Document:

NRX-2015.3.31-Exhibit 10.4

EXHIBIT 10.4

THIRD AMENDED AND RESTATED 
MANAGEMENT AND ADVISORY AGREEMENT 

dated as of May 7, 2015 

among 

NEW RESIDENTIAL INVESTMENT CORP.

and 

FIG LLC 

TABLE OF CONTENTS 
       Page
SECTION 1.DEFINITIONS.    1
SECTION 2.APPOINTMENT AND DUTIES OF THE MANAGER.    3
SECTION 3.DEVOTION OF TIME; ADDITIONAL ACTIVITIES.    8
SECTION 4.AGENCY.    8
SECTION 5.BANK ACCOUNTS.    8
SECTION 6.RECORDS; CONFIDENTIALITY.    9
SECTION 7.OBLIGATIONS OF MANAGER; RESTRICTIONS.    9
SECTION 8.COMPENSATION.    10
SECTION 9.EXPENSES OF THE COMPANY.    11
SECTION 10.CALCULATIONS OF EXPENSES.    13
SECTION 11.LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.    13
SECTION 12.NO JOINT VENTURE.    14
SECTION 13.TERM; TERMINATION.    14
SECTION 14.ASSIGNMENT.    15
SECTION 15.TERMINATION FOR CAUSE.    16
SECTION 16.ACTION UPON TERMINATION.    16
SECTION 17.RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.    17
SECTION 18.NOTICES.    17
SECTION 19.BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS.    18
SECTION 20.ENTIRE AGREEMENT.    18
SECTION 21.CONTROLLING LAW.    18
SECTION 22.INDULGENCES, NOT WAIVERS.    19
SECTION 23.TITLES NOT TO AFFECT INTERPRETATION.    19
SECTION 24.EXECUTION IN COUNTERPARTS.    19
SECTION 25.PROVISIONS SEPARABLE.    19
SECTION 26.GENDER.    19

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THIRD AMENDED AND RESTATED MANAGEMENT AND ADVISORY AGREEMENT 
THIS THIRD AMENDED AND RESTATED MANAGEMENT AND ADVISORY AGREEMENT, is made as of May 7, 2015 (the “Agreement”) by and among NEW RESIDENTIAL INVESTMENT CORP., a Delaware corporation (the “Company”), and FIG LLC, a Delaware limited liability company (together with its permitted assignees, the “Manager”).
W I T N E S S E T H: 
WHEREAS, the Company and the Manager entered into a Management and Advisory Agreement dated as of May 15, 2013 (the “Original Management Agreement”); 
WHEREAS, the Company and the Manager amended and restated the Original Management Agreement in its entirety in the Amended and Restated Management and Advisory Agreement dated as of August 1, 2013 (the “Amended and Restated Management Agreement”); 
WHEREAS, the Company and the Manager amended and restated the Amended and Restated Management Agreement in its entirety in the Second Amended and Restated Management and Advisory Agreement dated as of August 5, 2014 (the “Second Amended and Restated Management Agreement”); and 
WHEREAS, the Company and the Manager desire to amend and restate the Second Amended and Restated Management Agreement in its entirety on the terms and conditions hereinafter set forth.
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL AGREEMENTS HEREIN SET FORTH, THE PARTIES HERETO AGREE AS FOLLOWS: 

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I.    The Second Amended and Restated Management Agreement is hereby modified so that all of the terms and conditions of the aforesaid Second Amended and Restated Management Agreement shall be restated in their entirety as set forth herein.
II.    This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, and shall be deemed to be effective as of the date hereof.
III.    Any reference in any other document executed in connection with the Original Management Agreement, the Amended and Restated Management Agreement, the Second Amended and Restated Management Agreement or this Agreement to the Original Management Agreement, the Amended and Restated Management Agreement or the Second Amended and Restated Management Agreement shall be deemed to refer to this Agreement.
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL AGREEMENTS HEREIN SET FORTH, THE PARTIES HERETO FURTHER AGREE AS FOLLOWS: 
		
	SECTION 1.
	DEFINITIONS.

The following terms have the meanings assigned them: 
(a)    “Agreement” means this Third Amended and Restated Management and Advisory Agreement, as amended from time to time.
(b)    “Amortization of Non-Routine Items” means a portion of the expense associated with each Non-Routine Item, determined in accordance with an amortization schedule for each Non-Routine Item to be established by the Manager in good faith, which amortization schedule shall take into account factors that are reasonably determined to be relevant for purposes of amortizing a Non-Routine Item, such as the term of the related asset and, in the case of write-offs of unamortized deferred financing fees, the term of the related refinanced debt. 
(c)    “Board of Directors” means the Board of Directors of the Company.
(d)    “Code” means the Internal Revenue Code of 1986, as amended.
(e)    “Common Share” means a share of capital stock of the Company now or hereafter authorized as common voting stock of the Company.
(f)    “Distribution Date” means May 15, 2013.
(g)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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(h)    “Excess MSRs” means excess mortgage servicing rights.
(i)    “Funds from Operations” is as defined by the National Association of Real Estate Investment Trusts and means net income (computed in accordance with GAAP) excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.  Funds from Operations will be computed on an unconsolidated basis.  The computation of Funds from Operations may be adjusted at the direction of the Independent Directors based on changes in, or certain applications of, GAAP.
(j)    “Governing Instruments” means, with regard to any entity, the articles of incorporation and bylaws in the case of a corporation, certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership or the articles of formation and the operating agreement in the case of a limited liability company.
(k)    “Independent Directors” means the members of the Board of Directors who are not officers or employees of the Manager.
(l)    “Investment Company Act” means the Investment Company Act of 1940, as amended.
(m)    “Investments” means the investments of the Company.
(n)    “Junior Share” means a share of capital stock of the Company now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are inferior or junior to the REIT Shares.
(o)    “Non-Routine Items” means each of:  non-capitalized transaction-related expenses (such as acquisition and integration expenses), write-offs of unamortized deferred financing fees incurred in connection with the refinancing of debt, gains or losses related to litigation, claims and other contingencies, and any other item approved by the Independent Directors upon reasonable request by the Manager.
(p)    “Preferred Share” means a share of capital stock of the Company now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the REIT Shares.
(q)    “REIT Share” means a share of the Company’s Common Shares, par value $0.01 per share.  Where relevant in this Agreement, “REIT Shares” includes shares of the Company’s Common Shares, par value $0.01 per share, issued upon conversion of Preferred Shares or Junior Shares.

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(r)    “Subsidiary” means any subsidiary of the Company and any partnership, the general partner of which is the Company or any subsidiary of the Company and any limited liability company, the managing member of which is the Company or any subsidiary of the Company.
		
	SECTION 2.
	APPOINTMENT AND DUTIES OF THE MANAGER.

