Stock Purchase Agreement - Islensk Erfoagreining ehf., Kace Traders Ltd., Einar Stefansson and Thorsteinn Loftsson
STOCK
PURCHASE AGREEMENT
1. Islensk erfoagreining ehf., Lynghals 1, 110 Reykjavik, Iceland, an
Icelandic private limited company, hereinafter referred to as
"PURCHASER", a subsidiary of deCODE genetics, Inc. ("deCODE")
registered in Delaware, USA, with a principle offices at Lynghals 1,
110 Reykjavik, for the purpose of this Agreement represented by its
sole board member Kari Stefansson;
2. KACE TRADERS LTD. a company under the laws of Cyprus, Arcimidous, 24A,
Egkomi, D.C. 2411, Nicosa, Cyprus, for the purpose of this Agreement
represented by Gunnar Sturluson, hereinafter referred to as "VENDOR";
3. THE "FOUNDERS". Mr. Einar Stefansson, Idno. 190552-2769, Fjaroarasi
13, 110 Reykjavik, and Mr. Thorsteinn Loftsson, Idno. 010350-7519,
Sorlaskjoli 44, 107 Reykjavik;
WHEREAS:
1. Vendor is the owner of 64.32% of the shares ('the sold Shares') in
CYCLOPS EHF., Idno. 420394-2259, the nominal value being ISK 338,000 a
private limited liability company under Icelandic law, "THE COMPANY",
each share with a par value of 1 ISK. Nominal value of all outstanding
shares of the company is ISK 525,500.
2. Purchaser wishes to purchase the sold Shares and Vendor wishes to sell
the same;
3. Whereas the Company itself is the owner of shares of nominal value of
ISK 11.983.
4. The "FOUNDERS" have entered into a contractual relationship Mr.
Stefansson with the Purchaser for employment and Mr. Loftsson with the
Company for employment;
HAVE AGREED AS FOLLOWS:
ARTICLE 1
CONTRACT DOCUMENTS
The following documents are annexed to this agreement and shall be included as
contractual documents forming the relationship between the parties:
1. The annual accounts 1999 for the Company.
2. Preliminary financial statement for year 2000.
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<PAGE> 3
ARTICLE 2
PURCHASE OF SHARES
1. Subject to the terms and conditions hereof Vendor sells to the
Purchaser, and the Purchaser buys and accepts from the Vendor the
following shares: 64,32% of the share capital of the Company. The
nominal value of the sold Shares is ISK 338,000.
2. At the closing of this Agreement, all outstanding options, warrants
and other rights to purchase capital stock of the Company (whether or
not then exercisable) shall be terminated. Purchaser is purchasing the
remaining shares in the Company from an unrelated third party
shareholder at the time of the closing of this purchase.
ARTICLE 3
PURCHASE PRICE
1. Purchaser and Vendor declare that the purchase and sale of the Shares
is effected in return for 110,000 (one hundred and ten thousand)
assigned Common Stock shares in deCODE genetics, Inc. (the "deCODE
SHARES"), assigned for the benefit of the Vendor. A portion of the
deCODE shares are subject to a repurchase option pursuant to the terms
and conditions set forth on Joint Escrow Agreement Appendix 1.
ARTICLE 4
THE COMPANY'S ANNUAL ACCOUNTS
Except for any changes mentioned in this agreement the balance sheet
of the Company's Annual Accounts for 1999 has not changed in the
period between 31 December 1999 and the date of this agreement.
ARTICLE 5
CONDITIONS PRECIDENT
1. The closing of the Transaction is contingent on satisfaction of the
following conditions:
The Founders will continue to work for the Company and the Purchaser
and are in agreement with the Purchaser on the terms thereof.
The Founders will terminate their preemptive rights to purchasing
stock of the Company which become effective at this transaction and
also at the purchase, by the Purchaser, of the minority shares from a
third party on behalf of the company and on their own behalf.
2. Vendor hereby represents and warrants against the Purchaser as
follows:
(a) The Company at present owns 3 patents and 4 patent applications:
1. Thorsteinn Loftsson, "Cyclodextrin/drug complexation", U.S.
Patent No.: 5,324,718 (June 28, 1994).
2. Thorsteinn Loftsson, "Cyclodextrin complexation", European
Patent No.: 0579435 (March 17, 1999).
2
<PAGE> 4
3. Thorsteinn Loftsson, "Cyklodextrinflettun", Icelandic Patent
Application No.: 4049 (July 8, 1993).
4. Thorsteinn Loftsson, "Cyclodextrin Complexation", U.S.
Patent No. 5,472,954 (December 5, 1995).
