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EXHIBIT 10.3
NON-STATUTORY STOCK OPTION
_________________________, Optionee:
deCODE genetics, Inc., a Delaware corporation (the "Company"), has
granted to you, the optionee named above, an option to purchase shares of the
common stock of the Company ("Common Stock"). This option is not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The grant
hereunder is intended to comply with the provisions of Regulation S promulgated
by the United States Securities and Exchange Commission under the United States
Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. DEFINITIONS.
(A) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(B) "BOARD" means the Board of Directors of the Company.
(C) "CAUSE" means (a) gross or habitual failure to perform the
person's assigned duties, that is, performance failure not corrected within
thirty (30) days after written notice to the person thereof or (b) misconduct,
including, but not limited to: (i) conviction of a crime, or entry of a plea of
nolo contendere with regard to a crime, involving moral turpitude or dishonesty,
(ii) illegal drug use or alcohol abuse on Company premises or at a Company
sponsored event, (iii) conduct by the person which in the good faith and
reasonable determination of the Board demonstrates gross unfitness to serve,
(iv) participation in a fraud or act of dishonesty against the Company, or (v)
intentional, material violation by the person of any contract between the person
and the Company or of any statutory duty of the person to the Company. Neither
mental nor physical disability shall constitute "Cause".
(D) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(E) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the person's service with the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive
officer of the Company may determine, in that party's sole discretion, whether
Continuous Status as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the chief executive officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.
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(F) "DIRECTOR" means a member of the Board.
(G) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(H) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
2. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total
number of shares of Common Stock subject to this option is ______________
(__________).
3. VESTING. Subject to the limitations contained herein, twenty-
five percent (25%) of the shares will vest (become exercisable) on ____________,
and 1/48th of the shares will then vest on the last day of each month thereafter
until either: (i) you cease to provide services to the Company for any reason;
or (ii) this option becomes fully vested. Additionally, vesting will be
suspended for the duration of any leave of absence that does not constitute a
termination of your Continuous Status as an Employee, Director or Consultant.
4. EXERCISE PRICE AND METHOD OF PAYMENT.
(A) EXERCISE PRICE. The exercise price of this option
is $_______ per share.
(B) METHOD OF PAYMENT. Payment of the exercise price per
share is due in full upon exercise of all or any part of this option. You may
elect, to the extent permitted by applicable statutes and regulations, to make
payment of the exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in
cash (including check) at the time of exercise;
(ii) Payment according to a deferred payment
arrangement acceptable to the Board (including payment by promissory note),
except that payment of the common stock's "par value" (as defined in the
Delaware General Corporation Law) shall be made in cash (including check) at the
time of exercise;
(iii) Payment pursuant to a program developed
under Regulation T as promulgated by the United States Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds;
(iv) Provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
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(v) Payment by a combination of the methods of payment permitted
by subparagraph 4(b)(i) through 4(b)(iv) above.
5. EXERCISE PRIOR TO VESTING PERMITTED.
(A) CONDITIONS OF EARLY EXERCISE. Subject to the provisions of this option,
you may elect at any time during your Continuous Status as an Employee, Director
or Consultant with the Company or an Affiliate of the Company, to exercise the
option as to any part or all of the shares subject to this option at any time
during the term hereof, including without limitation, a time prior to the date
of earliest exercise ("vesting") stated in Paragraph 3; provided, however, that:
(i) a partial exercise of this option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares;
(ii) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option
in favor of the Company as described in the Early Exercise Stock Purchase
Agreement attached hereto; and
(iii) you shall enter into the Early Exercise Stock Purchase
Agreement attached hereto with a vesting schedule that will result in the
same vesting as if no early exercise had occurred.
(B) EXPIRATION OF EARLY EXERCISE ELECTION. The election provided in this
Paragraph 5 to purchase shares upon the exercise of this option prior to the
vesting dates (the "Early Exercise Election") shall cease upon termination of
your Continuous Status as an Employee, Director or Consultant with the Company
or an Affiliate of the Company and may not be exercised after the date thereof.
6. WHOLE SHARES. This option may not be exercised for any
number of shares which would require the issuance of anything other than
whole shares.
7. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or,
if such shares are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements
of the Act.
8. TERM. The term of this option commences on _________________,
the date of grant, and expires on ____________________ (the "Expiration
Date," which date shall be no more than ten (10) years from date this option
is granted), unless this option expires sooner as set forth herein. In no
event may this option be exercised on or after the Expiration Date. This
option shall expire on the date of your termination of Continuing Status as
an Employee, Director or Consultant if: (a) such termination is for Cause; or
(b) after such termination you provide services for or acquire an ownership
interest in any business which competes with the Company. However, this
option may be exercised following termination of Continuous Status as an
Employee, Director or Consultant only as to that number of shares as to which
it was exercisable on the date of termination of Continuous Status as an
Employee, Director or Consultant under the provisions of Paragraph 3.
