(1)	Wafergen Bio-Systems, Inc (WGBS.OB), a Nevada USA incorporated company with a registered address and place of business at Bayside Technology Center, 46531 Fremont Blvd, Fremont, CA 94538, USA (“Existing Shareholder”);

 

(2)	Kumpulan Modal Perdana Sdn Bhd (Company No. 547734-D), a company incorporated in Malaysia with a registered address at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur (“KMP”);

 

 

(4)	Wafergen Biosystems (M) Sdn Bhd  (Company No 795066-H), a company incorporated in Malaysia with a registered address at Unit C-12-4, Megan Avenue 11, No 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur (“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 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 Malaysian Technology Development Corporation Sdn Bhd (“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.

 

(D)	MTDC is, as at the date of this Agreement, the legal and beneficial owner of 888,888 Series A RCPS in the Company, representing 100% of the issued and paid up preference share capital of the Company.

 

(E)

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 Deed of Adherence.

 

(F)	The Existing Shareholder and the Company intend to raise a further RM1,500,000, in addition to the USD3,500,000 to be raised pursuant to the SSSA and Subscription Agreement.

 

 

(G)	The Existing Shareholder and the Company have requested KMP to, and KMP has agreed to, participate in the Company by way of subscription for the Series B RCPS upon the terms and subject to the conditions set out in this Agreement.

 

 

 

1	Definitions and Interpretations

 

1.1	Definitions

 

 

 

1.2	Interpretation

 

(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	Conditions Precedent

 

2.1.1

The subscription for the Series B RCPS by KMP is subject to, and conditional upon, the fulfilment of the following conditions precedent within 21 days from the date of this Agreement (subject to extension by agreement of KMP, the Existing Shareholder and the Company):

 

(a)

the approval and agreement of the investment committee of KMP;

 

(b)

the successful completion of the due diligence exercise and KMP being satisfied with the results of their investigation or due diligence exercise on the Company;

 

(c)

the Company secretarial forms and documents (including the register of members) having been updated and filed with the relevant authorities or bodies to reflect the change in directorship, shareholder and shareholding in the Company, in accordance with the terms and conditions of this Agreement;

 

(d)

KMP being satisfied that all internal resolutions regarding the Company and its activities are up to date and in order (where confirmation of satisfaction shall not be unreasonably withheld);

 

(e)

amendments to the Articles as are necessary to reflect in full the terms of this Agreement;

 

(f)

statutory declaration signed by the Existing Shareholder;

 

(g)

confirmation from the Existing Shareholder that there is no outstanding advance from directors or shareholders and any future advance from the Existing Shareholder will be subordinated to the RCPS;

 

(h)

there being no material adverse change in the financial condition or operations of the Company or the Existing Shareholder; and

 

(i)

execution of the deed of adherence referred to in Recital H.

 

 

 

 

(a)

to provide to KMP (as the case may be) a clear arrangement on the ownership of future intellectual property developed by the Company;

 

(b)

to put in place a comprehensive training programme to transfer the know-how from US experts to the Malaysian team; and

 

(c)

the Company entering into a research and development agreement or understanding to pursue agrobiotechnology research and development with a reputable Malaysian entity.

 

 

To the extent permitted by law, KMP may waive the fulfilment of any condition precedent in Clause 2.1.1 and any undertaking in Clause 2.2.

 

 

Unless specifically waived under Clause 2.3, if the condition precedents in Sub -clauses 2.1.1 are not fulfilled within 21 days after 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;

 

(c)

if in relation to the condition precedents in Sub - clauses 2.1.1(a), (b), (d) and (i), KMP shall not have any claim against any other party in relation to this Agreement and KMP shall pay the Existing Shareholder all costs and fees incurred by the Existing Shareholder in relation to the preparation of this Agreement; and

 

(d)

if in relation to the condition precedents in Sub-clauses 2.1.1(c), (e), (f), (g) and (h), the Existing Shareholder shall not have any claim against any other party in relation to this Agreement and the Existing Shareholder shall pay KMP all costs and fees incurred by KMP in relation to the preparation of this Agreement;

 

 

 

 

 

3.1.2

The subscription for the Series B RCPS by KMP is not dependant or interconditional on completion or performance of the SSSA and Subscription Agreement.

 

3.1.3

In respect of the subscription for Series B RCPS under this Agreement, the Company will issue a Subscription Notice to the Investor.  The Subscription Notice will specify the number of Series B RCPS to be subscribed by the Investor at the Closing and the Subscription Price.

 

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 B RCPS to the Investor pursuant to the terms of this Agreement.

 

 

4.1

Subject to fulfilment or waiver of all conditions precedent in Clause 2.1.1, the completion of the allotment and issue of the Series B RCPS to KMP pursuant to this Agreement shall take place at the registered office of the Company at the Closing Date or such other date and time as may be mutually agreed by the Company and KMP in writing.

 

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 B 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 Closing Date, the share certificates in respect of the Series B RCPS, a certified extract of the shareholders' resolution of the Company approving the subscription of the Series B RCPS by KMB at the Closing (including amendment of the Articles of the Company where required), pursuant to the terms and subject to the conditions of this Agreement; and

 

(b)

a certified extract of the resolution of the Board confirming the allotment and issue of the relevant number of the Series B RCPS to be subscribed by the Investor at the Closing, pursuant to the Subscription Notice.

 

4A.	Utilisation of Funds

 

 

 

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 B 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,

 

 

 

 

 

 

 

The Investor shall have the option to require the Existing Shareholder to purchase all (but not less than all) of the Conversion Shares or Series B RCPS held by the Investor, upon thirty (30) days’ notice in writing to the Existing Shareholder. The price payable for each Conversion Share shall be calculated based on the formula for the issue price per Conversion Share set out in paragraph 5 of Schedule 1 of this Agreement whereas the price payable for each Series B RCPS is RM7.9763, such price compounded at the rate of 8% per annum with yearly rests, up to the date of exercise of the option, and at the discretion of the Investor, may be satisfied by either cash or the issuance of shares in the Existing Shareholder. The option shall be exercisable as follows:

 

(a)

any time after the Closing Date for as long as KMP is the holder of Series B RCPS in the Company, in the event there is a material breach or default by the Company or the Existing Shareholder in any of their representations, warranties, undertakings, covenants and obligations under this Agreement which has not been remedied after 30 days written notice of such material breach or default; or

 

(b)

any time between 1 January 2011 and 31 December 2011 and subject to the following:

 

(i)

the share price of the Existing Shareholder’s shares is below USD2.25; or

 

(ii)

due to any breach or default attributable to the Existing Shareholder, the Investor is unable to exercise its rights under the Put 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.

 

 

8.1	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 Closing,

 

(a)

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

 

(b)

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

 

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.

 

 

 

(a)

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

 

(b)

not disclose any provision of this Agreement except :

 

(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.

 

 

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.