Document:

ex1.htm

Exhibit 10.4

 

AMENDED AND RESTATED GUARANTY

 

This AMENDED AND RESTATED GUARANTY, dated as of March 23, 2017 (this “Guaranty”), is made by each of the undersigned (each a “Guarantor”, and collectively, the “Guarantors”), in favor of Hudson Bay Master Fund Ltd (in its capacity as a holder of Notes (as defined below), including its successors, transferees and assigns, the “Investor”) pursuant to that certain Exchange Agreement, dated as of March 22, 2017 (as amended, restated, extended, replaced or otherwise modified from time to time, the “Exchange Agreement”)

 

W I T N E S S E T H :

 

WHEREAS, Interpace Diagnostics Group, Inc., a Delaware corporation (the “Company”), and the Investor are parties to the Exchange Agreement, pursuant to which a certain existing note (the “Original Note”) previously issued by the Company to RedPath Equityholder Representative, LLC (the “Original Holder”), which will be purchased, together with the security interests granted thereunder, by the Investor, shall be exchanged for the “Exchanged Notes” to be issued pursuant to the Exchange Agreement (as such Exchanged Notes may be amended, restated, extended, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Notes”);

 

WHEREAS, the Original Holder, the Company and certain of its Subsidiaries entered into that certain Guaranty and Collateral Agreement, dated October 31, 2014 with respect to security interests granted with respect to the Original Note (the “Original Security Agreement”), which is being assigned to the Investor concurrently with its purchase of the Original Note;

 

WHEREAS, the Company and the Investor desire to amend and restate the Original Security Agreement in the form of (i) this Guaranty guaranteeing all of the obligations of the Company under the Exchange Agreement, the Notes and the other Exchange Documents (as defined below) and (ii) an Amended and Restated Security and Pledge Agreement, dated as of March 23, 2017, granting the Investor a lien on and security interest in all of their assets and properties (the “Security Agreement”) to secure such transferred security interests; and

 

WHEREAS, the Exchange Agreement requires that the Guarantors execute and deliver to the Investor, (i) this Guaranty; and (ii) the Security Agreement; and

 

WHEREAS, each Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best interest of, such Guarantor.

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Investor to purchase the Original Note and, subsequently, exchange the Original Note into the Notes to be issued pursuant to the Exchange Agreement, each Guarantor agrees with the Investor, as follows:

 

Definitions. Reference is hereby made to the Exchange Agreement and the Notes for a statement of the terms thereof. All terms used in this Guaranty and the recitals hereto which are defined in the Exchange Agreement or the Notes, and which are not otherwise defined herein shall have the same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have the meanings set forth below:

 

 

 

 

 

“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency or similar laws).

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

 

“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

 

“Collateral” means all assets and properties of the Company and each Guarantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the collateral described in Section 2 of the Security Agreement.

 

“Common Stock” shall have the meaning set forth in the Exchange Agreement. 

 

“Company” shall have the meaning set forth in the recitals hereto.

 

“Exchange Agreement” shall have the meaning set forth in the recitals hereto.

 

“Exchange Documents” shall have the meaning set forth in Section 2.2 of the Exchange Agreement.

 

“Governmental Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guaranteed Obligations” shall have the meaning set forth in Section 2 of this Guaranty.

 

“Guarantor” or “Guarantors” shall have the meaning set forth in the recitals hereto.

 

“Indemnified Party” shall have the meaning set forth in Section 13(a) of this Guaranty

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

 

“Investor” shall have the meaning set forth in the recitals hereto.

 

“Notes” shall have the meaning set forth in the recitals hereto.

 

 

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“Obligations” shall have the meaning set forth in Section 3 of the Security Agreement.

 

“Other Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.

 

“Paid in Full” or “Payment in Full” means the indefeasible payment in full in cash or Common Stock of all of the Guaranteed Obligations. 

 

“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.

 

“Security Agreement” shall have the meaning set forth in the recitals hereto.

 

“Subsidiary” means any Person in which a Guarantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Subsidiaries”.

 

“Taxes” shall have the meaning set forth in Section 12(a) of this Guaranty.

 

“Transaction Party” means the Company and each Guarantor, collectively, “Transaction Parties”.

 

Guaranty. 

 

(a)     The Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty to the Investor, the punctual payment, as and when due and payable, by stated maturity or otherwise, of all Obligations, including, without limitation, all interest, make-whole and other amounts that accrue after the commencement of any Insolvency Proceeding of the Company or any Guarantor, whether or not the payment of such interest, make-whole and/or other amounts are enforceable or are allowable in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of actions, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of the Exchange Documents (all of the foregoing collectively being the “Guaranteed Obligations”), and agrees to pay any and all costs and expenses (including reasonable counsel fees and expenses) incurred by the Investor in enforcing any rights under this Guaranty or any other Exchange Document. Without limiting the generality of the foregoing, each Guarantor’s liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to the Investor under the Exchange Agreement and the Notes but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Transaction Party.