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9. EXERCISE UPON OR SUBSEQUENT TO VESTING.
(A) In lieu of making the Early Exercise Election,
Optionee may exercise this option, to the extent specified above, by delivering
a stock purchase agreement (in a then form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require for purposes of compliance
with any applicable law, rule or regulation.
(B) By exercising this option, you agree that:
(i) as a precondition to the completion of
any exercise of this option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of: (A) the exercise of this option;
(B) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (C) the disposition of shares acquired upon
such exercise;
(ii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, require that you not
sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested by
the Company or the representative of the underwriters. You further agree that
the Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period; and
(iii) at the request of the Company, you will
execute and become a party to any voting agreement then in effect between the
Company and any of its common stockholders.
10. TRANSFERABILITY This option is not transferable, except
(i) by will or by the laws of descent and distribution, (ii) to your spouse,
children, lineal ancestors and lineal descendants (or to a trust created solely
for your benefit and that of the foregoing persons), (iii) to an organization
exempt from taxation pursuant to Section 501(c)(3) of the Code or to which tax
deductible contributions may be made under Section 170 of the Code (excluding
such organizations classified as private foundations under applicable
regulations and rulings), or (iv) to your Affiliate. Notwithstanding the
foregoing, by delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your death,
shall thereafter be entitled to exercise this option.
11. OPTION NOT A SERVICE NOR EMPLOYMENT CONTRACT. This option is
neither a service nor an employment contract. Nothing in this option shall be
deemed to: (i) create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company; or (ii) obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
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12. NOTICES. Any notices provided for in this option shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the mail, postage prepaid, addressed to you at the address specified below or at
such other address as you hereafter designate by written notice to the Company.
13. GENDER. Whenever the context requires, words denoting gender
in this option shall include the masculine, feminine and neuter.
Dated: ________________ Very truly yours,
deCODE genetics, Inc.
By:__________________________________
Xxxx Xxxxxxxxxx, President
ATTACHMENTS:
Early Exercise Stock Purchase Agreement
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The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE _____________
(Initial)
OTHER _____________________________________
_____________________________________
_____________________________________
_____________________________________
(signature)
_____________________________________
(print name)
Address: _____________________________________
_____________________________________
_____________________________________
_____________________________________
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EARLY EXERCISE STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made by and between deCODE genetics, Inc., a Delaware
corporation (the "Company"), and ______________________________("Purchaser").
WITNESSETH:
WHEREAS, Purchaser holds a stock option to purchase shares of common
stock of the Company which Purchaser desires to exercise; and
WHEREAS, Xxxxxxxxx wishes to take advantage of the early exercise
provision of its option and therefore to enter into this Agreement;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Purchaser hereby agrees to purchase from the Company, and the
Company hereby agrees to sell to Purchaser, an aggregate of ____________ shares
of the common stock (the "Stock") of the Company, for an aggregate exercise
price of $_______________ ($____ per share) payable as follows:
Cash at Closing $______________
Nonrecourse Promissory Note in
the form of Exhibit A (the "Note") $______________
Total Exercise Price $______________
The closing hereunder shall occur at the offices of the Company on the
date of this Agreement or at such other time and place as the parties may
mutually agree upon in writing.
At the closing, Purchaser shall deliver to the Company: (i) the total
exercise price (accounted for by cash at closing and the executed Note if a
portion of the total exercise price is to be paid by a promissory note) and an
executed pledge agreement in the form attached hereto as Exhibit B (the "Pledge
Agreement") under which all shares of the Stock acquired by Note shall be
pledged as collateral security for the payment of the indebtedness represented
by the Note; (ii) three (3) Stock Powers, in the form attached as Exhibit C,
duly endorsed (with date and number of shares left blank); and (iii) the voting
agreement between the Company and the holders of its Common Stock in the form
attached hereto as Exhibit D, duly executed by Purchaser. The certificates for
all of the Stock that is subject to the Pledge Agreement, together with the
Stock Powers, shall be retained by the Company as security pursuant to the
Pledge Agreement.
