill and collect for such Professional Services and any and all related
technical services provided by Lab on a global fee basis, at its own expense
and under its own provider number. 
Consequently, Group has, and shall have, no claims as a third-party
beneficiary, or otherwise, for any compensation or other amounts from
third-party payors.  Group shall seek and
obtain compensation for the performance of Professional Services only from
Clarient pursuant to Section 4.1. 
Group shall not bill, assess or charge any fee, assessment or charge of
any type against any other person or entity for Professional Services
provided.  Group and Group Physicians
hereby assign to Lab all right, title and interest in any accounts receivable
generated by the provision of Professional Services under this Agreement, to
the extent permitted by applicable law. 
Accordingly, Lab shall be the sole owner of the accounts receivable for
any and all of the Professional Services performed under this Agreement.  Group shall promptly deliver to Lab any and
all compensation, in whatever form, that is received by Group for Professional
Services performed under this Agreement.


 


ARTICLE
V.


INSURANCE
AND INDEMNITY


 


5.1                               Group Malpractice Liability Insurance.  Group shall obtain
and continuously maintain professional malpractice liability insurance
coverage, issued by an insurance company licensed or otherwise qualified to
issue professional liability insurance policies or coverage in the 


 


7

















 


State of
California, and acceptable to Clarient and Lab, in the amount of at least One
Million Dollars ($1,000,000) per occurrence or claim and Three Million Dollars
($3,000,000) in the annual aggregate for the acts and omissions of Group and
each Group Physician.  Clarient may
assist Lab in obtaining and renewing medical malpractice insurance.  Such coverage shall provide for a date of
placement preceding or coinciding with the Effective Date of this Agreement.


 


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


 


5.3                               Group Tail Coverage.  If Group’s
professional malpractice liability insurance is provided on a claims-made
basis, upon the expiration or termination of this Agreement for any reason,
Group shall continuously maintain such insurance or purchase from an insurance
company licensed or otherwise qualified to issue professional liability
insurance policies or coverage in the State of California, and acceptable to
Clarient and Lab, extended reporting period (i.e., “tail”) coverage for the
longest extended reporting period then available to ensure that insurance
coverage in the amount set forth in Section 5.1 is maintained for claims
which arise from services provided by Group or Group Physicians during the term
of this Agreement.  This Section shall
survive any termination or expiration of this Agreement.


 


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


 


5.5                               Hold Harmless.  Clarient and Lab
shall be responsible for their own acts and omissions and the acts and
omissions of their employees and agents. 
Neither Clarient nor Lab shall be responsible for the acts and omissions
of Group or Group’s employees and agents in carrying out this Agreement.  Neither Clarient nor Lab shall be liable for
any judgment, settlement, award, fine or otherwise, which arises out of the
acts and omissions of Group, or its employees and agents, under this
Agreement.  To the extent that Clarient
and Lab utilize their own equipment, products, or other personal property in
the performance of their obligations under this Agreement, Clarient and Lab
shall ensure that such equipment, product, or other personal property is
suitable and fit for the purpose intended by Clarient and Lab, free from
defects which may damage Group, and otherwise operates in accordance with
applicable government standards and safety regulations.


 


5.6                               Cooperation between the Parties.


 


(a)                                  The Parties recognize that, during the term of this Agreement
and for a period thereafter, certain risk management issues, legal issues,
claims or actions may arise that involve or could potentially involve the
Parties and their respective employees and agents.  The Parties further recognize the importance
of cooperating with each other in good faith when such issues, claims or
actions arise, to the extent such cooperation does not violate any applicable
laws, cause the breach of 


 


8

















 


any duties
created by any policies of insurance or programs of self-insurance, or
otherwise compromise the confidentiality of communications or information
regarding the issues, claims or actions. 
As such, the Parties hereby agree to cooperate in good faith, using
their best efforts, to address such risk management and claims handling issues
in a manner that strongly encourages full cooperation between the Parties.


 


(b)                                 The Parties further agree that if a controversy, dispute,
claim, action or lawsuit (each, an “Action”)
arises with a third-party wherein all of the Parties are included as
defendants, each Party shall promptly disclose to the other Party in writing
the existence and continuing status of the Action and any negotiations relating
thereto.  Each Party shall make every
reasonable attempt to include the other Parties in any settlement offer or
negotiations.  In the event the other
Parties are not included in the settlement, the settling Party shall
immediately disclose to the other Parties in writing the acceptance of any
settlement and terms relating thereto.


 


ARTICLE
VI.


RELATIONSHIP
BETWEEN THE PARTIES


 


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


 


6.2                               Limitation on Control.  Neither Clarient nor
Lab shall have or exercise any control or direction over Group’s or any Group
Physician’s professional medical judgment or the methods by which Group or any
Group Physician performs professional medical services.


 


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


 


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


 


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


 


6.6                               Agent of Group.  Kenneth J.
Bloom, M.D., F.C.A.P., or his named designee(s), shall serve as Group’s sole
and exclusive agent for purposes of communicating with Lab concerning the
rights of Group pursuant to this Agreement. 
Group shall be bound by all actions and agreements made by this
agent.  Group may designate, from time to
time, a new agent(s) of Group, pursuant to written notice to Lab.