 

(b)     Each Guarantor, and by its acceptance of this Guaranty, the Investor, hereby confirms that it is the intention of all such Persons that this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and the Guaranteed Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Investor and the Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance. 

 

 

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Guaranty Absolute; Continuing Guaranty; Assignments. 

 

(a)     The Guarantors, jointly and severally, guaranty that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Exchange Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Investor with respect thereto. The Guaranteed Obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations of any other Guarantor or the Company under any Exchange Document, and a separate action or actions may be brought and prosecuted against any Guarantor to enforce such obligations, irrespective of whether any action is brought against any Transaction Party or whether any Transaction Party is joined in any such action or actions. The liability of any Guarantor under this Guaranty shall be a primary obligation (and not merely a suretyship) and shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way relating to, any or all of the following:

 

(i)     any lack of validity or enforceability of any Exchange Document;

 

(ii)     any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Exchange Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity of any Guaranteed Obligations or otherwise;

 

(iii)     any taking, exchange, release or non-perfection of any Collateral;

 

(iv)      any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;

 

(v)     any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Transaction Party; 

 

(vi)     any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Transaction Party under the Exchange Documents or any other assets of any Transaction Party or any of its Subsidiaries;

 

(vii)     any failure of the Investor to disclose to any Transaction Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter known to the Investor (each Guarantor waiving any duty on the part of the Investor to disclose such information); 

 

(viii)     taking any action in furtherance of the release of any Guarantor or any other Person that is liable for the Obligations from all or any part of any liability arising under or in connection with any Exchange Document without the prior written consent of the Investor; or 

 

 

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(ix)     any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Investor that might otherwise constitute a defense available to, or a discharge of, any Transaction Party or any other guarantor or surety.

 

(b)     This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Investor, or any other Person upon the insolvency, bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made. 

 

Waivers. To the extent permitted by applicable law, each Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other notice or formality of any kind with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Investor exhaust any right or take any action against any Transaction Party or any other Person or any Collateral. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right to revoke this Guaranty, and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, each Guarantor hereby unconditionally and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the Investor that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of such Guarantor hereunder. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Investor to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Investor.

 

Subrogation. No Guarantor may exercise any rights that it may now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence, payment, performance or enforcement of any Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Investor against any Transaction Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until there has been Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations). If any amount shall be paid to a Guarantor in violation of the immediately preceding sentence at any time prior to Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Investor and shall forthwith be paid to the Investor to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Exchange Document, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (a) any Guarantor shall make payment to the Investor of all or any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations), the Investor will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.

 

 

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Representations, Warranties and Covenants. 

 

(a)     Each Guarantor hereby represents and warrants as of the date first written above as follows:

 

(i)     such Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and to execute, deliver and perform its obligations under this Guaranty and each other Exchange Document to which such Guarantor is a party, and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary except where the failure to be so qualified (individually or in the aggregate) would not reasonable expected to result in a Material Adverse Effect.

 

(ii)     The execution, delivery and performance by such Guarantor of this Guaranty and each other Exchange Document to which such Guarantor is a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (B) do not and will not contravene its charter, articles, certificate of formation or by-laws, its limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on such Guarantor or its properties do not and will not result in or require the creation of any lien, security interest or encumbrance (other than pursuant to any Exchange Document) upon or with respect to any of its properties, and (C) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to it or material to its operations or any of its properties.

 

(iii)     No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required in connection with the due execution, delivery and performance by such Guarantor of this Guaranty or any of the other Exchange Documents to which such Guarantor is a party (other than as expressly provided for in any of the Exchange Documents), 

 

 

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(iv)     This Guaranty has been duly executed and delivered by each Guarantor and is, and each of the other Exchange Documents to which such Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law). 

 

(v)     There is no pending or, to the best knowledge of such Guarantor, threatened action, suit or proceeding against such Guarantor or to which any of the properties of such Guarantor is subject, before any court or other Governmental Authority or any arbitrator that (A) if adversely determined, would reasonably be expected to have a Material Adverse Effect or (B) relates to this Guaranty or any of the other Exchange Documents to which such Guarantor is a party or any transaction contemplated hereby or thereby (other than as expressly provided for in any of the Exchange Documents).

 

(vi)     Such Guarantor (A) has read and understands the terms and conditions of the Exchange Agreement and the other Exchange Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Company and the other Transaction Parties, and has no need of, or right to obtain from the Investor, any credit or other information concerning the affairs, financial condition or business of the Company or the other Transaction Parties.