5. Thorsteinn Loftsson, "Cyclodextrin Complexation", Singapore
Patent Application No. 9607266-5 (1996).
6. Thorsteinn Loftsson, Mar Masson and Einar Stefansson,
"High-Energy Cyclodextrin Complexes", U.S. Provisional
Patent Application No. 60/075,544 (Filed: February 23, 1998)
U.S. Patent Application No. (Filed February 16, 1999).
7. Thorsteinn Loftsson, Mar Masson and Einar
Stefansson, "High-Energy Cyclodextrin Complexes", PCT
Application No.: PCT/IS99/00003 (Filed February 16, 1999).
(b) The company at present owns: All other patents and/or patent
applications that have been filed or will be filed, claiming
priority from the patents/patent applications listed in a) and
the subject matter claimed therein.
(c) The Company is presently in negotiations with:
AstraZeneca, Inc.,
Procter&Gamble, Inc.
Merck Co., Inc.;
for upcoming projects in connection with cyclodextrin.
(d) The Company has not aggregate liabilities outside the balance
sheet of the Company's Annual accounts 1999, and preliminary
financial statement for 2000.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
1. The Vendor hereby explicitly and unconditionally guarantees, warrants,
represents, undertakes and agrees with the Purchaser that:
a) Vendor is sole, lawful owner of the Shares sold and transferred under
this Stock Purchase Agrement and its representatives signing this
Agreement are fully entitled and vested with all required power of
authority to transfer the Shares to Purchaser;
b) The Shares sold and transferred under this deed have been fully paid
up and correctly registered at the Icelandic registry of limited
companies ("hlutafelagaskra");
c) The Company is a company properly established and existing and in good
standing under Icelandic law, entitled to carry on such business as is
described in this Agreement;
d) The annexed Annual Accounts and preliminary financial statement fairly
state the Company's assets and liabilities as of the date hereof and
that there are no liabilities, neither actual, contingent or latent,
which are not
3
<PAGE> 5
disclosed in those balance sheets, no other liabilities will arise or
amounts become due that those connected with the normal day-to-day
management of the Company;
e) There exist no options or other rights under which any person may
demand the transfer of one or more of the Shares sold and transferred
under this deed;
f) No person holds any right of lien or any other right to pledge in
respect of the Shares sold and transferred under this deed, and no
person is entitled to demand that he be granted any such right of lien
or other right of pledge and that none of the Shares have been seized;
g) No registered depository receipts of the Shares sold and transferred
under this deed have been issued or assigned;
h) No person is entitled to demand from the Company that shares in the
share capital of the Company be issued to him or to a third party. No
person is entitled to options and warrants in the Company except for
as specifically disclosed at time of the closing;
i) Vendor will not and can not make any claims whatsoever vis-a-vis the
Company regarding the payments of a final or interim dividend over
past financial years or over the current financial year;
j) No resolutions or decisions exist, having been made by the general
meeting of shareholders or any other body of the Company before the
above transfer balance sheet date, which have not yet been executed by
the effective date of the sale of the Shares;
k) No legal actions have been taken against the Company at this moment
nor are there any grounds known to Vendor or Founders for taking legal
action against the Company;
l) No legal actions have been taken by the Public Prosecutor for the
dissolution of the Company;
m) All obligations concerning any tax law and/or social security law have
been complied with, that no liabilities concerning tax law and/or
social security laws exist, except those disclosed in the attached
balance sheet, as per the effective date of the sale of the Shares,
and thus further the Company has conformed to obligations concerning
any other legal provisions;
ARTICLE 7
PREFERENCE PURCHASE RIGHTS
Vendor declares that, in as far there are preference purchase rights,
such as preemptive rights, concerning the transfer of the Shares sold
and transferred by this deed, which preference rights are based on the
rule prohibiting the sale of the Shares in the articles of
association, this prohibiting rule will not be applicable.
Vendor declares that no third party consent is needed for the transfer
of the ownership of shares to take place from Vendor to Purchaser.
4
<PAGE> 6
ARTICLE 8
DUE DILIGENCE
Purchaser has performed due diligence on the operations, condition and
affairs of the Company as he deems appropriate.
ARTICLE 9
NON-DISCLOSURE
Each party will keep confidential and will not use or disclose to
unauthorized third parties, and will cause its representatives and
authorized third parties to whom disclosure is made to keep
confidential and not use or disclose, (except in connection with
evaluating and implementing the Transaction) all confidential
information obtained from the other as a result of its review and
investigation of the other in connection with the Transaction.
