EXHIBIT 10.23

 
[WAFERGEN LETTERHEAD]
 

 
June 17, 2009
 
Victor Joseph
35964 Killorglin Common
Fremont, CA 94536

 
Re:
Separation from Employment

 
Dear Victor:
 
This letter confirms the terms of your separation from employment with WaferGen
Bio-systems, Inc. (the “Company”), which will become effective as of June 17,
2009 (“Separation Date”).  You will also cease to be a director of any of the
Company’s subsidiaries effective as of the Separation Date.  We have valued the
important contributions that you have made, as a co-founder of the Company, over
a sustained period of time.
 
1. Final Paycheck.
 
You will be paid on the Separation Date your final paycheck in the amount of
$51,371.84, less applicable withholdings.  This payment includes (a) all
outstanding salary amounts and (b) any accrued, but unused, vacation time based
on an annual salary rate of $262,500.  If you seek reimbursement of any business
expenses, you agree to submit your final expense reimbursement statement within
ten (10) days of the Separation Date, along with receipts or other supporting
documentation.  The Company will reimburse valid business expenses in accordance
with its standard expense reimbursement policies.
 
2. COBRA.
 
You will be eligible to convert your medical insurance coverage under COBRA, and
will receive information from our plan administrator describing this conversion
election.
 
3. Accelerated Vesting.
 
In accordance with Section 9(e) of your Executive Employment Agreement dated May
31, 2007 (the “Employment Agreement”), all stock options granted to you pursuant
to the Company’s stock incentive plan (the “Options”) shall vest immediately and
become exercisable effective on your Separation Date; provided, however, that
any unexercised Options shall expire on the two-year anniversary of the
Separation Date.
 
4. Severance Benefits.
 
In exchange for the general release of claims and other agreements contained in
this letter, the Company also will provide you with the following severance
benefits:
 

 
 
 

--------------------------------------------------------------------------------

 

 
(a) Severance pay in the amount of $306,250.00, less applicable withholdings,
payable in the form of salary continuation in accordance with the Company’s
regular payroll practices.  This payment is equivalent to fourteen (14) months
of base salary, based on an annual salary rate of $262,500 (“Severance”), and
will be paid in twenty-eighty (28) equal installments beginning on the Company’s
first regular payroll date after expiration of the 7-day revocation period
discussed in Section 9 below.
 
(b) If you elect to convert your group health coverage under COBRA, the Company
will pay the premiums for your COBRA coverage until the earlier of (i) the
two-year anniversary of the Separation Date or (ii) the date you become covered
under another employer’s group health plan.
 
(c) Your receipt of the foregoing severance payments and benefits is conditioned
on your agreement not to compete with the Company, or its successors or assigns,
during the severance period.  In addition, you must continue to comply with your
obligations under Sections 11 and 12 of the Employment Agreement, including the
restrictive covenants contained in Section 12.  If you engage in any business
activity competitive with the Company or its successors or assigns during the
severance period, or violate your obligations under the Sections 11 or 12 of the
Employment Agreement, all severance payments and benefits immediately shall
cease.  Except for the separation benefits set forth above, you will not be
entitled to any compensation, benefits or other perquisites of employment
after the Separation Date.
 
5. Mutual Release of Claims.
 
(a) You hereby completely release and forever discharge the Company, its
affiliated, related, parent or subsidiary entities, and its and their present
and former directors, officers, and employees (the “Company Released Parties”)
from any and all claims that you may now have or have ever had against any of
the Company Released Parties, including but not limited to, any claims arising
under Title VII of the Civil Rights Act of 1964, the WARN Act or any state
counterpart, the California Fair Employment and Housing Act, the Age
Discrimination in Employment Act (“ADEA”), the Americans with Disabilities Act
of 1990, or any other claims for violation of any federal, state, or municipal
laws, and any and all claims for attorneys’ fees and costs (the “Released
Claims”).  You understand that you are not waiving any right or claim that
cannot be waived as a matter of law, such as workers’ compensation or
unemployment insurance benefits.
 

 
 
 

--------------------------------------------------------------------------------

 

 
You agree not to file or initiate any lawsuit concerning the Released Claims.
Notwithstanding the foregoing, this paragraph does not prevent you from filing a
charge with or participating in an investigation by a governmental
administrative agency; provided, however, that you hereby waive any right to
receive any monetary award resulting from such a charge or investigation.
 
(b) The Company hereby completely releases and discharges you from any and all
claims that it may now have or has ever had against you, including but not
limited to any claims for violation of any federal, state or municipal laws, and
any and all claims for attorney’s fees and costs.  The Company agrees not to
file or initiate any lawsuit against you concerning the claims released in this
paragraph.
 
(c) You and the Company acknowledge that the foregoing releases cover both known
and unknown claims.  Accordingly, the parties mutually waive their rights under
Section 1542 of the California Civil Code, or under any comparable law of any
other jurisdiction.  Section 1542 states:  “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”
 
6.           Lock-Up Agreement.
 
(a)           General Restriction.  You hereby agree that you will not, during
the period commencing on the date hereof and ending on the one year anniversary
of the date hereof:
 
(i)                      offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, directly or indirectly, any shares of the
Company’s Common Stock (the “Common Stock”) or securities convertible into or
exercisable or exchangeable for Common Stock owned by you on the date hereof or
acquired hereafter, including, without limitation, shares of Common Stock or any
such securities which may be deemed to be beneficially owned by you as of the
date hereof as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as the same may be amended or supplemented from time to time (the “Exchange
Act”), including any and all stock options granted by the Company to you (such
shares or securities, the “Beneficially Owned Shares”);
 
(ii)                      enter into any swap, hedge or other agreement or
arrangement that transfers in whole or in part, the economic risk of ownership
of any Beneficially Owned Shares, Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock; or
 
(iii)                      engage in any short selling of any Beneficially Owned
Shares, Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock.
 