(a)    The Company hereby appoints the Manager to manage the assets of the Company subject to the further terms and conditions set forth in this Agreement and the Manager hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein.  The appointment of the Manager shall be exclusive to the Manager except to the extent that the Manager otherwise agrees, in its sole and absolute discretion, and except to the extent that the Manager elects, pursuant to the terms of this Agreement, to cause the duties of the Manager hereunder to be provided by third parties.
(b)    The Manager, in its capacity as manager of the assets and the day-to-day operations of the Company, at all times will be subject to the supervision of the Company’s Board of Directors and will have only such functions and authority as the Company may delegate to it including, without limitation, the functions and authority identified herein and delegated to the Manager hereby.  The Manager will be responsible for the day-to-day operations of the Company and will perform (or cause to be performed) such services and activities relating to the assets and operations of the Company as may be appropriate, including, without limitation: 
(i)    serving as the Company’s consultant with respect to the periodic review of the investment criteria and parameters for Investments, borrowings and operations, any modifications to which shall be approved by a majority of the Independent Directors (such policy guidelines as are in effect on the date hereof, as the same may be modified with such approval, the “Guidelines”) and other policies for approval by the Board of Directors; 
(ii)    investigation, analysis, valuation and selection of investment opportunities; 
(iii)    with respect to prospective Investments by the Company and dispositions of Investments, conducting negotiations with real estate brokers, sellers and purchasers and their respective agents and representatives, investment bankers and owners of privately and publicly held real estate companies; 
(iv)    engaging and supervising, on behalf of the Company and at the Company’s expense, independent contractors which provide real estate brokerage, investment banking, leasing services, mortgage servicing, mortgage brokerage, securities brokerage and other financial services and such other services as may be required relating to the Investments; 
(v)    negotiating on behalf of the Company for the sale, exchange or other disposition of any Investments; 
(vi)    coordinating and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the joint venture or co-investment partners; 
(vii)    coordinating and supervising, on behalf of the Company and at the Company’s expense, all property managers, leasing agents and developers for the administration, leasing, management and/or development of any of the Investments; 
(viii)    providing executive and administrative personnel, office space and office services required in rendering services to the Company; 
(ix)    administering the day-to-day operations of the Company and performing and supervising the performance of such other administrative functions necessary in the management of the Company as may be agreed upon by the Manager and the Board of Directors, including, without limitation, the collection of revenues and the payment of the Company’s debts and obligations and maintenance of appropriate computer services to perform such administrative functions; 
(x)    communicating on behalf of the Company with the holders of any equity or debt securities of the Company as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders; 
(xi)    counseling the Company in connection with policy decisions to be made by the Board of Directors; 
(xii)    evaluating and recommending to the Board of Directors modifications to the hedging strategies in effect on the date hereof and engaging in hedging activities on behalf of the Company, consistent with such strategies, as so modified from time to time, with the Company’s status as a real estate investment trust, and with the Guidelines; 
(xiii)    counseling the Company regarding the maintenance of its status as a real estate investment trust and monitoring compliance with the various real estate investment trust qualification tests and other rules set out in the Code and Treasury Regulations thereunder; 
(xiv)    counseling the Company regarding the maintenance of its exemption from the Investment Company Act and monitoring compliance with the requirements for maintaining an exemption from that Act; 
(xv)    assisting the Company in developing criteria that are specifically tailored to the Company’s investment objectives and making available to the Company its knowledge and experience with respect to its target assets; 
(xvi)    representing and making recommendations to the Company in connection with the purchase and finance, and commitment to purchase and finance, of its target assets, and in connection with the sale and commitment to sell such assets; 
(xvii)    monitoring the operating performance of the Investments and providing periodic reports with respect thereto to the Board of Directors, including comparative information with respect to such operating performance, valuation and budgeted or projected operating results; 
(xviii)    investing and re-investing any moneys and securities of the Company (including investing in short-term Investments pending investment in Investments, payment of fees, costs and expenses, or payments of dividends or distributions to stockholders and partners of the Company) and advising the Company as to its capital structure and capital raising; 
(xix)    causing the Company to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures, compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to real estate investment trusts and to conduct quarterly compliance reviews with respect thereto; 
(xx)    causing the Company to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses; 
(xxi)    assisting the Company in complying with all regulatory requirements applicable to the Company in respect of its business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents required under the Exchange Act; 
(xxii)    taking all necessary actions to enable the Company to make required tax filings and reports, including soliciting stockholders for required information to the extent provided by the provisions of the Code applicable to real estate investment trusts; 
(xxiii)    handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject arising out of the Company’s day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board of Directors; 
(xxiv)    using commercially reasonable efforts to cause expenses incurred by or on behalf of the Company to be reasonable or customary and within any budgeted parameters or expense guidelines set by the Board of Directors from time to time; 
(xxv)    performing such other services as may be required from time to time for management and other activities relating to the assets of the Company as the Board of Directors shall reasonably request or the Manager shall deem appropriate under the particular circumstances; and 
(xxvi)    using commercially reasonable efforts to cause the Company to comply with all applicable laws.
Without limiting the foregoing, the Manager will perform portfolio management services (the “Portfolio Management Services”) on behalf of the Company with respect to the Investments.  Such services will include, but not be limited to, consulting with the Company on the purchase and sale of, and other investment opportunities in connection with, the Company’s portfolio of assets; the collection of information and the submission of reports pertaining to the Company’s assets, interest rates and general economic conditions; periodic review and evaluation of the performance of the Company’s portfolio of assets; acting as liaison between the Company and banking, mortgage banking, investment banking and other parties with respect to the purchase, financing and disposition of assets; and other customary functions related to portfolio management.  Additionally, the Manager will perform monitoring services (the “Monitoring Services”) on behalf of the Company with respect to any loan servicing activities provided by third parties.  Such Monitoring Services will include, but not be limited to, negotiating servicing agreements; acting as a liaison between the servicers of the assets and the Company; review of servicers’ delinquency, foreclosure and other reports on assets; supervising claims filed under any insurance policies; and enforcing the obligation of any servicer to repurchase assets.
(c)    The Manager may enter into agreements with other parties, including its affiliates, for the purpose of engaging one or more property and/or asset managers for and on behalf, and at the sole cost and expense, of the Company to provide property management, asset management, leasing, mortgage servicing, development and/or similar services to the Company (including, without limitation, Portfolio Management Services and Monitoring Services) with respect to the Investments, pursuant to property management agreement(s) and/or asset management agreement(s) with terms which are then customary for agreements regarding the management or servicing of assets similar in type, quality and value to the assets of the Company; provided, that (i) any such agreements entered into with affiliates of the Manager shall be (A) on terms no more favorable to such affiliate then would be obtained from a third party on an arms’-length basis and (B) to the extent the same do not fall within the provisions of the Guidelines, approved by a majority of the Independent Directors, (ii) with respect to Portfolio Management Services, (A) any such agreements shall be subject to the Company’s prior written approval and (B) the Manager shall remain liable for the performance of such Portfolio Management Services, and (iii) with respect to Monitoring Services, any such agreements shall be subject to the Company’s prior written approval.
(d)    The Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of accountants, legal counsel, appraisers, insurers, brokers, transfer agents, registrars, developers, investment banks, financial advisors, banks and other lenders and others as the Manager deems necessary or advisable in connection with the management and operations of the Company.  Notwithstanding anything contained herein to the contrary, the Manager shall have the right to cause any such services to be rendered by its employees or affiliates.  The Company shall pay or reimburse the Manager or its affiliates performing such services for the cost thereof; provided, that such costs and reimbursements are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis; and provided, further, that such costs shall not be reimbursed in excess of $500,000 per annum.
(e)    As frequently as the Manager may deem necessary or advisable, or at the direction of the Board of Directors, the Manager shall, at the sole cost and expense of the Company, prepare, or cause to be prepared, with respect to any Investment (i) an appraisal prepared by an independent real estate appraiser, (ii) reports and information on the Company’s operations and asset performance and (iii) other information reasonably requested by the Company.
(f)    The Manager shall prepare, or cause to be prepared, at the sole cost and expense of the Company, all reports, financial or otherwise, with respect to the Company reasonably required by the Board of Directors in order for the Company to comply with its Governing Instruments or any other materials required to be filed with any governmental body or agency, and shall prepare, or cause to be prepared, all materials and data necessary to complete such reports and other materials including, without limitation, an annual audit of the Company’s books of account by a nationally recognized independent accounting firm.
(g)    The Manager shall prepare regular reports for the Board of Directors to enable the Board of Directors to review the Company’s acquisitions, portfolio composition and characteristics, credit quality, performance and compliance with the Guidelines and policies approved by the Board of Directors.
(h)    Notwithstanding anything contained in this Agreement to the contrary, except to the extent that the payment of additional moneys is proven by the Company to have been required as a direct result of the Manager’s acts or omissions which result in the right of the Company to terminate this Agreement pursuant to Section 15 of this Agreement, the Manager shall not be required to expend money (“Excess Funds”) in excess of that contained in any applicable Company Account (as herein defined) or otherwise made available by the Company to be expended by the Manager hereunder.  Failure of the Manager to expend Excess Funds out-of-pocket shall not give rise or be a contributing factor to the right of the Company under Section 13(a) of this Agreement to terminate this Agreement due to the Manager’s unsatisfactory performance.
(i)    In performing its duties under this Section 2, the Manager shall be entitled to rely reasonably on qualified experts hired by the Manager.
		
	SECTION 3.
	 DEVOTION OF TIME; ADDITIONAL ACTIVITIES.

(a)    The Manager will provide a management team, including a Chief Executive Officer, a Chief Financial Officer and a Chief Accounting Officer of the Company, to provide the management services to be provided by the Manager to the Company hereunder.  The members of such team shall devote such of their time to the management of the Company as the Board of Directors reasonably deems necessary and appropriate, commensurate with the level of activity of the Company from time to time.
(b)    Except to the extent set forth in clause (a) above, nothing herein shall prevent the Manager or any of its affiliates or any of the officers and employees of any of the foregoing from engaging in other businesses or from rendering services of any kind to any other person or entity, including investment in, or advisory service to others investing in, any type of real estate or real estate related investment, including investments which meet the principal investment objectives of the Company.
(c)    Managers, members, partners, officers, employees and agents of the Manager or affiliates of the Manager may serve as directors, officers, employees, agents, nominees or signatories for the Company or any Subsidiary, to the extent permitted by their Governing Instruments, as from time to time amended, or by any resolutions duly adopted by the Board of Directors pursuant to the Company’s Governing Instruments.  When executing documents or otherwise acting in such capacities for the Company, such persons shall use their respective titles in the Company.
		
