Document:

Exhibit 4.9

 

RESALE REGISTRATION RIGHTS AGREEMENT

 

between

 

deCODE
GENETICS , INC .

 

J.P.
MORGAN SECURITIES INC .

 

and

 

LEHMAN BROTHERS INC .

 

as
representatives of the Initial Purchasers

 

 

DATED AS OF APRIL 14, 2004

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Shelf Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Additional Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Registration Procedures

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Registration Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Indemnification and Contribution

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Rule 144A

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Participation in Underwritten Registrations

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Miscellaneous

  	
   

  

 

 

RESALE REGISTRATION RIGHTS AGREEMENT, dated as
of April 14, 2004, between deCODE genetics, Inc., a Delaware corporation
(together with any successor entity, herein referred to as the “Company”), J.P. Morgan
Securities Inc. and Lehman Brothers Inc., as representatives of the several
initial purchasers (the “Initial
Purchasers”) listed on Schedule I to the purchase agreement
dated April 7, 2004 between the Company and the Initial Purchasers (the “Purchase Agreement”).

 

Pursuant to the Purchase Agreement, and the exercise by the Initial
Purchasers of their over-allotment option on April 8, 2004, the Initial
Purchasers have agreed to purchase from the Company $150,000,000 aggregate
principal amount of 3.5% Senior Convertible Notes due 2011 (the “Notes”).  The Notes initially will be convertible into
fully paid, nonassessable shares of common stock, par value $0.001 per share,
of the Company  (the “Common Stock”) on the
terms, and subject to the conditions, set forth in the Indenture (as defined
herein).  To induce the Initial
Purchasers to purchase the Notes, the Company has agreed to provide the
registration rights set forth in this Agreement pursuant to the Purchase
Agreement.

 

The parties hereby agree as follows:

 

1.             Definitions.  As used in this Agreement, the following
capitalized terms shall have the following meanings:

 

Additional
Amounts:   As
defined in Section 3(a) hereof.

 

Additional
Amounts Payment Date:   Each April 15 and October 15, commencing October 15, 2004.

 

Affiliate:   As such term is defined in Rule 405 under
the Securities Act.

 

Agreement:   This Resale Registration Rights Agreement,
as amended, modified or otherwise supplemented from time to time in accordance
with the terms hereof.

 

Blue
Sky Application: 
As defined in Section 6(a)(i) hereof.

 

Business
Day:  A day
other than a Saturday or Sunday or any day on which banking institutions in The
City of New York are authorized or obligated by law or executive order to
close.

 

Closing
Date:  The date
of this Agreement.

 

Commission:   Securities and Exchange Commission.

 

Common
Stock:   As
defined in the preamble hereto.

 

 

Effectiveness
Period:  As
defined in Section 2(a)(iii) hereof.

 

Effectiveness
Target Date: As defined in Section 2(a)(ii) hereof.

 

Exchange
Act: 
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder.

 

Holder:
A Person who owns, beneficially or otherwise, Transfer Restricted Securities.

 

Indemnified
Holder:  As
defined in Section 6(a) hereof.

 

Indenture:
The Indenture, dated as of April 14, 2004, between the Company and The Bank of
New York, as trustee (the “Trustee”), pursuant to which the Notes are to be
issued, as such Indenture is amended, modified or supplemented from time to
time in accordance with the terms thereof.

 

Initial
Purchasers:  As
defined in the preamble hereto.

 

Interest
Payment Date: Each April 15 and October 15 of each
year, commencing October 15, 2004.

 

Company:  As defined in the preamble hereto.

 

Majority
of Holders: 
Holders holding more than 50% of the aggregate principal amount at
maturity of Notes outstanding; provided
that, for purpose of this definition, a holder of shares of Common Stock which
constitute Transfer Restricted Securities when issued upon conversion of the
Notes shall be deemed to hold an aggregate principal amount at maturity of
Notes (in addition to the principal amount at maturity of Notes held by such
holder) equal to $1,000 times the quotient of (i) the number of such shares of
Common Stock received upon conversion of the Notes and then held by such holder
divided by (ii) the prevailing conversion rate, such prevailing conversion rate
as determined in accordance with the Indenture.

 

NASD:
National Association of Securities Dealers, Inc.

 

Notes:  As defined in the preamble hereto.

 

Person:
An individual, partnership, corporation, unincorporated organization, limited
liability company, trust, joint venture or a government or agency or political
subdivision thereof.

 

Prospectus:
The prospectus included in a Shelf Registration Statement, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

 

2

 

Purchase
Agreement:  As
defined in the preamble hereto.

 

Questionnaire:  As defined in Section 2(b) hereof.

 

Record Holder: With
respect to any Additional Amounts Payment Date, each Person who is a Holder on
the record date with respect to the Interest Payment Date on which such
Additional Amounts Payment Date shall occur. 
In the case of a Holder of shares of Common Stock issued upon conversion
of the Notes, “Record Holder” shall mean each Person who is a Holder of shares
of Common Stock that constitute Transfer Restricted Securities on the 15th day
preceding the relevant Additional Amounts Payment Date.

 

Registration
Default: As defined in Section 3(a) hereof.

 

Securities
Act: 
Securities Act of 1933, as amended, and the rules and resolutions of the
Commission thereunder.

 

Shelf
Filing Deadline: As defined in Section 2(a)(i) hereof.

 

Shelf
Registration Statement: As defined in Section 2(a)(i)
hereof.

 

Suspension
Period. As defined in Section 4(b)(i) hereof.

 

TIA:
Trust Indenture Act of 1939, as amended, and the rules and regulations of the
Commission thereunder, in each case, as in effect on the date the Indenture is
qualified under the TIA.

 

Transfer
Restricted Securities: Each Note and each share of
Common Stock issued upon conversion of Notes until the earlier of:

 

(a)         the date on which such Note or such
share of Common Stock issued upon conversion thereof has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement;

 

(b)         the date on which such Note or such
share of Common Stock issued upon conversion thereof is transferred in
compliance with Rule 144 under the Securities Act or may be sold or transferred
by a person who is not an Affiliate of the Company pursuant to Rule 144 under
the Securities Act (or any other similar provision then in force) without any
volume or manner of sale restrictions thereunder; and

 

(c)         the date on which such Note or such
share of Common Stock issued upon conversion ceases to be outstanding (whether
as a result of redemption, repurchase and cancellation, conversion or
otherwise); provided that any Note and any Common Stock issued upon conversion
of such Note that is redeemed or repurchased by the Company shall not be

 

3

 

deemed
Transfer Restricted Securities for purposes of this Agreement upon resale by
the Company.

 

Underwritten
Registration or Underwritten Offering: A registration
in which Notes or shares of our Common Stock issued upon conversion of Notes
are sold to an underwriter for reoffering to the public.

