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Exhibit 1.1
- Shares
deCODE genetics, Inc.
COMMON STOCK, $.001 PAR VALUE
UNDERWRITING AGREEMENT
-, 2000
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-, 2000
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
deCODE genetics, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS") - shares of its common stock, $.001 par value (the "FIRM
SHARES"). The Company also proposes to issue and sell to the several
Underwriters not more than an additional - shares of its common stock, $.001 par
value (the "ADDITIONAL SHARES"), if and to the extent that you, as Lead Manager
of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of common
stock, $.001 par value, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462
Registration Statement.
The Underwriters have agreed to reserve a portion of the Shares to be
purchased by them under this Agreement for sale to the Company's directors,
officers, employees and business associates and other parties related to the
Company (collectively, "Participants"), as set forth in the Prospectus under the
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heading "Underwriters" (the "DIRECTED SHARE PROGRAM"). The Shares to be sold by
the Underwriters pursuant to the Directed Share Program are referred to
hereinafter as the "Directed Shares." Any Directed Shares not orally confirmed
for purchase by any Participants by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus.
1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) The Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
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(d) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and, except as
disclosed in the Prospectus, are owned directly by the Company, free
and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement or the offering of
Shares as contemplated by the Prospectus, except such as may be
required by the securities or Blue Sky laws of the various states of
the United States of
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America or by the securities laws of other applicable jurisdictions in
connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance
with any and all applicable Icelandic and United States federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
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(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(p) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries, in
each case except as described in or contemplated by the Prospectus.
(q) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business
now operated by them, and, except as disclosed in the Prospectus,
neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
(r) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such
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coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not
materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, except as described in or contemplated
by the Prospectus.
(s) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus.
(t) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(u) The Company and each of its subsidiaries is in compliance
with the Foreign Corrupt Practices Act of 1977 (the "FCPA") and the
Company has no reason to believe that any of its officers, directors,
employees or agents have violated the provisions of the FCPA.
(v) Except as described in the Registration Statement
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), the Company has not sold, issued or
distributed any shares of Common Stock during the six-month period
preceding the date hereof, including any sales pursuant to Rule 144A
under, or Regulation D or S of, the Securities Act, other than shares
issued pursuant to employee benefit plans, qualified stock option plans
or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(w) The Company has, pursuant to Section 2.14 of the Amended
and Restated Investor Rights Agreement of deCODE genetics, Inc. dated
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February 2, 1998 (the "IRA"), requested each of its shareholders bound
by the terms of the IRA not to sell or otherwise transfer or dispose of
any Common Stock held by such shareholders for a period of 180 days
from the day the Registration Statement becomes effective.
(x) The issuance of the operating license granted by the
Icelandic Ministry of Health to the Company for the construction and
development of the Icelandic Health Sector Database, (the "LICENSE"),
and the entering into the related agreement between the Icelandic
Ministry of Health and the Company (the "AGREEMENT") are in compliance
with the Constitution of Iceland, applicable Icelandic laws and
regulations and international laws and directives which are applicable
in Iceland and have been incorporated into Icelandic law.
(y) The License is an exclusive license, effective for its
twelve-year term.
(z) The Registration Statement, the Prospectus and any
preliminary prospectus comply, and any amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection
with the Directed Share Program.
(aa) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.
(bb) The Company has not offered, or caused Morgan Stanley to
offer, Shares to any person pursuant to the Directed Share Program with
the intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $- a share (the "PURCHASE PRICE").
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On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to - Additional Shares
at the Purchase Price. If you, on behalf of the Underwriters, elect to exercise
such option, you shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
shares are to be purchased. Such date may be the same as the Closing Date (as
defined below) but not earlier than the Closing Date nor later than ten business
days after the date of such notice. Additional Shares may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. If any Additional
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased as the number of Firm
Shares set forth in Schedule I hereto opposite the name of such Underwriter
bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder or (B) the issuance by the Company of up
to 500,000 shares of Common Stock to be used in the context of strategic
investments or acquisitions for which the Underwriters have previously been
consulted or (C) (i) the issuance by the Company of shares of Common Stock upon
the exercise of an option or a warrant or the conversion of a security
outstanding on the date hereof; (ii) and the issuance by the Company of options
to purchase shares of Common Stock, and the issuance of shares upon the exercise
of such options, that are eligible for issuance under the Company's 1996 Equity
Incentive Plan on the Closing Date (as defined in Section 4 hereof), in either
case of which the Underwriters have been advised in writing.