At the closing or as soon thereafter as practicable, the Company shall
deliver to the Escrow Agent (as defined in Paragraph 8) share certificates for
all of the Stock that is to be
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subject to the Forfeiture Option (as defined in Paragraph 2), and shall deliver
share certificates to Purchaser for all of the Stock, if any, that is not to be
subject to the Forfeiture Option or the Pledge Agreement. The certificates for
all of the Stock that is subject to the Pledge Agreement but not the Forfeiture
Option shall be retained by the Company as security pursuant to the Pledge
Agreement.
2. The Stock to be purchased by Purchaser pursuant to this
Agreement shall be subject to the following option ("Forfeiture Option"):
(a) In the event that Purchaser shall cease to be an employee
of the Company for any reason (including his death), or no reason, with or
without cause, the Forfeiture Option may be exercised. The Company shall have
the right, at any time within the ninety (90) day period after Purchaser's
termination of service with the Company and all affiliates of the Company or
such longer period as may be agreed to by the Company and Purchaser, to require
Purchaser or its personal representative, as the case may be, to forfeit to the
Company up to but not exceeding the number of shares of the Stock set forth on
Exhibit E attached hereto. Upon such forfeiture, the Company shall return to
Purchaser for each share of Stock forfeited the price per share paid by
Purchaser pursuant to this Agreement (including accrued but unpaid interest on
the principal portion of any note given by Purchaser in payment of such price
which relates to the purchase price of the forfeited shares of Stock )
("Forfeiture Price")
(b) In addition, and without limiting the foregoing Forfeiture
Option, if at any time during the term of the Forfeiture Option, there occurs:
(i) a dissolution or liquidation of the Company; (ii) a merger or consolidation
involving the Company in which the Company is not the surviving corporation;
(iii) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of other securities, cash or otherwise; or (iv) any other capital
reorganization in which more that fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then: (1) if there is no successor to
the Company, the Company shall have the right to exercise its Forfeiture Option
as to all or any portion of the Stock then subject to the Forfeiture Option set
forth above to the same extent as if Purchaser's employment by the Company had
ceased on the date preceding the date of consummation of said event or
transaction; or (2) the Forfeiture Option may be assigned to any successor of
the Company, and the Forfeiture Option shall apply if Purchaser shall cease for
any reason to be an employee of such successor on the same basis as set forth
above. In that case, references herein to the "Company" shall be deemed to refer
to such successor.
(c) As used herein, employment with the Company shall include
Employment with an affiliate of the Company.
(d) This Agreement is not an employment contract and nothing
in this Agreement shall be deemed to create in any way whatsoever any obligation
on the part of Purchaser to continue in the employ to this Company, or of the
Company to continue
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Purchaser in the employ of the Company.
3. The Forfeiture Option may be exercised by giving written notice of
exercise delivered or mailed as provided in Paragraph 15. Upon providing of such
notice and payment or tender of the purchase price, the Company shall become the
legal and beneficial owner of the Stock being purchased and all rights and
interests therein or related thereto.
4. If from time to time during the term of the Forfeiture Option there
is any stock dividend or liquidating dividend or distribution of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company, then, in such event, any and all new,
substituted or additional securities or other property to which Purchaser is
entitled by reason of his ownership of Stock will be immediately subject to the
Forfeiture Option and be included in the word "Stock" for all purposes of the
Forfeiture Option with the same force and effect as the shares of Stock then
subject to the Forfeiture Option. While the total Option Price shall remain the
same after each such event, the Option Price per share of Stock upon exercise of
the Forfeiture Option shall be appropriately adjusted.
5. All certificates representing any shares of Stock of the Company
subject to the provisions of this Agreement shall have endorsed thereon legends
in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY
TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH
OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF
THE ISSUER OF THESE SHARES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE(S) AS PROVIDED IN THE BYLAWS OF THE CORPORATION.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A VOTING AGREEMENT BY AND AMONG THE COMPANY AND
CERTAIN OF ITS STOCKHOLDERS, DATED AS OF FEBRUARY 2, 1998, AS
SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE
COMPANY.
6. Purchaser acknowledges that it is aware that the Stock to be
issued to it by the Company pursuant to this Agreement has not been registered
under the United States Securities Act of 1933, as amended (the "Act"), on the
basis that no distribution or public offering of the Stock in the United States
is to be effected, and in this connection acknowledges that the Company is
relying on the following representations. In this connection, Purchaser warrants
and represents to the Company that it is acquiring the Stock for investment and
not with a view to or for sale in connection with any distribution of the Stock
or with any present intention of distributing or selling the Stock and he/she
does not presently have reason to anticipate any change in circumstances or any
particular occasion or event which would cause it to sell the Stock. Purchaser
recognizes that the Stock must be held indefinitely unless it is subsequently
registered under the Act or an exemption from such registration is available
and, further, recognizes that the Company is under no obligation to register the
Stock or to comply with any exemption from such registration.
