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Confidential GPC Biotech AG
Postfach 1455
82143 Planegg
Germany
Fraunhoferstrasse 20
82152 Martinsried/Munchen
Germany
GPC Biotech AG
Martinsried/Planegg
Convertible Bonds Terms and Conditions
for Managers of the Company and Management Bodies and Managers of Second-Tier
Domestic and Foreign Affiliated Enterprises as well as for Consultants
(Resolution of the General Meeting of June 11, 2002)
Preamble
The General Meeting of GPC Biotech AG (hereinafter "the Company" or "GPC")
resolved on June 11, 2002 to implement a program for the issuance of convertible
bonds, nominal value (euro) 1,00 per convertible bond (the "Convertible Bonds")
to managers of the Company and management bodies and managers of second-tier
domestic and foreign affiliated enterprises as well as to consultants
(hereinafter the "Allottees").
The terms and conditions of the program for the issuance of Convertible Bonds
are as follows:
ss. 1
Convertible Bonds
(1) The Allottees receive registered conversion privileges which comprise
the right to purchase ordinary no-par value bearer Shares (the
"Shares") of the Company in the number listed in the offer letter or in
the convertible bond certificate, subject
GPC Biotech AG Vorstand:
Amtsgericht Munchen HRB 119 555 Prof. Dr. Bernd Seizinger (Vorsitzender des Vorstands)
USt-1D-Nr.: DE 190 457 435 Dr. Elmar Maier,
Dr. Sebastian Meier-Ewert,
Deutsche Bank AG, Munchen (BLZ 700 700 10) Konto-Nr. 199 01 18 Dr. Mirko Scherer
Dresdner Bank AG, Munchen (BLZ 700 800 00) Konto-Nr. 300 906 300
HypoVereinsbank AG, Munchen (BLZ 700 202 70) Konto-Nr. 272 66 45 Vorsitzender des Aufsichtsrates:
Prof. Dr. Jurgen Drews
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to adjustment pursuant to ss. 9 hereof.
(2) By accepting the offer to purchase the Convertible Bonds, the Allottee
shall transfer the total nominal amount of the Convertible Bonds to
which he/she is entitled in Euros for unconditional disposition by the
Company and without further costs to an account to be specified by the
Company.
(3) The Convertible Bonds may be evidenced in several registered global
convertible bond certificates. The right to (individual) convertible
bond certificates is excluded.
(4) On behalf of the Company, a bonds register entitled "Convertible Bonds"
(hereinafter the "Options Register"), in which the Convertible Bonds
are registered together with the conversion price (see ss. 8 (1)
hereof), the series and number as well as the holder by name, date of
birth, residence address and occupation, will be maintained by the
exercise agent (see ss. 18 hereof). In addition, the Options Register
sets forth in particular the information necessary for determining the
period according to ss. 14 (1) hereof (the "Vesting Period").
(5) In relation to the Company, only parties registered as Allottees in
the Options Register are qualified as such.
ss. 2
Basic Features of the Convertible Bonds
(1) As provided by these terms and conditions, and subject to any
adjustment pursuant to ss.ss. 8 and 9 hereof, the Convertible Bonds may
be exercised to obtain one Share of the Company for each Convertible
Bond upon payment of the conversion price to be specified by the
Company in accordance with ss. 8 hereof.
(2) To cover the Convertible Bonds to be issued to the Allottees, the June
11, 2002 General Meeting of the Company created a conditional capital
in the amount of up to (euro) 500.000. The Management Board of the
Company may choose, in agreement with the Supervisory Board, whether
the Shares underlying the Convertible Bonds
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will be made available from such conditional capital or from a program
to repurchase its own Shares, resolved or possibly yet to be resolved
by the General Meeting.
ss. 3
Interest Rate, Repayment of the Nominal Amount
(1) The Convertible Bonds bear interest at 3.5% per annum starting from the
date of their issuance. The interest amounts are due at the end of the
respective calendar year. In the event of the cancellation of the
conversion privileges pursuant to ss. 14 hereof or of the due exercise
of the conversion privileges pursuant to ss. 10 hereof, the interest
amounts for the current calendar year are due immediately.
(2) A right to compound interest does not exist.
(3) The paid-in nominal amount is due for repayment within ten calendar
days after lapse of the conversion privileges for whatever reason.
ss. 4
Purchasing Periods, Time to Maturity
(1) The Convertible Bonds may be offered to the Allottees for subscription
within the last fifteen business days of each calendar month. The date
of issuance is the day on which the Management Board has made an offer
to the Allottee for subscription of the Convertible Bonds, provided,
such offer has been accepted within the subscription period.