 

(vii)     There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.

 

(b)     Each Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations), it will comply with each of the covenants (except to the extent applicable only to a public company) which are set forth in Section 4 of the Exchange Agreement as if such Guarantor were a party thereto.

 

Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Investor may, and is hereby authorized to, at any time and from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and to the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Investor to or for the credit or the account of any Guarantor against any and all Guaranteed Obligations now or hereafter existing under this Guaranty or any other Exchange Document, irrespective of whether or not the Investor shall have made any demand under this Guaranty or any other Exchange Document and although such obligations may be contingent or unmatured. The Investor agrees to notify the relevant Guarantor promptly after any such set-off and application made by the Investor, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Investor under this Section 7 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Investor may have under this Guaranty or any other Exchange Document in law or otherwise.

 

Section 8.     Limitation on Guaranteed Obligations. 

 

 

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(a)     Notwithstanding any provision herein contained to the contrary, each Guarantor’s liability hereunder shall be limited to an amount not to exceed as of any date of determination the greater of: 

 

(i)     the amount of all Guaranteed Obligations, including any applicable interest at the applicable Interest Rate as specified in the Note; and 

 

(ii)     the amount which could be claimed by the Investor from any Guarantor under this Guaranty without rendering such claim voidable or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, Guarantor’s right of contribution and indemnification.

 

(b)     Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Investor hereunder or under applicable law.

 

(c)     No payment made by the Company, any Guarantor, any other guarantor or any other Person or received or collected by the Investor from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations or any payment received or collected from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability of such Guarantor hereunder until after all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been Paid in Full (other than inchoate indemnity obligations). 

 

Notices, Etc. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Guaranty must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an nationally recognized overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. All notices and other communications provided for hereunder shall be sent, if to any Guarantor, to the Company’s address and/or facsimile number, or if to the Investor, to it at its respective address and/or facsimile number, each as set forth in Section 8.4 of the Exchange Agreement.

 

 

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Section 10.      Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Guaranty shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of New York. Each Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Exchange Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim, obligation or defense that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under Section 8.4 of the Exchange Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Investor from bringing suit or taking other legal action against any Guarantor in any other jurisdiction to collect on a Guarantor’s obligations or to enforce a judgment or other court ruling in favor of the Investor.

 

WAIVER OF JURY TRIAL, ETC. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER EXCHANGE DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER EXCHANGE DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

Taxes. 

 

(a)     All payments made by any Guarantor hereunder or under any other Exchange Document shall be made in accordance with the terms of the respective Exchange Document and shall be made without set-off, counterclaim, withholding, deduction or other defense. Without limiting the foregoing, all such payments shall be made free and clear of and without deduction or withholding for any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of the Investor by the jurisdiction in which the Investor is organized or where it has its principal lending office (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, “Taxes”). If any Guarantor shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Exchange Document:

 

(i)     the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including Taxes on amounts payable to the Investor pursuant to this sentence) the Investor receives an amount equal to the sum it would have received had no such deduction or withholding been made, 

 

(ii)     such Guarantor shall make such deduction or withholding,

 

(iii)     such Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and 

 

(iv)     as promptly as possible thereafter, such Guarantor shall send the Investor an official receipt (or, if an official receipt is not available, such other documentation as shall be satisfactory to the Investor, as the case may be) showing payment.  In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Exchange Document (collectively, “Other Taxes”).

 

 

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(b)     Each Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid by any Indemnified Party  as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Exchange Document, and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted.  This indemnification shall be paid within thirty (30) days from the date on which the Investor makes written demand therefor, which demand shall identify the nature and amount of such Taxes or Other Taxes.

 

(c)     If any Guarantor fails to perform any of its obligations under this Section 12, such Guarantor shall indemnify the Investor for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Guarantors under this Section 12 shall constitute part of the Guaranteed Obligations and shall survive the termination of this Guaranty and the payment of the Obligations and all other amounts payable hereunder.

 

Section 13.      Indemnification.

 

(a)     Without limitation of any other Guaranteed Obligations of any Guarantor or remedies of the Investor under this Guaranty or applicable law, except to the extent resulting from such Indemnified Party’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Investor and each of their affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction Party enforceable against such Transaction Party in accordance with their terms.

 

(b)     Each Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) or any fiduciary duty or obligation to any of the Guarantors or any of their respective affiliates or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating to the facilities, the actual or proposed use of the proceeds of the advances, the Exchange Documents or any of the transactions contemplated by the Exchange Documents.

 

Miscellaneous. 

 

 

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(a)     Each Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds to the Investor, at such address specified by the Investor from time to time by notice to the Guarantors.