7. Purchaser is aware that the Stock may not be sold pursuant to
Rule 144 adopted under the Act unless certain conditions are met. Among the
conditions for use of Rule 144 is the availability of specified current public
information about the Company. Purchaser recognizes that the Company presently
has no plans to make such information available to the public.
Whether or not the Forfeiture Option is exercised or has lapsed,
Purchaser further agrees not to make any disposition of any of the Stock in the
United States in any event unless and until:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Purchaser: (i) shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition; and (ii)
shall have given the Company an opinion of counsel, which opinion and counsel
shall be satisfactory to the Company, to the effect that such disposition will
not require registration of the Stock under the Act.
8. As security for its faithful performance of the terms of
this Agreement and to insure the availability for delivery of Purchaser's Stock
upon exercise of the Forfeiture
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Option herein provided for, Xxxxxxxxx agrees, at the closing hereunder (or as
soon thereafter as practicable), to deliver (or have the Company deliver on the
Purchaser's behalf) to and deposit with the Secretary of the Company ("Escrow
Agent"), as Escrow Agent in this transaction, three (3) Stock Powers duly
endorsed (with date and number of shares left blank), together with a
certificate or certificates evidencing all of the Stock subject to the
Forfeiture Option; said documents are to be held by the Escrow Agent and
delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Purchaser set forth in Exhibit F, which instructions shall also be
delivered to the Escrow Agent at the closing hereunder (or as soon thereafter as
practicable). If a portion of the total purchase price is paid by a promissory
note, the Stock is also subject to the Pledge Agreement, and possession of the
certificates and stock assignments by the Escrow Agent shall also constitute
possession by the Company of such instruments pursuant to the Pledge Agreement.
9. Purchaser shall not sell or transfer any of the Stock subject
to the Forfeiture Option or any interest therein so long as such Stock is
subject to the Forfeiture Option or the Pledge Agreement.
10. The Company shall not be required: (i) to transfer on its
books any shares of Stock of the Company which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement;
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall have been
so transferred.
11. Subject to the provisions of Paragraphs 9 and 10, Purchaser
(but not any unapproved transferee) shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Company with respect
to the Stock.
12. The parties agree to execute such further instruments and to
take such further action as reasonably may be necessary to carry out the intent
of this Agreement.
13. Purchaser hereby authorizes the Company, upon any event of
default pursuant to the terms of the Note, to date any stock powers, and to fill
in the appropriate number of shares necessary to transfer to the Company the
number of shares having a fair market value equal to the then outstanding
principal amount of the Note on the date of such default. If the fair market
value of the shares on such date is lower than the then outstanding principal
amount of the Note, then transfer of all the shares of the Purchaser to the
Company will constitute full and final settlement and complete discharge of the
Purchaser from any liability to the Company or any third parties
14. Xxxxxxxxx agrees that, if required by the Company (or a
representative of the underwriters) in connection with the first underwritten
registration of the offering of any securities of the Company under the Act, it
will not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date of the registration
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statement of the Company filed under the Act (the "Effective Date") as may be
requested by the Company or the representative of the underwriters. Purchaser
further agrees that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any mail box, by registered or certified mail with postage and fees
prepaid, addressed to the other party hereto at such party's address hereinafter
shown below such party's signature or at such other address as such party may
designate by ten (10) days' advance written notice to the other party hereto.
16. This Agreement shall bind and inure to the benefit of the
successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, inure to the benefit of and be binding upon
Purchaser, its heirs, executors, administrators, successors, and assigns.
Without limiting the generality of the foregoing, the Forfeiture Option of the
Company hereunder shall be assignable by the Company at any time or from time to
time, in whole or in part.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the _____ day of ____________________, 19___.
deCODE genetics, Inc.
By:_____________________________________
Xxxx Xxxxxxxxxx, President
Address: Xxxxxxxxx 0
XX-000 Xxxxxxxxx, Xxxxxxx
________________________________________
(signature)
________________________________________
(print name)
Address: ________________________________________
________________________________________
________________________________________
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ATTACHMENTS:
Exhibit A Nonrecourse Promissory Note
Exhibit B Pledge Agreement
Exhibit C Stock Powers
Exhibit D Voting Agreement
Exhibit E Vesting Schedule
Exhibit F Joint Escrow Instructions
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EXHIBIT A
NONRECOURSE PROMISSORY NOTE
Reykjavik, Iceland
$_______________ ____________,__________
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to
pay to the order of deCODE genetics, Inc., a Delaware corporation (the
"Company"), at the Company's principal office or at such other place as the
holder hereof may designate in writing, on __________________________, in lawful
money of the United States of America and in immediately available funds, the
total price of __________________________ Dollars ($______________), together
with interest, compounded annually, from the date hereof on the unpaid principal
at the rate of 6% per annum.