ARTICLE 10
VENUE AND APPLICAPLE LAW
In as far as parties have a free choice of law the validity
construction and performance of this agreement will be governed by the
laws of Iceland and all disputes arising out of or in connection with
this agreement will be brought before the competent Court in Iceland.
Thus made, in fourfold drawn up and signed in Reykjavik, on 8 November, 2000.
For the Purchaser:
/s/ Kari Stefansson
----------------------
Kari Stefansson
for the Vendor:
/s/ Gunnar Sturluson
----------------------
Gunnar Sturluson
the Founders:
/s/ Einar Stefansson
----------------------
Einar Stefansson
/s/ Thorsteinn Loftsson
-----------------------
Thorsteinn Loftsson
5
<PAGE> 7
Consent on the behalf of deCODE, Inc.,
to issue the deCODE shares
/s/ Kari Stefansson
---------------------------
LEGALIZATION OF SIGNATURE
/s/ illegible
080263-2289
6
<PAGE> 8
Attachments
to a STOCK PURCHASE AGREEMENT
BETWEEN ISLENSK ERFDAGREINING EHF.
KACE traders Ltd.
dated 8 November 2000
about the purchase of shares in Cyclops ehf.
("the Transaction")
APPENDIX 1
Joint Escrow Agreement and Instructions on the Issuance and delivery of the
deCODE shares
APPENDIX 2
Net royalty payment agreement
APPENDIX 3
Warranties and Representations of Founders
7
<PAGE> 9
ATTACHMENTS
to a STOCK PURCHASE AGREEMENT
BETWEEN ISLENSK ERFDAGREINING EHF.
KACE traders Ltd.
dated 8 November 2000
about the purchase of shares in Cyclops ehf.
("the Transaction")
APPENDIX 1 - JOINT ESCROW AGREEMENT AND INSTRUCTIONS ON THE ISSUANCE AND
DELIVERY OF deCODE SHARES
<PAGE> 10
APPENDIX 1
JOINT ESCROW AGREEMENT
AND INSTRUCTIONS ON
THE ISSUANCE AND DELIVERY OF
deCODE SHARES
AMONG: The parties to the Stock Purchase Agreement
(deCODE, Vendor and the Founders);
and
Kari Stefansson, Secretary of deCODE,
as Escrow Agent
WHEREAS:
A. Following the Transaction, the Founders have agreed to continue to
provide services to deCODE and/or the Company, Mr. Stefansson as an employee of
the Purchaser and Mr. Loftsson as an employee of the Company, for a period of at
leat four years after the closing of the Transaction.
B. A portion of the consideration being provided to Vendor in the form
of deCODE shares in consideration for the Shares of the Company are being
provided as compensation for these services to be provided by the Founders.
C. Therefore, the Vendor and the Purchaser have agreed that such
portion of the deCODE shares will be held in escrow and subject to repurchase by
deCODE in the event that either of the Founders fails to continue to provide
services to deCODE or the Company during such four year period for any reason
(other than death).
NOW, THEREFORE, the parties have agreed as follows:
1. 80.000 of the deCODE shares will unconditionally be delivered to the
Vendor at the closing of the Transaction under the Agreement.
2. 30.000 of the deCODE shares being issued to the Vendor at the closing
of the Transaction pursuant to the Agreement will be subject to the
repurchase option by deCODE as described below (the "Repurchase
Option"):
(a) In the event that either of the Founders cease to provide services
to deCODE as a result of termination of a Founder's employment or
consulting arrangement by either party for any reason (except as a
result of death of a Founder), deCODE shall have the right to exercise
its Repurchase Option. deCODE may, by exercising its Repurchase Option
at any time within ninety (90) business days after said cessation or
such longer period as may be determined by deCODE if such later
repurchase is deemed necessary by deCODE for treatment of its stock as
Qualified Small Business Stock under
<PAGE> 11
Section 1202 of the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder, repurchase from the Vendor at the
par value per share of such deCODE shares (the "Repurchase Price"), up
to but not exceeding the number of deCODE shares which have not vested
under the provisions of paragraph (b) below. As used herein, employment
and consulting arrangement with deCODE shall include employment or a
consulting arrangement with a "parent" or "subsidiary" of deCODE as
those terms are defined in Sections 424(e) and (f) of the Internal
Revenue Code of 1986, as amended.