 
 
 

--------------------------------------------------------------------------------

 

 
This Section 6(a) shall apply whether any such transaction described above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise.
 
(b)                      Exceptions.  Section 6(a) above shall not apply to the
following:
 
(i)                      the transfer of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock (w) acquired in
open market transactions after date hereof, (x) as a bona fide gift or gifts for
no consideration, (y) to any trust, family limited partnership or other person
or entity for estate or tax planning purposes for your benefit or the benefit of
your immediate family, in each case for no consideration, (z) by will or
intestacy to your legal representative, heir or legatee, provided that any
permitted donee, transferee or distributee in the case of (x), (y), or (z) shall
execute and deliver to the Company, prior to such transfer or other transaction,
a form of this lock-up agreement in Section 6 and such other documents as the
Company may reasonably request; or
 
(ii)                      the sale of all or part of the Beneficially Owned
Shares at any time and from time to time in privately negotiated transactions
not involving a sale on the open market or otherwise through or reportable on
the over-the-counter market or any stock exchange (such open market or other
over-the-counter market or stock exchange transactions are referred to herein as
“Market Transactions”), as the case may be; provided that the transaction is at
commercially reasonable arm’s length and the buyer of such Beneficially Owned
Shares is not your immediately family member or otherwise your “affiliate,” as
defined in Rule 12b-2 under the Exchange Act.
 
(iii)                      beginning on December 16, 2009 and ending on March
15, 2010, you shall be entitled to sell in Market Transactions on each trading
day during such three-month period an aggregate number of shares of the
Company’s Common Stock of no more than 15% of the average daily volume of shares
of the Company’s Common Stock traded over the counter or on any stock market, as
the case may be, during the three month period from September 1, 2009 through
November 30, 2009 (the “ADV”); and
 
(iv)                      beginning on March 16, 2010 and ending on June 15,
2010, you shall be entitled to sell in Market Transactions on each trading day
during such three-month period an aggregate number of shares of the Company’s
Common Stock of no more than 20% of the ADV.
 
For purposes of this Section 6, “immediate family” shall mean any relationship
by blood, marriage or adoption, not more remote than first cousin.
 

 
 
 

--------------------------------------------------------------------------------

 

 
(c)                      Stop Transfer.  You agree and consent to the entry of
stop transfer instructions with the Company’s transfer agent and registrar
against the transfer of your shares of Common Stock except in compliance with
the foregoing restrictions.
 
(d)                      Exercise of Options.  This Section 6 is not intended to
restrict the mere exercise, by you, of stock options outstanding on the date
hereof upon the payment of the exercise price thereof in cash, but Section 6
shall restrict your ability to exercise options on a cashless or similar basis
to the extent such exercise price is paid for though the sale of shares of
Common Stock underlying the stock option in a Market Transaction.
 
6. Nondisparagement.
 
You agree not to make or publish, either orally or in writing, any disparaging
statement about the Company Released Parties, and the Company agrees not to make
or publish any disparaging statement about you; provided that each party shall
respond accurately and fully to any inquiry or request for information when
required by legal process.
 
7. Return of Company Property.
 
Please return all Company materials in your possession, including keys, as soon
as possible.  Also, remember that even after your employment with the Company
ends, you must comply with your continuing obligation to maintain the
confidentiality of the Company’s proprietary information, including your
obligations under the proprietary information agreement you signed as a
condition of your employment (the “Proprietary Information Agreement”).
 
8. Entire Agreement.
 
This letter contains all of our agreements and understandings and fully
supersedes any other prior agreements or understandings that we may have had
regarding your employment with the Company or its termination, with the
exception of the Proprietary Information Agreement and Sections 11, 12, and 13
of the Employment Agreement.  For instance, it supersedes Section 10(f)(2) of
your Employment Agreement, with respect to the notice, payments and benefits you
will receive in connection with your separation from employment.  The agreement
is governed by California law and may be amended only in a written document
signed by you and the Company’s President.  If any term in this agreement is
unenforceable, the remainder of the agreement will remain enforceable.  This
agreement shall be binding upon and shall inure to the benefit of the parties
and their respective heirs, successors, attorneys and permitted assigns.  You
agree, however, that you will not assign any rights or obligations under this
agreement, and any such purported assignment shall be null and void.
 

 
 
 

--------------------------------------------------------------------------------

 

 
9. Consideration and Revocation Periods.
 
Please note that you have 45 days to consider this letter agreement (but may
sign it at any time before hand if you so desire).  You also acknowledge that
you have been advised that you can consult an attorney in considering this
agreement.  You also acknowledge that you have received the attached list of the
job titles and ages of the employees in the decisional unit for this reduction
in force.  The decisional unit for this layoff is the Company’s Fremont office,
and the eligibility factors for this layoff include changes in the Company’s
business needs.  In addition, you can revoke your release of ADEA claims within
seven days of signing this agreement by sending me a certified letter to that
effect.  Although the portion of this letter that pertains to the release of
claims under the ADEA shall not become effective or enforceable and no severance
payments or benefits will be provided until the 7-day revocation period has
expired, all other provisions of this letter will become effective upon your
signing of this letter.
 

 
[Remainder of page intentionally left blank]
 

 
 
 

--------------------------------------------------------------------------------

 

If you have any questions, please feel free to call me.  We wish you the best in
your future endeavors.
 
Very truly yours,

Alnoor Shivji
Chief Executive Officer of
WaferGen Bio-systems, Inc.

To accept the severance package described above, please sign below and return
this letter to me on or before August 1, 2009.

ACCEPTED AND AGREED:

Dated:                                                      
Victor Joseph

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------