	SECTION 4.
	AGENCY.

The Manager shall act as agent of the Company in making, acquiring, financing and disposing of Investments, disbursing and collecting the Company’s funds, paying the debts and fulfilling the obligations of the Company, supervising the performance of professionals engaged by or on behalf of the Company and handling, prosecuting and settling any claims of or against the Company, the Board of Directors, holders of the Company’s securities or the Company’s representatives or properties.
		
	SECTION 5.
	BANK ACCOUNTS.

At the direction of the Board of Directors, the Manager may establish and maintain one or more bank accounts in the name of the Company or any Subsidiary (any such account, a “Company Account”), and may collect and deposit funds into any such Company Account or Company Accounts, and disburse funds from any such Company Account or Company Accounts, under such terms and conditions as the Board of Directors may approve; and the Manager shall from time to time render appropriate accountings of such collections and payments to the Board of Directors and, upon request, to the auditors of the Company or any Subsidiary.
		
	SECTION 6.
	RECORDS; CONFIDENTIALITY.

The Manager shall maintain appropriate books of accounts and records relating to services performed under this Agreement, and such books of account and records shall be accessible for inspection by representatives of the Company or any Subsidiary at any time during normal business hours upon one (1) business day’s advance written notice.  The Manager shall keep confidential any and all information obtained in connection with the services rendered under this Agreement and shall not disclose any such information to nonaffiliated third parties except with the prior written consent of the Board of Directors.
		
	SECTION 7.
	OBLIGATIONS OF MANAGER; RESTRICTIONS.

(a)    The Manager shall require each seller or transferor of investment assets to the Company to make such representations and warranties regarding such assets as may, in the judgment of the Manager, be necessary and appropriate.  In addition, the Manager shall take such other action as it deems necessary or appropriate with regard to the protection of the Investments.
(b)    The Manager shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Guidelines or (ii) would adversely affect the status of the Company as a real estate investment trust under the Code or that, in its sole judgment made in good faith, would violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Company or any Subsidiary or that would otherwise not be permitted by such entity’s Governing Instruments.  If the Manager is ordered to take any such action by the Board of Directors, the Manager shall promptly notify the Board of Directors of the Manager’s judgment that such action would adversely affect such status or violate any such law, rule or regulation or the Governing Instruments.  Notwithstanding the foregoing, the Manager, its directors, officers, stockholders and employees shall not be liable to the Company or any Subsidiary, the Board of Directors, or the Company’s or any Subsidiary’s stockholders or partners for any act or omission by the Manager, its directors, officers, stockholders or employees except as provided in Section 11 of this Agreement.
(c)    The Manager shall not (i) consummate any transaction which would involve the acquisition by the Company of property in which the Manager or any affiliate thereof has an ownership interest or the sale by the Company of property to the Manager or any affiliate thereof, or (ii) under circumstances where the Manager is subject to an actual or potential conflict of interest because it manages both the Company and another Person (not an Affiliate of the Company) with which the Company has a contractual relationship, take any action constituting the granting to such Person of a waiver, forbearance or other relief, or the enforcement against such Person of remedies, under or with respect to the applicable contract, unless such transaction or action, as the case may be and in each case, is approved by a majority of the Independent Directors.
(d)    The Board of Directors periodically reviews the Guidelines and the Company’s portfolio of Investments.  If a majority of the Independent Directors determine in their periodic review of transactions that a particular transaction does not comply with the Guidelines, then a majority of the Independent Directors will consider what corrective action, if any, can be taken.  If the transaction involved the acquisition of an asset from the Manager or an affiliate of the Manager that was not approved in advance by a majority of the Independent Directors, then the Manager may be required to repurchase the asset at the purchase price (plus closing costs) to the Company.
(e)    The Manager shall at all times during the term of this Agreement (including the Initial Term and any renewal term) maintain a tangible net worth equal to or greater than $1,000,000.  Additionally, during such period the Manager shall maintain “errors and omissions” insurance coverage and other insurance coverage which is customarily carried by property and asset and investment managers performing functions similar to those of the Manager under this Agreement with respect to assets similar to the assets of the Company, in an amount which is comparable to that customarily maintained by other managers or servicers of similar assets.
		
	SECTION 8.
	COMPENSATION.

(a)    During the term of this Agreement, as the same may be extended from time to time, the Manager will receive an annual management fee (the “Management Fee”) equal to 1.50% of the Company’s “Gross Equity.” The Management Fee shall be calculated and paid monthly in arrears based upon the weighted daily average of the Gross Equity of the Company for such month.  The term “Gross Equity” for any period means (A) the sum of (i) the “Total Equity,” plus (ii) the value of contributions made by partners other than the Company, from time to time, to the capital of any Subsidiary (reduced proportionately in the case of a Subsidiary to the extent that the Company owns, directly or indirectly, less than 100% of the equity interests in such Subsidiary), less (B) any capital dividends or capital distributions made by the Company to its stockholders or, without duplication, by any Subsidiary to its stockholders, partners or other equity holders.  As used herein, the term “Total Equity” shall mean (i) the equity transferred by Newcastle Investment Corp. on the Distribution Date, plus (ii) the total net proceeds to the Company from any common or preferred equity capital heretofore or hereafter raised by the Company or any Subsidiary of the Company (exclusive, with respect to any Subsidiary, of capital of such Subsidiary consisting of a capital contribution or other form of capital investment made by the Company or another Subsidiary of the Company).
(b)    The Manager shall compute each installment of the Management Fee within 15 days after the end of the calendar month with respect to which such installment is payable.  A copy of the computations made by the Manager to calculate such installment shall thereafter, for informational purposes only and subject in any event to Section 13(a) of this Agreement, promptly be delivered to the Board of Directors and, upon such delivery, payment of such installment of the Management Fee shown therein shall be due and payable no later than the earlier to occur of (i) the date which is 20 days after the end of the calendar month with respect to which such installment is payable and (ii) the date which is two (2) business days after the date of delivery to the Board of Directors of such computations.
(c)    The Management Fee is subject to adjustment pursuant to and in accordance with the provisions of Section 13(a) of this Agreement.
(d)    The Board of Directors may, by written notice to the Manager delivered ten (10) days prior to the date on which any payment of the Incentive Compensation (as defined below) is payable, request that the Manager accept all or a portion of such payment in the form of issued Common Shares, which notice shall specify the amount of the payment of the Incentive Compensation, the amount thereof which the Company intends to pay in cash, if any, and the amount thereof which the Company intends to pay in the form of such Common Shares in the number of such shares as determined by the Board of Directors.  Within five (5) days following receipt of said notice, the Manager shall notify the Company in writing, such election to be made by the Manager in its sole discretion, whether it will accept such portion of such payment in the form of such shares and in such number of such shares.
(e)    In addition to the Management Fee otherwise payable hereunder, the Company shall pay the Manager annual incentive compensation (“Incentive Compensation”) on a cumulative, but not compounding, basis, in an amount equal to the product of (A) 25% of the dollar amount by which (1)(a) the Funds from Operations (before such payment) of the Company, excluding Funds from Operations from Investments in equity method investees that are invested in consumer loans as of the date hereof (the “Consumer Loan Companies”) and any unrealized gains or losses from mark-to-market valuation changes on investments and debt (and any deferred tax impact thereof), per REIT Share (based on the weighted average number of REIT Shares outstanding), plus (b) earnings (or losses) from the Consumer Loan Companies computed on a level-yield basis (such that the loans are treated as if they qualified as loans acquired with a discount for credit quality as set forth in ASC 310-30, as such codification was in effect on June 30, 2013) as if the Consumer Loan Companies had been acquired at their GAAP basis on the Distribution Date, earnings (or losses) from equity method investees invested in Excess MSRs as if such equity method investees had not made a fair value election, and gains (or losses) from debt restructuring and gains (or losses) from sales of property, plus Non-Routine Items, minus Amortization of Non-Routine Items, in each case per REIT Share (based on the weighted average number of REIT Shares outstanding), exceed (2) an amount equal to (a) the weighted average of the book value per REIT Share of the equity transferred by Newcastle Investment Corp. on the Distribution Date, and the prices per REIT Share at any subsequent offerings by the Company (adjusted for any prior capital dividends or capital distributions) multiplied by (b) a simple interest rate of ten percent (10%) per annum multiplied by (B) the weighted average number of REIT Shares outstanding during such period.  The obligation of the Company to pay the Incentive Compensation shall survive the expiration or earlier termination of this Agreement, subject to Section 16(b).
		
	SECTION 9.
	EXPENSES OF THE COMPANY.