(b) The right of deCODE to exercise its Repurchase Option as to the
maximum portion of the deCODE shares specified in the event of
termination shall be by reference to the following schedule:
(1) 7,500 of the deCODE shares issued to the Vendor shall
vest on the first anniversary of the closing of the
Transaction under the Agreement; and
(2) 7,500 of the deCODE shares issued to the Vendor shall
vest on the second anniversary of the closing of the
Transaction under the Agreement; and
(3) 7,500 of the deCODE shares issued to the Vendor shall
vest on the third anniversary of the closing of the
Transaction under the Agreement; and
(4) 7,500 of the deCODE shares issued to the Vendor shall
vest on the fourth anniversary of the closing of the
Transaction under the Agreement.
(c) Nothing in this Annex shall affect in any manner whatsoever the
right or power of deCODE (or a parent or subsidiary of deCODE) to
terminate either Founder's employment or consulting arrangement.
(d) The Repurchase Option shall be exercised by written notice signed
by an officer of deCODE and delivered or mailed to Vendor, the Founders
and the Escrow Agent at their respective addresses set forth in the
Agreement or such other address as may be provided by such party from
time to time. Such notice shall identify the number of deCODE shares to
be purchased and shall notify the Vendor and the Founders of the time,
place and date for settlement of such purchase, which shall be
scheduled by deCODE within one hundred fifty (150) business days from
the date of cessation of the employment or consulting arrangment.
(e) If, from time to time during the term of the Repurchase Option:
(1) There is any stock dividend or other distribution of
cash and/or property, stock split or other change in
the character or amount of any of the outstanding
securities of deCODE genetics, Inc.; or
(2) There is any consolidation, merger or sale of all, or
substantially all of the assets of deCODE genetics,
Inc.;
<PAGE> 12
then, in such event, any and all new, substituted or additional
securities or other property to which the Vendor is entitled by reason
of its ownership of the deCODE shares which are subject to the
Repurchase Option shall be immediately subject to the Repurchase Option
with the same force and effect as the deCODE shares presently subject
to the Repurchase Option. While the total Option Price shall remain the
same after each such event, the Option Price per share of deCODE shares
upon exercise of the Repurchase Option shall be appropriately adjusted.
Upon the occurrence of any event specified in clause (b) above, the
Repurchase Option may be assigned to any successor to deCODE, and the
Repurchase Option shall apply if either of the Founders does not become
or shall cease for any reason to be employed by or have a consulting
arrangement with such successor (or its parent or subsidiaries). In
such case, the references herein to "deCODE" shall be deemed to refer
to such successor.
3. As security for the performance of the terms of the Repurchase Option
by Vendor and the Founders, and to insure the availability for delivery
of the deCODE shares subject to the Repurchase Option upon exercise of
the Repurchase Option provided for above, the Vendor agrees, at the
closing or the Transaction, to deliver to and deposit with the
Secretary of deCODE ("Escrow Agent"), as Escrow Agent in the
Transaction, three stock assignments duly endorsed (with date and
number of shares blank) in the form attached hereto as Attachment A,
together with a certificate or certificates evidencing all of the
deCODE shares subject to the Repurchase Option; said documents are to
be held by the Escrow Agent and delivered by said Escrow Agent pursuant
to the following instructions:
(a) In the event deCODE provides notice of its exercise of the
Repurchase Option, deCODE, Vendor and the Founders hereby irrevocably
authorize and direct the Escrow Agent to close the transaction
contemplated by such notice in accordance with the terms of said
notice, and to (i) date the stock assignments necessary for the
transfer in question, (ii) fill in the number of shares being
transferred, and (iii) deliver the same, together with the certificate
evidencing the deCODE shares to be transferred, to deCODE against the
simultaneous delivery to Vendor of the Option Price for the number of
deCODE shares being purchased pursuant to the exercise of the
Repurchase Option.
(b) Vendor and the Founders: (i) irrevocably authorize deCODE to
deposit with Escrow Agent any certificates evidencing deCODE shares to
be held by Escrow Agent and any additions and substitutions to said
shares as specified herein, and (ii) hereby irrevocably appoints Escrow
Agent as attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities all documents necessary or
appropriate to make such securities negotiable and complete any
transaction herein contemplated.
(c) Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in
<PAGE> 13
relying or refraining from acting on any instrument reasonable believed
by Escrow Agent to be genuine and to have been signed or presented by
the proper party or parties. Escrow Agent shall not be personally
liable for any act he may do or omit to do hereunder as Escrow Agent or
as attorney-in-fact for Vendor or Founders while acting in good faith
and in the exercise of good judgment, and any act done or omitted by
Escrow Agent pursuant to the advice of his own attorneys shall be
conclusive evidence of such good faith. Escrow Agent is authorized to
disregard any and all warnings given by any of the parties or by any
other person or corporation, excepting only orders or process of courts
of law, and is authorized to comply with and obey orders, judgments or
decrees of any court, in which case Escrow Agent shall not be liable to
any of the parties or to any other person or entity 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.
