8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 12, 2012

WaferGen Bio-systems, Inc.

(Exact name of registrant as specified in its charter)

Nevada	333-136424	90-0416683
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

7400 Paseo Padre Parkway Fremont, CA  94555	94555
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 651-4450

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 12, 2012, WaferGen Bio-systems, Inc. (the “Company”) entered into a letter agreement (the “Letter Agreement”) with funds managed by Great Point Partners, LLC (“Great Point”), funds managed by Deerfield Management and a fund managed by Merlin Nexus (collectively, the “Investors”).  The Investors previously purchased convertible preferred stock, convertible promissory notes and warrants from the Company in a private placement completed in May 2011 (the “Private Placement”) pursuant to a Purchase Agreement dated as of May 25, 2011 (the “Purchase Agreement”)

The letter agreement provides that Great Point shall have the right to designate an additional individual to serve on the Board of Directors of the Company (the “Board”).  This right is in addition to the director designation right provided to Great Point under the Purchase Agreement, such that Great Point now has the right to designate two individuals for service on the Board.

In connection with the execution of the letter agreement, the Board appointed Scott Davidson and Joe Pesce to the Board, with such appointments effective as of January 12, 2012.  Mr. Davidson and Mr. Pesce are managing directors of Great Point and are Great Point’s designees for service on the Board.  In connection with their appointments, the Company entered into indemnification agreements with Mr. Davidson and Mr. Pesce, on substantially the same terms as for our other directors, which obligate us to indemnify them in their capacity as directors to the maximum extent permitted by law.

In accordance with the terms of the Letter Agreement, the Board also formed a Finance Committee and adopted a charter of the Finance Committee.  The purpose of the Finance Committee is to oversee areas of finance for the Company, including budget development and execution, tracking and evaluating performance, closely monitoring cash, evaluating potential strategic transactions and conducting other financing activities.  The Finance Committee shall consist of four members, with (i) two of the members being designees of Great Point and (ii) one of the Great Point designated directors being the Chairman of the Finance Committee.  The members of the Finance Committee are Joel Kanter, Bob Coradini, Scott Davidson and Joe Pesce.  The charter of the Finance Committee provides that if the Company’s available cash at any time is less than the Company’s “Projected Twelve-Month Burn” (as such term is defined in the charter), then the Finance Committee, at the option of the Great Point designees on the Finance Committee, may at any time thereafter cause the Finance Committee to be reduced from four members to three members (with the resigning or removed member being a director that is not one of the Great Point designees), and (ii) the Finance Committee shall have the ability to directly engage, on behalf of the Company, a nationally-recognized investment bank to advise the Company on potential strategic options and alternatives, including with respect to a possible sale of the Company.  The consummation of any such transaction would be subject to approval of the Board.

As of the date hereof, the Company’s available cash is less than the Company’s “Projected Twelve-Month Burn” (as such term defined in the charter).  Accordingly, Great Point’s designees on the Finance Committee may, at their option at any time hereafter in accordance with the charter of the Finance Committee, cause the Finance Committee to be reduced from four members to three members, and the Finance Committee has the ability to directly engage, on behalf of the Company, a nationally-recognized investment bank to advise the Company on potential strategic options and alternatives.

The foregoing letter agreement was entered into to as part of an agreement under which the Investors released certain potential claims relating to the Private Placement.

The foregoing summary of the terms of the Letter Agreement does not purport to be complete and is qualified in their entirety by the Letter Agreement attached hereto as Exhibit 10.1, which is incorporated herein by reference.  A copy of the charter of the Finance Committee is attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No. Description

10.1 Letter Agreement, dated as of January 12, 2012, by and among WaferGen Bio-systems, Inc. and the parties signatory thereto

99.1 Finance Committee Charter

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WaferGen Bio-systems, Inc.
Date: January 13, 2012	By:	/s/ Donald Huffman
		Donald Huffman
		Chief Financial Officer and Office of the President

EX-10.1

Dated:  January 12, 2012

To: WaferGen Bio-systems, Inc.

7400 Paseo Padre Parkway

Fremont, CA  94555

Ladies and Gentlemen:

Reference is made to that certain Purchase Agreement (the “Purchase Agreement”), dated as of May 25, 2011, by and among WaferGen Bio-systems, Inc. (the “Company”) and the investors who have executed the signature page(s) thereto (collectively, the “Investors”) and that certain Release Agreement (the “Release Agreement”), by and among the Company and the Investors.  Capitalized terms used but not defined in this letter shall have the respective meanings ascribed to them in the Purchase Agreement.

