Contents

(1)

Wafergen Bio-Systems, Inc (WGBS.OB), a Nevada USA incorporated company with a registered address and place of business at 7400 Paseo Padre Parkway, Fremont, CA 94555, USA (“Existing Shareholder”);

(2)

Malaysian Technology Development Corporation Sdn Bhd (Company No 235796-U), a company incorporated in Malaysia with a registered address at Level 8, Menara Yayasan Tun Razak, Jalan Bukit Bintang, 55100 Kuala Lumpur (“MTDC” or “Investor”);

(3)

Wafergen Biosystems (M) Sdn Bhd  (Company No 795066-H), a company incorporated in Malaysia with a registered address at Suite 2-1, 2nd Floor, Menara Penang Garden, 42A, Jalan Sultan Ahmad Shah, 10050 Penang (“Company”).

(A)

The Company is a private company limited by shares incorporated under the laws of Malaysia and has at the date of this Agreement an authorised share capital of RM10,000,000 divided into 8,000,000 ordinary shares of RM1.00 each and 200,000,000 redeemable convertible preference shares of RM0.01 each.

(B)

The Existing Shareholder is the legal and beneficial owner of the 300,000 ordinary shares of RM1.00 each in the Company, representing 100% of the issued and paid-up ordinary share capital of the Company.

(C)

The Existing Shareholder, the Company and MTDC have entered into a Share Subscription and Shareholders’ Agreement dated 8 May 2008 (“SSSA”) where MTDC agreed to subscribe for 888,888 Series A Redeemable Convertible Preference Shares (“Series A RCPS”) in the Company, pursuant to the terms and conditions in the SSSA. MTDC is, as at the date of this Agreement, the legal and beneficial owner of 888,888 Series A RCPS in the Company.

(D)

The Existing Shareholder, the Company, Prima Mahawangsa Sdn Bhd (“PMSB”) and Expedient Equity Ventures Sdn Bhd (“EEV”) have entered into a Share Subscription Agreement (“Subscription Agreement”) and Deed of Adherence (“DA”) both dated 3 April 2009 where PMSB agreed to subscribe for 444,444 Series B Redeemable Convertible Preference Shares (“Series B RCPS”) in the Company and EEV agreed to subscribe for 222,222 Series B RCPS, pursuant to the terms and conditions in the Subscription Agreement and DA.

 (E)

The Existing Shareholder, the Company and Kumpulan Modal Perdana Sdn Bhd (“KMP”) have entered into a Share Subscription Agreement and Deed of Adherence both dated 1 July 2009 where KMP agreed to subscribe for 188,057 Series B RCPS pursuant to the terms and conditions in the Share Subscription Agreement and Deed of Adherence both dated 1 July 2009.

(F)

Pursuant to certain put agreements entered into with the Existing Shareholder, EEV and KMP have exercised their right to exchange the Series B RCPS held by them for shares in the Existing Shareholder and as at the date of this Agreement, the Series B RCPS shareholding in the Company is as follows:

(G)

The Existing Shareholder and the Company intend to raise a further USD 7,500,000 in multiple tranches.

1

Definitions and Interpretations

 

In this Agreement, unless the context otherwise requires:

 

(a) 

headings and underlining are for convenience only and do not affect the interpretation of this Agreement;

 

(b) 

words importing the singular include the plural and vice versa;

 

(c) 

words importing a gender include any gender;

 

(d) 

an expression importing a natural person includes any corporation or other body corporate, partnership, association, governmental agency, two or more persons having a joint or common interest, or any other legal or commercial entity or undertaking;

 

(e) 

a reference to a party to a document includes that party's successors and permitted assigns;

 

(f) 

any part of speech or grammatical form of a word or phrase defined in this Agreement has a corresponding meaning; and

 

(g) 

a warranty, representation, covenant or agreement on the part of two or more persons binds them jointly and severally.

2.

Conditions

 

2.1.1

The subscription for the Series C RCPS by MTDC is subject to, and conditional upon, the fulfilment of the following conditions precedent within 14 days from the date of this Agreement (subject to extension by agreement of MTDC, the Existing Shareholder and the Company):

 

(a)

amendments to the Articles as are necessary to reflect in full the terms of this Agreement and the new shareholders agreement referred to in Recital (I); and

 

(b)

execution of the new shareholders agreement referred to in Recital (I).

2.2.1

If the conditions precedent in Sub-clauses 2.1.1 are not fulfilled within 14 days from the date of this Agreement (or such later date as the relevant Parties may mutually agree on):

 

(a)

this Agreement shall automatically cease and terminate;

 

(b)

all obligations and liabilities of the Parties under this Agreement shall cease to have effect; and

 

(c)

none of the Parties shall have any claim against any other party in relation to this Agreement,

3.