4. Subject to provisions of paragraph 3 above, the Vendor shall exercise
all rights and privileges of a shareholder of deCODE with respect to
the deCODE shares.
5. Paragraphs 2 and 3 above shall terminate upon the exercise in full or
expiration of the Repurchase Option, whichever occurs first.
6. The Vendor and the Founders shall reimburse deCODE for all costs
incurred by deCODE in enforcing the performance of, or protecting its
rights under, the Repurchase Option, including reasonable costs of
investigation and attorney's fees. It is the intention of the parties
that deCODE, upon exercise of the Repurchase Option and payment of the
Option Price, pursuant to the terms of the Repurchase Option, shall be
entitled to receive the deCODE shares, in specie, in order to have such
deCODE shares available for future issuance without dilution of the
holdings of other shareholders. Furthermore, it is expressly agreed
between the parties that money damages are inadequate to compensate
deCODE for the deCODE shares and that deCODE shall, upon proper
exercise of the Repurchase Option, be entitled to specific enforcement
of its rights to purchase and receive said deCODE shares.
7. Any notice required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery,
including delivery by express courier, or three (3) days after deposit
with the local postal service, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties
entitled to such notice at the addresses set forth for each of deCODE,
the Vendor and the Founders at the beginning of the Stock Purchase
Agreement and, with respect to the Escrow Agent, to Kari Stefansson,
Escrow Agent, at the address for deCODE, or at such other addresses as
a party may designate by ten days' advance written notice to each of
the other parties hereto.
8. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
<PAGE> 14
9. 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.
ISLENSK ERFOAGREINING EHF. ESCROW AGENT
By: /s/ Kari Stefansson /s/ Kari Stefansson
-------------------------------- ------------------------------------
Kari Stefansson, sole director Kari Stefansson
Secretary of deCODE
KACE TRADERS LTD. FOUNDERS
By: /s/ Gunnar Sturluson /s/ Einar Stefansson
-------------------------------- ------------------------------------
Gunnar Sturluson Einar Stefansson
8 November 2000
/s/ Thorsteinn Loftsson
------------------------------------
Thorsteinn Loftsson
<PAGE> 15
ATTACHMENT A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, KACE traders Ltd., hereby sells, assigns, and
transfers unto deCODE genetics, Inc. a Delaware corporation (the "Company"),
pursuant to the Repurchase Option under that certain Stock Purchase Agreement,
dated 8 November, 2000, by and between the undersigned and the Company (the
"Agreement"), shares of Common Stock of the Company standing in the
undersigned's name on the books of the Company represented by Certificate
No. and does hereby irrevocably constitute and appoint the Company's
Secretary attorney to transfer said stock on the books of the Company with full
power of substitution in the premises. This Assignment may be used only in
accordance with and subject to the terms and conditions of the Agreement, in
connection with the repurchase of shares of Common Stock issued to the
undersigned pursuant to the Agreement, and only to the extent that such shares
remain subject to the Company's Repurchase Option under the Agreement.
Dated: 20, December 2000 /s/ Gunnar Sturluson
------------------------------ --------------------------------------
(Signature)
KACE traders Ltd.
--------------------------------------
(Print Name)
<PAGE> 16
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
Certificate(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____________________________
For KACE Traders
/s/ Gunnar Sturluson
______________________________________
(This signature must be identical to the
name as written on the face of the
certificate)
<PAGE> 17
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
Certificate(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____________________________
For KACE Traders
/s/ Gunnar Sturluson
______________________________________
(This signature must be identical to the
name as written on the face of the
certificate)
<PAGE> 18
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
Certificate(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____________________________
For KACE Traders
/s/ Gunnar Sturluson
______________________________________
(This signature must be identical to the
name as written on the face of the
certificate)
<PAGE> 19
APPENDIX 2
to a STOCK PURCHASE AGREEMENT
BETWEEN ISLENSK ERFDAGREINING EHF.
KACE traders Ltd.
dated 8 November 2000
about the purchase of shares in Cyclops ehf.
("the Transaction")
WHEREAS:
A. Following the Transaction, the Founders have agreed to continue to
provide services to deCODE and/or the Company, Mr. Stefansson as an
employee of the Purchaser and Mr. Loftsson as an employee of the
Company and the Purchaser would like to aknowlegde the existence of
certain R&D projects they have contributed to as of the date of the
signing of this agreement and as a result of certain ongoing projects
the Purchaser has agreed to a following additional payment.
