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Dated December 14, 2010
 
Between
 
Wafergen Bio-Systems (M) Sdn Bhd
 
and
 
Wafergen Bio-Systems Inc
 
and
 
Malaysian Technology Development Corporation
Sdn Bhd
 
and
 
Prima Mahawangsa Sdn Bhd

amended and restated
Shareholders’
Agreement
Wafergen Biosystems (M) Sdn Bhd

 
 

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Contents

Recitals
   
1
       
1
Definitions and Interpretations
 
2
 
1.1
Definitions
 
2
 
1.2
Interpretation
 
4
         
2.
[Deleted]
 
5
       
3.
[Deleted]
 
5
       
4.
[Deleted]
 
5
       
5.
Undertakings, Warranties and Representations by the Parties
 
5
       
6.
Management of the Company
 
6
 
6.1
Board of Directors
 
6
 
6.2
Board Meetings
 
7
 
6.3
Provisions in respect of meetings
 
7
 
6.4
Resolutions
 
7
 
6.5
Circular resolution
 
7
 
6.6
No shareholding requirement
 
8
 
6.7
Management
 
8
 
6.8
Nominees
 
8
         
7.
General meetings
 
8
 
7.1
General meetings
 
8
 
7.2
Quorum
 
8
 
7.3
Decisions at meetings of the Shareholders
 
8
   
7.3.1
Ordinary Resolution
 
8
   
7.3.2
Special Resolution
 
9
 
7.4
Shareholder Reserve Matters
 
9
         
8.
Business of the Company
 
9
       
9
New Issues of Shares
 
11
 
9.1
New Issues by Company
 
11
 
9.2
Offer to Shareholders
 
11
 
9.3
Waiver
 
11
         
10.
Transfers, Acquisitions and Disposal of Shares
 
11
 
10.1
Pre-emption Rights
 
11
         
11
Put Options
 
13
 
11.1
Investors’ Put Right for shares in the Existing Shareholder
 
13
 
11.2
Investors’ Put Option for Series A RCPS or Conversion Shares
 
14
         
12.
Duration and Termination
 
14
       
13.
Previous Agreements and Prevalence of Agreement
 
14
       
14.
Remedy on an Event of Default
 
15
       
15.
Confidentiality
 
16
       
16.
Deadlock
 
16
 
16.1
Disputes
 
16
         
17.
Further Assurance
 
16

 
 
Page | i

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18.
Remedies
 
16
       
19.
Waiver and Variation
 
17
 
19.1
Rights not affected
 
17
 
19.2
Cumulative rights and remedies
 
17
 
19.3
Variation
 
17
         
20.
Severability
 
17
       
21.
Continuing Effect
 
17
       
22.
Time
 
17
       
23.
Legal Relationship
 
17
       
24.
Costs and Expenses
 
17
       
25.
Assignment; Successors
 
18
 
25.1 
Assignment  
18
 
25.2 
Successors and assigns  
18
       
26.
Notices
 
18
       
27.
Entire agreement
 
20
       
28.
Counterparts
 
20
       
29.
Governing Law and Jurisdiction
 
20
       
SCHEDULE 1
 
21
 
1.
Subscription Price and par value
 
21
 
2.
Premium
 
21
 
3.
Dividend Provision
 
21
 
4.
Liquidation Preference
 
21
 
5.
Conversion
 
21
 
6.
[Deleted]
 
23
 
7.
Redemption Rights
 
23
 
8.
Voting Rights
 
23
 
9.
Protective Provisions
 
23
 
10.
No Variation
 
24
         
SCHEDULE 2
 
25
 
1.
Representations and Warranties by the Investors
 
25
 
2.
Representations and Warranties by the Existing Shareholder and the Company
 
25
         
SCHEDULE 3
 
27
 
1.
Subscription Price and par value
 
27
 
2.
Premium
 
27
 
3.
Dividend Provision
 
27
 
4.
Liquidation Preference
 
27
 
5.
Conversion
 
27
 
6.
[Deleted]
 
29
 
7.
Redemption Rights
 
29
 
8.
Voting Rights
 
29
 
9.
Protective Provisions
 
29
 
10.
No Variation
 
30

 
 
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SCHEDULE 4
 
31
 
1.
Subscription Price and par value
 
31
 
2.
Premium
 
31
 
3.
Dividend Provision
 
31
 
4.
Liquidation Preference
 
31
 
5.
Conversion
 
31
 
6.
[Deleted]
 
32
 
7.
Redemption Rights
 
32
 
8.
Voting Rights
 
32
 
9.
Protective Provisions
 
32
 
10.
No Variation
 
33

 
 
Page | iii

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This Agreement is made on December 14, 2010  between:

(1)
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, Malaysia.  (“Company”);

 
and
 
(2)
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”);

 
and
 
(3)
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);

 
and
 
(4)
Prima Mahawangsa Sdn Bhd (Company No. 833152-M), a company incorporated in
Malaysia with a registered address at 5th Floor, Bangunan CIMB, Jalan Semantan,
Damansara Heights, 50490 Kuala Lumpur (“PMSB”).

 
(The Company, the Existing Shareholder, MTDC and PMSB are collectively referred
to as “Parties” and each as a “Party”).
 
Recitals
 
(A)
Pursuant to a Share Subscription and Shareholders’ Agreement dated 8 May 2008
between the Company, the Existing Shareholder and MTDC (“Shareholders’
Agreement”), MTDC agreed to subscribe for 888,888 redeemable convertible
preference shares of RM0.01 each in the capital of the Company (“Series A RCPS”)
and the Company, the Existing Shareholder and MTDC agreed to regulate the
affairs and their relationship in the Company in accordance with the
Shareholders’ Agreement.

 
(B)
The Existing Shareholder, the Company, Prima Mahawangsa Sdn Bhd (“PMSB”) and
Expedient Equity Ventures Sdn Bhd (“EEV”) 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.

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

 
 
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(D)
The Existing Shareholder, the Company and MTDC have entered into this Agreement
simultaneously with a Share Subscription Agreement dated December 2010 (“Series
C Subscription Agreement”) where MTDC agreed to subscribe for 3,233,734 Series C
Redeemable Convertible Preference Shares (“Series C RCPS”) in the Company with
an option to subscribe for a further 1,077,911 Series C RCPS pursuant to the
terms and conditions in the Series C Subscription Agreement.

 
(E)
EEV and KMP have exercised their put option under the relevant put agreements
and exchanged the Series B RCPS held with the Existing Shareholder for shares in
the Existing Shareholder and as at the date of this Agreement, EEV and KMP have
ceased to be Series B RCPS holders in the Company.

 
(F)
The remaining shareholders, that is the Existing Shareholder, MTDC and PMSB are
desirous of undertaking the Business through the Company and agree to regulate
their relationship as shareholders of the Company in accordance with the terms
and conditions of this Agreement.

 
(G)
Clause 11 is applicable only to MTDC.

