Interpace Diagnostics Group, Inc. (NASDAQ:IDXG) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01.Entry into a Material Definitive Agreement

On March 22, 2017, Interpace Diagnostics Group, Inc., a Delaware
corporation (the Company), entered into an exchange agreement
(the Exchange Agreement), with an institutional investor (the
Investor). Prior to the Company entering into the Exchange
Agreement, the Investor acquired that certain Non-Negotiable
Subordinated Secured Promissory Note, dated as of October 31,
2014, as amended (the RedPath Note), issued by the Company and
the Companys subsidiary, Interpace Diagnostics, LLC, in favor of
RedPath Equityholder Representative, LLC (the RedPath
Equityholder Representative) on behalf of the former
equityholders of RedPath Integrated Pathology, Inc. (RedPath).
The RedPath Note, which was entered into in connection with the
Companys acquisition of RedPath in October 2014, had an aggregate
principal amount of $9,336,250 outstanding and was acquired by
the Investor for $8,869,437.50. The RedPath Equityholder
Representative assigned all of its rights, title and interest in
the RedPath Note to the Investor, including, but not limited to,
its security interest in all of the assets of the Company and the
assets of the Companys subsidiaries.

to the Exchange Agreement, the Company and the Investor agreed to
exchange the RedPath Note for (i) a senior secured convertible
note in the aggregate principal amount of $5,321,662.50 (the
Exchanged Convertible Note), which is convertible into shares of
the Companys common stock, par value $0.01 per share (Common
Stock), in accordance with its terms, and (ii) a senior secured
non-convertible note with an aggregate principal amount of
$3,547,775 (the Exchanged Non-Convertible Note and collectively,
the Exchanged Notes), for a combined aggregate principal amount
of $8,869,437.50. The Exchanged Notes will rank senior to all of
the Companys outstanding and future indebtedness, other than the
indebtedness in favor of the Companys credit line lender and are
secured by a perfected security interest in all of the existing
and future assets of the Company and those of the Companys
subsidiaries. Upon the reduction of 55% of the aggregate
principal amount of each of the Exchanged Notes, the Investor
will release its security interest in its entirety.

The Exchange Agreement contains customary representations,
warranties and agreements by the Company in favor of the
Investor. The representations, warranties and agreements made by
the parties in the Exchange Agreement were made solely for the
benefit of the parties to such agreement, including, in some
cases, for the purpose of allocating risk among the parties, and
should not be deemed to be a representation, warranty or
agreement to or in favor of any other party. In addition, the
assertions embodied in any representations, warranties and
agreements contained in the Exchange Agreement may be subject to
qualifications with respect to knowledge and materiality
different from those applicable to security holders generally.
Moreover, such representations, warranties or agreements were
accurate only as of the date when made, except where expressly
stated otherwise. Accordingly, such representations, warranties
and agreements should not be relied on as accurately representing
the current state of the Companys affairs at any time.

The closing of the Exchange Agreement occurred on March 23, 2017.

The exchange of the RedPath Note for the Exchanged Notes was made
in reliance upon the exemption from registration provided by
Section 4(a)(2) of the Securities Act of 1933, as amended.

The Exchanged Notes

The Exchanged Notes mature at 125% of the face value on the
fifteenth month anniversary of the closing date, or June 22,
2018, and bear interest quarterly at one and one hundredth
percent (1.01%) per annum (as may be adjusted from time to time).
Under the terms of the Exchanged Notes, the Company has the right
to require a redemption of a portion (not less than $500,000) or
all of the applicable Exchanged Notes prior to their maturity at
a price equal to 115% of the principal amount of the Exchanged
Notes within the first 180 days of issuance, 120% of the
principal amount of the Exchanged Notes between 180 and 270 days
of issuance, and 125% of the principal amount of the Exchanged
Notes after 270 days of issuance. A mandatory redemption may be
required by the Investor in connection with the occurrence of an
event of default or change of control. In each event, the
redemption price is subject to a premium on parity, and the
Exchanged Convertible Note redemption may be subject to a premium
on parity if certain unfavorable conditions exist, as described
therein.