(2) The time to maturity of the conversion privileges is ten years from the
date of their issuance. ss. 3(3) notwithstanding, the conversion
privileges lapse without compensation upon expiration of the time to
maturity.
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ss. 5
Waiting Period
The Allottees may exercise the conversion privileges at the earliest after the
expiration of two years following their issuance pursuant to ss. 4 (1) hereof.
In addition, the conversion privileges may only be exercised if, after
expiration of the two-year waiting period, the cancellation periods set forth in
ss. 14 (1) hereof, as specified by the Company in the offer letter or in the
(global) convertible bond certificates, have expired.
ss. 6
Exercise Periods
(1) Conversion privileges may not be exercised on or after the day on which
the Company announces an offer to its shareholders to subscribe for new
Shares or bonds with conversion privileges or option rights attached to
them by letter to all shareholders or by a notice published in the
(Bundesanzeiger) of the Federal Republic of Germany, until the day on
which the Shares are quoted for the first time as "ex subscription
rights" on the Neuer Markt of the Frankfurt Stock Exchange.
(2) Notwithstanding ss. 6 (1) hereof, the conversion privileges may only be
exercised in the six weeks following publication of the quarterly
reports or of the annual financial statement respectively. The
conversion privileges may not be exercised from December 24 to December
31 of each calendar year.
(3) The Management Board has the right to impose further restrictions on
the exercise periods.
ss. 7
Performance Goals
(1) Notwithstanding ss.ss. 4 and 5 hereof, the conversion privileges may
only be exercised if the Share price, as determined pursuant to
paragraph (3) below, is at least 10% above the conversion price as
determined in accordance with ss. 8 hereof
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on five consecutive stock exchange trading days within a period of one
month prior to the exercise of the conversion privileges.
(2) The percentage amount referred to in paragraph (1) above applies to the
first year after expiration of the waiting period pursuant to ss. 5
hereof and will be raised by 5% points for each further year.
(3) The Share price shall be calculated as the closing price for the
Shares in the XETRA closing auction on the Frankfurt Stock Exchange.
ss. 8
Conversion Price
(1) As provided by these terms and conditions, each conversion privilege
represents the right to subscribe for one Share. The conversion price
to be paid upon exercise of the conversion privilege for the
subscription of one individual Share corresponds to the arithmetic
average of the closing prices of the Shares in the XETRA closing
auction on the Frankfurt Stock Exchange during the last five stock
exchange trading days prior to the date of issuance of the Convertible
Bonds, less (euro) 1.00. The conversion price will be adjusted in
accordance with these terms and conditions if the Company implements
certain capital measures during the time to maturity of the conversion
privileges or grants further option rights or conversion privileges to
its shareholders. The purpose of such adjustment is to ensure that
equivalence of the conversion price as well as of the exercise hurdles
is maintained even after completion of such measures and the related
impact on the Share price.
(2) Effective on such date on which the Shares are initially quoted "ex
subscription right" the conversion price shall be reduced pursuant to
the immediately following paragraph, but in no case to less than the
pro rata amount of the Share capital attributable to one Share (at
least (euro) 1.00).
(3) The conversion price shall be reduced if, during the time to maturity
of the
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Convertible Bonds, new Shares or warrants or Convertible Bonds with
option rights or conversion privileges to Shares attached to them are
issued a capital increase or if the Company disposes of its own Shares
and in connection with subscription rights to any such securities are
granted to the existing shareholders of the Company. The conversion
price will be reduced of the ratio of
(1) the arithmetic average of the Shares as traded "ex subscription
right" on [the Neuer Markt of the Frankfurt Stock Exchange] on all
days so traded and
(2) the closing price of the Shares on the last stock exchange trading
day immediately prior to the commencement of trading "ex
subscription right".
(4) The Company shall, simultaneously with the publication of the offer to
its existing shareholders to subscribe for any new Shares or bonds with
conversion privileges or option rights attached to them, the issuance
of which triggers the reduction of the conversion price, notify the
Allottees in writing of the conversion price as reduced pursuant to ss.
8(3) and of the date on which the Shares are initially quoted
"ex-subscription rights" on the Neuer Markt of the Frankfurt Stock
Exchange, from which date onward the reduced conversion price shall be
effective.