The Company shall pay all of its expenses and shall reimburse the Manager for documented expenses of the Manager incurred on its behalf (collectively, the “Expenses”).  Expenses include all costs and expenses which are expressly designated elsewhere in this Agreement as the Company’s, together with the following: 
(a)    expenses in connection with the issuance and transaction costs incident to the acquisitions, disposition and financing of Investments; 
(b)    travel and other out-of-pocket expenses incurred by managers, officers, employees and agents of the Manager in connection with the purchase, financing, refinancing, sale or other disposition of an Investment; 
(c)    costs of legal, accounting, tax, auditing, administrative and other similar services rendered for the Company by providers retained by the Manager or, if provided by the Manager’s employees, in amounts which are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis; 
(d)    the compensation and expenses of the Independent Directors and the cost of liability insurance to indemnify the Company’s directors and officers; 
(e)    compensation and expenses of the Company’s custodian and transfer agent, if any; 
(f)    costs associated with the establishment and maintenance of any credit facilities and other indebtedness of the Company (including commitment fees, legal fees, closing and other costs) or any securities offerings of the Company; 
(g)    costs associated with any computer software or hardware that is used solely for the Company; 
(h)    costs and expenses incurred in contracting with third parties, including affiliates of the Manager, for the servicing and special servicing of assets of the Company; 
(i)    all other costs and expenses relating to the Company’s business and investment operations, including, without limitation, the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of Investments, including appraisal, reporting, audit and legal fees; 
(j)    all insurance costs incurred in connection with the operation of the Company’s business except for the costs attributable to the insurance that the Manager elects to carry for itself and its employees; 
(k)    expenses relating to any office or office facilities maintained for the Company or Investments separate from the office or offices of the Manager; 
(l)    expenses connected with the payments of interest, dividends or distributions in cash or any other form made or caused to be made by the Board of Directors to or on account of the holders of securities of the Company or its Subsidiaries, including, without limitation, in connection with any dividend reinvestment plan; 
(m)    expenses connected with communications to holders of securities of the Company or its Subsidiaries and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the Securities and Exchange Commission, the costs payable by the Company to any transfer agent and registrar in connection with the listing and/or trading of the Company’s stock on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing, printing and mailing the Company’s annual report to its shareholders and proxy materials with respect to any meeting of the shareholders of the Company; and 
(n)    all other expenses actually incurred by the Manager which are reasonably necessary for the performance by the Manager of its duties and functions under this Agreement.
(o)    Without regard to the amount of compensation received under this Agreement by the Manager, the Manager shall bear the following expenses:  (i) wages and salaries of the Manager’s officers and employees; (ii) rent attributable to the space occupied by the Manager; and (iii) all other “overhead” expenses of the Manager.
		
	SECTION 10.
	CALCULATIONS OF EXPENSES.

The Manager shall prepare a statement documenting the Expenses of the Company and the Expenses incurred by the Manager on behalf of the Company during each calendar month, and shall deliver such statement to the Company within 20 days after the end of each calendar month.  Expenses incurred by the Manager on behalf of the Company shall be reimbursed monthly to the Manager on the first business day of the month immediately following the date of delivery of such statement.
		
	SECTION 11.
	LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.

(a)    The Manager assumes no responsibility under this Agreement other than to render the services called for under this Agreement in good faith and shall not be responsible for any action of the Board of Directors in following or declining to follow any advice or recommendations of the Manager, including as set forth in Section 7(b) of this Agreement.  The Manager, its members, managers, officers and employees will not be liable to the Company or any Subsidiary, to the Board of Directors, or the Company’s or any Subsidiary’s stockholders or partners for any acts or omissions by the Manager, its members, managers, officers or employees, pursuant to or in accordance with this Agreement, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Manager’s duties under this Agreement.  The Company shall, to the full extent lawful, reimburse, indemnify and hold the Manager, its members, managers, officers and employees and each other Person, if any, controlling the Manager (each, an “Indemnified Party”), harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of such Indemnified Party made in good faith in the performance of the Manager’s duties under this Agreement and not constituting such Indemnified Party’s bad faith, willful misconduct, gross negligence or reckless disregard of the Manager’s duties under this Agreement.
(b)    The Manager shall, to the full extent lawful, reimburse, indemnify and hold the Company, its shareholders, directors, officers and employees and each other Person, if any, controlling the Company (each, a “Company Indemnified Party”), harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from the Manager’s bad faith, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement.
		
	SECTION 12.
	NO JOINT VENTURE.

Nothing in this Agreement shall be construed to make the Company and the Manager partners or joint venturers or impose any liability as such on either of them.
		
	SECTION 13.
	TERM; TERMINATION.

(a)    Until this Agreement is terminated in accordance with its terms, this Agreement shall be in effect until the date that is one (1) year after May 15, 2013, and thereafter on each anniversary of such date be deemed renewed automatically each year for an additional one-year period unless (i) a majority consisting of at least two-thirds of the Independent Directors or a simple majority of the holders of outstanding Common Shares, agree that there has been unsatisfactory performance that is materially detrimental to the Company or (ii) a simple majority of the Independent Directors agree that the Management Fee payable to the Manager is unfair; provided, that the Company shall not have the right to terminate this Agreement under clause (ii) foregoing if the Manager agrees to continue to provide the services under this Agreement at a fee that the Independent Directors have determined to be fair.  If the Company elects not to renew this Agreement at the expiration of the original term or any such one-year extension term as set forth above, the Company shall deliver to the Manager prior written notice (the “Termination Notice”) of the Company’s intention not to renew this Agreement based upon the terms set forth in this Section 13(a) of this Agreement not less than 60 days prior to the expiration of the then existing term.  If the Company so elects not to renew this Agreement, the Company shall designate the date (the “Effective Termination Date”), not less than 60 days from the date of the notice, on which the Manager shall cease to provide services under this Agreement and this Agreement shall terminate on such date; provided, however, that in the event that such Termination Notice is given in connection with a determination that the compensation payable to the Manager is unfair, the Manager shall have the right to renegotiate the Management Fee by delivering to the Company, no fewer than forty-five (45) days prior to the prospective Effective Termination Date, written notice (any such notice, a “Notice of Proposal to Negotiate”) of its intention to renegotiate its compensation under this Agreement.  Thereupon, the Company and the Manager shall endeavor to negotiate in good faith the revised compensation payable to the Manager under this Agreement.  Provided that the Manager and the Company agree to a revised Management Fee (or other compensation structure) within 45 days following the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of no force and effect and this Agreement shall continue in full force and effect on the terms stated in this Agreement, except that the Management Fee shall be the revised Management Fee (or other compensation structure) then agreed upon by the parties to this Agreement.  The Company and the Manager agree to execute and deliver an amendment to this Agreement setting forth such revised Management Fee promptly upon reaching an agreement regarding same.  In the event that the Company and the Manager are unable to agree to a revised Management Fee during such 45 day period, this Agreement shall terminate, such termination to be effective on the date which is the later of (A) ten (10) days following the end of such 45 day period and (B) the Effective Termination Date originally set forth in the Termination Notice.
(b)    In the event that this Agreement is terminated in accordance with the provisions of Section 13(a) of this Agreement, the Company shall pay to the Manager, on the date on which such termination is effective, a termination fee (the “Termination Fee”) equal to the amount of the Management Fee earned by the Manager during the period consisting of the twelve (12) full, consecutive calendar months immediately preceding such termination.  The obligation of the Company to pay the Termination Fee shall survive the termination of this Agreement.
(c)    No later than sixty (60) days prior to the anniversary date of the Original Management Agreement (May 15) of any year during the Term, the Manager may deliver written notice to the Company informing it of the Manager’s intention not to renew the Term, whereupon the Term of this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date next following the delivery of such notice.
(d)    If this Agreement is terminated pursuant to this Section 13, such termination shall be without any further liability or obligation of either party to the other, except as provided in Section 13(b) and Section 16 of this Agreement.  In addition, Section 11 of this Agreement shall survive termination of this Agreement.
		
	SECTION 14.
	ASSIGNMENT.