Share Capital

 

3.1.1

Subject to the terms and conditions of this Agreement, MTDC shall subscribe in cash for Tranche A Shares and the Company will allot and issue Tranche A Shares to MTDC, free from any Encumbrance at Initial Closing.

 

3.1.2

Subject to the terms and conditions of this Agreement, MTDC shall have the option to subscribe for Tranche B Shares prior to the Subsequent Closing Date and the Company will allot and issue Tranche B Shares to MTDC, free from any Encumbrance at Subsequent Closing.

 

3.1.3

In respect of each subscription for Series C RCPS under this Agreement, the Company will issue a Subscription Notice to MTDC. The Subscription Notice will specify the number of Series C RCPS to be subscribed by MTDC under Tranche A at the Initial Closing, and Tranche B at the Subsequent Closing, and the Initial Subscription Price and Subsequent Subscription Price respectively.

 

3.1.4

The Existing Shareholder irrevocably confirms its waiver of all rights of pre-emption whatsoever that it may have in connection with the issue and conversion of the Series C RCPS to MTDC pursuant to the terms of this Agreement.

4.

Subscription Completion Date

4.1

Subject to fulfilment or waiver of all conditions precedent in Clause 2.1.1, the completion of each allotment and issue of the Series C RCPS to MTDC pursuant to this Agreement shall take place at the registered office of the Company as follows:

(a) 

Tranche A Shares at the Initial Closing; and

 

(b)

Tranche B Shares at the Subsequent Closing;

4.2

The Investor shall cause or procure a cheque, bank draft or cashier’s order in favour of the Company to be deposited, or a telegraphic or electronic transfer made, to the bank account of the Company held with HSBC Bank Berhad for the total subscription monies payable for the number of Series C RCPS to be subscribed (as set out in the relevant Subscription Notice), in exchange for the delivery by the Company of the following:

 

(a)

at the Initial Closing, the share certificates in respect of the Series C RCPS, a certified extract of the shareholders’ resolution of the Company approving the subscription of the Tranche A Shares by MTDC at the Initial Closing (including amendment of the Articles of Association of the Company where required), pursuant to the terms and subject to the conditions of this Agreement;

 

(b)

at the Subsequent Closing, the share certificates in respect of the Series C RCPS, a certified extract of the shareholders’ resolution of the Company approving the subscription of the Tranche B Shares at the Subsequent Closing, pursuant to the terms and subject to the conditions of this Agreement; and

4A.

Utilisation of Funds

4A.1

The Parties agree that investment amounts raised through the issuance of the Series C RCPS will be utilised for the working capital requirements of the Company and/or loaned to the Existing Shareholder for its working capital requirements, as determined by the Existing Shareholder.

5.

Undertakings, Warranties and Representations by the Parties

5.1

Subject to any exceptions expressly and specifically disclosed in any correspondence, communication, document or information in writing prior to or after the execution of this Agreement and prior to the completion of the subscription of the Series C RCPS, the Parties warrant to each other that the information and statements set out in the Warranties are true, accurate and correct in all respects at the date of this Agreement. To this effect, the Warranties will be deemed to be repeated during this period as if they had been entered into afresh during the said period in relation to the facts and circumstances then existing.

5.2

The Parties acknowledge and agree that each of them entered into this Agreement in reliance on the Warranties.

5.3

Each of the Warranties is separate and is to be construed independently of the others and is not limited by reference to any of the other Warranties.

5.4

Each Party will indemnify and will keep the other Parties indemnified against all losses, damages, costs and expenses which the other Parties may incur or be liable for in respect of any claim, demand, liability, action, proceedings or suits arising out of or in connection with:

 

(a)

a breach of a Warranty;

 

(b)

any Warranty not being true and correct in all respects; or

 

(c)

any Warranty being misleading in any respect,

6

Put Options

 

If the Investor is prohibited under US Federal or State Law from exchanging the Series C RCPS it holds for shares in the Existing Shareholder on the selected exchange date (“Exchange Date”) in accordance with the Put Agreement referred to in Clause 6.1, the Investor shall have the option to require the Existing Shareholder to purchase all (but not less than all) of the Series C RCPS held by the Investor, upon thirty (30) days’ notice in writing to the Existing Shareholder. The price payable for each Series C RCPS shall be at a price equal to the lower of:

 

(ii)

the closing share price of the Existing Shareholder on the over-the-counter bulletin board or relevant stock exchange (as the case may be) on the Exchange Date.

7.