(5) As stipulated by ss. 218 AktG, in the case of a capital increase from
corporate funds, an existing conditional capital is increased in the
same ratio as the share capital. The conversion ratio according to ss.
2 hereof is increased in the same ratio. Fractions of Shares created as
a result of the capital increase from corporate funds are not
considered in the exercise of Convertible Bonds.
(6) The conversion price will not be reduced if the Company, in adopting
the resolution on the issuance of new Shares or of bonds with
conversion privileges or option rights attached to them or on the
disposal of its own Shares also grants the Allottees a direct or
indirect subscription right that corresponds to the value of the
subscription right of the existing shareholders.
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ss. 9
Adjustment of the Conversion Privileges
(1) In the case of (1) a merger of the Company with and into another
company, (2) a reorganization of the Company, (3) a change in the
calculated nominal value of the Shares or (4) comparable measures that
impair the rights of the Allottees by abolishing or changing the
underlying Shares according to these terms and conditions, the
Convertible Bonds are replaced by the right to purchase, at the base
price, that number, respectively, of Shares, equity interests or any
other interests in the Company or its legal successors that otherwise
substitute the Shares of the Company whose value corresponds to the
market value of the Shares of the Company on the date on which such
measure is implemented. In all other respects these terms and
conditions shall remain applicable without restriction.
(2) In the case of a capital reduction by grouping of Shares (ss. 222(4)
AktG) or by redemption of Shares (ss. 237 AktG), the conversion ratio
is adjusted by multiplying it with the factor calculated by dividing
the number of Shares after the capital reduction by the number of
Shares before the capital reduction. Fractions of Shares created as a
result of a capital reduction are not made available for exercise of
the conversion privileges.
(3) Until the due exercise of the convertible bonds, the Allottees have no
rights to dividends or other distributions from the Shares underlying
the Convertible Bonds.
ss. 10
Exercise Procedure; Issuance of Underlying Shares
(1) To exercise the conversion privileges, the Allottee must
a) enter the number of conversion privileges to be exercised as
well as the exercise date in the original convertible bond
certificate. In addition, the exercise is to be signed by the
Allottee in the original convertible bond
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certificate and countersigned by the Company;
b) using the form available from the exercise agent or from a
trustee (see ss. 18 hereof), if such is appointed for the
purpose, deliver a written subscription declaration in
duplicate to the exercise agent or to the trustee; and
c) pay the conversion price in EURO, completely and free of costs
and charges to the Company, to the Company's account indicated
in the subscription declaration form.
(2) Declarations received by the exercise agent within the periods set
forth in ss.ss. 5 and 6 hereof are deemed to be delivered and received
on the next subsequent banking business day on which the exercise of
the convertible bond is again permissible. The Allottee may revoke
his/her subscription declaration only so long as receipt has not yet
effectively taken place.
(3) The Shares resulting from the exercise of the conversion privileges are
printed and delivered in the form provided by the Articles of
Association of the Company in their respective valid version. Issuance
takes place - to the extent possible and subject to receipt by the
Company of payment in full of the conversion price - within ten banking
business days after the subscription declaration becomes effective.
(4) In the event that the Allottee intends to sell the Shares acquired
through the exercise of his/her conversion privileges immediately after
such acquisition, the Company may, with a view to a smooth placement in
the market, tender, in a manner that safeguards the interests of the
Allottees, the Shares created from a large number of exercises in the
form of a block sale to (for example) institutional investors. The
Allottee shall, at the request of the Company, assist appropriately and
reasonably in the smooth placement on the market.
(5) Any issuance of Shares resulting from the exercise of conversion
privileges is only permitted in conformity with the terms and
conditions hereof and in no case
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prior to payment in full of the conversion price according to ss. 8
hereof (see ss. 199(1) AktG).
ss. 11
Dividend Entitlement of the New Shares
The Shares created through the exercise of conversion privileges - provided they
are created through exercise before the beginning of the General Meeting of the
Company that resolves on the allocation of balance sheet profits - are entitled
to dividends from the beginning of the previous fiscal year, or, to the extent
created through exercise after the beginning of General Meeting of the Company,
the respective fiscal year in which they were created through such exercise.
ss. 12
Nonassignability of the Convertible Bonds
(1) In principle, the Convertible Bonds may not be transferred.
(2) Other methods of disposing of the Convertible Bonds, granting of
subordinate equity interests or creation of a trust as well as
establishment of short positions by granting to third parties the
Convertible Bonds granted to the Allottee as well as comparable
offsetting transactions that are economically equivalent to a sale of
the Convertible Bonds are also prohibited.