This Note may not be prepaid.
The full amount of this Note is secured by a pledge of shares of Common
Stock of the Company, and is subject to all of the terms and provisions of the
Early Exercise Stock Purchase Agreement and the Pledge Agreement, each of even
date herewith between the undersigned and the Company. The Company's recovery
against the undersigned for failure to pay any amount owing hereunder when due
shall be limited solely to the shares of Common Stock or other collateral of the
undersigned pledged to the Company in the Pledge Agreement. The undersigned
shall not be liable or have any personal liability in any other respect for the
payment of any amount due under this Note.
The undersigned hereby represents and agrees that the amounts due under
this Note are not consumer debt, and are not incurred primarily for personal,
family or household purposes, but are for business and commercial purposes only.
The undersigned hereby waives presentment, protest and notice of
protest, demand for payment, notice of dishonor and all other notices or demands
in connection with the delivery, acceptance, performance, default or endorsement
of this Note.
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This Note shall be governed by, and construed, enforced and interpreted
in accordance with, the laws of the State of Delaware, excluding conflict of
laws principles that would cause the application of laws of any other
jurisdiction.
____________________________________
(signature)
____________________________________
(print name)
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EXHIBIT B
PLEDGE AGREEMENT
1. As collateral security for the payment of that certain
$___________ Nonrecourse Promissory Note issued this date to deCODE genetics,
Inc. ("Pledgee") by the undersigned (hereinafter called "indebtedness"), the
undersigned hereby assigns, transfers to and pledges with the Pledgee the
securities listed on Schedule 1 hereto which were this day delivered to be
deposited with Pledgee, together with any stock rights, rights to subscribe,
dividends paid in cash or other property in connection with the complete or
partial liquidation of Pledgee, stock dividends, dividends paid in stock, new
securities or other property to which the undersigned is or may hereafter become
entitled to receive on account of such property, and in the event that the
undersigned receives any such, the undersigned will immediately deliver it to
Pledgee to be held by Pledgee hereunder in the same manner as the property
originally pledged hereunder. All property assigned, transferred to and pledged
with Pledgee under this paragraph or any other provision of this Pledge
Agreement is hereinafter called "collateral."
2. At any time, without notice, and at the expense of the
undersigned, Pledgee in its name or in the name of its nominee or of the
undersigned may, but shall not be obligated to: (1) collect by legal proceedings
or otherwise all dividends, interest, principal payments and other sums now or
hereafter payable upon or on account of said collateral; (2) enter into any
extension, reorganization, deposit, merger, or consolidation agreement, or any
agreement in any way relating to or affecting the collateral, and in connection
therewith may deposit or surrender control of such collateral thereunder, accept
other property in exchange for such collateral and do and perform such acts and
things as it may deem proper, and any money or property received in exchange for
such collateral shall be applied to the indebtedness or thereafter held by it
pursuant to the provisions hereof; (3) insure, process and preserve the
collateral; (4) cause the collateral to be transferred to its name or to the
name of its nominee; (5) exercise as to such collateral all the rights, powers,
and remedies of an owner, except that so long as the indebtedness is not in
default the undersigned shall retain all voting rights as to the collateral.
3. The undersigned agrees to pay prior to delinquency all taxes,
charges, liens and assessments against the collateral, and upon the failure of
the undersigned to do so Pledgee at its option may pay any of them and shall be
the sole judge of the legality or validity thereof and the amount necessary to
discharge the same.
4. All advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by Pledgee in exercising any right,
power or remedy conferred by this Pledge Agreement, or in the enforcement
thereof, shall become a part of the indebtedness secured hereunder and Pledgee
shall have recourse solely against the collateral for payment of same.
5. The happening of any of the following events shall
constitute an event of default under this Pledge Agreement: (1) failure to keep
or perform any of the terms or
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provisions of this Pledge Agreement; (2) default in the payment of principal or
interest related to the indebtedness when due; (3) the levy of any attachment,
execution or other process against the collateral; or (4) the insolvency,
commission of an act of bankruptcy, general assignment for the benefit of
creditors, or filing of any petition in bankruptcy or for relief under the
provisions of any applicable law relating to insolvency or bankruptcy, of, by,
or against the undersigned.