B. The Vendor shall receive: 30% of all net royalties from the ongoing R&D
projects of Cyclops ehf. with Merck Co. (Carbonic Anhydrase Inhibitors)
and Procter & Gamble (Triclosan in oral care products). Net royalties
to be defined as gross income less attributable out of pocked expenses
(or payments) such as for example translation, patent applications,
infringement expenses, annual fees, costs for outside consultants and
other direct expenses connected with the patents. All the expenses for
such patents shall have been fully paid before any payments are made to
the Vendor.)
8 November 2000.
For the Vendor:
/s/ Gunnar Sturluson
-----------------------------
For the Purhaser:
/s/ Tanya Zharov
-----------------------------
Tanya Zharov
signing on the basis of a written Power of Attorney.
The Founders:
/s/ Einar Stefansson
-----------------------------
Einar Stefansson
/s/ Thorsteinn Loftsson
-----------------------------
Thorsteinn Loftsson
LEGALIZATION OF SIGNATURES:
/s/ Illegible
080263-2289
<PAGE> 20
APPENDIX 3
to a STOCK PURCHASE AGREEMENT
BETWEEN ISLENSK ERFDAGREINING EHF.
KACE traders Ltd.
dated 8 November 2000
about the purchase of shares in Cyclops ehf.
("the Transaction")
REPRESENTATIONS AND WARRANTIES
OF FOUNDERS
1. Islensk erfoagreining ehf., Lynghals 1, 110 Reykjavik, Iceland, an
Icelandic private limited company, hereinafter referred to as
"PURCHASER" a subsidiary of deCODE genetics, Inc. ("deCODE") Delaware,
USA, for the purpose of this Agreement represented by its sole board
member Kari Stefansson
2. KACE TRADERS LTD. a company under the laws of Cyprus, Arcimidous, 24A,
Egkomi, D.C. 2411, Nicosa, Cyprus, for the purpose of this Agreement
represented by Einar Stefansson and Thorsteinn Loftsson, the majority
of directors, hereinafter referred to as `VENDOR';
3. THE "FOUNDERS". Mr. Einar Stefansson, Idno. 190552-2769, Fjaroarasi 13,
110 Reykjavik, and Mr. Thorsteinn Loftsson, Idno. 010350-7519,
Sorlaskjoli 44, 107 Reykjavik;
WHEREAS:
1. Vendor is the owner of 64,32% of the shares (`the sold Shares') in
CYCLOPS EHF., Idno. 420394-2259, the nominal value being ISK 338.000, a
private limited liability company under Icelandic law, "THE COMPANY",
each share with a par value of 1 ISK. Nominal value of all outstanding
shares of the Company is ISK 525,500.
2. Purchaser wishes to purchase the sold Shares and Vendor wishes to sell
the same and have today entered into a Stock Purchase Agreement for the
sold Shares;
3. The Company itself is the owner of shares of nominal value of ISK
11.983.
4. The "FOUNDERS" were the owners of the sold shares and the controlling
majority shareholders of the Company, but recently conveyed them to the
Vendor as a part of this transaction. The Purchaser therefore has
requested the following representations and warranties from the
Founders personally;
1
<PAGE> 21
THE FOUNDERS HEREBY WARRANT AND REPRESENT THE FOLLOWING:
ARTICLE 1
THE COMPANY'S ANNUAL ACCOUNTS
Except for any changes mentioned in this agreement the balance sheet of
the Company's Annual Accounts for 1999 has not changed in the period
between 31 December 1999 and the date of this agreement.
ARTICLE 2
CONTINGENCIES
1. The closing of the Transaction is contingent on satisfaction of the
following conditions:
The Founders will continue to work for the Company and for the
Purchaser are in agreement with the Purchaser on the terms thereof.
The Founders will terminate their preemptive rights to purchasing stock
of the Company which become effective at this transaction and also at
the purchase, by the Purchaser, of the minority shares from a third
party on behalf of the Company and on their own behalf.
2. Founders hereby represent and warrants against the Purchaser as
follows:
(a) The Company at present owns 3 patents and 4 patent
applications:
1. Thorsteinn Loftsson, "Cyclodextrin/drug complexation", U.S.
Patent No.: 5,324,718 (June 28, 1994).
2. Thorsteinn Loftsson, "Cyclodextrin complexation", European
Patent No.: 0579435 (March 17, 1999).
3. Thorsteinn Loftsson, "Cyklodextrinflettun", Icelandic Patent
Application No.: 4049 (July 8, 1993).
4. Thorsteinn Loftsson, "Cyclodextrin Complexation", U.S. Patent
No. 5,472,954 (December 5, 1995).