(a)    Except as set forth in Section 14(b) of this Agreement, this Agreement shall terminate automatically in the event of its assignment, in whole or in part, by the Manager, unless such assignment is consented to in writing by the Company with the consent of a majority of the Independent Directors; provided, however, that no such consent shall be required in the case of an assignment by the Manager to an entity whose day-to-day business and operations are managed and supervised by Messrs. Wesley R. Edens and Randal A. Nardone (collectively, the “Principals”), provided, further, that such transaction is determined at the time not to be an “assignment” for purposes of Section 205 of the Investment Advisers Act of 1940, as amended, and the rules and regulations promulgated under such act and the interpretations thereof issued by the Securities and Exchange Commission.  Any such permitted assignment shall bind the assignee under this Agreement in the same manner as the Manager is bound, and the Manager shall be liable to the Company for all errors or omissions of the assignee under any such assignment.  In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as Manager.  This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company to another real estate investment trust or other organization which is a successor (by merger, consolidation or purchase of assets) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement.
(b)    Notwithstanding any provision of this Agreement, the Manager may subcontract and assign any or all of its responsibilities under Sections 2(b), 2(c) and 2(d) of this Agreement to any of its affiliates in accordance with the terms of this Agreement applicable to any such subcontract or assignment, and the Company hereby consents to any such assignment and subcontracting.  In addition, provided that the Manager provides prior written notice to the Company for informational purposes only, nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Manager under this Agreement.
		
	SECTION 15.
	TERMINATION FOR CAUSE.

(a)    The Company may terminate this Agreement effective upon sixty (60) days prior written notice of termination from the Company to the Manager, without payment of any Termination Fee, if any act of fraud, misappropriation of funds, or embezzlement against the Company or other willful violation of this Agreement by the Manager in its corporate capacity (as distinguished from the acts of any employees of the Manager which are taken without the complicity of any of the Principals) under this Agreement or in the event of any gross negligence on the part of the Manager in the performance of its duties under this Agreement.
(b)    The Manager may terminate this Agreement effective upon sixty (60) days prior written notice of termination to the Company in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting that the same be remedied in such 30 day period.
		
	SECTION 16.
	ACTION UPON TERMINATION.

(a)    From and after the effective date of termination of this Agreement, pursuant to Sections 13, 14, or 15 of this Agreement, the Manager shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing to the date of termination and, if terminated pursuant to Section 13 or Section 15(b), the applicable Termination Fee.  Upon such termination, the Manager shall forthwith: 
(i)    after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled, pay over to the Company or a Subsidiary all money collected and held for the account of the Company or a Subsidiary pursuant to this Agreement; 
(ii)    deliver to the Board of Directors a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board of Directors with respect to the Company or a Subsidiary; and 
(iii)    deliver to the Board of Directors all property and documents of the Company or any Subsidiary then in the custody of the Manager.
(b)    In the event that this Agreement is terminated, the Company shall have the option, to be exercised by written notice to the Manager within ten (10) days following such termination, to purchase from the Manager the right of the Manager to receive the Incentive Compensation.  In exchange therefor the Company will be obligated to pay the Manager a cash purchase price (the “Cash Price”) equal to the amount of the Incentive Compensation that would be paid to the Manager if all of the Company’s assets were sold for cash at their then current fair market value (taking into account, among other things, expected future performance of the underlying investments, the “Fair Market Value”).  In the event that the Company does not elect to exercise such option to purchase the Incentive Compensation, the Manager shall have the right to require the Company to do so at the Cash Price by delivering to the Company written notice within twenty (20) days following such termination.  The Fair Market Value shall be determined by independent appraisal to be conducted by a nationally recognized appraisal firm mutually agreed upon by the Company and the Manager.  If the Company and the Manager are unable to agree upon an appraisal firm, then each of the Company and the Manager shall choose an independent appraisal firm to conduct an appraisal.  In such event, (i) if the appraisals prepared by the two appraisers so selected are the same or differ by an amount that does not exceed 20% of the higher of the two appraisals, the Fair Market Value will be deemed to be the average of such appraisals, and (ii) if the two appraisals differ by more than 20% of the higher of the two appraisals, the two appraisers together shall select a third nationally recognized appraisal firm to conduct an appraisal.  If the two appraisers are unable to agree as to the identity of such third appraiser, either of the Manager and the Company may request that the American Arbitration Association (“AAA”) select the third appraiser, which shall then be selected by the AAA.  The Fair Market Value will then be deemed to be the amount determined by such third appraiser, but in no event less than the lower or more than the higher of the first two appraisals made under this Section 16(b).
		
	SECTION 17.
	RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.

The Manager agrees that any money or other property of the Company or Subsidiary held by the Manager under this Agreement shall be held by the Manager as custodian for the Company or Subsidiary, and the Manager’s records shall be appropriately marked clearly to reflect the ownership of such money or other property by the Company or such Subsidiary.  Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company requesting the Manager to release to the Company or any Subsidiary any money or other property then held by the Manager for the account of the Company or any Subsidiary under this Agreement, the Manager shall release such money or other property to the Company or any Subsidiary within a reasonable period of time, but in no event later than sixty (60) days following such request.  The Manager shall not be liable to the Company, any Subsidiary, the Independent Directors, or the Company’s or a Subsidiary’s stockholders or partners for any acts performed or omissions to act by the Company or any Subsidiary in connection with the money or other property released to the Company or any Subsidiary in accordance with the first sentence of this Section 17.  The Company and any Subsidiary shall indemnify the Manager and its members, managers, officers and employees against any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever, which arise in connection with the Manager’s release of such money or other property to the Company or any Subsidiary in accordance with the terms of this Section 17.  Indemnification pursuant to this provision shall be in addition to any right of the Manager to indemnification under Section 11 of this Agreement.
		
	SECTION 18.
	NOTICES.

Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile transmission or email against answerback, (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below: 
(a)    If to the Company:
New Residential Investment Corp. 
c/o FIG LLC  
1345 Avenue of the Americas 
46th Floor  
New York, New York 10105 
Attention:  Mr. Cameron D. MacDougall
(b)    If to the Manager:
FIG LLC  
1345 Avenue of the Americas  
46th Floor  
New York, New York 10105  
Attention:  Mr. Randal A. Nardone 
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 18 for the giving of notice.
		
	SECTION 19.
	BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns as provided in this Agreement.
		
	SECTION 20.
	ENTIRE AGREEMENT.

This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter of this Agreement.  The express terms of this Agreement control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms of this Agreement.  This Agreement may not be modified or amended other than by an agreement in writing.
		
	SECTION 21.
	CONTROLLING LAW.

This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York, notwithstanding any New York or other conflict-of-law provisions to the contrary.
		
	SECTION 22.
	INDULGENCES, NOT WAIVERS.

Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
		
	SECTION 23.
	TITLES NOT TO AFFECT INTERPRETATION.

The titles of paragraphs and subparagraphs contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation of this Agreement.
		
	SECTION 24.
	EXECUTION IN COUNTERPARTS.

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts of this Agreement, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
		
	SECTION 25.
	PROVISIONS SEPARABLE.

The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
		
	SECTION 26.
	GENDER.

Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
COMPANY:  
 
NEW RESIDENTIAL INVESTMENT CORP.,  
a Delaware corporation 
 
 
 
By:             
    Name:  Cameron D. MacDougall  
    Title:     Secretary
MANAGER:  
 
FIG LLC, 
a Delaware limited liability company  
 
 
 
By:             
    Name:  
    Title: 

4ex_10-1.htm

EXHIBIT 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (the “Agreement”), dated May 11, 2015 (the “Effective Date”), is by and between WAFERGEN BIOSYSTEMS, INC. (the “Company”) and ROLLAND CARLSON (“Executive”) (collectively, the “parties”).

 

	
A.

	
POSITION AND RESPONSIBILITIES

 

1.           Term.  The initial term of this Agreement shall begin on the Effective Date and shall end on the three (3) year anniversary of the Effective Date; provided, however, that this Agreement shall automatically renew and extend for an additional one (1) year term on the three (3) year anniversary of the Effective Date and on each anniversary of the Effective Date thereafter, unless either party gives written notice of non-renewal to the other party at least one hundred and eighty (180) calendar days prior to the anniversary date on which such renewal otherwise would occur (such initial term as renewed hereunder, the “Term”).

 

2.           Position.  Executive is employed by the Company to render services to the Company in the position of President and Chief Executive Officer.  Executive shall perform such duties and responsibilities as are normally related to such position in accordance with the standards of the industry and any additional duties, consistent with the position of President and Chief Executive Officer, now or hereafter assigned to Executive by the Board of Directors of the Company (“Board”).  Executive shall abide by Company rules, regulations, and practices as adopted or modified from time to time by the Board in its sole discretion.

 

3.           Location.  It is acknowledged and agreed that Executive lives in Texas and will not be required to relocate to California or elsewhere in connection with his employment by the Company pursuant to this Agreement.  Executive agrees to travel to the Company’s offices in California from time to time, as reasonably required in the Board’s discretion, in connection with the performance of his duties as the Company’s President and Chief Executive Officer.  The Company shall reimburse Executive for all reasonable travel expenses incurred in connection with working at the Company’s principal office in Fremont, California.