(3) Any violation of paragraphs (1) and/or (2) of this ss. 12 results in
forfeiture of the Convertible Bonds. To the extent that the Company or
the Allottees have substantive reasons, the Management Board, in
agreement with the Supervisory Board, may consent to dispositions of
the Convertible Bonds in the form described in paragraphs (1) and (2)
of this ss. 12.
(4) Notwithstanding paragraphs (1) and (2) of this ss. 12, the Allottee is
authorized, after expiration of the two-year waiting period or after
expiration of the cancellation period specified in the convertible bond
certificates, to sell his/her Convertible Bonds to a credit institution
to be specified by the Company.
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ss. 13
Succession
(1) The Convertible Bonds - provided they have not been cancelled pursuant
to ss. 14 hereof - may be transferred by will or the laws of descent
and distribution. The heirs shall be bound by these terms and
conditions.
(2) The heirs shall report their standing as heirs to the Company and must
prove their legitimacy in conformity with ss. 35 GBO.
ss. 14
Vesting Period; Cancellation of the Convertible Bonds
(1) The Convertible Bonds may in principle be cancelled for a maximum
period of up to four (4) years (the "Vesting Period"). Expiration of
the Vesting Period in relation to the conversion privileges granted in
total to the Allottee does not take place uniformly, but is divided
into stages over the Vesting Period. One quarter of the Convertible
Bonds becomes uncancellable each year, calculated from the beginning of
the vesting period. The Vesting Period begins to run with the issuance
of the convertible bonds. A different Vesting Period may be specified
by the Management Board for each individual case on the basis of
internal guidelines of the Company that may be formulated thereby for
common application and notified to the Allottee in the offer letter.
Above and beyond this, the expiration of the Vesting Period - if
certificates evidencing the conversion privilege are issued - is noted
in the respective certificates.
(2) The Company or second-tier enterprises currently affiliated with it or
in the future may immediately cancel the conversion privileges that are
still subject to the Vesting Period without compensation if the
Allottee's employment has been terminated prior to expiration of the
Vesting Period specified for the conversion privileges. The
cancellation of conversion privileges becomes effective upon receipt of
a separate written cancellation declaration by the Allottee, but not
earlier than:
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a) in the case of an ordinary termination by the Allottee, upon
receipt of his/her termination notice;
b) in the case of an ordinary termination of the Allottee by the
Company, upon effectiveness of such termination (termination
of employment) or - in the case of the exoneration of the
Allottee - on the date of such exoneration;
c) in the case of termination by the Allottee for cause, on the
date on which the ordinary termination - defined as the
termination notice by the Company or by a second-tier
enterprise currently affiliated with it or in the future on
the date of the termination notice by the Allottee - would
have become effective;
d) in all other cases, on the date of actual termination of
employment (for example, termination by rescission contract,
death, [early] retirement, educational leave of absence and
similar reasons).
(3) The Company or a second-tier enterprise affiliated currently with it or
in the future may cancel the conversion privileges no longer subject to
a Vesting Period without compensation if
a) the Allottee has not exercised his/her conversion privileges
within 12 calendar months after the cancellation according to
paragraph (2) above becomes effective, or
b) the Allottee has not exercised his/her conversion privileges
within 12 months after the second-tier affiliated enterprise
employing the Allottee has relinquished its affiliation with
the group (equity interest less than 50% in the equity or
Share capital),
Provided such exercise would have been possible subject to the waiting
period set forth in ss. 5 hereof and the exercise periods set forth in
ss. 6 hereof. If an exercise of the conversion privileges according to
ss.ss. 5 and 6 hereof is not possible on the
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effective date of the termination, the period begins when the exercise
prerequisites of ss.ss. 5 and 6 hereof exist for the first time.
(4) The Management Board may, in isolated cases, choose not to cancel all
or part of the conversion privileges if such cancellation seems
inequitable in such isolated cases (suspension of employment because of
a maternity or paternity leave of absence, general disability, [early]
retirement and similar reasons). The same shall apply mutatis mutandis
if the conversion privileges are intended to substitute for a severance
payment that may be due upon termination of employment or officer
status. In individual cases, the choice not to cancel the conversion
privileges may be made contingent upon the extension of the Vesting
Period by the duration of the suspension of employment (for example,
due to a maternal or paternal leave of absence or an unpaid leave of
absence).