 
(H)
The current shareholding in the Company is as follows:

 
Shareholder
 
Shares
   
Series A RCPS
   
Series B RCPS
 
Existing Shareholder
 
300,000
   
-
   
410,279
 
MTDC
 
-
   
888,888
   
-
 
PMSB
 
-
   
-
   
444,444
 

 
It is agreed as follows:
 
1 
Definitions and Interpretations

 
1.1
Definitions

 
In this Agreement, unless the context otherwise requires:

Act
means the Companies Act 1965;
   
Articles
means the articles of association of the Company;
   
Board
means the board of directors of the Company;
   
Business
means the business of the Company as defined in Clause 8.1;
   
Conversion Shares
means the Shares resulting from the conversion of the RCPS, such Conversion
Shares to rank pari passu in all respects with all other then existing Shares,
and “Conversion Share” means one (1) of the Conversion Shares;
   
Director
means any director of the Company appointed on the Board including, where
applicable, any alternate director;

 
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Encumbrance
means any mortgage, charge, pledge, lien, assignment, hypothecation, security
interest, title retention, right of first refusal, pre-emption right, option,
preferential right or trust arrangement or other security arrangement or
agreement  conferring a right to a priority of payment;
   
Investors
means MTDC, PMSB and any other person acceding to this Agreement;
   
IPO
means the listing of the Company on any approved stock exchange;
   
Parties
means the Existing Shareholder, MTDC, PMSB, and the Company, and “Party” refers
to any one (1) of them;
   
PMSB
means Prima Mahawangsa Sdn Bhd (Company No. 833152-M), a company incorporated in
Malaysia with a registered address at 5th Floor, Bangunan CIMB, Jalan Semantan,
Damansara Heights , 50490 Kuala Lumpur;
   
Public Authorities
includes:
 
(a)      any government in any jurisdiction, whether federal, state,
provisional, territorial or local;
 
(b)      any minister, department, officer, commission, delegate,
instrumentality, agency, board, authority or organisation of any government or
in which any government is interested;
 
(c)      any non-government regulatory authority; or
 
(d)      any provider of public utility services, whether or not government
owned or controlled;
   
Put Agreement
means the Put Agreement dated 28 May 2008 entered into by MTDC with the Existing
Shareholder;
   
RCPS
means Series A RCPS, Series B RCPS and/or Series C RCPS;
   
RM
means the lawful currency of Malaysia;
   
Series A Director
means the director as defined in Clause 6.1(a);
   
Series B Director
means the director as defined in Clause 6.1(c);
   
Series C Director
means the director as defined in Clause 6.1(a);
   
Series A RCPS
means Series A Redeemable Convertible Preference Shares of the Company with
principal terms as set out in Schedule 1;

 
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Series B RCPS
means Series B Redeemable Convertible Preference Shares of the Company with
principal terms as set out in Schedule 3;
   
Series C RCPS
means Series C Redeemable Convertible Preference Shares of the Company with
principal terms as set out in Schedule 4;
   
Shareholders
means the shareholders of the Company from time to time;
   
Shares
means ordinary shares of RM1.00 each in the share capital of the Company, and
“Share” refers to any one (1) of them;
   
Subscription Price
means the Ringgit Malaysia equivalent to the subscription price paid in USD for
the RCPS calculated at the prevailing exchange rate on the date  payment of the
Subscription Price is effected, paid by the respective Investors for each RCPS,
out of which RM0.01 is to be paid towards the par value of each RCPS and the
difference between the Subscription Price and the par value of RM0.01
(constituting the subscription premium) is to be credited to the share premium
account of the Company;
   
USD
means the lawful currency of United States of America; and
   
Warranties
means the representations and warranties made by the Investors, the
Existing  Shareholder and the Company, as set out in Schedule 2.

 
1.2
Interpretation

 
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

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

 
2.
[Deleted]

 
3.
[Deleted]

 
4.
[Deleted]

 
4A.
Effective Date

 
Notwithstanding that this Agreement is executed simultaneously with the Series C
Subscription Agreement, the Parties agree that this Agreement shall only take
effect on the Initial Closing Date (as defined in the Series C Subscription
Agreement).
 
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 the
execution of this Agreement, 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.

 
5.2
The Parties acknowledge and agree that each of them entered into this Agreement
and the subscription by the Investors for the RCPS is 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.

 
Save as disclosed to the Investors in any correspondence, communication,
document or information in writing prior to the execution of this Agreement, no
information relating to the RCPS or the Company will limit the nature of the
Warranties given by the Company under this Agreement, or will prejudice any
claim to be made by the Investors against the Company for any breach of the
Warranties.
 
Each of the 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,

 
save and except where any of the matters set out in paragraphs 5.1 to 5.3 above
shall have been apparent in any correspondence, communication, document or
information in writing and  disclosed or provided to the Investors prior to the
execution of this Agreement.

 
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6.
Management of the Company

 
6.1
Board of Directors

 
The Board shall comprise 8 directors of which:
 
 
(a)
MTDC shall have the right to appoint two (2) directors comprising one Series A
Director and 1 Series C Director. MTDC shall procure that (if relevant), the
Series A Director and Series C Director shall, prior to his appointment as a
director of the Company, provide a confidentiality and non-competition
undertaking to the Company;

 
 
(b)
the Existing Shareholder shall have the right to appoint five (5) directors and
such right shall include the appointment of the Chief Executive Officer; and

 
 
(c)
PMSB shall have the right to appoint one (1) director (“Series B Director”) and
PMSB shall procure that (if relevant), the Series B Director shall, prior to his
appointment as a director of the Company, provide a confidentiality and
non-competition undertaking to the Company.

 
MTDC shall have the right to nominate an alternate to the Series A Director and
Series C Director and the Existing Shareholder shall have the right to nominate
an alternate director to such directors appointed under paragraph 6.1(b). PMSB
shall have the right to nominate an alternate to the Series B Director.
 
MTDC and the Existing Shareholder will jointly appoint an independent director
to the Board with the requirement that the independent director has relevant
international industry experience in the Business and if such independent
director is appointed, the Existing Shareholder may only then appoint 4
directors.
 
The right of appointment of the Series A Director and Series C Director shall
include the right for MTDC to remove such persons at any time from such office
and also the right to determine from time to time the period which such persons
shall hold office as the Series A Director and Series C Director.  Upon MTDC
ceasing to be a shareholder in the Company, MTDC shall simultaneously procure
the resignation of the Series A Director and Series C Director . The Series A
Director and Series C Director may not be removed by the Existing Shareholder or
any other party except when MTDC ceases to be a shareholder in the Company.  Any
appointment or removal of the Series A Director and/or  Series C Director by
MTDC shall be made in writing and shall be delivered to the registered office of
the Company.
 