 

(b)     No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by each Guarantor and the Investor, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(c)     No failure on the part of the Investor to exercise, and no delay in exercising, any right or remedy hereunder or under any other Exchange Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any Exchange Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Investor provided herein and in the other Exchange Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of the Investor under any Exchange Document against any party thereto are not conditional or contingent on any attempt by the Investor to exercise any of their respective rights or remedies under any other Exchange Document against such party or against any other Person.

 

(d)     Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

(e)     This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other than Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations)) and (ii) be binding upon each Guarantor and its respective successors and assigns. This Guaranty shall inure, together with all rights and remedies of the Investor hereunder, to the benefit of and be enforceable by the Investor and its successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Investor may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of the Exchange Agreement or any other Exchange Document to any other Person in accordance with the terms thereof, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Investor herein or otherwise, in each case as provided in the Exchange Agreement or such Exchange Document. None of the rights or obligations of any Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of the Investor.

 

(f)     This Guaranty and the other Exchange Documents reflect the entire understanding of the transaction contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.

 

(g)     Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.

 

 

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Section 15.     Currency Indemnity.

 

If, for the purpose of obtaining or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment Currency”) an amount due under this Guaranty in any currency (the “Obligation Currency”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (a) the date of actual payment of the amount due, in the case of any proceeding in the courts of courts of the jurisdiction that will give effect to such conversion being made on such date, or (b) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 15 being hereinafter in this Section 15 referred to as the “Judgment Conversion Date”).

 

If, in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available funds, the Guarantors shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of’ the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from the Guarantors under this Section 15 shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Guaranty.

 

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date first above written.

 

	
 
	
GUARANTORS:
	
 

	 	 	 
	 	
INTERPACE DIAGNOSTICS, LLC
	 
	 	 	 	 
	
 
	
By:
	
Interpace Diagnostics Group, Inc.
	
 

	 	 	its Sole Member	 
	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	/s/ Jack E. Stover	
 

	
 
	
 
	
Name: Jack E. Stover
	
 

	
 
	
 
	
Title: President and Chief Executive Officer
	
 

	 	 	 	 
	 	 	 	 
	 	
INTERPACE DIAGNOSTICS CORPORATION
	 
	 	 	 
	 	 	 
	 	 	 	 
	 	By:	/s/ Jack E. Stover	 
	 	 	
Name: Jack E. Stover
	 
	 	 	Title: Title: President and Chief Executive Officer	 

  

 

[Signatures continue on following page]

 

 

 

 

	
ACCEPTED BY:
	  
	
HUDSON BAY MASTER FUND LTD., 
as the Investor

 

By:    /s/ George Antonopoulos            

Name: George Antonopoulos
Title: Authorized SignatoryExhibit

HARRIS & HARRIS GROUP, INC.
CHANGE IN CONTROL AND SEVERANCE AGREEMENT
This Change in Control and Severance Agreement (the “Agreement”) is made and entered into by and between [      ] (“Executive”) and 180 Degree Capital Corp., a New York corporation (the “Company”), effective as of [         ] (the “Effective Date”).
RECITALS
1. The Company’s Board of Directors (the “Board”) believes that it is in the best interests of the Company and its stockholders (i) to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat, or occurrence of a Change in Control and (ii) to provide Executive with an incentive to continue Executive’s employment prior to a Change in Control and to motivate Executive to maximize the value of the Company upon a Change in Control for the benefit of its stockholders.
2. The Board believes that it is imperative to provide Executive with certain severance benefits upon Executive’s termination of employment under certain circumstances. These benefits will provide Executive with enhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Change in Control.
3. Certain capitalized terms used in the Agreement are defined in Section 6 below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
1. Term of Agreement. This Agreement will have a term of the Effective Date through the last date of employment of the Executive by the Company, unless a Change in Control occurs.  If a Change in Control occurs, the term of this Agreement will extend automatically through the date that is 12 months following the effective date of the Change in Control. If Executive becomes entitled to benefits under Section 3 during the term of this Agreement, the Agreement will not terminate until all of the obligations of the parties hereto with respect to this Agreement have been satisfied. 

2. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and will continue to be at-will, as defined under applicable law. As an at-will employee, either the Company or the Executive may terminate the employment relationship at any time, with or without Cause.
3. Severance Benefits.
(a) Termination without Cause or Resignation for Good Reason Unrelated to a Change in Control. If the Company terminates Executive’s employment with the Company without Cause (excluding death or Disability) or if Executive resigns from such employment for Good Reason, and, in each case, such termination occurs outside of the Change in Control Period, then subject to Section 4, Executive will receive the following:
(i) Accrued Compensation. The Company will pay Executive all expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements.
(ii) Severance Payments. Executive will be paid severance pay at a rate equal to Executive’s base salary in effect immediately before the date of termination, for twelve (12) months from the date of such termination of employment (the “Continuance Period”), to be paid periodically in accordance with the Company’s normal payroll policies. Severance payments are conditioned on Executive signing a Release as described in Section 4(a).  Any installment payments of severance pay that are delayed pending the signed Release and expiration of any 

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revocation period will be paid no later than the first Company payroll following the Release Deadline.   In the event of Executive's death before all payments have been made, the remaining payments will be made to Executive's surviving spouse, or if none, to Executive's estate.  
(iii) Pro-Rated Bonus Payment. Executive will be paid a portion of Executive’s incentive compensation for the fiscal year in which Executive's employment terminates, pro-rated based on time employed during the fiscal year (the “Pro-Rated Bonus”).  Payment of the Pro-Rated Bonus will be subject to the terms and conditions of the underlying incentive compensation plan and, accordingly, will only be paid only to the extent that performance metrics in the plan are achieved.  Unless the bonus program provides for payment at a different time, the Pro-Rated Bonus will be paid at the same time as payments to other executives in the applicable incentive compensation plan, provided that if the incentive plan is designed to be exempt from Code Section 409A, payment will be made, no later than March 15th of the calendar year following Executive’s termination date.  Notwithstanding Section 10(b) of this Agreement, the benefit under this clause (iii) may be unilaterally amended and replaced by the Company with a substantially similar benefit in order to comply Section 162(m) of the Code.
(iv) Continuation Coverage. If Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) within the time period prescribed pursuant to COBRA for Executive and Executive’s eligible dependents, then the Company will pay Executive's COBRA premiums for that coverage (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of: (A) a period of twelve (12) from the date of termination; (B) the date Executive becomes covered under similar plans; or (C) the date Executive becomes eligible for coverage under Medicare. 
(v)   Required Delay of Certain Payments.  If Executive is a “specified employee” at the time Executive becomes eligible to receive a payment under this Section 3(a), and the payment is not exempt from Section 409A of the Code, the portion of the payment that constitutes “deferred compensation” (within the meaning of Code Section 409A) shall be made no earlier than 6 months following Executive's termination date.   Determination of whether Executive is a specified employee will be made under Treas. Reg. § 1.409A-1(i) (or any successor thereto).  Any payments delayed under this provision shall be paid immediately following the end of the six month period. Upon Executive's death during the 6 month period, any delayed payments will be paid in a lump sum as soon as practicable following Executive's death.  
(b) Termination without Cause or Resignation for Good Reason in Connection with a Change in Control. If the Company terminates Executive’s employment with the Company without Cause (excluding death or Disability) or if Executive resigns from such employment for Good Reason, and, in each case, such termination occurs during the Change in Control Period, then subject to Section 4, Executive will receive the following:
(i) Accrued Compensation. The Company will pay Executive all expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements.
(ii) Severance Payment. Executive will receive a lump-sum payment (less applicable withholding taxes) equal to twelve (12) months of Executive’s annual base salary as in effect immediately prior to Executive’s termination date, provided that (x) if Executive incurred a termination prior to a Change in Control that qualifies Executive for severance payments under Section 3(a)(ii); and (y) a Change in Control occurs within the Change in Control Period that qualifies Executive for the superior benefits under this Section 3(b)(ii), then the lump sum payment to Executive under this Section 3(b)(ii) shall be reduced by any monthly severance payments already paid under Section 3(a)(ii) and will be reduced by any Deferred Payments that are subject to Code Section 409A, and such Deferred Payments will continue to be paid under Section 3(a)(ii).   The identification of the portion of payments that are Deferred Payments will be made under Section 4(c)(v).  The lump sum amount payable under this Section 3(b)(ii) shall be conditioned on Executive signing a Release as described in Section 4(a) by the Release Deadline, and the lump sum payment will be made no later than 74 days following Executive's termination of employment.  In the event of Executive's death before all payments have been made, the remaining payments will be made to Executive's surviving spouse, or if none, Executive's estate.  

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(iii) Bonus Payment. Executive will be paid a portion of Executive’s incentive compensation for the fiscal year in which Executive's employment terminates, pro-rated based on time employed during the fiscal year.  If the bonus program is exempt from Code Section 409A, payment of the bonus will be made in a lump sum no later than the first Company payroll following the Release Deadline.  If the bonus program is considered non-exempt deferred compensation under Code Section 409A, the bonus will be paid at the time originally scheduled under the bonus program unless action is taken to terminate the bonus program and accelerate payment in a manner permitted under Code Section 409A.  
 