6. Upon the happening of any of the events of default specified
in the last preceding paragraph, Pledgee may then, or at any time thereafter, at
its election, apply, set off, collect or sell in one or more sales, or take such
steps as may be necessary to liquidate and reduce to cash in the hands of
Pledgee in whole or in part, with or without any previous demands or demand of
performance or notice or advertisement, the whole or any part of the collateral
in such order as Pledgee may elect, and any such sale may be made either at
public or private sale at its place of business or elsewhere, or at any broker's
board or securities exchange, either for cash or upon credit or for future
delivery; provided, however, that if such disposition is at private sale, then
the purchase price of the collateral shall be equal to the public market price
then in effect, or, if at the time of sale no public market for the collateral
exists, then, Pledgee and the undersigned hereby agree that such private sale
shall be at a purchase price mutually agreed to by Pledgee and the undersigned
or, if the parties cannot agree upon a purchase price, then at a purchase price
established by a majority of three independent appraisers knowledgeable of the
value of such collateral, one named by the undersigned within 10 days after
written request by the Pledgee to do so, one named by Pledgee within such 10 day
period, and the third named by the two appraisers so selected, with the
appraisal to be rendered by such body within 30 days of the appointment of the
third appraiser. The cost of such appraisal, including all appraiser's fees,
shall be charged against the proceeds of sale as an expense of such sale.
Pledgee may be the purchaser of any or all collateral so sold and hold the same
thereafter in its own right free from any claim of the undersigned or right of
redemption. Demands of performance, notices of sale, advertisements and presence
of property at sale are hereby waived, and Xxxxxxx is hereby authorized to sell
hereunder any evidence of debt pledged to it. Any sale hereunder may be
conducted by any officer or agent of Pledgee.
7. The proceeds of the sale of any of the collateral and all sums
received or collected by Pledgee from or on account of such collateral shall be
applied by Pledgee to the payment of expenses incurred or paid by Pledgee in
connection with any sale, transfer or delivery of the collateral, to the payment
of any other costs, charges, attorneys' fees or expenses mentioned herein, and
to the payment of the indebtedness or any part thereof, all in such order and
manner as Pledgee in its discretion may determine. For purposes of this Pledge
Agreement, collateral in the form of cash shall be treated as if it were the
proceeds of the sale of collateral.) The Pledgee's receipt of such proceeds
shall be considered a complete payment of the Note and the undersigned shall
thereafter be discharged from any further liability thereunder. Pledgee shall
pay any balance to the undersigned.
8. Pledgee shall be under no duty or obligation whatsoever
to make or give any presentments, demands for performance, notices of
non-performance, protests, notices of protest or notices of dishonor in
connection with any obligations or evidences of
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indebtedness held by Xxxxxxx as collateral, or in connection with any
obligations or evidences of indebtedness which constitute in whole or in part
the indebtedness secured hereunder.
9. Pledgee may at any time deliver the collateral or any part
thereof to the undersigned and the receipt of the undersigned shall be a
complete and full acquittance for the collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefor.
10. Upon the transfer of all or any part of the indebtedness
Pledgee may transfer all or any part of the collateral and shall be fully
discharged thereafter from all liability and responsibility with respect to such
collateral so transferred, and the transferee shall be vested with all the
rights and powers of Pledgee hereunder with respect to such collateral so
transferred; but with respect to any collateral not so transferred Pledgee shall
retain all rights and powers hereby given.
11. Until all indebtedness shall have been paid in full the power
of sale and all other rights, powers and remedies granted to Pledgee hereunder
shall continue to exist and may be exercised by Pledgee at any time and from
time to time irrespective of the fact that the indebtedness or any part thereof
may have become barred by any statute of limitations, or that the personal
liability of the undersigned may have ceased. The undersigned will be deemed to
have repaid the indebtedness in full as provided in Section 7.
12. Pledgee agrees that so long as the indebtedness is not in
default, the collateral held hereunder shall be released from pledge as the
indebtedness is paid or if substitute collateral acceptable to the Pledgee is
deposited with the Pledgee. The amount of the collateral to be released shall be
determined by the Pledgee in light of the amount of collateral which it
determines to be necessary to secure the outstanding indebtedness. Release from
this pledge, however, shall not result in release from the provisions of those
certain Joint Escrow Instructions, if any, of even date herewith among the
parties to this Pledge Agreement and the Escrow Agent named therein, or from the
Purchase Option granted by the undersigned set forth in the Early Exercise Stock
Purchase Agreement, if any, between the parties to this Pledge Agreement.