 


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


 


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


 


6.9                               Merger or Sale of Group.


 


(a)                                  Merger or Sale Restrictions.  Group acknowledges that Clarient and Lab have
agreed to enter into this Agreement based upon the skills, qualifications,
experience, and characteristics of Group and that any material change in Group’s
operations, ownership, control or qualifications may be harmful to the interests
of Clarient and Lab under this Agreement. 
In recognition of Clarient’s and Lab’s dependence on Group’s ability to
maintain its skills, qualifications, experience, and characteristics, Group
agrees that during the term of this Agreement, and any extensions thereto, it
shall not enter into a merger or consolidation with another medical group or
any other legal entity (“Merger”)
without at least one hundred twenty (120) days prior written notice to Clarient
and Lab.  Group further agrees that
during the term of this Agreement, and any extensions thereto, it shall not
enter into a sale, conveyance, pledge, exchange, assignment, hypothecation,
encumbrance or other transfer of any equity interest (including but not limited
to shares) or assets comprising five percent (5%) or more of the equity
interests or assets of the Group (“Sale”)
without at least one hundred twenty (120) days prior written notice to Clarient
and Lab.  Any purported Merger or Sale
without such prior written consent shall be void and shall constitute a breach
of this Agreement.


 


(b)                                 Consent to Assignment of Agreement.  In connection with
each notice provided by Group with respect to a Merger or Sale, Group shall
submit to Clarient and Lab the terms of the proposed transaction, the identity of
the parties to the transaction, and all other information reasonably requested
by Clarient and Lab concerning the proposed transaction.  Clarient and Lab shall have the right to
terminate this Agreement upon sixty (60) days prior written notice after receipt
of such notice, without further liability to Group except for the payment of
amounts due under Section 3.1.


 


6.10                        Non-Compete.  Throughout the term
of this Agreement, Group shall not itself provide administrative services that
are substantially similar to services provided by Clarient or any of the
services provided by Clarient to other parties. 
In addition, Group shall not secure the administrative services of any
other provider.


 


10
















 


ARTICLE
VII.


TERM AND
TERMINATION


 


7.1                               Term.  This Agreement shall commence on the date
hereof and shall continue in effect until September 1, 2014 (the “Expiration Date”), subject to the
termination provisions of this Agreement. 
This Agreement shall automatically renew for two (2) additional
terms of five (5) years each, unless any Party gives the other Parties
written notice of its intention not to renew this Agreement at least thirty
(30) calendar days prior to the expiration of the then current term.


 


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


 


(a)                                  material breach of this Agreement by Group or any Group
Physician where the breach is not cured within thirty (30) calendar days after
either Clarient or Lab gives written notice of the breach to Group;


 


(b)                                 neglect of professional duty by Group in a manner that poses
an imminent danger to the health or safety of any individual, or violates
either Clarient’s or Lab’s policies, rules and regulations; or


 


(c)                                  termination of the employment of Kenneth J. Bloom, M.D. as
Group’s Chief Medical Director for any reason whatsoever.


 


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


 


7.4                               Rights upon Termination.  Upon any termination
or expiration of this Agreement as set forth in Section 7.1, all rights
and obligations of the Parties shall cease except those rights and obligations
that have accrued or expressly survive such termination or expiration.


 


7.5                               Return of Property.  Upon any termination
or expiration of this Agreement, Group shall immediately return to Clarient and
Lab all property of Clarient and Lab, including equipment, supplies, furniture,
furnishings and patient records, which is in Group’s possession or under Group’s
control, in good condition, normal wear and tear excepted, free and clear of
any lien, security interest, claim or encumbrance of any kind, unless
previously agreed to in writing by Clarient and Lab.


 


ARTICLE
VIII.


TRADE SECRETS,
TRADENAMES AND SERVICE MARKS


 


8.1                               Trade Secrets.  During the term of
this Agreement, Group and Group Physicians will have access to and become
acquainted with confidential information and trade secrets of Clarient and Lab,
including information and data relating to payor contracts and accounts,
clients, patients, patent 


 


11

















 


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


 


8.2                               Tradenames and Service Marks.  Clarient and Lab may
adopt one or more tradenames or service marks. 
Group authorizes Clarient and Lab to associate such tradenames or
service marks with Group’s name on any correspondence or other public or
private communication or advertisement, and Group agrees that Clarient and Lab
may utilize such tradenames and service marks with other physicians who are
employed by or contract with Group to provide medical services.  During the term of this Agreement, Group
shall not, absent the prior written consent of Clarient and Lab, use such
tradenames or service marks.  Group
further agrees that upon any termination or expiration of this Agreement, Group
shall not use such tradenames or service marks or contest the sole and
exclusive ownership of Clarient and Lab and right to the use of such tradenames
or service marks.


 


8.3                               Injunctive Relief.  Group acknowledges
that any violation of the provisions of this Article will cause Clarient
and Lab irreparable injury.  Accordingly,
Clarient and Lab may enforce such provisions by seeking injunctive or other
equitable relief in addition to any other remedies available at law.  If a court of competent jurisdiction declares
any of the provision of this Article to be too broad to be specifically
enforced, such provisions shall be enforced to the maximum extent permitted by
law.