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3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at $- a
share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at a
price that represents a concession not in excess of $- a share under the Public
Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $- a share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on -, 2000 or at such other time
on the same or such other date, not later than -, 2000, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred to
as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than -, 2000 as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [_____] (New York City time) on the date hereof.
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The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated
in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of Smith, Stratton, Wise, Heher & Brennan, U.S. counsel for
the Company, dated the Closing Date, to the effect set forth in Exhibit
A hereto.
(d) The Underwriters shall have received on the Closing Date
an opinion of Baldur Gudlaugsson Esq., Icelandic counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit B
hereto.
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(e) The Underwriters shall have received on the Closing Date
an opinion of Stibbe Simont Monahan Duhot, Belgian counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit C
hereto.
(f) The Underwriters shall have received on the Closing Date
an opinion of Hamilton Brook Smith & Reynolds, P.C., patents U.S.
counsel for the Company, dated the Closing Date, to the effect set
forth in Exhibit D hereto.
(g) The Underwriters shall have received on the Closing Date
an opinion of Davis Polk & Wardwell, U.S. counsel for the Underwriters,
dated the Closing Date, to the effect set forth in Exhibit E hereto.
(h) The Underwriters shall have received on the Closing Date
an opinion of Jakob Moller, Esq., of Logos Legal Services, Icelandic
counsel for the Underwriters, dated the Closing Date, to the effect set
forth in Exhibit F hereto.
(i) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from PricewaterhouseCoopers ehf, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(j) Each of the "lock-up" agreements, each substantially in
the form of Exhibits G and H hereto, between you and certain
shareholders, and the lock-up agreements, each substantially in the
form of Exhibit I hereto, between you and each officer and director of
the Company, in each case relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(k) The Shares shall have been approved for quotation, subject
to official notice of issuance, on the Nasdaq National Market and in
the European Association of Securities Dealers Automated Quotation
("EASDAQ").
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The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, three signed copies of
the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York
City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and during the
period mentioned in Section 6(c) below, as many copies of the
Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be
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misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement of the
Company and its subsidiaries covering the twelve-month period ending
June 30, 2001 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer
and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel to the Underwriters incurred in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all fees and
expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to listing the Shares on the Nasdaq
National Market and EASDAQ, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer
agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show"
undertaken in connection with the
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marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, (ix) the costs and
expenses of the Underwriters in connection with the transactions
contemplated hereby up to a maximum amount of $600,000, (x) all
expenses incurred by the Underwriters in connection with the Directed
Share Program and stamp duties, similar taxes or duties or other taxes,
if any, incurred by the Underwriters in connection with the Directed
Share Program, and (xi) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled
"Indemnity and Contribution", and the last paragraph of Section 10
below, the Underwriters will pay any excess of (A) the amount of all of
their costs and expenses, excluding Directed Share Program expenses,
over (B) $600,000.
(g) Not to waive in any respect the compliance with Section
2.14 of the IRA by each shareholder of the Company bound by such
section.
(h) To place stop transfer orders on any Directed Shares that
have been sold to Participants subject to the three month restriction
on sale, transfer, assignment, pledge or hypothecation imposed by NASD
Regulation, Inc. under its Interpretative Material 2110-1 on
free-riding and withholding to the extent necessary to ensure
compliance with the three month restrictions.
(i) To comply with all applicable securities and other
applicable laws, rules and regulations in each jurisdiction in which
the Directed Shares are offered in connection with the Directed Share
Program.