 

2.                           Shelf
Registration. (a) 
The Company shall:

 

(i)            not later than 90 days after the
date hereof (the “Shelf Filing Deadline”),
cause to be filed a registration statement pursuant to Rule 415 under the
Securities Act (together with any amendments thereto, and including any
documents incorporated by reference therein, the “Shelf Registration Statement”), which Shelf Registration
Statement shall provide for resales of all Transfer Restricted Securities held
by Holders that have provided the information required pursuant to the terms of
Section 2(b) hereof;

 

(ii)           use its commercially reasonable best
efforts to cause the Shelf Registration Statement to be declared effective by
the Commission as promptly as practicable, but in no event later than 180 days
after the date hereof (the “Effectiveness
Target Date”); and

 

(iii)          use its commercially reasonable best
efforts to keep the Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 4(b) hereof
to the extent necessary to ensure that (A) it is available for resales by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Agreement and (B) conforms with the requirements of this Agreement and the
Securities Act for a period (the “Effectiveness
Period”) of:

 

(A)          two years following the last date of
original issuance of any of the Notes; or

 

(B)           such shorter period that will
terminate when (x) all of the Holders of Transfer Restricted Securities are
able to sell all Transfer Restricted Securities immediately without restriction
pursuant to Rule 144(k) under the Securities Act or any successor rule thereto,
(y) when all Transfer Restricted Securities have ceased to be outstanding
(whether as a result of redemption, repurchase and cancellation, conversion or
otherwise) or (z) all Transfer Restricted Securities registered under the

 

4

 

Shelf
Registration Statement have been disposed of in accordance with the
Registration Statement.

 

(b)           To have its Transfer Restricted
Securities included in the Shelf Registration Statement pursuant to this
Agreement at the time of effectiveness, each Holder shall complete the Selling
Securityholder Notice and Questionnaire, the form of which is contained in
Annex A to the Offering Memorandum relating to the Notes (the “Questionnaire”), and deliver the
Questionnaire within 20 Business Days of the date of the Questionnaire.  The Company shall mail the Questionnaire at
least 20 Business Days (but not more than 40 Business Days) prior to the time
the Company intends in good faith to have the Shelf Registration Statement
declared effective by the Commission. 
Upon receipt of a written request for additional information from the
Company, each Holder who intends to be named as a selling securityholder in the
Shelf Registration Statement shall furnish to the Company in writing, within 20
Business Days after such Holder’s receipt of such request, such additional
information regarding such Holder and the proposed distribution by such Holder
of its Transfer Restricted Securities, in connection with the Shelf
Registration Statement or Prospectus or Preliminary Prospectus included therein
and in any application to be filed with or under state securities law, as the
Company may reasonably request.  In
connection with all such requests for information from Holders of Transfer
Restricted Securities, the Company shall notify such Holders of the
requirements set forth in this paragraph regarding their obligation to provide
the information requested pursuant to this Section.  Each Holder must notify the Company not later than three Business
Days prior to any proposed sale by that Holder pursuant to the Shelf
Registration Statement.  This notice
will be effective for five Business Days. 
Holders who have not delivered a Questionnaire prior to the
effectiveness of the Shelf Registration Statement may receive a Questionnaire
from the Company upon request.  Upon
receipt of such a completed Questionnaire from a Holder following the effectiveness
of the Shelf Registration Statement, the Company shall, as promptly as
reasonably practicable, and in any event within 30 calendar days, file such
amendments to the Shelf Registration Statement or supplements to a related
Prospectus as are necessary to permit such Holder to be named in, and to
transfer its Transfer Restricted Securities pursuant to, the Shelf Registration
Statement.  Each Holder as to which the
Shelf Registration Statement is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make
information previously furnished to the Company by such Holder not materially
misleading.

 

5

 

3.             Additional
Amounts.

 

(a)        If:

 

(i)      the Shelf Registration Statement is not
filed with the Commission prior to or on the Shelf Filing Deadline;

 

(ii)       the Shelf Registration Statement has not
been declared effective by the Commission prior to or on the Effectiveness
Target Date;

 

(iii)       except as provided in Section 4(b)(i)
hereof, the Shelf Registration Statement is filed and declared effective but,
during the Effectiveness Period, shall thereafter cease to be effective or fail
to be usable for its intended purpose without being succeeded within five Business
Days by a post-effective amendment to the Shelf Registration Statement, a
supplement to the Prospectus or a report filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure
and, in the case of a post-effective amendment, is itself immediately declared
effective; or

 

(iv)       (A) prior to or on the 60th or 90th day,
as the case may be, of any Suspension Period, such suspension has not been
terminated or (B) Suspension Periods exceed an aggregate of 120 days in any
360-day period,

 

(each such event referred to in foregoing
clauses (i) through (iv), a “Registration
Default”), the Company hereby agrees to pay additional amounts (“Additional Amounts”) with respect to the
Notes from and including the day following the Registration Default to but
excluding the day on which the Registration Default has been cured, accruing at
a rate:

 

(x) with respect to each day during the first 90-day period during
which a Registration Default shall have occurred and be continuing, equal to
0.25% per annum of the principal amount of the Notes, and

 

(y) with respect to each day during the period commencing on the 91st
day following the day the Registration Default shall have occurred and be
continuing, equal to 0.50% per annum of the principal amount of the Notes; provided that in no event shall Additional
Amounts accrue at a rate per annum exceeding 0.50% of the principal amount of
the Notes.

 

(b)           All accrued Additional Amounts shall
be paid semiannually in arrears to Record Holders by the Company on each
Additional Amounts Payment Date by wire transfer of immediately available funds
or by federal funds check.  Following
the cure of all Registration Defaults

 

6

 

relating to
any particular Security, the accrual of Additional Amounts with respect to such
Security will cease.  The Company agrees
to deliver all notices, certificates and other documents contemplated by the
Indenture in connection with the payment of Additional Amounts.

 

All obligations of the Company set forth in this Section 3 that are
outstanding with respect to any Notes at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such Transfer Restricted Security shall have been
satisfied in full.

 

The Additional Amounts set forth above shall be the exclusive monetary
remedy available to the Holders of Notes for such Registration Default.

 

4.             Registration Procedures.

 

(a)        In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 4(b) hereof and shall use its commercially reasonable best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and pursuant thereto, shall prepare and file with the
Commission a Shelf Registration Statement relating to the registration on any
appropriate form under the Securities Act.