(iv) Continuation Coverage. If Executive elects continuation coverage pursuant to COBRA within the time period prescribed pursuant to COBRA for Executive and Executive’s eligible dependents, then the Company will pay Executive's COBRA premiums for that coverage (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of: (A) a period of twelve (12) months from the date of termination; (B) the date Executive becomes covered under similar plans; or (C) the date Executive becomes eligible for coverage under Medicare. 
(v)  Required Delay of Certain Payments.  If Executive is a “specified employee” at the time Executive becomes eligible to receive a payment under this Section 3(b), and the payment is not exempt from Section 409A of the Code, the portion of the payment that constitutes “deferred compensation” (within the meaning of Code Section 409A) shall be made no earlier than 6 months following Executive's termination date.   Determination of whether Executive is a specified employee will be made under Treas. Reg. § 1.409A-1(i) (or any successor thereto).  Any payments delayed under this provision shall be paid immediately following the end of the six month period.  Upon Executive's death during the 6 month period, any delayed payments will be paid in a lump sum as soon as practicable following Executive's death.  
(c) Voluntary Resignation; Termination for Cause. If Executive’s employment with the Company terminates (i) voluntarily by Executive (other than for Good Reason) or (ii) for Cause by the Company, then Executive will not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.
(d) Disability; Death. If the Company terminates Executive’s employment as a result of Executive’s Disability, or Executive’s employment terminates due to Executive’s death, then Executive will not be entitled to receive any other severance or other benefits, except for those (if any) as may then be established under the Company’s then existing written severance and benefits plans and practices or pursuant to other written agreements with the Company.
(e) Exclusive Remedy. In the event of a termination of Executive’s employment as set forth in Section 3(a) or (b) of this Agreement, the provisions of Section 3 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive or the Company otherwise may be entitled, whether at law, tort or contract, in equity, or under this Agreement (other than the payment of accrued but unpaid wages, as required by law, and any unreimbursed reimbursable expenses). Executive will be entitled to no benefits, compensation or other payments or rights upon a termination of employment other than those benefits expressly set forth in Section 3 of this Agreement.  Notwithstanding the foregoing, this Section 3(e) shall not apply to any benefits, compensation or other payments or rights due under Company benefit plans (other than plans providing salary continuation severance benefits), such as but not limited to the Retiree Medical Benefit Plan.
4. Conditions to Receipt of Severance
(a) Release of Claims Agreement. The receipt of any severance payments or benefits (other than the accrued benefits set forth in either Sections 3(a)(i) or 3(b)(i)) pursuant to this Agreement is subject to Executive signing and not revoking a release of all claims against the Company and its officers, directors and affiliates in a form determined by the Company (the “Release”).   Executive must sign and deliver the signed Release to the Company by the due date set by the Company, which will be no later than 60 days following Executive's termination date.  The Company will provide the Release to Executive at least 21 days before the due date for return of the 

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Release.    The "Release Deadline" is seven days after the due date set by the Company for return of the Release, or such later date when any right of Executive to revoke the release under applicable law expires.  In no event will the Release Deadline be later than 74 days following the date of Executive's termination date. If Executive does not sign and return the Release by the due date set by the Company, Executive will forfeit any right to severance payments or benefits under this Agreement.  In no event will severance payments or benefits be paid or provided until the Release actually becomes effective and irrevocable.
 
(b) Restrictive Covenants. Notwithstanding the terms of any other agreement between the Company and Executive, even if it provides for negation of covenants from Executive to the Company in the event of a Change in Control, in exchange for this Agreement, Executive agrees to adhere to the following covenants during Executive's employment and after termination of employment: 

(i) Non-Solicitation. Executive’s receipt of any payments or benefits under Section 4 (other than the accrued benefits set forth in either Sections 3(a)(i) or 3(b)(i)) will be subject to Executive continuing to comply with the terms of the Non-Solicitation Agreement between the Company and Executive as such agreement may be amended and/or superseded from time to time (the “Non-Solicitation Agreement”) between the Company and Executive dated June 7, 2012.  

(ii)  Confidentiality.  Executive's employment by Company creates a relationship of confidence and trust between Executive and the Company.  Executive acknowledges that Company has invested, and continues to invest, substantial time, money and specialized knowledge into developing its resources.  Therefore, unless Executive has obtained the Company's advance written consent, and except for authorized use in performance of Executive's duties on behalf of and for the benefit of Company, Executive shall not disclose to any others, or use, at any time, in any way, or anywhere, either during or subsequent to employment with the Company, any trade secret or other Confidential Information (of either technical or non-technical nature) of the Company.  This shall not be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order and provided that Executive promptly provides written notice to the Company of any such order.    For purposes of this Agreement, (i) "Confidential Information" means information, not generally known in the industry in which the Company is or may be engaged, disclosed to Executive, or known by Executive, as a consequence of or through his employment by the Company, about the Company's business, including but not limited to marketing, ideas, problems, developments, research records, technical data, processes, products, plans for products or service improvement and development, business and strategic plans, financial information, forecasts, and any other information which derives independent economic value, actual or potential, and all other information of a trade secret or confidential nature.