The right of appointment of the Series B Director shall include the right for
PMSB to remove such person at any time from such office and also the right to
determine from time to time the period which such person shall hold office as
the Series B Director.  Upon PMSB ceasing to be a shareholder in the Company,
PMSB shall simultaneously procure the resignation of the Series B Director. The
Series B Director may not be removed by the Existing Shareholder or any other
party except when PMSB ceases to be a shareholder in the Company.  Any
appointment or removal of the Series B Director by PMSB shall be made in writing
and shall be delivered to the registered office of the Company.

 
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6.2
Board Meetings

 
The quorum at all meetings shall be at least four (4) Directors and must include
one (1) Series A Director (or his alternate) or Series C Director (or his
alternate) and one (1) Series B Director (or his alternate). If a quorum is not
present within forty-five (45) minutes after the time appointed for the
commencement of a meeting of the Board, that meeting shall be adjourned to the
same time, seven (7) days after that meeting at the same place, provided that at
such adjourned meeting (for the same agenda), the quorum shall be any three (3)
Directors and must include one (1) Series A Director (or his alternate) or one
(1) Series C Director ( or his alternate).
 
The Directors may meet together either in person or by telephone, radio, video
conference or similar communication equipment or any other form of audio or
audio-visual instantaneous communication by which all persons participating in
the meeting are able to hear and be heard by all other participants and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting.
 
The Company’s Articles shall be amended to provide that a quorum of the Board
must include at least one (1) Series A Director or one (1) Series C Director,
including at any adjourned meeting.
 
6.3
Provisions in respect of meetings

 
Any Director may at any time request for a meeting to be convened, subject to
the Board meeting at least once quarterly, unless otherwise agreed to by a vote
of a majority of Directors including at least one vote from a Series A Director
or  Series C Director and at least one (1) vote from a Series B Director. The
request for a meeting must be made in writing and delivered to the company
secretary of the Company.
 
Upon receiving the request, the company secretary is to issue a notice, giving
at least seven (7) days’ prior written notice to all Directors and their
alternates. The notice shall set out the date, time, venue and the agenda or
matters to be discussed for the Board meeting.  Such notice shall not be
required if all Directors are present or represented at the meeting or if the
absent Directors agree in writing to waive the requirement of such notice.
 
6.4
Resolutions

 
So long as a quorum is present throughout the meeting of the Board in accordance
with clause 6.2, all resolutions or decisions of the Board are to be by a simple
majority of all the Directors present and capable of voting at the meeting of
the Board.
 
6.5
Circular resolution

 
A written resolution or minute of a decision made by the Board which is signed
by all the Directors is regarded as valid and effectual as if it had been passed
at a duly convened Board meeting. Any such written resolution or minute may
consist of several documents (or facsimiles thereof) in like form or in one or
more counterparts, each signed by one or more of the Directors, and all
counterparts taken together constitute one document.

 
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6.6
No shareholding requirement

 
The Directors need not be shareholders of the Company and are not liable to
retire by rotation until removed/replaced by the Party nominating them.
 
6.7
Management

 
The operations of the Company will be managed by the Board, but the day to day
administration or management of the Company may be vested in a management
committee (“Management Committee”) appointed by the Board from time to time who
shall at all times be responsible and subject to the control of the Board. The
Management Committee may comprise members of the Board.
 
6.8 
Nominees

 
The parties acknowledge that as the Series A Director and Series C Director
are  nominees of MTDC and that the Series B Director is a nominee of PMSB, the
Series A Director, Series C and the Series B Director shall be entitled to
report all matters concerning the Company, including but not limited to matters
discussed at any meeting of the Board, to MTDC and PMSB and their shareholders
respectively and that the Series A Director and Series C Director may take
advice and obtain instructions from MTDC whereas the Series B Director may take
advice and obtain instructions from PMSB.
 
The Company agrees to indemnify and keep the Series A Director, Series C
Director and Series B Director indemnified, subject to section 140 of the Act.
 
7.
General meetings

 
7.1
General meetings

 
Annual general meetings and extraordinary general meetings are to be held in
accordance with the provisions of the Act.
 
7.2
Quorum

 
The quorum for all general meetings is two (2) persons being present throughout
the meeting, consisting of the holders of the Shares or their respective proxy,
attorney or authorised representative.
 
7.3
Decisions at meetings of the Shareholders

 
7.3.1
Ordinary Resolution

 
So long as a quorum is present throughout the meeting of the holders of the
Shares in accordance with clause 7.2, subject to clause 7.4, a simple majority
vote of those present and voting suffices to pass an ordinary resolution.

 
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7.3.2
Special Resolution

 
The approval of the holders of the Shares by way of special resolution (as
defined in the Act) is required for matters which require a special resolution
to be passed as specified in the Act.
 
7.4
Shareholder Reserve Matters

 
The resolutions in relation to the following matters require approval from all
holders of Shares present and voting at a general meeting or by circular
resolution (signed by all the holders of the Shares):
 
 
(a)
any amendment to the Memorandum and Articles of Association of the Company;

 
 
(b)
the appointment or removal of any Director or senior management of the Company
other than the Investors’ nominated directors; and

 
 
(c)
the declaration of dividends by the Company.

 
8.
Business of the Company

 
8.1
The core business of the Company, unless otherwise agreed in writing by the
Investors, shall be developing, manufacturing, and distributing state of the art
solutions for Gene Analysis (Gene Expression, and Genotyping) and stem cell
research and cell biology (“Business”).  The Company will not engage in any
other business which detracts from, or is not complementary to, the Business.

 
8.2
The Business is to be carried out in accordance with all applicable laws and
requirements.

 
8.3
The Shareholders shall use its reasonable endeavours without being required to
incur any further financial obligation (other than as expressly set out in this
Agreement) to promote the interests of the Company. The Business is to be
conducted in the Shareholders’ and the Company’s best interests on sound
commercial profit-making principles so as to generate the maximum achievable
maintainable profits available for distribution, and otherwise in accordance
with the general principles as varied from time to time by agreement in writing
between the Parties.

 
8.4
The Company shall not, and the Existing Shareholder shall ensure that the
Company shall not, without the prior written consent of the Investors or as
expressly stated in this Agreement:

 
 
(a)
cease to conduct or carry on its Business substantially as now conducted and/or
acquire or dispose of or dilute any interest in any other business, company,
partnership or sole proprietorship; and

 
 
(b)
purchase, sell, mortgage or charge any substantial asset, or property or any
material interest in those assets or property or sell or dispose of the whole or
a substantial part of the undertaking and goodwill or the assets of the Company.

 
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8.5
The Existing Shareholder and/or the Company shall ensure that:

 
 
(a)
the Company shall at all times carry on and conduct its business in a proper and
efficient manner;

 
 
(b)
each employee and consultant of the Company enters into a confidential
information and inventions agreement (in a form acceptable to the Investors)
with the Company;

 
 
(c)
the Company shall submit to the Investors without being formally requested:

 
 
(i)
an annual budget and operating plan no later than sixty (60) days prior to the
commencement of each fiscal year;

 
 
(ii)
an annual business plan;

 
 
(iii)
audited financial statements on an interim and annual basis; and

 
 
(iv)
monthly reports, including financial reports, bank statements and technical
reports.