 

(b)        In connection with the Shelf
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities, the Company shall:

 

(i)      Use its commercially reasonable best
efforts to keep the Shelf Registration Statement continuously effective during
the Effectiveness Period; upon the occurrence of any event or the existence of
any fact that would cause the Shelf Registration Statement or the Prospectus
contained therein, in either case including any document incorporated by
reference therein, (A) to contain a material misstatement or omission or (B)
not be effective and usable for resale of Transfer Restricted Securities during
the Effectiveness Period, the Company shall file promptly an appropriate amendment
to the Shelf Registration Statement, a supplement to the Prospectus or a report
filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use its commercially
reasonable best efforts to cause such amendment to be declared effective and
the Shelf Registration Statement and the related Prospectus to become usable
for their intended purposes as soon as practicable thereafter.  Notwithstanding the foregoing, the Company
may suspend the

 

7

 

effectiveness
of the Shelf Registration Statement by written notice to the Holders for a
period not to exceed an aggregate of 60 days in any 90-day period (each such
period, a “Suspension Period”) if:

 

(x)  an event occurs and is continuing as a
result of which the Shelf Registration Statement would, in the Company’s
reasonable judgment, contain an 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; and

 

(y)  the Company reasonably determines that the
disclosure of such event at such time would have a material adverse effect on
the business of the Company (and its subsidiaries, if any, taken as a whole);

 

provided that in the event the disclosure
relates to a previously undisclosed proposed or pending material business
transaction, the disclosure of which would impede the Company’s ability to
consummate such transaction, the Company may extend a Suspension Period from 60
days to 90 days; provided, however,  that Suspension Periods shall not exceed an
aggregate of 120 days in any 360-day period.

 

(ii)           Prepare and file with the Commission
such amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary to keep the Shelf Registration Statement
effective during the Effectiveness Period; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Securities Act
in a timely manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in the Shelf Registration
Statement or supplement to the Prospectus.

 

(iii)          Advise the underwriter(s), if any, and
selling Holders promptly (but in any event within two Business Days) and, if
requested by such Persons, to confirm such advice in writing:

 

(A)          when the Prospectus or any Prospectus
supplement or post-effective amendment (other than a document incorporated by
reference upon filing with the Commission) has been filed, and, with respect to
the Shelf

 

8

 

Registration
Statement or any post-effective amendment thereto (other than a document
incorporated by reference upon filing with the Commission), when the same has
become effective,

 

(B)           of any request by the Commission for
amendments to the Shelf Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto,

 

(C)           of the issuance by the Commission of
any stop order suspending the effectiveness of the Shelf Registration Statement
under the Securities Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, or

 

(D)          of the existence of any fact or the
happening of any event, during the Effectiveness Period, that makes any
statement of a material fact made in the Shelf Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated
by reference therein untrue, or that requires the making of any additions to or
changes in the Shelf Registration Statement or the Prospectus in order to make
the statements therein not misleading.

 

If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Shelf Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its commercially reasonable
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time and will provide to the Initial Purchasers and each Holder who is
named in the Shelf Registration Statement prompt notice of the withdrawal of
any such order.

 

(iv)          Furnish to each of the selling Holders
and each of the underwriter(s), if any, before filing with the Commission, a
copy of the Shelf Registration Statement and copies of any Prospectus included
therein or any amendments or supplements to the Shelf Registration Statement or
Prospectus (other than documents incorporated by reference after the initial
filing of the Shelf Registration Statement), which documents will be subject to
the review of such Holders and underwriter(s), if any, for a period of at least
ten Business Days (in the case of the Shelf Registration

 

9

 

Statement and
Prospectus) and two Business Days (in the case of any amendment or supplement
thereto), and the Company will not file the Shelf Registration Statement or
Prospectus or any amendment or supplement to the Shelf Registration Statement
or Prospectus (other than documents incorporated by reference) to which a
selling Holder of Transfer Restricted Securities covered by the Shelf
Registration Statement or the underwriter(s), if any, shall reasonably object
prior to the filing thereof.  A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected to
such filing if the Shelf Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission.

 

(v)           Make available at reasonable times
for inspection by one or more representatives of the selling Holders,
designated in writing by a Majority of Holders whose Transfer Restricted
Securities are included in the Shelf Registration Statement, any underwriter
participating in any distribution pursuant to the Shelf Registration Statement,
and any attorney or accountant retained by such selling Holders or any of the
underwriter(s), all financial and other records, pertinent corporate documents
and properties of the Company as shall be reasonably necessary to enable them
to exercise any applicable due diligence responsibilities, and cause the
Company’s officers, directors, managers and employees to supply all information
reasonably requested by any such representative or representatives of the
selling Holders, underwriter, attorney or accountant in connection with the
Shelf Registration Statement after the filing thereof and before its
effectiveness, provided, however,  that any information designated by the
Company as confidential at the time of delivery of such information shall be
kept confidential by the recipient thereof.

 

(vi)          If requested by any selling Holders or
the underwriter(s), if any, promptly incorporate in the Shelf Registration
Statement or Prospectus, pursuant to a supplement or post effective amendment
if necessary, such information as such selling Holders and underwriter(s), if
any, may reasonably request to have included therein, including, without
limitation: (1) information relating to the “Plan of Distribution” of the
Transfer Restricted Securities, (2) information with respect to the principal
amount of Notes or number of shares of Common Stock being sold to such
underwriter(s), (3) the purchase price being paid therefor and (4) any other
terms of the offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or post
effective amendment as soon as reasonably practicable after the Company

 

10

 

is notified of
the matters to be incorporated in such Prospectus supplement or post effective
amendment.

 

(vii)         Furnish to each selling Holder and each
of the underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto (and any documents incorporated by reference therein or
exhibits thereto (or exhibits incorporated in such exhibits by reference) as
such Person may request).

 

(viii)        Deliver to each selling Holder and each
of the underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; subject to any notice by the Company in
accordance with this Section 4(b) of the existence of any fact or event of the
kind described in Section 4(b)(iii)(D), the Company hereby consents to the use
of the Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto.

 

(ix)           Upon request, furnish to each selling
Holder and each underwriter, if any, in such substance and scope as they may
reasonably request and as are customarily made by issuers to underwriters in
primary underwritten offerings for selling security holders, upon the date of
closing of any sale of Transfer Restricted Securities in an Underwritten
Registration:

 

(A)          a certificate, dated the date of such
closing, signed by an executive officer of the Company confirming, as of the
date thereof, matters of the type set forth in Section 5(a) of the Purchase
Agreement and such other matters as such parties may reasonably request;

 

(B)           opinions, each dated the date of such
closing, of counsel to the Company covering such of the matters as are
customarily covered in legal opinions to underwriters in connection with
underwritten offerings of securities; and

 

(C)           customary comfort letters, dated the
date of such closing, from the Company’s independent accountants in the
customary form and covering matters of the type customarily covered in comfort
letters to

 

11

 

underwriters
in connection with underwritten offerings of securities.

 

(x)            Set forth in full in the
underwriting agreement, if any, indemnification provisions and procedures which
provide rights no less protective than those set forth in Section 6 hereof with
respect to all parties to be indemnified.

 

(xi)           Deliver such other documents and
certificates as may be reasonably requested by such parties to evidence
compliance with Section 4(b)(ix) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
selling Holders pursuant to this Section 4(b)(xi).

 

(xii)          Before any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the underwriter(s),
if any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions in the United States as the selling Holders
or underwriter(s), if any, may reasonably request and do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however,
that the Company shall not be required (A) to register or qualify as a foreign
corporation or a dealer of securities where it is not now so qualified or to
take any action that would subject it to the service of process in any
jurisdiction where it is not now so subject or (B) to subject itself to
taxation in any such jurisdiction if it is not now so subject.