(iii) Non-Transferability of Company Securities.   If Executive is entitled to any payments or benefits under Section 3(a) (other than the accrued benefits set forth in Section 3(a)(i)), then until such payments have all been made, Executive will not sell, enter into any transaction, or solicit any transaction involving equity in the Company owned by or to be issued to Executive.  More specifically, Executive agrees that Executive will not offer, sell, agree to offer or sell, solicit offers to sell, grant any call option or purchase any put option with respect to, pledge, encumber, assign, borrow or otherwise dispose of or transfer (each a “Transfer”) any securities of the Company held or to be issued to Executive.  
(c) Section 409A.
(i) Notwithstanding anything to the contrary in this Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to this Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A of the Code, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a “separation from service” within the meaning of Section 409A.

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(ii) It is intended that the severance payments under this Agreement will not constitute Deferred Payments, but rather will be exempt from Section 409A as a payment that would fall within the “short-term deferral period” as described in Section 4(c)(iv) below or resulting from an involuntary separation from service as described in Section 4(c)(v) below, to the maximum amount permitted under Section 409A.
(iii) Each payment and benefit payable under this Agreement is intended to constitute a separate payment under Section 1.409A-2(b)(2) of the Treasury Regulations.   
 
(iv)  Any amount paid under this 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 for purposes of clause (i) above.  Severance payments made in the first 74 days following separation from service will be short-term deferrals.  
(v) Any amount paid under this 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.   Specifically, with respect to payments under Section 3(a)(ii), severance payments made after the first 74 days following separation from service and during the six month period following separation from service that are not in excess of the Section 409A Limit will not constitute Deferred Payments. To the extent total severance payments under Section 3(a)(ii) made after 74 days following separation from service will exceed the Section 409A Limit, the first payments scheduled to be made more than six months after separation from service will be considered to be Deferred Payments subject to Code Section 409A up to the amount of such non-exempt Deferred Payments.  
(vi) 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 this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A, provided that the Company does not guarantee any tax result. 
5. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of the Code, then Executive’s benefits under Section 3 will be either:
(a) delivered in full, or
(b) reduced to an amount that is $1 less than the maximum amount which would result in no portion of such benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. If a reduction in severance and other benefits constituting “parachute payments” is necessary under (b) above, reduction will occur in the following order: (i) reduction of cash payments that are not Deferred Payments; (ii) reduction of cash payments that are Deferred Payments beginning with payments to be paid latest in time; (iii) reduction of employee benefits. 
Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by the Company’s independent public accountants serving immediately prior to a Change in Control or such other person or entity to which the parties mutually agree (the “Firm”), whose determination will be conclusive and binding upon Executive and the Company. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. 

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The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section. The Company will bear all costs the Firm may incur in connection with any calculations contemplated by this Section 5.
6. Definition of Terms. The following terms referred to in this Agreement will have the following meanings:
(a) “Cause” means:
(i) an act of dishonesty made by Executive in connection with Executive’s responsibilities as an employee;
(ii) Executive’s conviction of, or plea of nolo contendere to, a felony or any crime involving fraud or embezzlement;
(iii) Executive’s gross misconduct;
(iv) Executive’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company;
(v) Executive’s willful breach of any obligations under any written agreement or covenant with the Company;
(vi) Executive’s failure to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested Executive’s cooperation; or
(vii) Executive’s continued failure to perform Executive’s employment duties after Executive has received a written demand of performance from the Company which specifically sets forth the factual basis for the Company’s belief that Executive has not substantially performed his duties and has failed to cure such non-performance to the Company’s satisfaction within 10 business days after receiving such notice.
(b) “Change in Control” means the occurrence of any of the following provided that the Change in Control meets the definition of a change in ownership, effective control or assets under Treas. Reg. Section 1.409A-3(i)(5):

		
	(i)
	any Person is or becomes the "beneficial owner" (as such term is used in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 40% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (iii) below; or 

		
	(ii)
	 the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or 

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	(iii)
	there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of (A) any parent of the Company or the entity surviving such merger or consolidation (B) if there is no such parent, of the Company or such surviving entity; or 

		
	(iv)
	the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. 