 
The obligation of the Company to furnish the information set out in paragraph
8.5(c) will cease when the Company completes its IPO or becomes subject to the
reporting provisions of any applicable stock exchange requirements or all of the
Investors cease to be a shareholder in the Company.
 
 
(d)
at all times keep true accurate and up to date books and records of all the
affairs of the Company;

 
 
(e)
supply to the Investors such information relating to the Company as it may
require and without prejudice to the foregoing shall keep the Investors fully
and promptly informed as to all material developments regarding the Company’s
financial and business affairs and promptly notify the Investors of any
significant litigation or arbitration affecting or likely to affect the Company
and of any bona fide offer to purchase or subscribe any share capital of the
Company;

 
 
(f)
at all times be adequately insured in respect of the assets of the company which
are of an insurable nature and obtain life insurance for the core management
team of the Company, the proceeds of which are payable to the Company; and

 
 
(g)
upon the Company’s receipt of reasonable notice, the Investors may have access
during normal business hours to relevant non-confidential information and/or
non-competitive information requested by the Investors including the right to
visit the Company’s business premises and inspect the Company’s record books.

 
Page | 10

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9 
New Issues of Shares

 
9.1
New Issues by Company

 
The Shareholders agree that any new Shares and/or RCPS issued by the Company
must be with the prior approval of the Shareholders (“Offered Shares”) and the
Offered Shares shall be first offered to each of the Shareholders in proportion
to each of their shareholding in the Company at the time of the proposed new
issue other than:
 
 
(i)
for the initial issuance of the Series A RCPS to MTDC and Series B RCPS to PMSB,
EEV and KMP;

 
 
(ii)
the issuance of the Series C RCPS pursuant to the Series C Subscription
Agreement;

 
 
(iii)
the Conversion Shares, where applicable;

 
 
(iv)
Shares issued pursuant to employee share option plans approved by a majority of
the Board;

 
 
(v)
Shares issued for merger or acquisition transactions; or

 
 
(vi)
any issuance excepted from the right of first refusal by a majority of the
Board.

 
 
(vii)
any issue of new Shares to the Existing Shareholder for consideration in cash or
in kind of up to 1,000,000 Shares, in addition to the initial share capital of
RM300,000 contributed by the Existing Shareholder and for the avoidance of
doubt, any such consideration in kind may comprise capitalization of the value
(or part of the value) of intellectual property or other rights granted or
undertakings pursuant to the product licensing agreement between the Existing
Shareholder and the Company based on the valuation of USD10,000,000 agreed by
the parties.

 
9.2
Offer to Shareholders

 
An offer of the Offered Shares shall be made by notice specifying the number of
new Shares and/or RCPS offered, the subscription price and limiting a period
(not being less than thirty (30) days) within which the offer, if not accepted,
will be deemed to be declined. Upon the expiration of such period the Board
shall offer the Offered Shares so declined to the other Shareholders who have
notified their willingness to take all or any of such Offered Shares in
accordance with the terms of the offer and in case of competition, pro rata (as
nearly as possible) according to the number of Shares and RCPS held by the other
Shareholders.
 
9.3
Waiver

 
The Existing Shareholder and PMSB irrevocably confirm their waiver of all rights
of pre-emption whatsoever that they may have in connection with the issue and
conversion of the Series C RCPS to MTDC pursuant to the terms of this Agreement
and the Series C Subscription Agreement.
 
10.
Transfers, Acquisitions and Disposal of Shares

 
10.1
Pre-emption Rights

 
10.1.1
The rights of the Shareholders to sell, transfer, assign, pledge, charge,
encumber or otherwise dispose of their shareholding in the Company (or any part
thereof) shall be subject to the restrictions and provisions set out below:

 
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(a)
In the event any Shareholder desires to dispose of all or any portion of their
shareholding in the Company pursuant to a bona-fide third party offer for the
shares (“Transferor”), the Transferor shall first afford the other Shareholders
(“the Transferees”) a right of first refusal with regard to those shares (“the
Relevant Shares”) in proportion to such Transferee’s shareholding in the
Company. In this regard, the Transferor shall give the Transferees written
notice (hereinafter called a “Transfer Notice”) of the Transferor’s intention to
dispose of the Relevant Shares, which notice shall include the proposed
transferee, the number of shares to be transferred, the price per share, and the
terms of payment.

 
 
(b)
Upon receipt of the Transfer Notice, the Transferees shall have the option, but
not the obligation, to purchase the Relevant Shares at either (i) the same terms
and conditions price for the Relevant Shares as set forth in the Transfer
Notice, or (ii) to request that the Shareholders appoint an independent firm (at
the cost and expense of the Transferor) to determine the sale price per Relevant
Share in accordance with the shareholders funds or the net tangible assets
(whichever is lower) of the Company as at the date of the Transfer Notice (“the
Prescribed Price”).

 
 
(c)
In the event the Transferees determine to accept the terms contained in the
Transfer Notice or upon the determination of and purchase of the Relevant Shares
at the Prescribed Price, the Relevant Shares shall promptly be offered by the
Transferor by notice in writing to the Transferees (and if there is more than
one Transferee, to each Transferee in proportion to such Transferee’s
shareholding in the Company) for purchase. Such offer shall be open for
acceptance at any time within the Prescribed Period. The Prescribed Period shall
commence on the date that:

 
 
(i)
the Transferees notify the Transferor of their acceptance of the offer to
purchase the Relevant Shares on the terms contained in the Transfer Notice; or

 
 
(ii)
the Prescribed Price is determined;

 
and will expire sixty (60) days thereafter, after either (i) or (ii) as
applicable. The Transferee(s) so accepting the offer shall hereinafter be called
the “Purchaser(s)”.
 
 
(d)
If there is more than one (1) Purchaser, each Purchaser shall have the right to
purchase the Relevant Shares pro rata in accordance with the ratio that his
shareholding bears to the aggregate shareholdings of all the Purchasers provided
that the said Purchaser must purchase all the Relevant Shares offered to him.
Upon acceptance of such offer by the Purchasers within the Prescribed Period,
the Transferor shall be bound to sell the Relevant Shares to the Purchasers as
set forth above. The sale and purchase of the Relevant Shares shall be completed
in accordance with the provisions herein.

 
 
(e)
If the offer of the Relevant Shares shall not be accepted by the Transferees,
then the Transferor shall be at liberty to transfer or dispose of the Relevant
Shares within a period of three (3) months from the expiry of the Prescribed
Period to the person identified in the Transfer Notice and in accordance with
the terms thereof, subject to Clause 10.1.2 below.

 
 
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(f)
Any transfer, disposal or sale of shares contemplated by this Clause 10.1.1
shall be subject to the approval(s) of the Public Authorities should such
approval be required in law or in practice. Completion and payment of the
Prescribed Price shall take place not less than three (3) days nor more than ten
(10) Business Days after the date of the receipt of such approval(s) of the
Public Authorities.