 

(xiii)         Cooperate with the selling Holders and
the underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends (unless required by applicable securities
laws); and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days before any sale
of Transfer Restricted Securities made by such underwriter(s).

 

(xiv)        Use its commercially reasonable best
efforts to cause the Transfer Restricted Securities covered by the Shelf
Registration Statement to be registered with or approved by such other U.S.
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the

 

12

 

underwriter(s),
if any, to consummate the disposition of such Transfer Restricted Securities.

 

(xv)         Provide CUSIP numbers for all Transfer
Restricted Securities not later than the effective date of the Shelf
Registration Statement and provide the Trustee under the Indenture with
certificates for the Notes that are in a form eligible for deposit with The Depository
Trust Company.

 

(xvi)        Cooperate and assist in any filings
required to be made with the NASD and in the performance of any due diligence
investigation by any underwriter that is required to be retained in accordance
with the rules and regulations of the NASD.

 

(xvii)       Otherwise use its commercially reasonable
best efforts to comply with all applicable rules and regulations of the
Commission and all reporting requirements under the Exchange Act.

 

(xviii)      Cause the Indenture to be qualified under
the TIA not later than the effective date of the Shelf Registration Statement
required by this Agreement, and, in connection therewith, cooperate with the
Trustee and the holders of Notes to effect such changes to the Indenture as may
be required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its commercially reasonable best efforts to
cause the Trustee thereunder to execute all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner.

 

(xix)         Cause all shares of Common Stock
covered by the Shelf Registration Statement to be listed or quoted, as the case
may be, on each securities exchange or automated quotation system on which
similar securities issued by the Company are then listed or quoted.

 

(xx)          Provide to each Holder upon written
request each document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act after the effective date of the
Shelf Registration Statement.

 

(xxi)         If requested by the underwriter(s),
make appropriate officers of the Company available to the underwriter(s) for
meetings with prospective purchasers of the Transfer Restricted Securities and
prepare and present to potential investors customary “road show” or marketing
materials in a

 

13

 

manner
consistent with other new issuances of other securities similar to the Transfer
Restricted Securities.

 

(c)           Each Holder agrees by acquisition of
a Transfer Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in Section
4(b)(iii)(D) hereof, such Holder will, and will use its reasonable best efforts
to cause any underwriter(s) in an Underwritten Offering to, forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the Shelf
Registration Statement until:

 

(i)      such Holder has received copies of the
supplemented or amended Prospectus contemplated by Sections 4(b)(i) and
4(b)(viii) hereof; or

 

(ii)     such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus.

 

If so directed by the Company, each Holder
will deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in such Holder’s possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice of suspension.

 

5.             Registration Expenses.

 

(a)     All expenses incident to the Company’s
performance of or compliance with this Agreement shall be borne by the Company
regardless of whether a Shelf Registration Statement becomes effective,
including, without limitation:

 

(i)      all registration and filing fees and
expenses (including filings made by any Initial Purchasers or Holders with the
NASD);

 

(ii)     all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws;

 

(iii)    all expenses of printing (including printing
of Prospectuses and certificates for the Common Stock to be issued upon
conversion of the Notes) and the Company’s expenses for messenger and delivery
services and telephone;

 

(iv)    all fees and disbursements of counsel to the
Company and, subject to Section 5(b) below, the Holders of Transfer Restricted
Securities;

 

14

 

(v)     all application and filing fees in
connection with listing (or authorizing for quotation) the Common Stock on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and

 

(vi)    all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).

 

The Company shall bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

 

(b)     In connection with the Shelf Registration
Statement required by this Agreement, including any amendment or supplement
thereto, and any other documents delivered to any Holders, the Company shall
reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being registered pursuant to the Shelf Registration Statement, as
applicable, for the reasonable fees and disbursements of not more than one
counsel, which shall be chosen by a Majority of Holders for whose benefit the
Shelf Registration Statement is being prepared.

 

6.             Indemnification and Contribution.

 

(a)     The Company shall indemnify and hold
harmless each Holder, such Holder’s officers, directors, partners and employees
and each person, if any, who controls such Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Indemnified Holder”), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to resales of the Transfer Restricted Securities), to which
such Indemnified Holder may become subject, insofar as any such loss, claim,
damage, liability or action arises out of, or is based upon:

 

(i)      any untrue statement or alleged untrue
statement of a material fact contained in (A) the Shelf Registration Statement
or Prospectus or any amendment or supplement thereto or (B) any blue sky
application or other document or any amendment or supplement thereto prepared
or executed by the Company (or based upon written information furnished by or
on behalf of the Company expressly for use in such blue sky application or
other document or amendment on supplement) filed in any jurisdiction
specifically for the purpose of qualifying any or all of the Transfer
Restricted Securities under the securities law of

 

15

 

any state or
other jurisdiction (such application or document being hereinafter called a “Blue Sky Application”); or

 

(ii)     the omission or alleged omission to state
in the Shelf Registration Statement, Prospectus or any amendment or supplement
thereto, or in any Blue Sky Application, any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,

 

and shall reimburse each Indemnified Holder
promptly upon demand for any legal or other expenses reasonably incurred by
such Indemnified Holder in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action
as such expenses are incurred; provided,
however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, (A) any untrue statement
or alleged untrue statement or omission or alleged omission made in the Shelf
Registration Statement or Prospectus or amendment or supplement thereto or Blue
Sky Application or other document referred to in Section 6(a)(i) hereof in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder specifically for inclusion therein and
(B) the failure of the Indemnified Holder to deliver any corrective amendment
or supplement after delivery by the Company to such Indemnified Holder of such
amendment or supplement.  The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Indemnified Holder.

 

(b)           Each Holder, severally and not
jointly, shall indemnify and hold harmless the Company, its officers, directors
and employees and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such officer, director, employee or controlling person may
become subject, insofar as any such loss, claim, damage or liability or action
arises out of, or is based upon:

 

(i)      any untrue statement or alleged untrue
statement of any material fact contained in the Shelf Registration Statement or
Prospectus or any amendment or supplement thereto or any Blue Sky Application
or other document referred to in Section 6(a)(i) hereof; or

 

(ii)     the omission or the alleged omission to
state in the Shelf Registration Statement, Prospectus or any amendment or
supplement thereto, or in any Blue Sky Application or other document referred
to in Section 6(a)(i) hereof, any material fact required to be stated therein
or necessary to make the statements

 

16

 

therein, in
light of the circumstances under which they were made, not misleading,

 

but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder (or its related Indemnified
Holder) specifically for use therein, and shall reimburse the Company and any
such officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by the Company or any such officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action
as such expenses are incurred.  In no
event shall the liability of any Holder hereunder be greater in amount than the
dollar amount of the proceeds received by such Holder upon the sale of the
Transfer Restricted Securities pursuant to the Shelf Registration Statement
giving rise to such indemnification obligation.  The foregoing indemnity agreement is in addition to any liability
which any Holder may otherwise have to the Company and any such officer,
employee or controlling person.