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 
 (c) “Change in Control Period” means the period beginning three months prior to, and ending 12 months following, a Change in Control.
(d) “Code” means the Internal Revenue Code of 1986, as amended.
(e) “Disability” means that Executive has been unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
(f) “Good Reason” means Executive’s voluntary termination, within 30 days following the expiration of any Company cure period (discussed below) following the occurrence of one or more of the following, without Executive’s consent:
(i) a material reduction of Executive’s responsibilities;
(ii) a material reduction in Executive’s base salary; or;
(iii) a material change in the geographic location of Executive’s primary work facility or location; provided, that a relocation of less than 50 miles from Executive’s then present location will not be considered a material change in geographic location.
Executive may not resign for Good Reason without first providing the Company with written notice within 90 days of the initial existence of the condition that Executive believes constitutes Good Reason specifically identifying the acts or omissions constituting the grounds for Good Reason and a reasonable cure period of not less than 30 days following the date of such notice.
For purposes of the “Good Reason” definition, the term “Company” will be interpreted to include any subsidiary, parent, affiliate or successor thereto, if applicable.
(g) “Section 409A Limit” means two times the lesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the Executive’s taxable year preceding the Executive’s taxable year of Executive’s termination of employment as determined under, and with such adjustments as are set forth in, 

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Treasury Regulation 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 Code for the year in which Executive’s employment is terminated.
7. Successors and Assigns. This Agreement is binding on and is for the benefit of the Company and its successors and assigns; including but not limited to any successor of the Company, direct or indirect, resulting from purchase, merger, consolidation, or otherwise.  The Company must ensure that any asset sale or other transaction in which the Company's obligations under this Agreement are not assumed by the successor as a matter of law is entered into only under terms providing for the successor to assume the Company's obligations under this Agreement. This Agreement is also binding on Executive and shall inure to the benefit of Executive, his personal or legal representatives, successors, heirs and assigns.  No interest of Executive, or any right to receive any payment or distribution hereunder, will be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligation or debts, or other claims against, Executive, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings.  All of Executive’s rights under this Agreement will at all times be entirely unfunded, and no provision will at any time be made with respect to segregating ay assets of the Company or any affiliate for payment of any amounts due hereunder.  Executive will have only the rights of a general unsecured creditor of the Company.
8. Notice.
(a) General. Notices and all other communications contemplated by this Agreement will be in writing and will be deemed to have been duly given when sent electronically, personally delivered, mailed by U.S. registered or certified mail, return receipt requested and postage prepaid, or delivered by a private courier service such as UPS, DHL or Federal Express that has tracking capability. In the case of Executive, notices will be sent to the e-mail address or Executive's home address, in either case which Executive most recently communicated to the Company in writing. In the case of the Company, electronic notices will be sent to the e-mail addresses of the Chief Executive Officer and to the Chief Compliance Officer, and mailed notices will be addressed to its corporate headquarters, and all notices will be directed to the attention of its Chief Executive Officer and Chief Compliance Officer.
(b) Notice of Termination. Any termination by the Company for Cause or by Executive for Good Reason will be communicated by a notice of termination to the other party hereto given in accordance with Section 8(a) of this Agreement. Such notice will indicate the specific termination provision in this Agreement relied upon, will set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and will specify the termination date (which will be not more than 90 days after the giving of such notice).
9. Resignation. Upon the termination of Executive’s employment for any reason, Executive will be deemed to have resigned from all officer and/or director positions held at the Company and its affiliates voluntarily, without any further required action by Executive, as of the end of Executive’s employment and Executive, at the Board’s request, will execute any documents reasonably necessary to reflect Executive’s resignation.
10. Miscellaneous Provisions.
(a) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any earnings that Executive may receive from any other source.
(b) Waiver. No provision of this Agreement will be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will be considered a waiver of any other condition or provision or of the same condition or provision at another time.

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(c) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.
 
(d) Entire Agreement. This Agreement, together with the Non-Solicitation Agreement, constitutes the entire agreement of the parties hereto and supersedes in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof, including, but not limited to, any rights to any severance and/or change in control benefits set forth in Executive’s original offer letter and any prior severance agreement. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless it is in a writing that specifically mentions this Agreement and that is signed by Executive and by an authorized officer of the Company (other than Executive).
(e) Choice of Law; Venue. The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of New York (with the exception of its conflict of laws provisions). Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) will be commenced or maintained in any state or federal court located in New York County.
(f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision hereof, which will remain in full force and effect.
(g) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income, employment and other taxes.
(h) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
[Signature Page to Follow]

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.
 
	
							
	 
	 
	 
	 
	 
	 
	 

	COMPANY
	 
	180 Degree Capital Corp.

	 
	 
	 
	 

	 
	 
	 
	 
	By:
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 
	Title:
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 
	Date:
	 
	 

	 
	 
	 
	 

	

EXECUTIVE
	 
	 
	 
	

By:
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 
	Date:
	 
	 

[signature page of the Change in Control and Severance Agreement]

10

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