Previous Agreements and Prevalence of Agreement

7.1

This Agreement and the documents referred to in its provisions are in substitution for all previous agreements between all or any of the Parties and contain the whole agreement between the Parties relating to the subject matter of this Agreement.

8.

Remedy on an Event of Default

8.1

Each of the following will be regarded as an Event of Default:

 

(a)

either of the Parties committing a breach of its obligations under this Agreement and, in the case of a breach capable of remedy, failing to remedy the same within twenty one (21) days of being specifically required in writing so to do by the other Party; or

 

(b)

any distress, execution, sequestration or other process being levied or enforced upon or sued out against the property of any of the Parties which is not discharged within ten (10) days; or

 

(c)

any encumbrancer taking possession of or a receiver or trustee being appointed over the whole or any part of the undertaking, property or assets of any of the Parties; or

 

(d)

the making of an order or the passing of a resolution for the winding up of any of the Parties, otherwise than for the purpose of a reconstruction or amalgamation without insolvency or previously approved by the other Parties (such approval not to be unreasonably withheld).

8.2

In the event of an Event of Default taking place prior to the Initial Closing,

 

(a)

where the Company or the Existing Shareholder is the defaulting Party, MTDC shall be entitled to terminate this Agreement;

 

(b)

where MTDC is the defaulting Party, the Company and the Existing Shareholder shall be entitled to terminate this Agreement as against MTDC,

 

without prejudice to any rights or remedies the non-defaulting Parties may have against the defaulting Party for any antecedent breach.

8.3

Notwithstanding any provision in this Agreement to the contrary, this Agreement shall remain in full force and effect for so long as shall be necessary to fulfil and give effect to the arrangements and undertakings contained in this Agreement.

8.4

Termination of this Agreement for any cause in accordance with the provisions of this Agreement shall not release any Party from any liability which at the time of termination has already accrued to the other or which thereafter may accrue in respect of any act or omission prior to such termination or which has accrued in consequence of this clause.

9.

Confidentiality

 

(a)

ensure the confidentiality of this Agreement and the transactions contemplated in this Agreement;

 

(i)

where required by law or any relevant governmental regulatory body or competent authority;

(ii)

to any financier or professional adviser acting for the party; or

 

(iii)

the information is public knowledge otherwise than as a consequence of breach of this Clause.

 

All public announcements where references are made to the Investor or companies related to the Investor shall only be made with the prior written consent of the Investor (which shall not be unreasonably withheld), irrespective of the jurisdiction in which the announcement is made.

 

This restriction continues to apply after the expiration or sooner termination of this Agreement without limit in point of time but ceases to apply to information or knowledge which may properly come into the public domain through no fault of the Party so restricted.

10.

Further Assurance

11.

Remedies

12.

Waiver and Variation

13.

Severability

14.

Continuing Effect

15.

Time

16.

Legal Relationship

 

Nothing in this Agreement shall create, or be regarded as creating, a partnership or the relationship of employer and employee between the Parties. None of the Parties shall have any authority to bind the other in any way.

 

The Parties are all separate legal entities and as such no third parties shall have any claim or recourse against the Company for the liabilities and obligations of the Existing Shareholder to the abovementioned third parties.

17.

Costs and Expenses

18.

Assignment; Successors

19.

Notices

Without affecting any other effective mode of service, any notice given under this Agreement:

 

(a)

must be in writing and may be delivered personally or sent by registered post to the intended recipient at the address shown below or the address last notified by the intended recipient to the sender:

 

(b)

must be signed; and

 

(c)

will be taken to be duly given or made:

 

(i)

(in the case of delivery in person) when delivered, received or left at the above address; and

 

(ii)

(in the case of delivery by registered post) 48 hours after posting, and in proving service it shall only be necessary to prove that the communication was contained in an envelope which was duly addressed and posted in accordance with this Clause,

 

but if delivery, receipt or service occurs, or will be taken to occur, on a day on which business is not generally carried on in the place to which the communication is sent or is later than 4 p.m. (local time) it will be taken to have been duly given or made at the commencement of business on the next day on which business is generally carried on in the place.

20.

Entire agreement

21.

Counterparts

22.

Governing Law and Jurisdiction

7.1

The Company may redeem any or all Series C RCPS registered in the name of the holder of the Series C RCPS at any time if the Company is prohibited from granting a loan to the Existing Shareholder using the proceeds from the issuance of the Series C RCPS due to legal or regulatory restrictions in Malaysia, by giving a Notice of Redemption. The Series C RCPS will be redeemable from funds legally available for distribution at the redemption price (“Redemption Price”) which comprises a par value of RM0.01 with redemption premium equivalent to the difference between (i) the aggregate of the Initial Subscription Price or Subsequent Subscription Price (as the case may be) and such price multiplied at the rate of 5% per annum prorated by day, up to the date of the redemption based on a 365-days year (and without any compounding or addition to the principal Initial Subscription Price or Subsequent Subscription Price (as the case may be)) and (ii) the par value of RM0.01 per Series C RCPS plus all accrued but unpaid dividends and dividends in arrears, if any.