 

(c)           Promptly after receipt by an
indemnified party under this Section 6 of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 6,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
under this Section 6 except to the extent it has been materially prejudiced by
such failure and, provided,  further,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6.  If any such claim or action
shall be brought against an indemnified party, and the indemnified party shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. 
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided, however,
that a Majority of Holders shall have the right to employ a single counsel to
represent jointly a Majority of Holders and their respective officers,
directors, partners, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by a Majority of Holders against the Company under this Section 6, and, if a
Majority of Holders seeking

 

17

 

indemnification
shall have been advised by legal counsel that there may be one or more legal
defenses available to them and their respective directors, officers, partners,
employees and controlling persons that are different from or additional to
those available to the Company and its officers, directors, employees and
controlling persons, the fees and expenses of a single separate counsel shall
be paid by the Company.  No indemnifying
party shall:

 

(i)      without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld) settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or

 

(ii)     be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be
a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or judgment.

 

(d)           If the indemnification provided for
in this Section 6 shall for any reason be unavailable or insufficient to hold
harmless an indemnified party under Section 6(a) or 6(b) in respect of any
loss, claim, damage or liability (or action in respect thereof) referred to
therein, each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability (or action in
respect thereof):

 

(i)      in such proportion as is appropriate to
reflect the relative benefits received by the Company from the offering and
sale of the Transfer Restricted Securities on the one hand and a Holder with
respect to the sale by such Holder of the Transfer Restricted Securities on the
other, or

 

(ii)     if the allocation provided by Section
6(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in Section
6(d)(i) but also the relative fault of the Company on the one hand and the
Holders on the other in connection with the statements or omissions or alleged
statements or alleged omissions that resulted

 

18

 

in such loss,
claim, damage or liability (or action in respect thereof), as well as any other
relevant equitable considerations.

 

The relative benefits received by the Company
on the one hand and a Holder on the other with respect to such offering and
such sale shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes purchased under the Purchase Agreement
(before deducting expenses) received by the Company on the one hand, bear to
the total proceeds received by such Holder with respect to its sale of Transfer
Restricted Securities on the other.  The
relative fault of the parties shall be determined by reference to 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 on the one hand or the Holders on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. 
The Company and each Holder agree that it would not be just and
equitable if the amount of contribution pursuant to this Section 6(d) were
determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the first sentence of this paragraph
(d).  The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 6 shall be deemed
to include, for purposes of this Section 6, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim.  Notwithstanding the provisions of this
Section 6, no Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Transfer Restricted Securities
purchased by it were resold exceeds the amount of any damages which such Holder
has otherwise been required to pay by reason of any 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 Holders’ obligations to contribute as
provided in this Section 6(d) are several and not joint.

 

7.             Rule 144A.   In the event the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company hereby agrees with each
Holder, for so long as any Transfer Restricted Securities remain outstanding,
to make available to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.

 

8.             Participation in Underwritten Registrations.  No
Holder may participate in any Underwritten Registration hereunder unless such
Holder:

 

19

 

(a)         agrees to sell such Holder’s Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements; and

 

(b)         completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.

 

9.                           Miscellaneous.

 

(a)         Remedies.   The Company
acknowledges and agrees that any failure by the Company to comply with its
obligations under Section 2 hereof may result in material irreparable injury to
the Initial Purchasers or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce
the Company’s obligations under Section 2 hereof.  The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

 

(b)         Actions Affecting Transfer Restricted Securities.
  The Company shall not, directly or indirectly, take any action with
respect to the Transfer Restricted Securities as a class that would adversely
affect the ability of the Holders of Transfer Restricted Securities to include
such Transfer Restricted Securities in a registration undertaken pursuant to
this Agreement.

 

(c)         No Inconsistent Agreements.   The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.  In addition, the Company shall not grant to any of its security
holders (other than the Holders of Transfer Restricted Securities in such capacity)
the right to include any of its securities in the Shelf Registration Statement
provided for in this Agreement other than the Transfer Restricted
Securities.  Except as contained in any
agreement filed as an exhibit to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2003, the Company has not previously entered into
any agreement (which has not expired or been terminated) granting any
registration rights with respect to its securities to any Person which rights
conflict with the provisions hereof.

 

(d)         Amendments and Waivers.   This
Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given, unless the

 

20

 

Company has
obtained the written consent of a Majority of Holders or such greater
percentage of the Holders as required by the Indenture.

 

(e)         Notices.  
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, first class mail (registered or
certified, return receipt requested), telex, facsimile transmission, or air
courier guaranteeing overnight delivery:

 

(i)      if to a Holder, at the address set forth
on the records of the registrar under the Indenture or the transfer agent of
the Common Stock, as the case may be; and

 

(ii)       if to the Company:

 

	
  deCODE genetics, Inc.

  Sturlugata 8

  Reykjavik, Iceland

  Attention:  Corporate Counsel

  Fax: +354-570-1806

  Telephone: +354-570-1943

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Stevens & Lee, P.C.

  600 College Road East

  Suite 4400

  Princeton, NJ 08540

  United States of America

  
	
  Attention: Marsha E. Novick, Esq.

  Fax: +1-610-371-7929

  Telephone: +1-609-987-6677

  

 

All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if transmitted by
facsimile; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.

 

(f)            Successors and Assigns.   This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that (i) this Agreement
shall not inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired Transfer
Restricted Securities from such Holder and (ii) nothing contained herein shall
be deemed to

 

21

 

permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms of the Purchase Agreement or the Indenture.  If any transferee of any Holder shall
acquire Transfer Restricted Securities, in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement.

 

(g)           Counterparts.   This Agreement may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

 

(h)           Securities Held by the Company or Its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Transfer Restricted Securities is required hereunder, Transfer Restricted
Securities held by the Company or its Affiliates shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.

 

(i)            Headings.   The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.

 

(j)            Governing Law.   This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

(k)           Severability.   If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

 

(l)            Entire Agreement.   This Agreement
is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. 
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

22

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

	
   

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kari Stefansson

  
	
   

  	
   

  	
  Title:

  	
  President and Chief

  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  J.P. Morgan Securities Inc.

  Lehman Brothers Inc.

  
	
   

  	
  Acting severally on behalf of themselves

  and the several initial purchasers named in

  Schedule I to the Purchase Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  J.P. Morgan Securities Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Yaw Asamoah-Duodu 

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Lehman Brothers Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven R. Halperin

  
	
   

  	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.3

English
translation of Icelandic document

 

Loan Agreement

(Loan in foreign currency)

 

 

Between

 

 

Vetrargarðurinn ehf.

as Borrower

 

and

 

Íslandsbanki hf.

as Lender

 

 

Table of contents

 

	
  1.