 

4.           Other Activities.  Except upon the prior written consent of the Company’s Board of Directors, Executive will not, during the term of this Agreement, (i) commence any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that would interfere with Executive’s duties and responsibilities hereunder or create a conflict of interest with the Company.  Prior to the execution of this Agreement, Executive will provide a list of any outside business activities in which he is currently involved and which he wishes to continue during his employment with the Company for consideration by the Board of Directors. During his employment, Executive will not commence any additional outside business activity without first obtaining the approval of the Board of Directors.

 

5.           Director.  On the Effective Date of this Agreement, the Board shall appoint Executive to the Board in accordance with applicable law and the Company’s Bylaws.  Upon termination of Executive’s employment with the Company for any reason, Executive shall resign from the Board.

 

  

  

  

6.           No Conflict.  Executive represents and warrants that Executive’s execution of this Agreement, employment with the Company, and the performance of Executive’s proposed duties under this Agreement shall not violate any obligations Executive may have to any other employer, person or entity, including any obligations with respect to proprietary or confidential information of any other person or entity.

 

	
B.

	
COMPENSATION AND BENEFITS

 

1.           Base Salary.  In consideration of the services to be rendered under this Agreement, the Company shall pay Executive a salary at the rate of Three Hundred and Fifty Thousand Dollars ($350,000) per year (“Base Salary”).  The Base Salary shall be paid in accordance with the Company’s regularly established payroll practice.  Executive’s Base Salary will be reviewed from time to time in accordance with the established procedures of the Company for adjusting salaries for similarly situated employees.  In no event shall the Executive’s Base Salary be less than his Base Salary amount for the immediately preceding twelve (12) month period other than in the circumstance where the Company reduces the base salaries of all similarly situated executives of the Company, provided, however, even in that circumstance, Executive’s Base Salary shall not be reduced by more than twenty percent (20%). Executive’s salary shall not be reduced during the nine (9) month period from the Effective Date of the Agreement.

 

2.           Bonus.  Executive shall be eligible to earn a performance bonus for each completed fiscal year of his employment with the Company, in an amount up to fifty percent (50%) of his then-current Base Salary, in accordance with an annual incentive plan to be established for each year by the Compensation Committee of the Company’s Board of Directors (“Bonus”).  Any Bonus payment for 2015 shall be pro-rated based on Executive’s partial year of service.  Executive must remain employed by the Company through the end of a given fiscal year in order to be eligible for any Bonus for such fiscal year; provided, however, that Executive shall not be entitled to any Bonus for a given fiscal year or quarter if Executive’s employment is terminated For Cause prior to the date on which a Bonus is paid to Executive by the Company for such fiscal year or quarter.  All Bonuses shall be paid no later than April 30 of the year following the year for which the Bonus is earned.

 

3.           Equity.  On the date following the Effective Date, the Company will grant Executive, effective as of the close of trading on such date,

 

(a)           a stock option to purchase 150,000 shares of the Company’s common stock (the “Initial Option”). The Initial Option will vest over a period of three (3) years, with one-third of the shares subject to the Initial Option vesting on the first anniversary of the Grant Date, and the remaining two-thirds of the shares subject to the Initial Option vesting in eight (8) equal quarterly installments over two years following the one-year anniversary of the Grant Date (for a three-year vesting period in total), subject to Executive’s continued employment with the Company through each vesting date. The exercise price of the Initial Option will be equal to the closing market price on the Grant Date.  The Initial Option shall be deemed a special inducement option and is not made pursuant to the Company’s 2008 Stock Incentive Plan.  The Initial Option will have such

 

  

2

  

other terms and conditions specified in the form of Nonstatutory Stock Option Agreement attached hereto as Exhibit C (“Stock Option Agreement”); and

 

(b)           50,000 Restricted Stock Units (“RSUs”) pursuant to the Restricted Stock Unit Award Agreement attached hereto as Exhibit D (“RSU Agreement”).

 

4.           Benefits.  Executive shall be eligible to participate in the benefits made generally available by the Company to similarly-situated executives, including the Company’s health, dental, life insurance, disability and 401(k) plans, in each case in accordance with the benefit plans established by the Company, and as may be amended from time to time in the Company’s sole discretion.  Executive shall be eligible to accrue four (4) weeks of paid vacation per calendar year, in accordance with the Company’s vacation policy as amended from time to time. Executive shall begin to accrue paid vacation upon the Effective Date of this Agreement.  In 2015 Executive shall accrue and be eligible to take two (2) weeks of vacation.

 

5.           Expenses.  The Company shall reimburse Executive for reasonable business expenses incurred in the performance of Executive’s duties hereunder in accordance with the Company’s expense reimbursement guidelines.

 

6.           Indemnification.  In connection with the execution of this Agreement, Executive and the Company have executed the Company’s standard indemnification agreement for officers and directors. A copy of the standard indemnification agreement for officers and directors is attached as Exhibit E.

 

7.           Liability Insurance.  Both during and after termination (for any reason) of Executive’s employment, the Company shall cause Executive to be covered under a directors and officers’ liability insurance policy for his acts (or non-acts) as an officer or director of the Company or any of its Affiliates.  Such policy shall be maintained by the Company, at its expense in an amount and on terms (including the time period of coverage after the Executive’s employment terminates) at least as favorable to the Executive as policies covering the Company’s other members of its Board of Directors. Prior execution of this Agreement, Executive has been provided a copy of the Director and Officer Liability and related insurance policies.

 

8.           Legal Fees.  Company shall promptly reimburse Executive for his reasonable legal fees and expenses incurred by Executive in connection with his negotiation and execution of this Agreement, up to a maximum amount of $5000. In addition, if any legal action is brought by Executive relating to this Agreement against the Company and Executive is the prevailing party in any final judgment, Executive shall be entitled to receive from the Company all reasonable expenses, including all court costs and actual attorneys’ fees paid or incurred in good faith in connection with such legal action.

 

	
C.

	
EFFECT OF TERMINATION OR NON-RENEWAL

 

1.           Severance.  Except in situations where the employment of Executive is terminated For Cause, By Death or By Disability (as defined in Section D(4) below), by Executive other than for Good Reason (as defined in Section D(1)) below), or by Non-Renewal (as defined in Section C(2) below), Executive will be eligible to receive the following severance benefits

 

  

3

  

(collectively, “Severance Benefits”) if the Company terminates Executive’s employment prior to the end of the Term or Executive terminates his employment with the Company for Good Reason prior to the end of the Term:

 

(a)           an amount equal to twelve (12) months of Executive’s then-current Base Salary, of which (i) one-half of such amount shall be paid in a single lump-sum amount, less applicable withholdings, on the Company’s next regular payroll schedule date following the expiration of the 7-day revocation period referenced in Exhibit A hereto, and (ii) the remaining one-half of such amount shall be paid in the form of salary continuation on the Company’s regular payroll schedule, less applicable withholdings, over twelve (12) months; provided, however, that such payments will be delayed until the Company’s first regularly scheduled payroll date occurring on or after the 60th day following Executive’s termination of employment (the “First Payroll Date”), and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date; and

 

(b)           if Executive elects to continue his group health coverage under COBRA, the Company will pay Executive’s COBRA premiums for coverage until the earlier of (a) the end of the eighteen (18) month period following the date of such termination; or (b) the date Executive becomes covered under another employer’s health plan; provided, however, that, in the event that the Company determines, in its sole discretion, that either the payments under this Section C(1)(b) are no longer exempt from the application of Section 409A or providing the payments will subject the Company to tax or penalty pursuant to Section 4980D of the Internal Revenue Code of 196, as amended (the “Code”), then the Company shall pay Executive an amount equal to each remaining COBRA premium as taxable compensation in monthly installments.

 

Executive’s eligibility for the foregoing Severance Benefits is conditioned on Executive having first signed and not revoked a release agreement in the form attached as Exhibit A within sixty (60) days of Executive’s termination or such earlier deadline required by the release (such deadline, the “Release Deadline”).  The Severance Benefits will not be paid or provided until the release agreement becomes effective and irrevocable, and, subject to Section T below,  any Severance Benefits otherwise payable between the date of Executive’s termination and the date such release agreement becomes effective shall be paid on the effective date of such release agreement. If the release agreement does not become effective by the Release Deadline, Executive will forfeit all rights to severance payments and benefits under this Agreement.  For the avoidance of doubt, Executive shall not be entitled to the foregoing Severance Benefits if Executive’s employment is terminated For Cause, By Death or By Disability; by Non-Renewal pursuant to Section C(2); by Executive other than for Good Reason; or if Executive’s employment ends upon expiration of the Term following notice of non-renewal given pursuant to Section A(1).