7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have
15
<PAGE> 16
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. The indemnifying party will be entitled to
participate in such proceeding, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party. Whether or not the indemnifying party
elects to participate in such proceeding, it shall, upon request of the
indemnified party, retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying party
may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing
16
<PAGE> 17
by Morgan Stanley & Co. Incorporated, in the case of parties indemnified
pursuant to Section 7(a), and by the Company, in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other
17
<PAGE> 18
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
7 and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
8. Directed Share Program Indemnification. (a) The Company agrees to
indemnify and hold harmless Morgan Stanley and each person, if any, who controls
Morgan Stanley within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act ("Morgan Stanley Entities"), from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue
18
<PAGE> 19
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed Share Program other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Morgan Stanley Entities.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any Morgan Stanley Entity
in respect of which indemnity may be sought pursuant to Section 8(a),
the Morgan Stanley Entity seeking indemnity shall promptly notify the
Company in writing. The Company will be entitled to participate in such
proceedings, and to the extent it may elect by written notice delivered
to the Morgan Stanley Entity promptly after receiving the aforesaid
notice from such Morgan Stanley Entity, to assume the defense thereof
with counsel satisfactory to such Morgan Stanley Entity. Whether or not
the Company elects to participate in such proceeding, it shall, upon
request of the Morgan Stanley Entity, retain counsel reasonably
satisfactory to the Morgan Stanley Entity to represent the Morgan
Stanley Entity and any other the Company may designate in such
proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any Morgan Stanley
Entity shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Morgan Stanley
Entity unless (i) the Company shall have agreed to the retention of
such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the
Morgan Stanley Entity and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not, in respect of the legal
expenses of the Morgan Stanley Entities in connection with any
proceeding or related proceedings the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Morgan Stanley Entities. Any such firm for
the Morgan Stanley Entities shall be designated in writing by Morgan
Stanley. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify the Morgan Stanley Entities from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time a Morgan Stanley
Entity shall have
19
<PAGE> 20
requested the Company to reimburse it for fees and expenses of counsel
as contemplated by the second and third sentences of this paragraph,
the Company agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by the Company of the
aforesaid request and (ii) the Company shall not have reimbursed the
Morgan Stanley Entity in accordance with such request prior to the date
of such settlement. The Company shall not, without the prior written
consent of Morgan Stanley, effect any settlement of any pending or
threatened proceeding in respect of which any Morgan Stanley Entity is
or could have been a party and indemnity could have been sought
hereunder by such Morgan Stanley Entity, unless such settlement
includes an unconditional release of the Morgan Stanley Entities from
all liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section
8(a) is unavailable to a Morgan Stanley Entity or insufficient in
respect of any losses, claims, damages or liabilities referred to
therein, then the Company, in lieu of indemnifying the Morgan Stanley
Entity thereunder, shall contribute to the amount paid or payable by
the Morgan Stanley Entity as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Morgan Stanley Entities on the other hand from the offering of the
Directed Shares or (ii) if the allocation provided by clause 8(c)(i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause 8(c)(i) above but also the relative fault of the Company on the
one hand and of the Morgan Stanley Entities on the other hand in
connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand and of the Morgan Stanley Entities on the other hand in
connection with the offering of the Directed Shares shall be deemed to
be in the same respective proportions as the net proceeds from the
offering of the Directed Shares (before deducting expenses) and the
total underwriting discounts and commissions received by the Morgan
Stanley Entities for the Directed Shares, bear to the aggregate Public
Offering Price of the Shares. If the loss, claim, damage or liability
is caused by an untrue or alleged untrue statement of a material fact,
the relative fault of the Company on the one hand and the Morgan
Stanley Entities on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement or
the omission or alleged omission relates to information supplied by the
Company or by the Morgan Stanley
20
<PAGE> 21
Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(d) The Company and the Morgan Stanley Entities agree that it
would not be just or equitable if contribution pursuant to this Section
8 were determined by pro rata allocation (even if the Morgan Stanley
Entities were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in Section 8(c). The amount paid or payable
by the Morgan Stanley Entities as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the
Morgan Stanley Entities in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
Section 8, no Morgan Stanley Entity shall be required to contribute any
amount in excess of the amount by which the total price at which the
Directed Shares distributed to the public were offered to the public
exceeds the amount of any damages that such Morgan Stanley Entity has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any Morgan Stanley
Entity at law or in equity.
(e) The indemnity and contribution provisions contained in
this Section 8 shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Morgan Stanley Entity or the
Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Directed
Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market
or EASDAQ, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York, Iceland or Belgium
shall have been declared by governmental authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and (b) in the case of any of the events specified in clauses 9(a)(i)
through 9(a)(iv), such event, singly or together with any other such event,
makes it, in
21
<PAGE> 22
your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, you shall use your reasonable efforts to procure within
36 hours thereafter one or more of the other Underwriters or any others to
purchase from the Company such amounts as may be agreed upon and upon the terms
set forth herein of the Firm Shares which the defaulting Underwriter or
Underwriters, failed to purchase. If during such 36 hours you shall not have
procured such other Underwriters or any others to purchase the Firm Shares, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
22
<PAGE> 23
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
deCODE genetics, Inc.