  	
  AMOUNT OF LOAN AND DISBURSEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  REPAYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST, INTEREST ADJUSTMENTS AND PAYMENT
  OF INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  COST

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  CONDITIONS FOR DISBURSEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  SPECIFIC WARRANTS OF THE BORROWER

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PAYMENT OF TAXES RELATING TO THE CONCLUSION
  OF THE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  SPECIFIC COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  EVENTS OF DEFAULT – REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  FORCE MAJEURE

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  FURTHER PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ANNEX 1 – LOAN DISBURSEMENT APPLICATION

  	
   

  
	
   

  	
  ANNEX 2 - FOREIGN CURRENCY ACCOUNTS

  	
   

  

 

2

 

Íslandsbanki
hf., State Reg. No. 550500-3530, Kirkjusandur 2, 155 Reykjavík, hereinafter
referred to as the Lender, and Vetrargarðurinn, State Reg. No. 581201-2490,
Sturlugata 8 ehf., Reykjavík, hereinafter referred to as the Borrower, enter
into the following

 

Loan Agreement

 

on a
loan for a term of 9 years in the amount of up to

 

USD 17,500,000.- seventeen million five hundred thousand
00/100 US dollars

 

on
the terms described herein.

 

1.              Amount of Loan and Disbursement

 

The Borrower undertakes to borrow, and the Lender undertakes to lend the
agreed amount. The loan is available for disbursement as of the signature of
this Agreement until 19 March 2004.  The
loan shall be disbursed to the Borrower in a single payment.

 

The Borrower shall send to the Lender a disbursement application with at
least 2 working days’ notice specifying the account number in which the loan
shall be deposited.  A disbursement
application form is attached to this Agreement as Annex 1.

 

In the event that the Borrower has not sent a written disbursement
application before 17 March 2004 the loan offer of the Lender shall lapse
without notice and without warning, provided that the Lender has not given
written confirmation to the contrary. 
In the event that the obligation of the Lender lapses pursuant to the
above, the Borrower shall pay the Lender all costs incurred by the Lender as a
result of this Agreement.

 

The Lender shall dispose of the loan directly for the full discharge of
a long-term loan to the Borrower from the Lender dated 13 March 2002, initially
amounting to USD 6.62 million, with the remaining balance for general use in
the operation of the Company.

 

2.              Repayment

 

The Borrower undertakes to repay the loan in 20 quarterly instalments,
the first instalment being due for payment on 1
March 2009.

 

The loan shall be repaid into the foreign currency account of the
Lender, identified in Annex 2.

 

In the event that the payment date of instalments and/or interest does
not fall on a banking day, the payment date shall be transposed to the banking
day immediately following, unless such day is in the following month, in which
case the payment date shall be transposed to the immediately preceding banking
day.

 

Annually, as of the interest payment date on 1 March 2006, the Borrower may pay the loan in full subject to
payment of a prepayment premium of 1% for each remaining year of the term of
the loan, as current at any time.  In
any case, such prepayment premium shall never exceed 6%. No later than 10
working days prior to the interest payment date, the Borrower shall notify the
Lender of a proposed prepayment of the loan.

 

Repayment and/or mortgaging relating to
mortgage ratio:

 

On each due date during the term of the loan the Borrower shall ensure
that the mortgage ratio (calculated as the balance of the bond issued by the
Borrower on 3 January 2002 in the initial amount of ISK 1,400 million, in
addition to the balance pursuant to a loan agreement dated 21 December between
Sturlugata ehf. (currently the Borrower “Vetrargarðurinn ehf.”) and the Lender
in the initial amount USD 4.0 million, as well as the loan pursuant to this
Agreement, divided by the market value of the property Sturlugata 8, Reykjavík)
is less than or equal to the ratio shown in the following table:

 

3

 

	
  From the
  signing of this Loan Agreement until December 2004

  	
   

  	
  >75

  	
  %

  
	
  From
  December 2004

  	
   

  	
  >70

  	
  %

  
	
  From
  December 2005

  	
   

  	
  >65

  	
  %

  
	
  From
  December 2006 to the close of the loan term

  	
   

  	
  >60

  	
  %

  

 

The Borrower may, at his own option, prepay the loan on interest payment
dates, without payment of a separate prepayment premium, provided that the
above ratios are maintained; alternatively, the Borrower may provide as
security, in the form of cash, an amount corresponding to the amount of
prepayment required to maintain the above ratios.

 

During the term of the loan, the Borrower is entitled to request on two
occasions an independent assessment of the market value of the property at
Sturlugata 8, Reykjavík.  The Borrower
shall bear the expense of such assessment. 
The property shall be assessed by two real estate agencies, Kjöreign
ehf. and Eignamiðlunin ehf., and the market value for the purposes of this
Agreement shall be the average of the assessment of both real estate
agencies.  If either or both of the
above real estate agencies cease their operation during the term of the
Agreement the Borrower and the Lender shall jointly decide which accredited
real estate agent shall replace them.  The Lender and the Borrower agree that the market value of
Sturlugata 8 on the signature of this Agreement is the assessed market value of
the property in November 2001, amounting to ISK 3,200 million, adjusted from
time to time pursuant to the consumer price index on the basis of the 2001
November base index (217.7 points), corresponding, on the signature of this
Agreement, to ISK 3,371 million, unless this is changed following an
independent assessment pursuant to the above.

 

A banking day is a business day when banks are open in Reykjavík and
London.

 

The place of payment is with the Lender.

 

3.              Interest, Interest Adjustments and Payment of Interest

 

(a)                                                                  The loan
shall carry an interest rate equivalent to 3-month
LIBOR rates as determined for the US dollar at any time, plus a
margin of 3.0% - three-point-zero percent. LIBOR
(London Inter Bank Offered Rate) interest refers to interest on the London
Interbank Market as posted at 11 a.m., local time, in London on the Reuter BBA
screen.

 

(b)                                                                 In the
event of default by the Borrower in respect of a debt pursuant to this Loan
Agreement, the Borrower shall pay penalty interest corresponding to the base
interest rate plus the margin referred to in item (a) above, plus the added
default margin of 6.0% - six-point-zero
percent of the due amount or called-in amount from the due date to
the date of payment.

 

(c)                                                                  In the
event of default by the Borrower on the loan pursuant to this Agreement, the
Lender may, furthermore, convert the loan into Icelandic krónur based on the
posted selling rate of the Lender for the currencies of which the loan is
composed at the close of the date of calling in.  In place of interest and default margin pursuant to item (b)
above, the default interest shall in such an event be paid based on the base
default interest rate posted by the Central Bank of Iceland at each time with
default margins pursuant to Paragraph 1 of Article 6 of the Interest Act No.
38/2001, on the due or called-in amount from the due date to the date of
payment. The Lender shall notify the Borrower of the date of the intended
conversion of the debt with a minimum advance notice of one week. Once the loan
has been converted into Icelandic krónur it may not be converted back into the
original currency without the written approval of the Borrower.

 

Interest is calculated from the date of disbursement of the loan. The
interest shall be calculated so that on an annual basis the actual number of
days is used to multiply and then divided by 360.