13. The rights, powers and remedies given to Pledgee by this
Pledge Agreement shall be Pledgee's sole rights, powers and remedies for the
undersigned's failure to pay any indebtedness secured by this agreement. Pledgee
may exercise its lien or right of setoff with respect to the indebtedness in the
same manner as if the indebtedness were unsecured. Any forbearance or failure or
delay by Pledgee in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of Pledgee shall continue in
full force and effect until such right, power or remedy is specifically waived
by an instrument in writing executed by Pledgee. The undersigned will be deemed
to have repaid the indebtedness in full as provided in Section 7.
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Dated: ____________________
deCODE genetics, Inc. ____________________________________
(signature)
By:_________________________________ ____________________________________
Xxxx Xxxxxxxxxx, President (print name)
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SCHEDULE 1
TO
PLEDGE AGREEMENT
____________________________ shares of common stock of deCODE genetics, Inc., a
Delaware corporation, represented by share certificate number, dated
_______________, 19___.
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EXHIBIT C
STOCK POWER
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers unto __________________________________
________________________ Shares of the common stock of deCODE genetics, Inc.
standing in my name on the books of said Corporation represented by
Certificates(s) No(s)___________________________________________ and does hereby
irrevocably constitute and appoint ____________________________________ attorney
to transfer the said stock on the books of said Corporation with full power of
substitution in the premises.
Dated______________________
____________________________________________
(This signature must be identical to the
name as written on the face of the
certificate)
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EXHIBIT D
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement"), dated as of February 2, 1998,
by and among Xxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxx (collectively, the "Investor
Founders"), deCODE genetics, Inc., a Delaware, USA corporation (the "Company"),
and the holders of shares of Common Stock, par value $0.001 per share ("Common
Stock"), of the Company with respect only to such shares of Common Stock held by
them as of the date of this Agreement or shares hereafter acquired by them other
than by conversion of Preferred Stock of the Company into Common Stock (such
holders, the "Common Stockholders"). The Investor Founders and the Common
Shareholders are collectively referred to as the "Investors" and each
individually as an "Investor."
PRELIMINARY STATEMENTS
X. Xxxxxxxx to the certain Series C Preferred Stock and Warrant
Purchase Agreement, dated as of February 1, 1998 (the "Stock Purchase
Agreement"), Roche Finance Ltd ("Roche") has agreed to purchase a certain number
of shares of the Series C Preferred Stock of the Company, as well as Warrants to
purchase shares of Series C Preferred Stock of the Company.
B. A condition to the execution of the Stock Purchase Agreement
by Roche is the execution and delivery by the Investor Founders and the Common
Stockholders of this Agreement relating to, among other things, the election of
members to the Company's Board of Directors (the "Board of Directors").
NOW, THEREFORE, in consideration of the foregoing statements and the
mutual covenants and agreements of the parties contained in this Agreement, the
parties hereto agree as follows:
1. ALL VOTING OF COMMON STOCKHOLDERS.
1.1 General. At any time at which the holders of Common Stock will
have the right to vote on any matter pursuant to the Certificate of
Incorporation or the Bylaws of the Company, as in effect from time to time, or
applicable law, including without limitation, with respect to the election of
directors of the Company, each of the Common Stockholders will vote all shares
of Common Stock owned or hereafter acquired by such Common Stockholder, as
follows:
(a) In favor of any action in favor of which the holders
of a majority of the shares owned by the Investor Founders (the "Founders
Shares") have voted,
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and against any action against which the holders of a majority of the Founders
Shares have voted;
(b) Specifically with respect to the election of
directors:
(i) at each annual or special meeting of
Stockholders (or by written consent in lieu of a meeting of Stockholders), to
cause and maintain the election to the Board of Directors of the individuals
nominated by the holders of a majority of the Founders Shares;
(ii) in favor of removal of a director elected
by the holders of the Common Stock only if the holders of a majority of the
Founders Shares vote the majority of such shares in favor of such removal, and
in such case, in favor of such removal;
(iii) for filling any vacancy in the office
of a director to be elected by the holders of the Common Stock with another
individual nominated by the holders of a majority of the Founders Shares.
1.2 Termination of Voting Agreement. The voting obligations
imposed by this Voting Agreement shall terminate upon the effective date of a
registration statement pertaining to the initial public offering of the Common
Stock.
2. FUTURE ISSUANCE OF COMMON STOCK.
2.1 The company shall require any person to whom or which any
shares of Common Stock are to be issued after the date hereof, other than upon
conversion of Preferred Stock of the Company into Common Stock, as a condition
to the issuance of such shares, to agree to become a party to this Agreement as
a "Common Stockholder" with respect to such shares of Common Stock.