The Exchanged Convertible Note is convertible into shares of
Common Stock. The Investor may elect to convert all or a portion
of the Exchanged Convertible Note and all accrued and unpaid
interest with respect to such portion, if any, into shares of
Common Stock at a fixed conversion price of $2.44 (the Fixed
Conversion Price). In the event the Company seeks and obtains
stockholder approval to issue shares of Common Stock in
connection with the conversion of the Exchanged Convertible Note
(which determination shall be at the Companys sole discretion)
from and after the date of the Exchange Agreement, the Exchanged
Convertible Note may alternatively be converted (Alternative
Conversion) by the Investor at the greater of (i) $0.40 and (ii)
lowest of (x) the applicable conversion price as in effect on the
applicable conversion date of the applicable Alternative
Conversion, and (y) 88% of the lowest volume-weighted average
price of the Common Stock during the 10 consecutive trading day
period ending and including the date of delivery of the
applicable conversion notice. If the volume-weighted average
price of the Common Stock exceeds 135% of the Fixed Conversion
Price, or $3.29, for five consecutive trading days and no equity
conditions failure then exists, the Company has the option to
convert the Exchanged Convertible Note into shares of Common
Stock at the Fixed Conversion Price. The Company shall not effect
the conversion of any portion of the Exchanged Convertible Note,
and the Investor shall not have the right to convert any portion
of the Exchanged Convertible Note, to the extent that after
giving effect to such conversion, the Investor together with any
other persons whose beneficial ownership of the Companys Common
Stock could be aggregated with the Investors collectively would
be in excess of 9.99% of the shares of Common Stock outstanding
immediately after giving effect to such conversion. Additionally,
any such conversion will be null and void and treated as if never
made.

Security Agreements

As noted above, simultaneously with the sale of the RedPath Note
to the Investor, RedPath Equityholder Representative assigned all
of its security interest in the assets of the Company and its
subsidiaries to the Investor. to this assignment, on March 23,
2017, the Company and its subsidiaries, Interpace Diagnostics
Corporation and Interpace Diagnostics LLC (collectively, the
Material Subsidiaries), entered into an Amended and Restated
Security and Pledge Agreement (the Security Agreement) and an
Amended and Restated Intellectual Property Security Agreement
(the IP Security Agreement) with the Investor, evidencing the
transfer of security interest in favor of the RedPath
Equityholder Representative to the Investor. In addition, the
Material Subsidiaries entered into a Guaranty in favor of the
Investor, to support the obligations of the Company to the terms
of the Exchange Agreement. The Security Agreement, among other
things, authorizes the Investor to file UCC-3 financing
statements to transfer the liens on file with the Secretary of
State of the State of Delaware to the Investor. The Investor will
also have control of certain deposit accounts in the name of the
Company. Under the IP Security Agreement, the Company also
granted the Investor the right to assign the liens on its
intellectual property in favor of the RedPath Equityholder
Representative to the Investor. The liens in favor of the
Investor are senior to any other indebtedness of the Company,
except the lien in favor of the Companys credit line lender. As
noted above, upon the reduction of 55% of the aggregate principal
amount of each of the Exchanged Notes, the Investor will release
its security interest in its entirety.