 

2.           Non-Renewal.  If either party gives notice of non-renewal of this Agreement as described in Section A(1) above (“Non-Renewal”), the Company may elect to make the termination of Executive’s employment effective immediately at any time prior to the end of the applicable notice period (“Notice Period”) and, provided that the Company is not making the

 

  

4

  

election to terminate Executive’s employment For Cause or By Death or By Disability, the Company will provide the following separation benefits to Executive:

 

(a)           Executive’s then-current Base Salary for the period from the date of such termination through the remainder of the Notice Period, which shall be paid in the form of salary continuation on the Company’s regular payroll schedule, less applicable withholdings;

 

3.           A full or, if such termination occurs prior to the end of the fiscal year, pro-rata portion of any Bonus which Executive otherwise would have earned if he had remained employed by the Company through the end of the Notice Period, which shall be paid on the Company’s regular bonus payment schedule; all Bonuses shall be paid no later than April 30 of the year following the year for which the Bonus is earned; and

 

4.           if Executive elects to continue his group health coverage under COBRA, payment of Executive’s COBRA premiums for coverage until the earlier of (a) the end of the Notice Period; or (b) the date Executive becomes covered under another employer’s health plan; provided, however, that, in the event that the Company determines, in its sole discretion, that the payments under this Section C(2) are no longer exempt from the application of Section 409A or providing the payments will subject the Company to tax or penalty pursuant to Section 4980D of the Code, then the Company shall pay Executive an amount equal to each remaining COBRA premium as taxable compensation in monthly installments.

 

	
D.

	
OTHER TERMINATIONS

 

1.           Termination by Executive for Good Reason.  Executive’s termination shall be for “Good Reason” if Executive provides written notice to the Company of the Good Reason within ninety (90) days of the event constituting Good Reason, the Company fails to cure the Good Reason within thirty (30) days of such written notice (the “Cure Period”), and Executive terminates his employment within ninety (90) days of the expiration of the Cure Period.  For purposes of this Agreement, “Good Reason” shall mean any of the following events if effected by the Company without the consent of Executive:  (A) an adverse change in Executive’s title, or a change in Executive’s position with the Company which materially reduces Executive’s level of responsibility; provided that a change in Executive’s title or position due to the fact that the Company or its successor becomes a stand-alone division or subsidiary of another company will not alone constitute Good Reason so long as Executive continues to act as the most senior level employee of such division or subsidiary; (B) a material reduction in Executive’s Base Salary, except for reductions that meet the requirements of Section B(1) of this Agreement; (C) the Company commits a material breach of this Agreement; or (D) the Company materially violates or continues to materially violate any law or regulation contrary to the written advice of both Executive and the Company’s outside counsel to the Board.

 

2.           Termination for Cause.  For purposes of this Agreement, “For Cause” shall mean: (i) Executive is convicted of a crime involving dishonesty, breach of trust, or violence to any person; (ii) Executive willfully engages in conduct that is in bad faith and materially injurious to the Company, including but not limited to, misappropriation of trade secrets, fraud or embezzlement; (iii) Executive commits a material breach of this Agreement, which breach is not

 

  

5

  

cured within twenty (20) days after written notice to Executive from the Board; (iv) Executive willfully refuses to implement or follow a reasonable, customary and lawful policy or directive of the Board, which breach is not cured within twenty (20) days after written notice to Executive from the Board; or (v) Executive engages in misfeasance or malfeasance demonstrated by a pattern of failure to perform job duties diligently and professionally which is not cured within twenty (20) days after written notice to Executive from the Board.  The Board may terminate Executive’s employment For Cause at any time, without any advance notice (following any applicable notice and cure period set forth in the immediately preceding sentence).  The Company shall pay to Executive all compensation to which Executive is entitled up through the effective date of termination, subject to any other rights or remedies of the Company under law; and thereafter all obligations of the Company under this Agreement shall cease.

 

3.           By Death.  Executive’s employment shall terminate automatically upon Executive’s death.  The Company shall pay to Executive’s beneficiaries or estate, as appropriate, any compensation then due and owing.  Thereafter all obligations of the Company under this Agreement shall cease.  Nothing in this Section shall affect any entitlement of Executive’s heirs or devisees to the benefits of any life insurance plan or other applicable benefits.

 

4.           By Disability.  If Executive becomes eligible for the Company’s long term disability benefits or if, in the reasonable opinion of the Board, Executive is unable to carry out the responsibilities and functions of the position held by Executive by reason of any physical or mental impairment for more than ninety (90) consecutive days or more than one hundred and eighty (180) days in any twelve (12) month period, then, to the extent permitted by law, the Board may terminate Executive’s employment.  The Company shall pay to Executive all compensation to which Executive is entitled up through the date of termination, and thereafter all obligations of the Company under this Agreement shall cease.  Nothing in this Section shall affect Executive’s rights under any disability plan in which Executive is a participant.

 

	
E.

	
CHANGE OF CONTROL

 

1.           “Change of Control.”  For purposes of this Agreement, “Change of Control” shall mean (A) a sale or disposition (including by way of liquidation) of all or substantially all of the assets of the Company; or (B) the acquisition of the Company by another entity by means of any reorganization, merger or consolidation (but excluding any reorganization, merger or consolidation effected exclusively for the purpose of changing the domicile of the Company) or series of related transactions, in each case in which the Company’s stockholders of record as constituted immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions (by virtue of securities issued in such transaction or series of related transactions) fail to hold at least 50% of the voting power of the resulting or surviving corporation following such transaction or series of related transactions; provided, however, that (i) any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or indebtedness of the Company is cancelled or converted (or a combination thereof) shall not be deemed to be a Change of Control; (ii) any transaction or series of transactions resulting in Great Point Partners, LLC, Deerfield Management or their affiliates owning individually or together in the aggregate 50% or more of the voting power of the resulting or surviving corporation following such transaction or series of related transactions shall not be deemed to be a Change of Control; or

 

  

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(iii) any transaction or series of transactions in which individual investors are selling their equity interests in the Company to individual buyers in privately-negotiated transactions to which the Company is not a party shall not be deemed to be a Change of Control.

 

2.           Termination Before or Following a Change of Control.  If the Company terminates Executive’s employment with the Company other than “For Cause” within three (3) months before or twelve (12) months following a Change of Control, and such termination entitles Executive to Severance Benefits under Section C(1) above, Executive will be eligible to receive (1) Severance Benefits in accordance with, and subject to the requirements of, Section C(1); and (2) a supplemental severance payment equal to three (3) additional months of Executive’s Base Salary, which supplemental severance payment amount shall be paid in a single lump-sum amount, less applicable withholdings, on the later of the effective date of the termination or the Change of Control (provided, however, Company shall be deemed in compliance with the foregoing if it makes such lump-sum payment on the Company’s first regularly scheduled payroll date occurring on or after the 60th day following Executive’s termination of employment or the Change of Control, as applicable).  Executive’s receipt of the foregoing benefits, including the supplemental payment, shall be subject to the conditions set forth in Section C(1) for receipt of Severance Benefits.  For avoidance of doubt, Executive shall not be eligible for the payments or benefits set forth in this paragraph if Executive’s employment is terminated For Cause, By Death or By Disability; by Non-Renewal pursuant to Section C(2); by Executive other than for Good Reason; or if Executive’s employment ends upon expiration of the Term following notice of non-renewal given pursuant to Section

 

A(1).  Fifty percent of Executive’s unvested options granted under this Agreement shall accelerate and vest in the event of a change of control. The 50% remaining unvested options shall accelerate and vest two years from the closing date of the Change of Control event.  If Executive’s employment is terminated as a result of a Change of Control (except in the case of his resignation without Good Reason or his termination by the Company for Cause) 100% of Executive’s options shall vest upon termination

 

	
F.

	
TERMINATION OBLIGATIONS

 

1.           Return of Property.  Executive agrees that all property (including without limitation all equipment, tangible proprietary information, documents, records, notes, contracts and computer-generated materials) furnished to or created or prepared by Executive incident to Executive’s employment by the Company belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment.

 

2.           Resignation and Cooperation.  Upon termination of Executive’s employment, Executive shall be deemed to have resigned from all offices and directorships then held with the Company.  Following any termination of employment, Executive shall cooperate with the Company in the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees.  Executive shall also reasonably cooperate with the Company, at the Company’s expense, in the defense of any action brought by any third party against the Company that relates to Executive’s employment by the Company.

 

  

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G.

	
INVENTIONS AND PROPRIETARY INFORMATION; PROHIBITION ON THIRD PARTY INFORMATION

 

1.           Proprietary Information Agreement.  Executive agrees to sign and be bound by the terms of the Company’s Proprietary Information and Inventions Agreement, which is attached as Exhibit B (“Proprietary Information Agreement”).