The Company and the Investors hereby agree as follows:

1.           Designated Board Seat.  In addition to the rights relating to a designated seat on the Company’s Board of Directors set forth in Section 4.4 of the Purchase Agreement, the Company shall use reasonable best efforts to ensure that (i) one (1) additional individual, as may be designated by Great Point Partners, LLC (“Great Point”) from time to time in a writing delivered to the Company, is elected as a member of the Board of Directors of the Company, such that a total of two (2) individuals may be designated for service on the Board of Directors by Great Point (collectively, the “Great Point Designees”)), (ii) no such director designated and elected pursuant to clause (i) of this sentence be removed from office unless such removal is directed or approved in writing by Great Point, and (iii) any vacancy created by the resignation, removal or death of any such director designated and elected pursuant to clause (i) of this sentence be filled pursuant to clause (i) of this sentence.

2.           Finance Committee.  On the date hereof, the Board of Directors of the Company shall approve of the following: (i) the appointment of Scott Davidson and Joe Pesce to the Board of Directors of the Company, as the two Great Point Designees, (ii) the formation of a Finance Committee consisting of Bob Coradini, Scott Davidson, Joel Kanter and Joe Pesce, and (iii) the adoption of a charter of the Finance Committee in the form attached hereto as Exhibit A.

3.           Director and Officer Insurance.  So long as any Great Point Designee is serving on the Board, the Company shall maintain coverage under its current director and officer liability insurance policy (or another policy with at least substantially comparable coverage as such current policy), unless otherwise approved by the majority of the Board, including at least one of the Great Point Designees.  So long as any Great Point Designee is serving on the Board, the Company shall ensure that any Great Point Designees are covered by such policy.

4.           Miscellaneous.  In connection with the delivery of this letter, the Investors will deliver to the Company a release of certain claims in form and substance acceptable to the Company.  The parties hereto agree that in case, at any time after the date hereof, any further action is necessary or desirable to carry out the purposes and intent of this letter, the parties will take such further action as any party or parties may reasonably request.  This letter may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any signature page of any such counterpart, or any electronic facsimile thereof, may be attached or appended to any other counterpart to complete a fully executed counterpart of this letter, and any telecopy or other facsimile transmission of any signature shall be deemed an original.

Please confirm your agreement with the foregoing by signing and returning to Great Point Partners, LLC the duplicate copy of this letter agreement enclosed herewith.

Very truly yours,
INVESTORS:
GREAT POINT PARTNERS, LLC
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:

2

BIOMEDICAL VALUE FUND, L.P.
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

BIOMEDICAL INSTITUTIONAL VALUE FUND, L.P.
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

BIOMEDICAL OFFSHORE VALUE FUND, LTD.
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

WS INVESTMENTS III, LLC
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

DAVID J. MORRISON
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

CLASS D SERIES OF GEF-PS, L.P.
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

 

3

LYRICAL MULTI-MANAGER FUND, L.P.
By: Great Point Partners, LLC, its investment manager
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:	Managing Director

 

JEFFREY R. JAY, TRUSTEE FOR THE BENEFIT OF THOMAS C. JAY QPERT
By:		/s/ Jeffrey R. Jay
	Name:	Jeffrey R. Jay
	Title:

 

JEFFREY R. JAY, TRUSTEE FOR THE BENEFIT OF CAROLYN JAY TRUST
By:		/s/ Kevin Penn
	Name:	Kevin Penn
	Title:

 

JEFFREY R. JAY, TRUSTEE FOR THE BENEFIT OF JR JAY JR TRUST
By:		/s/ Kevin Penn
	Name:	Kevin Penn
	Title:

 

JEFFREY R. JAY
By:	/s/ Jeffrey R. Jay

 

4

DEERFIELD SPECIAL SITUATION FUND, L.P.
By:	Deerfield Capital, L.P.
	General Partner
	By:	J.E. Flynn Capital, LLC
		General Partner
		By:		/s/ David Clark
			Name:	David Clark
			Title:	Authorized Signatory

DEERFIELD SPECIAL SITUATIONS FUND INTERNATIONAL LIMITED
By:		/s/ David Clark
	Name:	David Clark
	Title:	Authorized Signatory

 

DEERFIELD PRIVATE DESIGN FUND II, L.P.
By:	Deerfield Capital, L.P.
	General Partner
	By:	J.E. Flynn Capital, LLC
		General Partner
		By:		/s/ David Clark
			Name:	David Clark
			Title:	Authorized Signatory

DEERFIELD PRIVATE DESIGN INTERNATIONAL II, L.P.
By:	Deerfield Capital, L.P.
	General Partner
	By:	J.E. Flynn Capital, LLC
		General Partner
		By:		/s/ David Clark
			Name:	David Clark
			Title:	Authorized Signatory

 

5

PAUL SCHIMMEL ROLLOVER IRA
By:		/s/ Paul Schimmel
	Name:
	Title:

MERLIN NEXUS III, LP
By:	Merlin Nexus III, LLC (Its General Partner)
	By:		/s/ Alberto Bianchinotti
		Name:	Alberto Bianchinotti
		Title:	CFO

 

6

THE SHIVJI FAMILY TRUST DATED JUNE 12, 2000
By:		/s/ Alnoor Shivji
	Name:	Alnoor Shivji
	Title:	Trustee