Termination Agreement

Simultaneously with the consummation of the sale of the RedPath
Note to the Investor, on March 22, 2017, the Company and its
subsidiaries entered into a Termination Agreement with the
RedPath Equityholder Representative. Under the terms of the
Termination Agreement, RedPath Equityholder Representative agreed
to terminate certain royalty and milestone rights (collectively,
the Royalties) provided under that certain Contingent
Consideration Agreement, dated October 31, 2014, entered into in
connection with the Companys acquisition of RedPath. In addition,
the RedPath Equityholder Representative agreed to terminate its
rights, granted under that certain Agreement and Plan of Merger,
dated October 31, 2014, among RedPath, the Company and certain
other parties, to designate an observer to be present in an
observer capacity at meetings of the Companys board of directors
(the Board Observer Rights). As consideration for the termination
of its Royalties and Board Observer Rights, the Company agreed to
issue warrants (the Warrants) to purchase up to an aggregate of
100,000 shares of the Companys Common Stock to certain former
equityholders of RedPath, as designated by the RedPath
Equityholder Representative. The Company has 10 days from the
instruction of the RedPath Equityholder Representative to effect
the issuance of any Warrants.

The Warrants will have an exercise price of $4.69 per share,
which is subject to adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Common Stock.
The Warrants will be exercisable at any time on or after the six
month anniversary of the issuance date (the Initial Exercise
Date) and willsurvive until the fifth anniversary of the Initial
Exercise Date.

If at any time the Company grants, issues or sells any
instruments that are convertible into or exercisable or
exchangeable for Common Stock or rights to purchase stock,
warrants, securities or other property pro rata to all of the
stockholders (the Purchase Rights), then the holder of a Warrant
will be entitled to acquire, on the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the holder
could have acquired if the holder had held the number of shares
of Common Stock acquirable upon complete exercise of the Warrant
immediately before the date on which a record is taken or
otherwise determined for the grant, issuance or sale of such
Purchase Rights. In addition, during such time as the Warrants
are outstanding, if the Company declares any dividend or other
distribution of its assets (or rights to acquire its assets) to
all of the stockholders, by way of return of capital or otherwise
(a Distribution), then, in each such case, the holder will be
entitled to participate in such Distribution to the same extent
that the holder would have participated therein if the holder had
held the number of shares of Common Stock acquirable upon
complete exercise of the Warrant immediately before the date of
which a record is taken or otherwise determined for participation
in such Distribution.

The foregoing descriptions are qualified in their entirety by
reference to the full text of the agreements, which are filed as
exhibits to this Current Report on Form 8-K and incorporated
herein by reference in their entirety.

The Companys press release, dated March 23, 2017, announcing the
transactions is attached as Exhibits 99.1 to this Current Report
on Form 8-K.

The information contained in Item 1.01 of this Current Report on
Form 8-K in relation to the Termination Agreement is incorporated
herein by reference.

The information contained in Item 1.01 of this Current Report on
Form 8-K in relation to the Exchanged Notes is incorporated
herein by reference.

The information contained in Item 1.01 of this Current Report on
Form 8-K in relation to the Termination Agreement, the Warrant
and the shares of Common Stock issuable upon the exercise of the
Warrant is incorporated herein by reference.

(d)Exhibits

* To be filed by amendment

About Interpace Diagnostics Group, Inc. (NASDAQ:IDXG)

Interpace Diagnostics Group, Inc., formerly PDI, Inc., is focused on developing and commercializing molecular diagnostic tests principally focused on early detection of high potential progressors to cancer and leveraging the latest technology and personalized medicine for patient diagnosis and management. The Company operates through molecular diagnostics segment. It offers molecular tests, such as PancraGen, which is a pancreatic cyst molecular test that can aid in pancreatic cyst diagnosis and pancreatic cancer risk assessment utilizing its PathFinder platform; ThyGenX, which assesses thyroid nodules for risk of malignancy, and ThyraMIR, which assesses thyroid nodules risk of malignancy utilizing a gene expression assay. Through its molecular diagnostics business, the Company provides diagnostic options for detecting genetic and other molecular alterations that are associated with gastrointestinal and endocrine cancers, which are focused on early detection of cancer.

Interpace Diagnostics Group, Inc. (NASDAQ:IDXG) Recent Trading Information

Interpace Diagnostics Group, Inc. (NASDAQ:IDXG) closed its last trading session down -0.25 at 2.61 with 9,936,286 shares trading hands.