 
 
(g)
Any transfer, disposal or sale of shares contemplated by Clause 10.1.1(e) to a
third party purchaser shall be further subject to such third party purchaser
entering into a deed or other suitable documentation agreeing to be bound by all
the terms of this Agreement.

 
 
(h)
Notwithstanding anything contained herein, the restrictions on transfer of
shares contained in this Clause 10 shall not apply in the case where the entire
shareholdings or part thereof is to be transferred by MTDC to any of its holding
company, subsidiaries or associated companies or any such transfer undertaken by
MTDC pursuant to any internal restructuring scheme of MTDC and the consents of
the other shareholders of the Company are deemed to be given for such transfer
of shares by MTDC pursuant to this Clause.

 
 
(i)
The procedures and pre-emption rights under this Clause 10 may be waived in
writing by the Shareholders.

 
10.1.2
Pursuant to Clause 10.1.1(e), if the Existing Shareholder wishes to sell its
shares to a third party, the Existing Shareholder shall ensure that the
Investors be entitled (but not obliged) to sell any part of its holding of
Shares to the third party on no less favourable terms and conditions as are
applicable to the Existing Shareholder.  Upon any exercise by the Investors of
this entitlement within thirty (30) days from the date of notice by the Existing
Shareholder of such entitlement of the Investors, the Existing Shareholder shall
not transfer or sell any of its shares to the third party unless the relevant
shares of Investors are so purchased by the third party.

 
10.1.3
All third parties who acquire shares in the Company under this Clause 10shall
enter into a deed of ratification and accession under which the third party
shall agree to be bound by the obligations, and shall be entitled to the
benefit, of this Agreement.

 
11
Put Options

 
11.1
Investors’ Put Right for shares in the Existing Shareholder

 
The Existing Shareholder has granted to MTDC an option to sell all the Series A
RCPS held by MTDC to the Existing Shareholder upon the terms and conditions of
the Put Agreement entered into between the Existing Shareholder and MTDC.
 
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11.2
Investors’ Put Option for Series A RCPS or Conversion Shares

 
MTDC shall have the option to require the Existing Shareholder to purchase all
(but not less than all) of the Conversion Shares or Series A RCPS held by MTDC,
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 A RCPS is USD2.25, 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 MTDC, 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 Initial Closing of the Series A Subscription Agreement for as
long as MTDC is the holder of Series A 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 thirty (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.

 
This clause applies only to any Conversion Shares resulting from the conversion
of the Series A RCPS.
 
12.
Duration and Termination

 
Subject to the provisions of this Clause 12, this Agreement shall take effect
without limit in point of time.  If the Investors or the Existing Shareholder
sells or transfers all of its shares in the Company or if the Investors redeems
or exchanges all the RCPS to the shares in the Existing Shareholder, in
accordance with the provisions of this Agreement or the Articles (to the extent
not inconsistent with this Agreement) or the Put Agreement respectively, it
shall be released from all of its rights and obligations under this Agreement
and cease to be a party to this Agreement, and all obligations of that Party and
all entitlements and requirements relating to that Party under this Agreement
will cease.  If following any such sale, transfer, redemption or exchange, two
(2) or more parties continue to be bound by this Agreement, this Agreement shall
continue in full force and effect as between those parties.
 
13.
Previous Agreements and Prevalence of Agreement

 
13.1
This Agreement constitutes the entire agreement between the Parties with respect
of the matters dealt with here and the Parties hereby mutually agree and confirm
that the Shareholders’ Agreement, DA and KMP DA shall be terminated with effect
from the date of this Agreement and be superseded by this Agreement.

 
 
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13.2
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.

 
13.3
If, during the continuance of this Agreement, there is any conflict between this
Agreement and the Articles, the provisions of this Agreement shall prevail
between the Parties.  In the event of such conflict arising, the Parties shall
procure and take all necessary steps including effecting such alteration to the
Articles as may be necessary to resolve such conflict.

 
14.
Remedy on an Event of Default

 
14.1
Each of the following will be regarded as an Event of Default:

 
 
(a)
any of the Shareholders 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 Shareholder; or

 
 
(b)
any distress, execution, sequestration or other process being levied or enforced
upon or sued out against the property of any of the Shareholders 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
Shareholders; or

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

 
14.2
In the event of an Event of Default taking place,

 
 
(a)
the non-defaulting Shareholder shall be entitled to terminate this Agreement; or

 
 
(b)
the deadlock provisions referred to in clause 16 shall apply,

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

 
14.3
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.

 
14.4
Termination of this Agreement for any cause in accordance with the provisions of
this Agreement shall not release any Shareholder 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.

 
 
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15.
Confidentiality

 
Parties shall:
 
 
(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.

 
The Existing Shareholder and the Company are permitted to disclose the names of
the Parties or make reference to the Parties contributions to the Company. For
purposes deemed necessary for the furtherance of the Business, the
confidentiality obligation in this Agreement does not cover the names of the
Parties and their respective interests in the Company.
 
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.
 
16.
Deadlock

 
16.1
Disputes

 
If the Shareholders or their respective representatives are unable to reach
agreement in relation to any reserved matter provided for in Clause 7.4 or there
is an Event of Default pursuant to Clause 14 or otherwise in relation to any
matter of material importance to the future conduct of the Business, the meeting
at which such resolution is tabled shall be adjourned for 30 days (or such other
number of days as the Parties may agree) during which the Parties, through
Alnoor Shivji and the Chief Executive Officer of MTDC, shall mutually discuss in
order to resolve the deadlock. Alnoor Shivji and the Chief Executive Officer of
MTDC shall endeavour to resolve any disagreement in the best interest of the
Company as a whole.
 
17.
Further Assurance

 
Each party shall execute and do all such documents and things as are necessary
to carry this Agreement into effect or to give full effect to this Agreement.
 
18.
Remedies

 
If a Party does not comply with its obligations under this Agreement, the other
Party is entitled to the remedy of specific performance and injunctive relief
(as may be applicable), and monetary compensation by itself is not an adequate
remedy.

 
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19. 
Waiver and Variation

 
19.1
Rights not affected

 
The rights which each Party has under this Agreement shall not be prejudiced or
restricted by any delay in exercising or failure to exercise any right or remedy
under this Agreement.  Unless otherwise agreed in writing, no waiver by any
Party in respect of a breach shall operate as a waiver in respect of any
subsequent breach.
 
19.2
Cumulative rights and remedies

 
The rights and remedies provided in this Agreement are in addition to, and do
not exclude or limit, any rights or remedies provided by law.
 
19.3
Variation

 
This Agreement shall not be varied unless the variation is expressly agreed in
writing by each Party.
 
20.
Severability

 
If any provision of this Agreement is void or unenforceable, by operation of law
or by any reason whatsoever, it shall be regarded as deleted from this
Agreement, and the remaining provisions shall continue to apply.
 