7

CIBC TRUST COMPANY (BAHAMAS) LIMITED AS TRUSTEE
By:		/s/ Helen M. Carroll   /s/ Linda G. Williams
	Name:	Helen M. Carroll & Linda G. Williams
	Title:	Authorised Signatories

KANTER FAMILY FOUNDATION
By:		/s/ Joel Kanter
	Name:	Joel Kanter
	Title:	President

JOEL KANTER
By:	/s/ Joel Kanter

8

ROBERT CORADINI
By:	/s/ Robert Coradini

9

Accepted and agreed:
WaferGen Bio-systems, Inc.
By:		/s/ Donald Huffman
	Name:	Donald Huffman
	Title:	Office of the President and
		Chief Financial Officer

10

EX-99.1

FINANCE COMMITTEE CHARTER

OF

WAFERGEN BIO-SYSTEMS, INC.

The finance committee (the “Committee”) of the Board of Directors (the “Board”) of WaferGen Bio-systems, Inc., a Nevada corporation (the “Company”), is appointed by the Board to undertake the specific duties and responsibilities listed below and such other duties and responsibilities as the Board shall from time to time prescribe, and shall have all powers necessary and proper to fulfill all such duties and responsibilities.  Subject to Section II below, the Committee shall consist of four (4) members, with (i) two (2) of the members being designees of Great Point Partners, LLC as provided under that certain letter agreement dated January 12, 2012 between the Company and certain investors (each such designee, a “GP Designee”) and (i) one (1) of the GP Designees being the Chairman of the Committee.

I. In fulfilling its purposes as stated in this Charter, the Committee shall, via weekly calls with the Company’s Chief Financial Officer and other officers of the Company, as necessary:

A. Budget Development and Execution. Work with management to formulate and shape the annual budget, continuously monitor performance versus budget, and determine whether Board should conduct intra-year re-evaluations and revisions of the budget so that go-forward budget continues to reflect best thinking in terms of future results.

B. Tracking and Evaluating Performance.

1. Company.  Formulate monthly financial dashboard to be distributed to full Board, ensure that dashboard is delivered on-time and accurately, and preview the finance-related components of each board packet prior to their finalization.

2. Finance Team.  Continually assess performance of finance team and its individual members and discuss assessment with the Board from time to time.

C. Closely Monitoring Cash

1. Outflows.

(a) On a weekly basis review the spending plan for the week ahead as well as actual spending during the week prior;

(b) Hold temporary veto power over large one-time items or large unbudgeted expenses that it believes should be brought to the attention of the Board, and such expenses will be brought to the Board for review and approval within two weeks of the Committee’s use of such temporary veto power; and

(c) Bring to the Board’s attention important deviations from the plan or spending.

2. Cash Management.  Formulate formal cash management policies, present such policies to Board for approval and monitor compliance with such policies.

3. Assess Potential Future Needs to Augment Cash.  Review cash runway versus timing of key value-creating events.

D. Other Matters

1. Exchange Listing.  Assist the Company in achieving and maintaining a listing on a national exchange.

2. Investor Relations.  Assist the Company with investor relations efforts.

II. To the extent that the Company’s Available Cash (as defined below) at any time is less than the Company’s Projected Twelve Month Burn (as defined below), then at any time thereafter (i) the Committee, at the option of the GP Designees, shall be reduced from four members to three members, with one of the members who is not a GP Designee either resigning from the Committee or being removed from the Committee by the Board, and (ii) the Committee shall have the ability to directly engage, on behalf of the Company, a nationally-recognized investment bank and other advisors in order to advise the Company on potential strategic options and alternatives, including, without limitation, with respect to a possible sale of, or business combination (including, a merger, reverse merger or merger of equals) involving, the Company (collectively, a “Transaction”).  Any such investment bank engaged by the Committee may provide advice and assistance with respect to defining the Transaction’s objectives, performing valuation analyses, identifying and contacting potential purchasers, designing appropriate Transaction structures, evaluating proposals, formulating negotiating strategy, assisting in negotiations, and other matters pertinent to closing the Transaction.  Notwithstanding the foregoing, the consummation of any such Transaction would be subject to approval of the Board.

For purposes of this Section II, “Available Cash” shall mean, at any particular time, the Company’s cash and cash equivalents minus its accrued but unpaid liabilities.  “Projected Twelve Month Burn” shall mean, at any particular time, the greater of (i) twelve (12) times the Company’s average monthly burn rate (including both actual cash disbursed plus accruals that will be settled for cash in the future) for the three (3) month period immediately preceding the relevant measurement date, and (ii) the Company’s projected burn, as approved by the Board and set forth in the Company’s budget, for the twelve (12) month period immediately following the relevant measurement date..

Section II of this Charter may not be amended or altered in any way, either directly or indirectly, without the unanimous approval of the Board.