By:
Name:
Title:
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
23
<PAGE> 24
By:
Name:
Title:
24
<PAGE> 25
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated ............
Lehman Brothers Inc...........................
Total: ................................ ----------------
================
</TABLE>
<PAGE> 26
EXHIBIT A
OPINION OF SMITH, STRATTON, WISE, HEHER & BRENNAN,
U.S. COUNSEL FOR THE COMPANY
(i) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware, has the corporate power
and authority to own its property and to conduct its business as described in
the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(ii) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(iii) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable.
(iv) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights imposed by law, the Company's
Certificate of Incorporation or bylaws or, to the best of such counsel's
knowledge, any contract or agreement to which the Company is a party.
(v) The Agreement has been duly authorized, executed and delivered by
the Company.
(vi) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Agreement will not contravene any
provision of applicable U.S. law or the certificate of incorporation or by-laws
of the Company or, to the best of such counsel's knowledge, any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its
<PAGE> 27
subsidiaries, taken as a whole, or, to the best of such counsel's knowledge, any
judgment, order or decree of any U.S. governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any U.S. governmental body or
agency is required for the performance by the Company of its obligations under
this Agreement, except such as may be required by the securities or Blue Sky
laws of the various states of the United States in connection with the offer and
sale of the Shares.
(vii) The statements in the Prospectus under the captions "Business -
Products and Services - Collaborations", "Certain Transactions", "Principal
Stockholders", "Description of Securities", "Tax Considerations - U.S. Federal
Tax Considerations for Non-U.S. Holders of Common Stock" and "Shares Eligible
for Future Sale" and in the Registration Statement in Item 14, in each case
insofar as such statements constitute summaries of legal matters, fairly present
the information called for with respect to such legal matters and fairly
summarize the matters referred to therein.
(viii) After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(ix) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus will not be, required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
(x) Such counsel is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules and other financial
and statistical data included therein as to which such counsel need not express
any opinion) comply as to form in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(xi) Such counsel has participated in conferences with certain officers
and representatives of the Company, the independent public
A-2
<PAGE> 28
accountants for the Company, the Underwriters and the Underwriters' counsel at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, based solely on such participation and without
independent review or verification, except as stated in (viii) above, no facts
have come to the attention of such counsel which would lead such counsel to
believe that either the Registration Statement at the time it became effective
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or that the Prospectus as of its date (or any amendment thereof
or supplement thereto made prior to the Closing Date as of the date of such
amendment or supplement) and as of the Closing Date contained or contains an
untrue statement or material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief or opinion which respect to
the financial statements, including the notes and schedules thereto and other
financial and statistical data). In rendering such opinion, such counsel may
rely as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and its
subsidiaries.
A-3
<PAGE> 29
EXHIBIT B
OPINION OF BALDUR GUDLAUGSSON, ESQ.,
ICELANDIC COUNSEL FOR THE COMPANY
(i) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency in Iceland is required for the performance
by the Company of its obligations under this Agreement.
(ii) The statements in the Prospectus under the captions "Risk Factors",
"Business-deCODE's Unique Approach-Database Services-The License",
"Business-Government Regulation-The Icelandic Health Sector Database License"
and "Business-Legal Proceedings", in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein.
(iii) The Company, Islensk erfoagreining ehf ("IE") and other Icelandic
subsidiaries of the Company (A) are in compliance with any and all applicable
Icelandic Environmental Laws, (B) have received all permits, licenses or other
approvals required of them under applicable Icelandic Environmental Laws to
conduct their respective businesses and (C) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Icelandic Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and other Icelandic
subsidiaries of the Company, taken as a whole.
(iv) The passing of Act No. 139/1998 (the "ACT"), by the Icelandic
Parliament, the issuance of the operating license grated by the Icelandic
Ministry of Health to the Company for the construction and development of the
Icelandic Health Sector Database (the "LICENSE"), the regulation based on the
Act (the "REGULATION"), and the entering into the related agreement between the
Icelandic Ministry of Health and the Company (the "AGREEMENT") are in compliance
with the Constitution of Iceland, applicable Icelandic laws and regulations and
international laws
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and directives, including European Union directives, which are applicable in
Iceland and have been incorporated into Icelandic law.
(v) The License is an exclusive license effective for its twelve-year
term, subject to the terms and conditions of the Act, the Regulation, the
License and the Agreement.
(vi) IE has been duly incorporated, is validly existing as a corporation
in good standing under the laws of Iceland, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on IE and the Company, taken as a whole.