3. MISCELLANEOUS.
3.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware, USA as applied to agreements
among Delaware, USA residents entered into and to be performed entirely within
Delaware, USA.
3.2 Severability. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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3.3 Amendment and Waiver. Except as otherwise expressly provided,
neither this Agreement nor any provision herein may be amended or waived except
by the written consent of the Company, holders of a majority of the Founders
Shares, and holders of a majority of the Common Stockholders.
3.4 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.5 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original, but all of which together shall
constitute one instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement, or have caused this Voting Agreement to be executed by its duly
authorized officer, as of the date first above written.
deCODE genetics, Inc.
By:__________________________________
Name: Xxxx Xxxxxxxxxx
Title: President
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Dated:_____________________ ____________________________________
(signature)
____________________________________
(print name)
Address:
____________________________________
____________________________________
____________________________________
____________________________________
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EXHIBIT E
VESTING SCHEDULE
The Forfeiture Option shall be in effect with respect to all of the
shares of Stock on the date of the Purchaser's execution of the Early Exercise
Stock Purchase Agreement and shall expire:
(a) As to 25% of the shares of Stock, on ____________________; and
(b) thereafter, as to 1/48 of such shares on the last day of each
month.
29
EXHIBIT F
JOINT ESCROW INSTRUCTIONS
Secretary
deCODE genetics, Inc.
Lynghalsi 1
IS-110 Reykjavik, Iceland
Dear Sir/Madam:
As Escrow Agent for both deCODE genetics, Inc., a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Early Exercise Stock
Purchase Agreement (the "Agreement"), of even date herewith, to which a copy of
these Joint Escrow Instructions is attached as Exhibit F, in accordance with the
following instructions:
1. In the event the Company or an assignee shall elect to
exercise the Forfeiture Option set forth in the Agreement, the Company or its
assignee will give to Purchaser and you a written notice specifying the number
of shares of stock to be forfeited, the amount to be returned to Purchaser by
the Company (the "Forfeture Price"), and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing you are directed: (a) to date any stock powers
necessary for the transfer in question; (b) to fill in the number of shares
being transferred; and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the Forfeiture Price of the number of shares of
stock being purchased pursuant to the exercise of the Forfeiture Option.
3. Purchaser irrevocably authorizes the Company to deposit with
you any certificates evidencing shares of stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his/her
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
4. This escrow shall terminate upon expiration or exercise in
full of the Forfeiture Option, whichever occurs first.
30
5. If at the time of termination of this escrow you should have
in your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged of
all further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Company that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Company.
6. Except as otherwise provided in these Joint Escrow
Instructions, your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties or their assignees. You shall not be personally liable for any act you
may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for
Purchaser while acting in good faith and any act done or omitted by you pursuant
to the advice of your own attorneys shall be conclusive evidence of such good
faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or Company,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or Company by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under
any statute of limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
11. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be Secretary of the Company or if you shall
resign by written notice to each party. In the event of any such termination,
the Company may appoint any officer or assistant officer of the Company as
successor Xxxxxx Agent and Purchaser hereby confirms the appointment of such
successor or successors as his attorney-in-fact and agent to the full extent of
your appointment.
12. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you are authorized and directed to retain in your possession without
liability to anyone all or any part of said securities until such dispute shall
31
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such proceedings.
14. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, including
delivery by express courier or five days after deposit in any mail box, by
registered or certified mail with postage and fees prepaid, addressed to each of
the other parties hereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days' advance written notice to each
of the other parties hereto:
Company: deCODE genetics, Inc.
Lynghalsi 1
IS-110 Reykjavik, Iceland
Purchaser: ___________________________
___________________________
___________________________
___________________________
Escrow Agent: Secretary
deCODE genetics, Inc.
Lynghalsi 1
IS-110 Reykjavik, Iceland
15. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
16. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder. You may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor. The Company shall be responsible
for all fees generated by such legal counsel in connection with your obligations
hereunder.
17. This instrument shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns. It
is understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
18. This Agreement shall be governed by and interpreted and
determined in accordance with the laws of the State of Delaware as such laws are
applied by Delaware courts to contracts made and to be performed entirely in
Delaware by residents of that state.
32
Very truly yours,
deCODE genetics, Inc.
By___________________________
Xxxx Xxxxxxxxxx
President
Purchaser:
___________________________
(signature)
___________________________
(print name)
Escrow Agent:
_______________________________________
Xxxx Xxxxxxxxxx
Secretary