 


ARTICLE IX.


GENERAL
PROVISIONS


 


9.1                               Dispute Resolution.  In the event any
dispute arises between the Parties relating in any way to this Agreement,
including any dispute regarding the enforceability or the construction of any
of the terms or provisions of this Agreement, or with respect to the rights,
duties or obligations of any party hereunder or over the existence of a breach,
actual or alleged, of this Agreement by any Party, then, the Parties shall
endeavor in good faith to resolve such dispute by good faith negotiations and,
if an agreement is reached, the Parties shall implement such agreement promptly.  If, on the other hand, the Parties are unable
to reach such a resolution within a period of thirty (30) days from the
commencement of such negotiations, any Party may, at its option, submit the
dispute to binding arbitration to be conducted by J.A.M.S. in accordance with
its rules and procedures, in Orange County, California, and the other
Party or Parties to such dispute shall be obligated to participate
therein.  Each Party shall pay its own
costs and expenses (including the fees and disbursements of its attorneys,
accountants, experts or other advisors) incurred in connection with such
arbitration, except that the fees and expenses of the arbitrator shall be
shared equally by the Parties.  The
Parties covenant and agree that they will participate in the arbitration in
good faith.  Any Party unsuccessfully
refusing to comply with an order of the arbitrator shall be liable for costs
and expenses, including attorneys’ fees, incurred by the other Parties in
enforcing the award.  Notwithstanding
anything to the contrary contained in this Agreement, this Section shall
not apply to any request by any party to this Agreement for temporary,
preliminary or permanent injunctive relief or other forms of equitable relief.


 


12

















 


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


 


9.3                               Assignment.  Except for
assignment by Clarient or Lab to an entity owned, controlled by, or under
common control with Clarient or Lab, no Party may assign any interest or
obligation under this Agreement without the prior written consent of the other
Parties.  Subject to the foregoing, this
Agreement shall be binding on and shall inure to the benefit of the Parties and
their respective successors and assigns.


 


9.4                               Attorneys’ Fees.  If a Party brings an
action for any relief or collection against another Party, declaratory or
otherwise, arising out of the arrangements described in this Agreement, the
losing Party shall pay to the prevailing Party a reasonable sum for attorneys’
fees and costs actually incurred in bringing such action, including without
limitation fees incurred in arbitration, at trial, on appeal and on any review
therefrom, all of which shall be deemed to have accrued upon the commencement
of such action and shall be paid whether or not such action is prosecuted to
judgment.  Any judgment or order entered
in such action shall contain a specific provision providing for the recovery of
attorneys’ fees and costs incurred in enforcing such judgment.  For the purpose of this Section, attorneys’
fees shall include fees incurred in connection with discovery, post judgment
motions, contempt proceedings, garnishment and levy.


 


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


 


9.6                               Confidentiality.  No Party shall
disclose any of the terms of this Agreement to any person or entity (other than
its attorneys or accountants) without the prior written consent of the other
Parties, unless and only to the extent such disclosure is required by law.


 


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


 


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


 


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


 


13

















 


9.10                        Force Majeure.  No Party shall be
liable for nonperformance or defective or late performance of any of its
obligations under this Agreement to the extent and for such periods of time as
such nonperformance, defective performance or late performance is due to
reasons outside such Party’s control, including acts of God, war (declared or
undeclared), action of any governmental authority, riots, revolutions, fire,
floods, explosions, sabotage, nuclear incidents, lightning, weather,
earthquakes, storms, sinkholes, epidemics, or strikes.


 


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


 


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


 


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


 


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


 


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


 


If
to Clarient or Lab, addressed to:


 


Clarient, Inc.


31
Columbia


Aliso
Viejo, CA  92656


Attention:  Chief Financial Officer


 


If
to Group, addressed to:


 


Clarient
Pathology Services, Inc.


31
Columbia


Aliso
Viejo, CA  92656


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


 


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


 


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


 


14

















 


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


 


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


 


15

















 


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


 


	
   

  	
  LAB

  
	
   

  	
   

  
	
   

  	
  CLARIENT
  DIAGNOSTIC SERVICES, INC., a

  
	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CLARIENT

  
	
   

  	
   

  
	
   

  	
  CLARIENT,
  INC., a

  
	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
  GROUP

  
	
   

  	
   

  
	
   

  	
  CLARIENT
  PATHOLOGY SERVICES, INC.,

  
	
   

  	
  a
  California professional corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Kenneth J.
  Bloom, MD, FCAP,

  
	
   

  	
  Its:

  	
  President

  



 


16

















 


Exhibit 1.1


 


PROFESSIONAL SERVICES TO BE PROVIDED BY GROUP


 


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


 

















 


Exhibit 1.2


 


ADDITIONAL SERVICES TO BE PROVIDED BY GROUP


 


Group
shall:


 


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


 


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


 


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


 


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


 

















 


Exhibit 3.1(d)


 


POWER OF ATTORNEY


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


	
   

  	
  GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
  President