(vii) All of the issued shares of capital stock of IE have been duly and
validly authorized and issued, are fully paid and non-assessable. The shares of
IE are owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(viii) After due inquiry with officers of the Company and of IE, such
counsel does not know of any legal or governmental proceedings pending or
threatened in Iceland to which the Company, IE or other Icelandic subsidiaries
of the Company is a party or to which any of the properties of the Company, IE
or other Icelandic subsidiaries of the Company is subject, except as described
in the Prospectus.
(ix) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable Icelandic law or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon IE that is material to
the Company, IE or other Icelandic subsidiaries of the Company, taken as a
whole, or, to the best of such counsel's knowledge, any judgment, order or
decree of any Icelandic governmental body, agency or court having jurisdiction
over the Company, IE or other Icelandic subsidiaries of the Company, and no
consent, approval, authorization or order of, or qualification with, any
Icelandic governmental body or agency is required for the performance by the
Company of its obligations under this Agreement. The phrase "to the best of our
knowledge" where used hereinabove refers to the knowledge of the attorneys in
this firm who are actively involved in the representation of the Company and IE
in Iceland and does not include or imply any independent
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investigation or inquiry as to the matter to which such phrase refers other than
an inquiry of responsible officers of the Company and IE.
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EXHIBIT C
OPINION OF STIBBE SIMONT
MONAHAN DUHOT, BELGIAN
COUNSEL FOR THE COMPANY
(i) The statements in the in the Prospectus under the caption "Tax
Considerations - Belgian Tax Considerations for Belgian Holders of Common
Stock", insofar as such statements constitute summaries of matters of Belgian
tax law, fairly summarize the matters referred to therein.
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EXHIBIT D
OPINION OF HAMILTON
BROOK SMITH & REYNOLDS, P.C.,
PATENTS COUNSEL FOR THE COMPANY
(i) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
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EXHIBIT E
OPINION OF DAVIS POLK & WARDWELL,
U.S. COUNSEL FOR THE UNDERWRITERS
(i) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights imposed
by law, the Company's Certificate of Incorporation or bylaws.
(ii) The statements in the Prospectus under the captions
"Description of Securities" and "Underwriters", insofar as such
statements constitute summaries of matters of United States federal law
or New York state law, fairly summarize the matters referred to
therein.
(i) Such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and schedules
and other financial and statistical data included therein as to which
such counsel need not express any opinion) comply as to form in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (B) has no reason to believe
that (except for financial statements and schedules and other financial
and statistical data as to which such counsel need not express any
belief) the Registration Statement and the prospectus included therein
at the time the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
With respect to paragraph (ii) above, counsel may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
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EXHIBIT F
OPINION OF JAKOB MOLLER, ESQ., LOGOS-legal services,
ICELANDIC COUNSEL FOR THE UNDERWRITERS
After having examined the following instruments:
(a) The Operating License;
(b) Act No. 139/1998, on a Health-Care Database passed by the
Icelandic Parliament on 22 December 1998 (the "Act");
(c) The Bill for the Act No. 139/1998, on a Health-Care
Database, with the accompanying explanatory notes, as presented by the
Minister to the Icelandic Parliament on the 123rd parliamentary assembly
1998-1999 (the "Bill")
(d) Regulation No. 32/2000 on a Health-Care Database issued by the
Minister on 22 January 2000 (the "Regulation").
(e) An Agreement between The Minister for Health and Social Security
and Islensk erfoagreining ehf. Relating to the Issue of an Operating
Licence for the Creation and Operation of a Healthcare Database, dated 21
January 2000 (the "Agreement");
(f) The Prospectus;
(g) Directive No. 95/46/EC of 24 October 1995 on the protection of
individuals with regard to the processing of personal data and on the free
movement of such data ("EC Directive 95/46");
(h) Lawbill no. 280/1999-2000, incorporating EU Directive 95/46 into
Icelandic law;
(i) The European Convention on Human Rights ("The
Convention")
hereinafter collectively referred to as the "Documents", we are of the
opinion that under the laws of Iceland at present in force:
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(i) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency in Iceland is required for the performance
by the Company of its obligations under this Agreement or the offering of the
Shares in Iceland as contemplated by the Prospectus.
(ii) The statements in the Prospectus under the captions "Risk Factors",
"Business-deCODE's Unique Approach-Database Services-The License" and
"Business-Government Regulation-The Icelandic Health Sector Database License",
in each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein.