21.
Continuing Effect

 
Notwithstanding the completion of the transaction contemplated in this
Agreement, the provisions of this Agreement shall continue to survive or subsist
so long as may be necessary for the purpose of giving effect to each of them.
 
22.
Time

 
Time wherever mentioned in this Agreement shall be of the essence of this
Agreement.
 
23.
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.
Neither Party has any authority to bind the other in any way.
 
24.
Costs and Expenses

 
Each Party shall bear its own costs (including legal fees) and expenses in
respect of the preparation and execution of this Agreement.

 
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25.
Assignment; Successors

 
25.1
Assignment

 
Parties shall not assign or otherwise deal with its respective rights or
benefits under this Agreement without the prior written consent of the other
Parties.
 
25.2
Successors and assigns

 
This Agreement shall be binding upon the Parties and their respective
successors, permitted assigns and personal representatives.
 
26.
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:

 
For the Investors:
MTDC
Level 8-9, Menara Yayasan Tun Razak,
Jalan Bukit Bintang,
55100 Kuala Lumpur
Attn: Norhalim Bin Yunus , Chief Executive Officer
Tel: 03-2172 6000
Fax: 03-2163 7542
 
PMSB
5th Floor, Bangunan CIMB,
Jalan Semantan, Damansara Heights,
50490 Kuala Lumpur
Attn: Darawati Hussain
Tel: +603 2084 8888
Fax: +603 2093 9688
or
c/o
Trupartners Sdn Bhd
M-2-1, Block M,
Plaza Damas,

 
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60 Jalan Sri Hartamas 1,
54080 Kuala Lumpur
Attn: Norazharuddin Abu Talib
Tel: +603 6203 3030
Fax: +603 6203 3131

 
For the Existing Shareholder:
Wafergen Bio-Systems Inc
7400 Paseo Padre Parkway
Fremont, CA 94555, USA
Attn: Alnoor Shivji
Tel: +1 (510) 468-0546
Fax: +1 (510) 651-4599
 
For the Company:
Wafergen Biosystems (M) Sdn Bhd
Suite B.3(2), Ground Floor
KHTP Business Centre
KHTP, 09000 Kulim
Kedah Darul Aman, Malaysia
Tel: +6019 312 4751
Fax: +604 402 3305
Attn: Nazri Said
 
 
(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 envelop 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.

 
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27.
Entire agreement

 
This Agreement is the entire agreement between the Parties in respect of its
subject matter and supersedes all previous agreements with respect to its
subject matter.
 
28.
Counterparts

 
This Agreement may be executed in any number of counterparts, and all
counterparts taken together constitute one and the same instrument.
 
29.
Governing Law and Jurisdiction

 
This Agreement is governed by the laws of Malaysia, and each party submits to
the non-exclusive jurisdiction of the courts exercising jurisdiction in
Malaysia.

 
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SCHEDULE 1
 
Principal Terms of the Series A RCPS
 
1.
Subscription Price and par value

 
The subscription price for each Series A RCPS shall be Ringgit Malaysia
equivalent to USD2.25 calculated at the prevailing exchange rate on the on the
date payment of the Subscription Price is effected .  Each Series A RCPS shall
have a par value of RM0.01.
 
2. 
Premium

 
Each Series A RCPS shall be issued at a premium being the difference between the
Subscription Price and the par value of RM0.01.
 
3.
Dividend Provision

 
There is no specific dividend rate attached to the Series A RCPS and the Company
is not obliged to declare and pay any dividend while the Investors are holding
the Series A RCPS.
 
4.
Liquidation Preference

 
In the event of any liquidation, dissolution or winding up of the Company, the
holders of the Series A RCPS will be entitled to receive only in preference to
the holders of Shares, and not the Series B RCPS (which rank pari passu for the
purposes of this provision), the relevant Subscription Price paid for the Series
A RCPS plus all accrued but unpaid dividends and dividends in arrears, if any.
 
5. 
Conversion

 
Each holder of the Series A RCPS will have the right, at the option of the
holder at any time, to convert all or part of the Series A RCPS into such number
of Shares as may be determined in accordance with the following formula:
 
[ex10-3pg25.jpg]
 
 
A
represents the aggregate original investment amount in USD (comprising the
subscription moneys paid to the Company for subscription for RCPS) of the holder
in the Company

 
B
represents the aggregate original investment amount in USD (comprising the
subscription moneys paid to the Company for subscription for RCPS) of all other
holders (past and present) of RCPS in the Company

 
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The conversion is to be effected by and subject to the redemption of the Series
A RCPS from funds legally available for distribution at the redemption price of
USD2.25 per Series A RCPS and the issuance of such number of new Shares to the
holder with the issue price based on the following formula:

Issue price per Share
=
A
     
N
 

and applying the redemption monies towards such issue price.

PROVIDED THAT
 
 
(i)
where N includes any fractions, N is to be rounded downwards to the nearest
whole number

 
 
(ii)
where the number of new Shares to be issued includes any fractions, such number
of new Shares is to be rounded downwards to the nearest whole number

 
 
(iii)
where the issue price includes any fractions of sen, the issue price is to be
rounded downwards to the nearest sen

 
 
For the purposes of this provision:

 
 
(a)
the amount in USD of the investment amount is based on the value in USD of the
subscription moneys as at the respective date(s) of the relevant
subscription(s).

 
 
(b)
for the avoidance of doubt, where any RCPS has been held by more than one
holder, such RCPS and investment amount in relation to the RCPS, is to be
counted only once.

 
To effect the above conversion, a conversion notice shall be sent by the
holder(s) of the Series A RCPS to the Company not less than thirty (30) days
before the intended date of conversion.  Such notice shall be in writing and
shall fix the date and the time for the conversion.
 
The Company may from time to time consult with, and make proposals to, the
holder(s) of Series A RCPS in relation to the exercise of the holder(s)’
entitlement to convert the Series A RCPS.
 
Completion of the conversion of the Series A RCPS into Conversion Shares shall
be effected at the registered office of the Company unless agreed otherwise by
the holder(s) of the Series A RCPS and the Company.  On the date fixed for
conversion, the holder(s) of the Series A RCPS shall deliver to the Company the
share certificate(s) for the relevant Series A RCPS in exchange for share
certificates in relation to the relevant amount of Conversion Shares resulting
from the conversion of those Series A RCPS.  If any share certificate so
delivered to the Company relates to any Series A RCPS which are not to be
converted on that day, a fresh share certificate for those Series A RCPS shall
be immediately issued by the Company to such holder(s).