5. Thorsteinn Loftsson, "Cyclodextrin Complexation", Singapore
Patent Application No. 9607266-5 (1996).
6. Thorsteinn Loftsson, Mar Masson and Einar Stefansson,
"High-Energy Cyclodextrin Complexes", U.S. Provisional Patent
Application No. 60/075,544 (Filed: February 23, 1998) U.S.
Patent Application No. (Filed February 16, 1999).
7. Thorsteinn Loftsson, Mar Masson and Einar Stefansson,
"High-Energy Cyclodextrin Complexes", PCT Application No.:
PCT/IS99/00003 (Filed February 16, 1999).
(b) The company at present owns: All other patents and/or patent
applications that have been filed or will be filed, claiming
priority from the patents/patent applications listed in a) and
the subject matter claimed therein.
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(c) The Company is presently in negotiations with:
AstraZeneca, Inc.,
Procter&Gamble, Inc.
Merck Co., Inc.;
for upcoming projects in connection with cyclodextrin.
(d) The Company has no aggregate liabilities outside the balance
sheet of the Company's Annual accounts 1999, and preliminary
financial statement for 2000.
(e) To the best knowledge of the Founders: (i) the Intellectual
Property does not infringe on the intellectual property of any
third party, (ii) no third party is infringing on any of the
Intellectual Property or claiming any ownership interest in
any of the Intellectual roperty, and (iii) no officer,
director or employee of the Company has disclosed any of the
Intellectual Property to any third party without appropriate
confidentiality obligations.
(f) The founders warrant and represent that all Intellectual
Property rights to the patents and patent applications listed
in (a) and (b) is held by the Company and not by them
personally.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
1. The Founders hereby explicitly and unconditionally guarantee, warrant,
represent, undertake and agree with the Purchaser that:
a) Vendor is sole, lawful owner of the Shares sold and transferred under
this Stock Purchase Agrement and its representatives signing this
Agreement are fully entitled and vested with all required power of
authority to transfer the Shares to Purchaser;
b) The Shares sold and transferred under this deed have been fully paid up
and correctly registered at the Icelandic registry of limited companies
("hlutafelagaskra");
c) The Company is a company properly established and existing and in good
standing under Icelandic law, entitled to carry on such business as is
described in this Agreement;
d) The annexed Annual Accounts and preliminary financial statement fairly
state the Company's assets and liabilities as of the date hereof and
that there are no liabilities, neither actual, contingent or latent,
which are not disclosed in those balance sheets, no other liabilities
will arise or amounts become due that those connected with the normal
day-to-day management of the Company;
e) There exist no options or other rights under which any person may
demand the transfer of one or more of the Shares sold and transferred
under this deed;
f) No person holds any right of lien or any other right to pledge in
respect of the Shares sold and transferred under this deed, and no
person is entitled to demand that he be granted any such right of lien
or other right of pledge and that none of the Shares have been seized;
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<PAGE> 23
g) No registered depository receipts of the Shares sold and transferred
under this deed have been issued or assigned;
h) No person is entitled to demand from the Company that shares in the
share capital of the Company be issued to him or to a third party. No
person is entitled to options, warrants or other rights to company
shares except for as specifically disclosed at time of the closing;
i) Vendor will not and can not make any claims whatsoever vis-a-vis the
Company regarding the payments of a final or interim dividend over past
financial years or over the current financial year;
j) No resolutions or decisions exist, having been made by the general
meeting of shareholders or any other body of the Company before the
above transfer balance sheet date, which have not yet been executed by
the effective date of the sale of the Shares;
k) No legal actions have been taken against the Company at this moment nor
are there any grounds known to Vendor or Founders for taking legal
action against the Company;
l) No legal actions have been taken by the Public Prosecutor for the
dissolution of the Company;
m) All obligations concerning any tax law and/or social security law have
been complied with, that no liabilities concerning tax law and/or
social security laws exist, except those disclosed in the attached
balance sheet, as per the effective date of the sale of the Shares, and
thus further the Company has conformed to obligations concerning any
other legal provisions;
ARTICLE 4
PREFERENCE PURCHASE RIGHTS
The Founders declare that, in as far there are preference purchase
rights, such as preemptive rights, concerning the transfer of the
Shares sold and transferred by either the Stock Purchase Agreement
between Purchaser and Vendor or between themselves and Vendor, which
preference rights are based on the rule prohibiting the sale of the
Shares in the articles of association, they warrant and represent that
this prohibiting rule will not be applicable.
The Founders declares that no third party consent is needed for the
transfer of the ownership shares to take place from Vendor to
Purchaser.