(iii) The Act constitutes a legislative Act with a binding legal effect
in all respects.
(iv) The precautions taken to render data, originally personal, anonymous
constitute prima facie evidence that the Act, Regulation, License, and Agreement
do not conflict with Article 71 of the Constitution. Such prima facie evidence
could be overturned, but only by conclusive evidence to the contrary, proving
the security and encoding measures not to be sufficient to render the data on
the Database non-identifiable. The conclusion reached above will not change by
the passing of the Bill as it is currently pending before the Althing, the
Icelandic Parliament, for the incorporation of EU Directive 95/46 into Icelandic
law.
(v) The issuance of a second and concurrent operating license for a
second central health care database would be incompatible with the Act and
expose the Icelandic state to liability towards the Licensee.
(vi) The Minister can not revoke or suspend the Operating License without
good cause, and only on the grounds for revocation according to Article 13 of
the Act.
(vii) Neither the Act, the License itself nor the Agreement allow the
Licensee to expect the renewal of the License to the Licensee as licensee as a
legal certainty at its expiry in 12 years.
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(viii) The provisions on financial separation are consistent with
Icelandic competition law and do not include a regulation of the designation of
dividends by the Licensee nor the distribution of dividends out of the Licensee
and the receipt of dividends by deCODE genetics, Inc. from the Licensee.
(ix) The Licensee is not to receive any remuneration in lieu for the
obligation to relinquish the IHD, to deliver the software and hardware and
ensure intellectual property rights at the expiry of the License, except in the
sole event that operation of the Database is started again for business purposes
within 5 years of the end of the term of the License.
(x) The Indemnity Clause, being a very extensive one, will be
interpreted in a restrictive manner, should it become subject to judicial
review, as its effect is relieving a party (the Government) of obligations it
would have to bear under normal circumstances.
(xi) The Licensee's waiver of claims against the Government, would only
apply insofar as a claim was based on changes brought about by EEA rules or
other international rules, whilst claims brought about by a legislative change
or change in the License with a pure domestic law or e.g. a political origin
would not be regarded as coming within the ambit of the waiver.
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EXHIBIT G
[FORM OF SHAREHOLDER LOCK-UP LETTER]
-, 2000
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with deCODE genetics, Inc., a Delaware corporation
(the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by
the several Underwriters, including Morgan Stanley (the "UNDERWRITERS"), of
shares (the "SHARES") of the common stock, par value $.001, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of
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Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of any Shares to the Underwriters
pursuant to the Underwriting Agreement or (b) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the Public Offering. In addition, the undersigned agrees that,
without the prior written consent of Morgan Stanley on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
(Name)
(Address)
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<PAGE> 40
EXHIBIT H
[FORM OF SHAREHOLDER (SERIES B) LOCK-UP LETTER]
-, 2000
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that as part of the preparation for the
proposed public offering (the "PUBLIC OFFERING") of deCODE genetics Inc., a
Delaware corporation (the "COMPANY") by the several Underwriters, including
Morgan Stanley (the "UNDERWRITERS"), of shares (the "SHARES") of the common
stock, par value $.001, of the Company (the "COMMON STOCK") the Underwriters
have requested the following.
The undersigned hereby agrees that, without the prior written consent of
Morgan Stanley on behalf of the Underwriters, it will not, during the period
commencing on the date of the preliminary prospectus relating to the Public
Offering (the "PRELIMINARY PROSPECTUS") and ending 180 days after the date of
the final prospectus relating to the Public Offering (the "PROSPECTUS"), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement or (b) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Public Offering. In addition, the undersigned agrees that, without the prior
written consent of Morgan Stanley on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of
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Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock. This agreement is in consideration of the preparation of the
initial Public Offering by Underwriters and the Company.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions.
Very truly yours,
(Name)
(Address)
(Identification number ("kennitala"))
(Signature)
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EXHIBIT I
[FORM OF DIRECTOR/OFFICER LOCK-UP LETTER]
-, 2000
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with deCODE genetics, Inc., a Delaware corporation
(the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by
the several Underwriters, including Morgan Stanley (the "UNDERWRITERS"), of -
shares (the "SHARES") of the common stock, par value $.001, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, he/she will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior
I-1
<PAGE> 43
written consent of Morgan Stanley on behalf of the Underwriters, he/she will
not, during the period commencing on the date hereof and ending 180 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
(Name)
(Address)
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