 

The interest is determined in advance for three months at a time, two
working days prior to the beginning of the next interest period.  The first interest period may be longer or
shorter, as it begins on the date of the disbursement of the loan and ends on 1
June 2004.

 

4

 

Interest shall be paid every three months, with the first payment on 1
June 2004.

 

Unpaid default interest shall accrue to the principal every 12 months,
for the first time 12 months after the first date of default.

 

The Lender may adjust the interest margin unilaterally on the interest
payment date 1 March 2009. No
later than 30 days prior to the said interest payment date, the Lender shall
notify the Borrower of the applicable margin as of that interest payment date.
If the Lender’s decision on the interest margin is unacceptable to the
Borrower, the Borrower may pay the loan, including accrued interest and costs,
in full, on the review date of the interest without payment of a separate
prepayment fee, provided that he has informed the Lender of such intention with
one week’s notice.

 

4.              Cost

 

The Borrower shall pay a facility fee amounting to 2% of the total loan amount, to be deducted
on the disbursement of the loan.

 

The Borrower undertakes to pay any collection costs arising from each
interest and/or instalment payment pursuant to the tariff of the Lender as
current at any time as well as any costs which may arise from collection
measures taken as a result of his default, at no cost to the Lender.  In addition, the Borrower shall pay the cost
of individual services of the Lender pursuant to the tariff of the Lender, as
current at any time, such as costs resulting from transfers and the cost of
delivering payments to the Lender.

 

5.              Insurance

 

A General Bond previously issued by the Borrower to the Lender, dated 28
February 2002, initially secured by a third-rank mortgage (currently a
second-rank mortgage) on the property Sturlugata 8, Reykjavík, amounting to ISK
800,000,000 and USD 7,280,000, secured the debts of that Loan Agreement and the
bonds to be paid up with the loan taken pursuant to this Agreement.

 

The Borrower undertakes to inscribe the General Bond so that instead of
securing the above debts, which will now be paid in full, the Bond will secure
all the debts and obligations of the Borrower under the present Loan
Agreement.  A separate statement shall
be issued to this effect to be officially registered.

 

By their signature of this Loan Agreement, and as surety for the prompt
and full payment of the loan, deCODE genetics Inc., Delaware, USA, and Íslensk
erfðagreining ehf., State Reg. No. 691295-3549, Sturlugata 8, Reykjavík,
undertake to guarantee the loan, jointly and severally, as absolute guarantors.
The guarantee covers the payment of the amount of the loan including all
interest and costs of any kind. The guarantee shall remain in effect regardless
of whether a payment deferral is granted on one or more occasion, until such
time as the loan is fully discharged.

 

6.              Conditions for Disbursement

 

The Borrower’s delivery of the following documents to the Lender, of the
content and in a form acceptable to the Lender, is a prerequisite for the
disbursement of the loan pursuant to this Agreement:

 

1.               The Articles of
Association of the Borrower and Guarantors.

2.               Decision of the Board
of Directors of the Borrower concerning the borrowing and mortgaging or a power
of attorney from the Board for the borrowing and mortgaging.

3.               Decision
of the Board of Directors of Íslensk erfðagreining ehf. and deCODE genetics
Inc. concerning absolute guarantees pursuant to Article 5 of this Agreement or
power of attorney to sign the loan documents.

4.               Certification that
the Borrower has purchased insurance for the mortgaged property.

5.               An
inscription on the General Bond pursuant to Article 5, officially registered
without comment.

6.               “Secretary’s
Certificate” from deCODE genetics, Inc. to the effect that the guarantee of
deCODE genetics Inc is provided on the authority of the Board of Directors and
is binding for the Company.

7.               Written disbursement
instructions.

 

5

 

7.              Specific Warrants of the Borrower

 

By his signature on this Loan Agreement the Borrower warrants to the
Lender that:

a)              All the necessary
decisions taken on the part of the Borrower in order to establish a binding
agreement have been made in a lawful manner;

b)             The Agreement is
signed on behalf of the Borrower by parties legally entitled to do so and a
contract has been established which is binding for the Borrower in every respect;

c)              The Agreement does
not violate the Articles of Association of the Borrower or any agreement that
the Borrower has entered into with a third party or parent company or
subsidiary;

d)             The Borrower is not
engaged in any litigation or disputes that could have a substantial negative
impact on his financial standing or ability to fulfil his obligations under the
provisions hereof;

e)              None of the events of
default described in Article 10 are present;

f)                He has provided the
Lender with all the information necessary to assess his financial standing;

g)             The information
contained in the Agreement, or provided by the Borrower in connection with its
content, is adequate and materially correct, and

h)             The accounts of the
Borrower are in compliance with the law and generally accepted accounting
standards.

 

The above information from the Borrower shall be regarded as repeated on
the due dates of the interest and / or instalments unless specifically stated
otherwise by the Borrower.

 

8.              Payment of Taxes Relating to the Conclusion of the Agreement

 

The Borrower shall pay all public levies or taxes which may be imposed
on the Agreement or payments pursuant to the Agreement at no cost to the
Lender.

 

9.              Specific Covenants

 

The Borrower and the Guarantors undertake to observe the following terms
until the debt pursuant to the Agreement is fully discharged:

 

(i)                                                Notice of
default: The Borrower
and the Guarantors undertake to notify the Lender in writing without delay if
it comes to their attention that an event of default has taken place.

(ii)                                             Annual Accounts and Interim Statements: The
Borrower and the Guarantors undertake to send to the Lender an audited Annual
Statement as well as reviewed semi-annual statements no later than four months
following the close of the accounting period. 
The Annual Accounts shall be audited and prepared in accordance with
statutory law and accepted accounting standards.

(iii)                                          Sale of mortgaged property:  The Borrower and Íslensk erfðagreining ehf.
undertake not to sell the property pledged as security for this Agreement
without the prior approval of the Lender.

(iv)                                         Ban on mergers or demergers: The
Borrower undertakes not to merge with another company or companies or to divide
the company into two or more independent companies without the approval of the
Lender.

(v)                                            Insurances: The Borrower
undertakes to insure the mortgaged property for its real worth for the entire
term of the Agreement.

(vi)                                         Restrictions on changing the operation or object of the
Borrower: The Borrower undertakes not to change his operations
in such a way as to require amendment of the Company’s object in its Articles
of Association.

(vii)                                      Disposal of insurance compensation, notification
requirement:  The Borrower
undertakes to inform the Lender immediately if circumstances arise where the
Borrower is, or may be, entitled to insurance compensation owing to damage of
the mortgaged property if the damage is valued in excess of ISK
10,000,000.-  Furthermore, the Borrower
undertakes not to dispose of such payments except in consultation with and with
the approval of the Lender.

(viii)                               Delivered Declarations: The Borrower warrants that declarations delivered in
connection with the conclusion of this Agreement are correct. The Lender is
entitled to request confirmation that such information is correct at any time
during the term of effect of the Agreement.