 

2.           Non-Disclosure of Third Party Information.  Executive represents and warrants and covenants that Executive shall not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others at any time, including but not limited to any proprietary information or trade secrets of any former employer, if any; and Executive acknowledges and agrees that any violation of this provision shall be grounds for Executive’s immediate termination and could subject Executive to substantial civil liabilities and criminal penalties.  Executive further specifically and expressly acknowledges that no officer or other employee or representative of the Company has requested or instructed Executive to disclose or use any such third party proprietary information or trade secrets.

 

	
H.

	
AMENDMENTS; WAIVERS; REMEDIES

 

This Agreement may not be amended or waived except by a writing signed by Executive and by a duly authorized representative of the Company other than Executive.  Failure to exercise any right under this Agreement shall not constitute a waiver of such right.  Any waiver of any breach of this Agreement shall not operate as a waiver of any subsequent breaches.  All rights or remedies specified for a party herein shall be cumulative and in addition to all other rights and remedies of the party hereunder or under applicable law.

 

	
I.

	
ASSIGNMENT; BINDING EFFECT

 

1.           No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation, or pursuant to the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company.  This Agreement will not be terminated by any merger, consolidation or transfer of assets of the Company referred to above. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement will be binding upon the surviving, resulting or successor corporation or the person or entity to which such assets are transferred.  The Company agrees that if the Company completes an asset sale pursuant to which all or substantially all of the assets of the Company are sold, or any other Change of Control transaction pursuant to which the acquiring or surviving party in such transaction does not assume the Company’s obligations under this Agreement either by operation of law or contractually, then concurrently with such asset sale or other transaction the Company will cause the purchaser of such assets, or such other acquiring or surviving party, to unconditionally assume in writing all of the obligations of the Company hereunder.  Without limiting the foregoing, but subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the Affiliates, officers, directors, agents, successors and assigns of the Company.  This Agreement will inure to the benefit of, and be enforceable by or against, Executive or Executive’s personal or legal representatives, executors, administrators,

 

  

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successors, heirs, distributees, designees and legatees.  None of Executive’s rights or obligations under this Agreement may be assigned or transferred by Executive other than Executive’s rights to compensation and benefits, which may be transferred only by will or operation of law.  If Executive should die while any amounts or benefits have been accrued by Executive but not yet paid as of the date of Executive’s death and which would be payable to Executive hereunder had Executive continued to live, all such amounts and benefits unless otherwise provided herein will be paid or provided in accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no such person is so appointed, to Executive’s estate.

 

	
J.

	
NOTICES

 

All notices or other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered:  (a) by hand; (b) by a nationally recognized overnight courier service; or (c) by United States first class registered or certified mail, return receipt requested, to the principal address of the other party, as set forth below.  The date of notice shall be deemed to be the earlier of (i) actual receipt of notice by any permitted means, or (ii) five business days following dispatch by overnight delivery service or the United States Mail.  Executive shall be obligated to notify the Company in writing of any change in Executive’s address.  Notice of change of address shall be effective only when done in accordance with this paragraph.

 

Company’s Notice Address:

 

WaferGen Biosystems, Inc.

7400 Paseo Padre Parkway

Fremont, CA 94555

Attention: Chairman of the Board

 

Executive’s Notice Address:

 

Rolland Carlson

4401 Silent Trail

Austin, TX 78746

 

	
K.

	
SEVERABILITY

 

If any provision of this Agreement shall be held by a court or arbitrator to be invalid, unenforceable, or void, such provision shall be enforced to the fullest extent permitted by law, and the remainder of this Agreement shall remain in full force and effect.  In the event that the time period or scope of any provision is declared by a court or arbitrator of competent jurisdiction to exceed the maximum time period or scope that such court or arbitrator deems enforceable, then such court or arbitrator shall reduce the time period or scope to the maximum time period or scope permitted by law.

 

  

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L.

	
TAXES

 

All amounts paid under this Agreement shall be paid less all applicable state and federal tax withholdings (if any) and any other withholdings required by any applicable jurisdiction or authorized by Executive.

 

	
M.

	
GOVERNING LAW

 

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

 

	
N.

	
INTERPRETATION

 

This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party.  Sections and section headings contained in this Agreement are for reference purposes only, and shall not affect in any manner the meaning or interpretation of this Agreement.  Whenever the context requires, references to the singular shall include the plural and the plural the singular.

 

	
O.

	
OBLIGATIONS SURVIVE TERMINATION OF EMPLOYMENT

 

Each party agrees that any and all of its obligations under this Agreement, including but not limited to Exhibit B, shall survive the termination of employment and the termination of this Agreement, except as otherwise provided herein.

 

	
P.

	
COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement, but all of which together shall constitute one and the same instrument.

 

	
Q.

	
NO MITIGATION REQUIRED

 

In no event will Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, and such amounts will not be reduced (except as otherwise specifically provided herein) whether or not Executive obtains other employment.

 

	
R.

	
AUTHORITY

 

Each party represents and warrants that such party has the right, power and authority to enter into and execute this Agreement and to perform and discharge all of the obligations hereunder; and that this Agreement constitutes the valid and legally binding agreement and obligation of such party and is enforceable in accordance with its terms.

 

  

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S.

	
ENTIRE AGREEMENT

 

This Agreement is intended to be the final, complete, and exclusive statement of the terms of Executive’s employment by the Company and may not be contradicted by evidence of any prior or contemporaneous statements or agreements, except for agreements specifically referenced herein (including the Proprietary Information and Inventions Agreement attached as Exhibit B and the Company’s 2008 Stock Incentive Plan and Executive’s Stock Option Agreement and Inducement Restricted Stock Unit Award Agreement).  To the extent that the practices, policies or procedures of the Company, now or in the future, apply to Executive and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.  Any subsequent change in Executive’s duties, position, or compensation will not affect the validity or scope of this Agreement.

 

	
T.

	
409A COMPLIANCE

 

Notwithstanding anything to the contrary in the Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to the Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has had a “separation from service” within the meaning of Section 409A.  Similarly, no severance payable to Executive, if any, that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has had a “separation from service” within the meaning of Section 409A.  Each payment and benefit payable under the Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

Any severance payments or benefits under the Agreement that would be considered Deferred Payments will be paid or will commence on the sixtieth (60th) day following Executive’s separation from service, or, if later, such time as required by the next paragraph.

 

Notwithstanding anything to the contrary in the Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s termination (other than due to death), then, to the extent required by Section 409A, the Deferred Payments that would otherwise have been payable within the first six (6) months following Executive’s separation from service, will be paid on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service, but in no event later than seven months after the date of such separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.

 

  

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Any amount paid under the Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments.  Each installment payment provided under the Agreement shall be treated as a separate identified payment for purposes of Section 409A.  Any amount paid under the Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments.  For this purpose, the “Section 409A Limit” will mean two (2) times the lesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to him during Executive’s taxable year preceding his taxable year of his separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which Executive’s separation from service occurred.

 

The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.  The Company and Executive agree to work together in good faith to consider amendments to the Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.

 

All reimbursements under the Agreement, including but not limited to under Sections A(3), B(5) and B(H), will be paid in accordance with Section 409A, including, where applicable, the requirement that (a) any reimbursement is for expenses incurred during Executive’s lifetime (or during a shorter period of time specified in the Agreement), (b) any such reimbursements or in-kind benefits be made or provided no later than the last day of the calendar year following the calendar year in which the expense was incurred, (c) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, and (d) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

If a Change of Control (as defined in the Agreement) constitutes a payment event with respect to any payment under the Agreement which provides for the deferral of compensation and is subject to Section 409A, the Change of Control with respect to such payment must also constitute a “change in control event,” as defined in Treasury Regulation section 1.409A-3(i)(5).

 

	
U.

	
EXECUTIVE ACKNOWLEDGEMENT

 

EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL COUNSEL CONCERNING THIS AGREEMENT, THAT HE HAS READ AND UNDERSTANDS THE AGREEMENT, THAT HE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT HE HAS ENTERED INTO IT FREELY BASED ON HIS OWN JUDGMENT AND NOT ON ANY REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

 

  

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ACCEPTED AND AGREED:

	  	  
	  	
WAFERGEN BIOSYSTEMS, INC.

	  	  	  
	  	
Signature:

	  /s/ Ivan Trifunovich
	  	  	  
	  	
Title:

	  Executive Chairman
	  	  	  
	  	
Date:

	  May 11, 2015
	  	  	  
	  	  	  
	  	  	  
	  	
ROLLAND CARLSON

	  	  	  
	  	
Signature:

	  /s/ Rolland Carlson
	  	  	  
	  	
Date:

	  May 11, 2015

 

  

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