ARTICLE 5
NON-DISCLOSURE
The Founders will keep confidential and will not use or disclose to
unauthorized third parties, and will cause its representatives and
authorized third parties to whom disclosure is made to keep
confidential and not use or disclose, (except in connection with
evaluating and implementing the Transaction) all confidential
information obtained from the other as a result
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<PAGE> 24
of its review and investigation of the other in connection with the
Transaction.
ARTICLE 6
VENUE AND APPLICAPLE LAW
In as far as parties have a free choice of law the validity
construction and performance of this agreement will be governed by the
laws of Iceland and all disputes arising out of or in connection with
this agreement will be brought before the competent Court in Iceland.
Thus made, in fourfold drawn up and signed in Reykjavik, on 8 November, 2000.
For the Purchaser:
/s/ Kari Stefansson
---------------------
Kari Stefansson
The Founders:
/s/ Einar Stefansson
----------------------
Einar Stefansson
/s/ Thorsteinn Loftsson
-------------------------
Thorsteinn Loftsson
LEGALIZATION OF SIGNATURE
Seen for legalization of the signature of Mr. Einar Stefansson, and
Mr. Porsteinn Loftsson residing in Reykjavik, Iceland, by me, Gunnar
Sturluson, Supreme Court Attorney, practising in Reykjavik, Iceland, on this
day, the 8 November 2000.
/s/ Gunnar Sturluson
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<PAGE> 25
POWER OF ATTORNEY
I, the undersigned, Kari Stefansson, Id. No. 060449-3849, CEO and the sole
Member of the Board of Directors of Islensk Erfoagreining ehf., and CEO of
deCODE genetics, Inc. hereby grant to Helga Tatjana Zharov, Attorney at Law, Id.
No. 080966-4749, domiciled at Granaskjol 16, 107 Reykjavik, full and unlimited
power of attorney to sign on behalf of the company documents pertaining to the
purchase by the company of a 100% share in the company Cyclops ehf. This power
of attorney also covers the signing of the purchase agreement, conveyance of
title and all other documents relating to the said purchase including the
signing of a confirmation of the issue of shares in deCODE in payment for the
purchase.
Her signature on these documents shall be the equivalent of my own.
Reykjavik, 10 October 2000
/s/ Kari Stefansson
----------------------
Witnesses to the correct signature,
date and legal competence:
/s/ Hannes Por Smarason Id. No. 251167-3389
--------------------------- -------------
/s/ Edward Mcneil Farmer Id. No. 010568-2349
---------------------------- -------------
Reykjavik 13 March 2001
CERTIFIED TRANSLATION
Jon Skaptason
/s/ Jon Skaptason
<PAGE> 26
KACE TRADERS LIMITED
MINUTES OF THE MEETING
OF THE BOARD OF DIRECTORS
HELD ON THE 26TH OCTOBER 2000 AT 9 A.M.
AT THE REGISTERED OFFICE OF THE COMPANY
IN NICOSIA - CYPRUS
--------------------------------------------------------------------------------
Present: NAIRY MERHEJE - Director
BEDROS DER ARAKELIAN - Director
DORINA PAPAKYRIACOU
for ARAKEL SERVICES LTD - Secretary
--------------------------------------------------------------------------------
Mrs. Nairy Merheje acted as the Chairman of the meeting and Mrs. Dorina
Papakyriacou as Secretary thereof. The Chairman ascertained that there was a
quorum in accordance with the Company's Articles of Association, called the
meeting to order and said that the meeting had been called for the purpose of
appointing the below mentioned as representative and lawful Attorney of the
Company.
MR. GUNNAR STURLUSON
ID No. 170767-4119
of Reykjavik, Iceland
After discussion and upon motion duly made, seconded and unanimously carried, it
was resolved as follows:
"RESOLUTIONS
1. That MR. GUNNAR STURLUSON ID No. 170767-4119 of Reykjavik, Iceland, be and
is hereby appointed the lawful attorney of the Company in order to act on
behalf of the Company in any matters to do with the operations of the
Company anywhere in the world and to sign and/or execute any documents
whatsoever on behalf of the Company.
2. That a special Power of Attorney in the terms of the draft presented to
the meeting and approved, be issued to the above mentioned, such Power of
Attorney to be executed by a Director and the Secretary of the Company."
There being no further matters for discussion the meeting was adjourned at
10:00 a.m.
/s/ NAIRY MERHEJE /s/ DORINA PAPAKYRIACOU
----------------------- ----------------------------
NAIRY MERHEJE DORINA PAPAKYRIACOU
Chairman/Director Secretary
for ARAKEL SERVICES LTD.