 

6

 

(ix)                                           Disposal of the loan:  The Borrower undertakes to dispose of the loan for the
purpose that it was intended.

 

10.       Events of Default – Remedies

 

The following shall constitute events of default on the part of the
Borrower under this Agreement:

 

(i)                                                             The
Borrower fails to pay on the correct due date or in the correct currency, and
such default continues for longer than 14 days from the due date;

(ii)                                                          The
Borrower repeatedly fails to pay at the correct time and in the correct
currency;

(iii)                                                       A debt or
commitment of the Borrower or the Guarantor, extraneous to this Agreement,
amounting to over USD 1,000,000, or an equivalent amount in any other currency,
is defaulted on in such a way that it gives rise to the right to call in the
debt, unless such default arises from a reasonable protest on the part of the
Borrower to such a claim and a proper defence is maintained;

(iv)                                                      The Borrower
violates Article 9 concerning the insurance of the mortgaged property (v) and
the Borrower and/or Íslensk erfðagreining as Guarantor violate the provisions
of Article 9 concerning the sale of the mortgaged property (iii);

(v)                                                         The
Borrower violates any provisions of Article 9 other than those referred to in
Article 9 (v) and such violation continues for longer than 15 days after the
Lender has sent the Borrower a request for remedy;

(vi)                                                      The
Borrower’s or the Guarantor’s assets are subjected to attachment, a request is
submitted for the enforced auction of their assets, they petition for a
moratorium on debts, they seek formal or informal composition agreements with
their creditors on the cancellation of debts or a request is made for the
subjection of their estates to bankruptcy proceedings;

(vii)                                                   A request
is made for the dissolution of the Borrower’s company or the Guarantor’s
company;

(viii)                                                Any
information from the Borrower or the Guarantor and/or the obligations
undertaken by the Borrower or the Guarantor under this Agreement prove to have
been so substantially false, inadequate or misleading when they were submitted
to the Lender that it would probably have affected the Lender’s willingness to
grant the loan.

 

In the event of default, as defined in this
Article, the lender may, without notice or warning, call in the entire balance
of the loan together with accrued interest and other payments due from the
Borrower pursuant to this Agreement. The Borrower shall pay default interest on
the due or called-in amount pursuant to Article 3 of the Agreement.

 

When the loan is due in accordance with the
above, the Lender is entitled, without further notice, to seek enforcement of
his claims in the security provided by the Borrower to the Lender. The Lender
is free to decide, at his sole discretion, whether to seek enforcement of all
the security placed or any part of the security, and, if the latter, in what
order.

 

11.       Notices

 

All notices sent by the parties to one another pursuant to this
Agreement shall be sent as specified below:

 

Íslandsbanki, Attn. Corporate Finance Division, Kirkjusandur 2, 155
Reykjavík.  Fax. + 354 580-5120.

 

Vetrargarðurinn ehf., Attn. Board of Directors, Sturlugata 8, 101
Reykjavík. Fax. +354 570-1981

 

Íslensk erfðagreining, Attn. Chief Financial Officer, Sturlugata 8, 101
Reykjavík. Fax. + 354 570-1981.

 

deCODE genetics Inc., Attn. CEO, Sturlugata 8, 101 Reykjavík. . Fax. +
354 570-1981.

 

Notices may be sent by fax, provided that the sender takes full
responsibility that such notices are received by the intended recipient. The
Borrower will notify the Lender promptly of any change in his address,
telephone number, e-mail address or other comparable information.

 

7

 

12.       Force Majeure

 

In the event of a substantial change in the business terms of the Lender
resulting from events for which the Lender cannot be held responsible, and
which do not relate to his financial standing and credit rating, all other
things being equal, e.g. changes in loan markets, government decisions, war,
nuclear accidents or incidents that can be classified as events of force
majeure, with the result that the Lender is unable to obtain overseas loan
capital for the financing of this Agreement on similar terms as those
anticipated on its negotiation, the Lender may, following prior notification to
the Borrower, call in the balance of the loan with 60 days’ notice.  The Lender is not responsible for any
potential losses incurred by the Borrower in connection with such a calling in
of the balance.

 

13.       Further Provisions

 

Headings in this Agreement are solely for convenience and have no
substantive significance for this Agreement.

 

This Agreement is subject to the law of the Republic of Iceland. Any
legal proceedings in respect of this Agreement shall be conducted before the
District Court of Reykjavík.

 

The Lender may assign all or any of its rights and obligations
hereunder, in full or in part, to other financial institutions.

 

This Agreement is concluded in 10 numbered pages and in two copies, one
to be held each party.

 

In witness whereof, the parties have signed this Agreement in the
presence of witnesses to the correct date and signature.

 

 

Reykjavík, 12 March 2004

 

	
  For
  the Board of Vetrargarðurinn ehf.

  	
   

  	
  For
  Íslandsbanki hf.

  

 

 

In acceptance of the above in the capacity of

Guarantors:

 

	
  For
  Íslensk erfðagreining ehf.

  	
   

  	
  For deCODE genetics, Inc.

  

 

8

 

ANNEX 1 – LOAN DISBURSEMENT APPLICATION

 

 

Íslandsbanki

Corporate Finance
Kirkjusandur
2
155
Reykjavík

 

 

[Place], [Date]

 

Subject:  Request for
disbursement of loan.

 

With
reference to Article 1 of the Agreement between [the Borrower] and Íslandsbanki
hf., dated [date] concerning a loan in the amount of [currency] [amount]-, a request
is hereby submitted, in accordance with the concluding provisions of Article 1
of the Agreement, for the loan to be disbursed as follows:

 

Loan [or part of loan] in [currency]:

 

	
  Payment
  date:

  	
   

  	
  [

  	
  ]

  
	
  Recipient
  of Disbursement:

  	
   

  	
  [Name,
  Id. No., Address

  	
  ]

  
	
  Account
  No.

  	
   

  	
  [

  	
  ]

  
	
  Receiving
  Bank

  	
   

  	
  [

  	
  ]

  
	
  Explanation

  	
   

  	
  [if
  appropriate

  	
  ]

  

 

 

Respectfully,

 

9

 

ANNEX 2 – FOREIGN CURRENCY ACCOUNTS

 

Foreign currency accounts for the payment of loans

when paying in foreign currency

 

Íslandsbanki
hf.

State Reg. No. 550500-3530
Kirkjusandur
2
155
Reykjavík

 

Domestic USD account

 

	
  Branch

  	
   

  	
  Acct. type No.

  	
   

  	
  Number

  	
   

  	
  Currency

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  500

  	
   

  	
  38

  	
   

  	
  119160

  	
   

  	
  USD

  

 

Overseas USD account

 

	
  Currency

  	
   

  	
  Bank

  	
   

  	
  SWIFT code

  	
   

  	
  Account number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USD

  	
   

  	
  Chase
  Manhattan Bank, New York

  	
   

  	
  CHASU33

  	
   

  	
  544-7-21738

  

 

10

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