 
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6.
[Deleted]

 
7.
Redemption Rights

 
The holders of the Series A RCPS may at any time after 31 December 2011, subject
to the completion of the PMSB Subsequent Closing or EEV Subsequent Closing
(where relevant), by giving a thirty (30) day notice of redemption in such form
as may be acceptable to the Company (“Notice of Redemption”), redeem any or all
Series A RCPS registered in the name of the holder of the Series A RCPS. The
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
Subscription Price and such price multiplied at the rate of 20% 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 Subscription Price) and
(ii) the par value of RM0.01 per Series A RCPS plus all accrued but unpaid
dividends and dividends in arrears, if any.   
 
All redemption of the Series A RCPS shall be effected at the registered office
of the Company unless agreed otherwise by the holder(s) of the Series A RCPS and
the Company.  On the date fixed for redemption, the holder(s) of the Series A
RCPS shall deliver to the Company the share certificate(s) for the relevant
Series A 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 A RCPS.  If any share
certificate so delivered to the Company relates to any Series A RCPS which are
not to be redeemed on that day, a fresh share certificate for those Series A
RCPS shall be issued by the Company to such holder(s).
 
No Series A RCPS redeemed by the Company shall be capable of reissue.
 
8.
Voting Rights

 
The holder of the Series A RCPS will be entitled to the voting rights as
referred to in Section 148(2) of the Act.
 
9.
Protective Provisions

 
Without the approval of the holders of at least a majority of the Series A RCPS,
the Company will not take any action, whether by merger, consolidation or
otherwise, that:
 
 
(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 A RCPS prior to the
transaction owning less than 50% of the voting power of the Company’s Series A
RCPS after the transaction(s),

 
 
(c)
alters or changes the rights, preferences or privileges of the Series A RCPS,

 
 
(d)
increases or decreases the number of authorized Series A RCPS,

 
 
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(e)
authorises the issuance of securities having a preference over or on a parity
with the Series A 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 A 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.

 
For purposes of these protective provisions, any reference to the Company will
be deemed to include any subsidiary of the Company.
 
10.
No Variation

 
The rights attached to the Series A RCPS shall not be varied, modified or
deleted unless in accordance with paragraph 9 above.
 
[The remainder of this page is intentionally left blank]

 
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SCHEDULE 2

Representations and Warranties
 
1.
Representations and Warranties by the Investors

 
The Investors warrant to the Company as follows.
 
 
1.1
Capacity and Authority

 
The Investors are duly incorporated and validly exist under the laws of Malaysia
and has the power to own its assets and carry on its business as now being
conducted.
 
 
1.2
Power to execute this Agreement

 
 
(a)
The Investors have the right, power and authority, and have taken or will take
all action necessary, to validly execute, deliver and exercise its right, and
perform its 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 Investors of this Agreement or the performance by
the Investors of the transactions contemplated under this Agreement;

 
 
(c)
This Agreement is a valid and binding obligation of the Investors and is
enforceable against the Investors 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 Investors are subject and will not be
inconsistent with any constitutional documents or contracts to which the
Investors are a party to or otherwise binding on the Investors; and

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

 
2.
Representations and Warranties by the Existing Shareholder and the Company

 
The Existing Shareholder and the Company warrant to the Investors as follows.
 
 
2.1
Capacity and Authority

 
The Company is duly incorporated and validly exists under the laws of Malaysia
and has the power to own its assets and carry on the Business.

 
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2.2
Power to execute this Agreement

 
 
(a)
The Existing Shareholder and Company have the right, power and authority, and
has taken or will take all action necessary, to validly execute, deliver and
exercise its right, and perform its 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.

 
 [The remainder of this page is intentionally left blank]

 
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SCHEDULE 3
 
Principal Terms of the Series B RCPS
 
1.
Subscription Price and par value

 
The subscription price for each Series B RCPS shall be Ringgit Malaysia
equivalent to USD2.25 calculated at the prevailing exchange rate on the on the
date payment of the Subscription Price is effected.  Each Series B RCPS shall
have a par value of RM0.01.
 
2. 
Premium

 
Each Series B RCPS shall be issued at a premium being the difference between the
Subscription Price and the par value of RM0.01.
 
3.
Dividend Provision

 
There is no specific dividend rate attached to the Series B RCPS and the Company
is not obliged to declare and pay any dividend while the Investors are holding
the Series B RCPS.
 
4.
Liquidation Preference

 
In the event of any liquidation, dissolution or winding up of the Company, the
holders of the Series B RCPS will be entitled to receive only in preference to
the holders of Shares, and not the Series A RCPS (which rank pari passu for the
purposes of this provision), the relevant Subscription Price paid for the Series
B RCPS (subject to adjustments for share dividends, splits, combinations and
similar events plus accrued dividends (other than any special dividends), if
any.
 
5. 
Conversion

 
Each holder of the Series B RCPS will have the right, at the option of the
holder at any time, to convert all or part of the Series B RCPS into such number
of Shares as may be determined in accordance with the following formula:

 
[ex10-3pg31.jpg]
 
 
A
represents the aggregate original investment amount in USD (comprising the
subscription moneys paid to the Company for subscription for RCPS) of the holder
in the Company

 
B
represents the aggregate original investment amount in USD (comprising the
subscription moneys paid to the Company for subscription for RCPS) of all other
holders (past and present) of RCPS in the Company

 
Page | 27

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The conversion is to be effected by and subject to the redemption of the Series
B RCPS from funds legally available for distribution at the redemption price of
USD2.25 per Series B RCPS and the issuance of such number of new Shares to the
holder with the issue price based on the following formula:

Issue price per Share
=
A
     
N
 

and applying the redemption monies towards such issue price.

PROVIDED THAT

 
(i)
where N includes any fractions, N is to be rounded downwards to the nearest
whole number

 
 
(ii)
where the number of new Shares to be issued includes any fractions, such number
of new Shares is to be rounded downwards to the nearest whole number

 
 
(iii)
where the issue price includes any fractions of sen, the issue price is to be
rounded downwards to the nearest sen

 
For the purposes of this provision:
 
 
(a)
the amount in USD of the investment amount is based on the value in USD of the
subscription moneys as at the respective date(s) of the relevant
subscription(s).

 
 
(b)
for the avoidance of doubt, where any RCPS has been held by more than one
holder, such RCPS and investment amount in relation to the RCPS, is to be
counted only once.

 
To effect the above conversion, a conversion notice shall be sent by the
holder(s) of the Series B RCPS to the Company not less than thirty (30) days
before the intended date of conversion.  Such notice shall be in writing and
shall fix the date and the time for the conversion.
 
The Company may from time to time consult with, and make proposals to, the
holder(s) of Series B RCPS in relation to the exercise of the holder(s)’
entitlement to convert the Series B RCPS.
 
Completion of the conversion of the Series B RCPS into Conversion Shares shall
be effected at the registered office of the Company unless agreed otherwise by
the holder(s) of the Series B RCPS and the Company.  On the date fixed for
conversion, the holder(s) of the Series B RCPS shall deliver to the Company the
share certificate(s) for the relevant Series B RCPS in exchange for share
certificates in relation to the relevant amount of Conversion Shares resulting
from the conversion of those Series B RCPS.  If any share certificate so
delivered to the Company relates to any Series B RCPS which are not to be
converted on that day, a fresh share certificate for those Series B RCPS shall
be immediately issued by the Company to such holder(s).