(5) In the event that the employment and/or the officer status of an
Allottee with the Company or with a second-tier enterprise currently
affiliated with it or in the future is - irrespective of the reason -
terminated, but at the same time a new employment or officer status is
established with the Company or with a second-tier enterprise currently
affiliated with it or in the future, the aforementioned cancellation
rights shall not apply on the occasion of such termination but only
relative to any termination of the new employment or new officer
status.
(6) The Company has the right to cancel the conversion privileges with
immediate effect if and as soon as insolvency proceedings are
instituted against the assets of the Allottee, institution of
insolvency proceedings is declined for insufficiency of assets or
conversion privileges are attached by a creditor and the enforcement
measure is not rescinded within six (6) months (with expiration of the
6-month period).
(7) For his/her part, the Allottee may cancel the conversion privilege with
three-months notice as of the end of a quarter without having to give
any reasons.
(8) The Company may request the return of any issued and cancelled
convertible
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bond certificates from the Allottee or from any other possessor.
ss. 15
Taxes
The Allottee himself/herself shall pay all taxes that may be incurred in
connection with the issuance or exercise of conversion privileges, including
church taxes and solidarity surcharge. However, the Company shall deduct such
taxes and charges from the Allottee's salary to the extent legally prescribed
and pay them over, if appropriate in the form of wage-tax withholding, to the
tax office having jurisdiction over its permanent establishment. Above and
beyond this, the Company may, if necessary, make the issuance of Shares
contingent upon proof of appropriate tax payments by the Allottee or upon
lodging of reasonable surety. If the Allottee does not or cannot meet his/her
obligations stipulated by this ss. 15 hereof, the Company has to so report to
the tax office having jurisdiction over its permanent establishment.
ss. 16
Insider Rules
(1) The Company hereby advises each Allottee that such Allottee may be
subject to insider regulations and under certain circumstances may be
punishable for disregard of these regulations. In particular, insiders
are prohibited from selling any Shares acquired through the exercise of
conversion privileges by exploiting their knowledge of insider facts
(ss. 14(1) WpHG).
(2) The Allottee hereby undertakes to acknowledge and honor any current or
future internal guidelines published by the Company with respect to the
prevention of insider violations. Any violation of such guidelines is a
breach of the accessory obligations defined by labor law and may give
rise to, possibly immediate, termination of the Allottee's employment.
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ss. 17
Reservation of Voluntary Nature
Any issuance of conversion privileges is voluntary in nature and an Allottee who
has been issued conversion privileges does not, by reason of such issuance,
accrue any right to receive additional conversion privileges at any point in the
future.
ss. 18
Exercise Agent
The exercise agent is the Management Board of the Company. The Management Board
empowers the Legal Department to accept subscription declarations and to handle
the exercise procedure. In addition, the Company has the right to appoint a
trustee (such as a bank), which in this respect assumes the tasks of the
Management Board and functions as the exercise agent.
ss. 19
Announcements
Declarations, notices, amendments or adjustments in regard to the conversion
privileges are announced to the Allottee in writing. Written announcements of
legally binding nature (such as cancellation declaration, adjustment of the
conversion price and similar information) are effected by personal delivery with
acknowledgment of receipt or by registered letter or messenger to the address
last reported by the Allottee to the Company or to the second-tier enterprise
affiliated with it.
ss. 20
Miscellaneous Provisions
(1) Should any of these terms and conditions be or become invalid or
unenforceable, in part or in whole, such provision shall be replaced by
such valid and enforceable provision that, in a legally permissible
manner, matches as closely as possible the invalid or unenforceable
provision, attaining the same or a similar economic effect. The
invalidity or unenforceability of any provision hereof shall not affect
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the validity or enforceability of any other provision hereof, which
shall remain in full force and effect. The same shall apply mutatis
mutandis if a loophole requiring amplification is discovered during
execution of these terms and conditions.
(2) Amendments and additions to these conditions shall be in writing,
unless recording by a notary is required. The foregoing sentence
applies mutatis mutandis to any amendments of this ss. 20(2).
(3) The place of performance and place of jurisdiction is the registered
seat of the Company.
(4) The form and content of the conversion privileges as well as the rights
and obligations of the Allottees and of the Company are construed in
accordance with the laws of the Federal Republic of Germany.
Martinsried/Planegg, May 20, 2003
The Management Board of
GPC Biotech AG
Duly noted:
------------------------------
(John Richard)