7.2

All redemption of the Series C RCPS shall be effected at the registered office of the Company unless agreed otherwise by the holder(s) of the Series C RCPS and the Company.  On the date fixed for redemption, the holder(s) of the Series C RCPS shall deliver to the Company the share certificate(s) for the relevant Series C RCPS in exchange for payment in cash (by way of bank draft or any other manner acceptable to the holder(s)) by the Company of the aggregate Redemption Price for the time being payable for those Series C RCPS.  If any share certificate so delivered to the Company relates to any Series C RCPS which are not to be redeemed on that day, a fresh share certificate for those Series C RCPS shall be issued by the Company to such holder(s).

 

No Series C RCPS redeemed by the Company shall be capable of reissue.

 

(a)

effects a sale, lease, license or other disposition of all or substantially all of the Company’s assets, property or business or undertakings in excess of RM250,000.00,

 

(b)

effects or enters into any agreement regarding any transaction, or series of transactions, which results in the holders of the Series C RCPS prior to the transaction owning less than 50% of the voting power of the Company’s Series C RCPS after the transaction(s),

 

(c)

alters or changes the rights, preferences or privileges of the Series C RCPS,

 

(d)

increases or decreases the number of authorized  Series C RCPS,

 

(e)

authorises the issuance of securities having a preference over or on a parity with the Series C RCPS,

 

(f)

changes the number of directors,

 

(g)

amends, modifies or repeals the Memorandum of Association and/or Articles of the Company in a manner which adversely affects the holders of the Series C RCPS,

 

(h)

effects any recapitalization or reorganization, or any voluntary or involuntary liquidation under applicable bankruptcy or reorganization legislation, or any dissolution, liquidation, or winding up of the Company,

 

(i)

declares or pays dividends on or makes any distributions with respect to any share capital of the Company.

 

1.1

 

1.2

 

(a)

The Investor has the right, power and authority, and has taken or will take all action necessary, to validly execute, deliver and exercise its rights, and perform their obligations under this Agreement;

 

(b)

Other than those set out in this Agreement, no other consent, approval, authorization or other order of any court, regulatory body, administrative agency or other order of any other governmental body is required for the execution and delivery by the Investor of this Agreement or the performance by the Investor of the transactions contemplated under this Agreement;

 

(c)

This Agreement is a valid and binding obligation of the Investor and is enforceable against the Investor in accordance with its terms;

 

(d)

The execution, delivery and performance of this Agreement will not violate any judgment, order or decree to which the Investor is subject and will not be inconsistent with any constitutional documents or contracts to which the Investor id a party to or otherwise binding on the Investor; and

 

(e)

There is no action, proceeding, claim or investigation pending against the Investor before any court or administrative authority, which, if determined against the Investor, may reasonably be expected to have a material adverse effect on the Investor’s ability to perform the obligations hereunder.

 

2.1

 

2.2

 

(a)

The Existing Shareholder and Company have the right, power and authority, and have taken or will take all action necessary, to validly execute, deliver and exercise their rights, and perform their obligations under this Agreement;

 

(b)

Other than those set out in this Agreement, no other consent, approval, authorization or other order of any court, regulatory body, administrative agency or other order of any other governmental body is required for the execution and delivery by the Existing Shareholder and the Company of this Agreement or the performance by the Existing Shareholder and the Company of the transactions contemplated under this Agreement;

 

(c)

This Agreement is a valid and binding obligation of the Existing Shareholder and the Company and after fulfillment of the conditions precedent is enforceable against the Existing Shareholder and the Company in accordance with its terms;

 

(d)

The execution, delivery and performance of this Agreement will not violate any judgment, order or decree to which the Existing Shareholder and the Company is subject and save as otherwise disclosed, will not be inconsistent with any constitutional documents or contracts to which the Existing Shareholder and/or the Company is a party to or otherwise binding on the Existing Shareholder and/or the Company; and

 

(e)

There is no action, proceeding, claim or investigation pending against the Existing Shareholder and/or the Company before any court or administrative authority, which, if determined against the Existing Shareholder and/or the Company, may reasonably be expected to have a material adverse effect on the Existing Shareholder and the Company’s ability to perform the obligations hereunder.