 
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6.
[Deleted]

 
7.
Redemption Rights

 
The holders of the Series B RCPS may at any time after 31 December 2011, subject
to the completion of the PMSB Subsequent Closing or EEV Subsequent Closing
(where relevant), by giving a thirty (30) day notice of redemption in such form
as may be acceptable to the Company (“Notice of Redemption”), redeem any or all
Series B RCPS registered in the name of the holder of the Series B RCPS. The
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
Subscription Price and such price multiplied at the rate of 20% 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 Subscription Price) and
(ii) the par value of RM0.01 per Series B RCPS plus all accrued but unpaid
dividends and dividends in arrears, if any.  
 
All redemption of the Series B RCPS shall be effected at the registered office
of the Company unless agreed otherwise by the holder(s) of the Series B RCPS and
the Company.  On the date fixed for redemption, the holder(s) of the Series B
RCPS shall deliver to the Company the share certificate(s) for the relevant
Series B 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 B RCPS.  If any share
certificate so delivered to the Company relates to any Series B RCPS which are
not to be redeemed on that day, a fresh share certificate for those Series B
RCPS shall be issued by the Company to such holder(s).
 
No Series B RCPS redeemed by the Company shall be capable of reissue.
 
8.
Voting Rights

 
The holder of the Series B RCPS will be entitled to the voting rights as
referred to in Section 148(2) of the Act.
 
9.
Protective Provisions

 
Without the approval of the holders of at least a majority of the Series B RCPS,
the Company will not take any action, whether by merger, consolidation or
otherwise, that:
 
 
(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 B RCPS prior to the
transaction owning less than 50% of the voting power of the Company’s Series B
RCPS after the transaction(s),

 
(c)
alters or changes the rights, preferences or privileges of the Series B RCPS,

 
(d) 
increases or decreases the number of authorized Series B RCPS,

 
 
Page | 29

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(e)
authorises the issuance of securities having a preference over or on a parity
with the Series B 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 B 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.

 
For purposes of these protective provisions, any reference to the Company will
be deemed to include any subsidiary of the Company.
 
10.
No Variation

 
The rights attached to the Series B RCPS shall not be varied, modified or
deleted unless in accordance with paragraph 9 above.

 
Page | 30

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SCHEDULE 4
 
Principal Terms of the Series C RCPS
 
1.
Subscription Price and par value

 
The subscription price for each Series C RCPS at the Initial Closing shall be
Ringgit Malaysia equivalent to USD1.5462 calculated at the prevailing exchange
rate on the date of payment of the Initial Subscription Price is effected. The
subscription price for each Series C RCPS at the Subsequent Closing shall be
Ringgit Malaysia equivalent to USD2.3193 calculated at the prevailing exchange
rate on the date of payment of the Subsequent Subscription Price is effected.
Each Series C RCPS shall have a par value of RM0.01.
 
2. 
Premium

 
Each Series C RCPS shall be issued at a premium being the difference between the
Initial Subscription Price or Subsequent Subscription Price (as the case may be)
and the par value of RM0.01.
 
3.
Dividend Provision

 
There is no specific dividend rate attached to the Series C RCPS and the Company
is not obliged to declare and pay any dividend while the Investor is holding the
Series C RCPS.
 
4.
Liquidation Preference

 
In the event of any liquidation, dissolution or winding up of the Company, the
holders of the Series C RCPS will be entitled to receive only in preference to
the holders of Shares, and not the Series A RCPS and Series B RCPS (which rank
pari passu for the purposes of this provision), the relevant Initial
Subscription Price and Subsequent Subscription Price (as the case may be) paid
for the Series C RCPS plus all accrued but unpaid dividends and dividends in
arrears, if any.
 
5.
Conversion

 
Each holder of the Series C RCPS will have the right, at the option of the
holder at any time, to convert all or part of the Series C RCPS into such number
of Shares at a conversion ratio of one hundred-to-one (100 Series C RCPS : 1
Share).
 
The conversion is to be effected by way of consolidating the par value of every
one hundred Series C RCPS of RM0.01 each, into the total par value of RM1.00 of
each Share.
 
To effect the above conversion, a conversion notice shall be sent by the
holder(s) of the Series C RCPS to the Company not less than thirty (30) days
before the intended date of conversion.  Such notice shall be in writing and
shall fix the date and the time for the conversion.
 
The Company may from time to time consult with, and make proposals to, the
holder(s) of Series C RCPS in relation to the exercise of the holder(s)’
entitlement to convert the Series C RCPS.

 
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Completion of the conversion of the Series C RCPS into Conversion Shares 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
conversion, 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 share
certificates in relation to the relevant amount of Conversion Shares resulting
from the conversion of those Series C RCPS.  If any share certificate so
delivered to the Company relates to any Series C RCPS which are not to be
converted on that day, a fresh share certificate for those Series C RCPS shall
be immediately issued by the Company to such holder(s).
 
6.
[Deleted]

 
7.
Redemption Rights

 
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.
 
8.
Voting Rights

 
The holder of the Series C RCCPS will be entitled to the voting rights as
referred to in Section 148(2) of the Act.
 
9.
Protective Provisions

 
Without the approval of the holder of the Series C RCPS, the Company will not
take any action, whether by merger, consolidation or otherwise, that:

 
Page | 32

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(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.

 
For purposes of these protective provisions, any reference to the Company will
be deemed to include any subsidiary of the Company.
 
10.
No Variation

 
The rights attached to the Series C RCPS shall not be varied, modified or
deleted unless in accordance with paragraph 9 above.
 
 
Page | 33

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Execution
 
Executed as an Agreement.

Signed for and on behalf of WaferGen Bio-systems, Inc (WGBS.OB) in the presence
of:
[brace.jpg]
       
Witness
 
Signatory
Name:
 
Name:
NRIC No:
 
Designation:
   
NRIC No:

 
Signed for and on behalf of Malaysian Technology Development Corporation Sdn Bhd
(Company No 235796-U) in the presence of:
[brace.jpg] 
       
Witness
 
Signatory
Name:
 
Name:
NRIC No:
 
Designation:
   
NRIC No:

 
Page | 34

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Signed for and on behalf of Prima Mahawangsa Sdn Bhd  (Company No 833152-M) in
the presence of:
[brace.jpg]
       
Witness
 
Signatory
Name:
 
Name:
NRIC No:
 
Designation:
   
NRIC No:

 
Signed for and on behalf of Wafergen Biosystems (M) Sdn Bhd (formerly known as
Global Dupleks Sdn Bhd) (Company No 795066-H) in the presence of:
[brace.jpg]
       
Witness
 
Signatory
Name:
 
Name:
NRIC No:
 
Designation:
   
NRIC No:

 
 
Page | 35

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