Notice of Annual General Meeting in Morphic Technologies AB (publ)

Entitlement to attend
Shareholders registered in the printed copy of the register of shareholders from October 13, 2007 are entitled to attend the AGM. A shareholder can be represented by an agent under a power of attorney. Shareholders whose shares are registered in the name of a nominee must temporarily have their shares reregistered in their own name. Such registration of voting rights must be completed by October 13, 2007. To ensure that this deadline is met, shareholders should contact their nominees in good time to request registration of voting rights.
Enrolment
Notice of attendance may be made by mail to: Morphic Technologies, Box 5243, 402 24 Gothenburg; by telephone, +46 (0)586-67396; by fax, +46 (0)31-775 9061; by e-mail at [email protected] or on the Internet at www.morphic.se/stamma. The notice must state the name, personal/Social Security/organization number and telephone number as well as the name(s) of any assistants and must be received by the company no later than October 16, 2007.
Proposed agenda
1. Opening of the meeting
2. Election of Chairman of the meeting
3. Drawing up and approving the voters’ list
4. Approval of the agenda
5. Election of one or two members to verify the minutes
6. Determination of whether the meeting has been duly convened
7. Presentation by the Chief Executive Officer
8. Presentation of the annual report and audit report and the consolidated financial statements and consolidated audit report.
9. Decision on whether to approve the income statement and balance sheet as well as the consolidated income statement and consolidated balance sheet
10. Decision on the treatment of the company’s profit or loss according to the approved balance sheet
11. Decision on freedom from liability for the Directors and Chief Executive Officer
12. Decision on the number of Directors
13. Decision on Directors’ fees
14. Election of the Chairman of the Board of Directors and other Directors
15. Resolution on auditors’ fees
16. Resolution on amendments to the Articles of Association
17. Resolution on authorization to decide on the issue of new shares (i)
18. Resolution on authorization to decide on the issue of new shares (ii)
19. Resolution on a set of principles for remuneration and other employment terms for the company’s management
20. Resolution on an employee stock option program involving the issue of warrants
21. Resolution on the nomination process for the 2008 AGM
22. Transaction of other business
23. Close of meeting
Proposed decisions
* Treatment of the company’s profits (item 10)
The Board of Directors proposes that no dividend be paid for the 2006/07 fiscal year.
* Elect Directors and decide on Directors’ and auditors’ fees (items 12-15)
Shareholders representing approximately 33 percent of the votes of the company have presented the following proposals:
Elect eight Directors with no deputies
– Directors’ fees of SEK 200,000 to each of the non-executive Directors
– Re-elect the Directors Peter Enå, Kurt Dahlberg, Jan Alvén, Anette Myrheim, Kjell Östergren, Börje Vernet, Eva-Lotta Kraft and Lars Olof Nilsson
– Re-elect Peter Enå as Chairman of the Board of Directors
– Fees to the auditors, in accordance with approved invoices
* Decide on amendments to the Articles of Association (item 16)
The Board proposes that a prior notification procedure for participation at general meetings of the company be introduced in the Articles of Association.
* Decide on authorization to decide on the issue of new shares (i) (item 17)
The Board proposes that the AGM authorize the Board, during the period up to the next Annual General Meeting, to decide, on one or several occasions, to issue up to 13,600,000 new shares of series A and/or B (subject to the limits defined in the Articles of Association) for cash consideration or by offset or subject to other terms and conditions and thereby to derogate from the preferential rights of existing shareholders. In case of issues of new shares for cash consideration without preferential rights, the issue price shall be set at market rates. The purpose of this authorization and the reason for derogating from the preferential rights of existing shareholders is to enable the company to raise working capital and capital for use as collateral in connection with delivery agreements. If the authorization is fully exercised the increase in share capital would result in a dilution effect of about 10 percent and an increase in the share capital of SEK 544,000.
* Decide on authorization to decide on the issue of new shares (ii) (item 18)
The Board proposes that the AGM authorize the Board, during the period up to the next Annual General Meeting, to decide, on one or several occasions, to issue up to 13,600,000 new shares of series A and/or B (subject to the limits defined by the Articles of Association) for cash or non-cash consideration or by offset or subject to other terms and conditions and thereby to derogate from the preferential rights of existing shareholders. In case of issues of new shares for cash consideration without preferential rights, the issue price shall be set at market rates. The purpose of this authorization and the reason for derogating from the preferential rights of existing shareholders is to enable the company to make acquisitions of businesses for a cash or non-cash consideration or by payment in the form of new shares or a combination of these. If the authorization is fully exercised the increase in share capital would result in a dilution effect of about 10 percent and an increase in the share capital of SEK 544,000.
* Decide on a set of principles for the remuneration and other employment terms for the company’s management (item 19)
The main rationale behind the Board’s proposal for principles of compensation and other terms of employment for company management is that the company should seek to offer its leading executives a competitive compensation package. Under the proposal, the compensation will be based on the importance of the tasks as well as the skills, experience and performance requirements of each role. The compensation will comprise the following components: a fixed basic salary, bonus, pension benefits and other benefits and conditions of termination. Company management consists of the Chief Executive Officer and the heads of department in Morphic’s management group as well as the Managing Directors of Morphic’s subsidiaries.
* Decide on an employee stock option program involving the issue of warrants (item 20)
The Board of Directors proposes that the AGM resolve to introduce an employee stock option program. The intention behind the Board’s proposal and the reasons for derogating from the preferential rights of existing shareholders is to strengthen the employees’ commitment to the Group’s business and emphasize the relationship between employee benefits and the company’s performance. It is essential that the company is able to create the conditions that will allow it to recruit and retain skilled staff. The Board therefore considers that the proposed options program would benefit Morphic and its shareholders.
The Board proposes that the AGM resolve to issue no more than 1,000,000 employee stock options. Each employee stock option will entitle the holder to acquire one series B share in the company.
To guarantee the company’s obligations in respect of issued options and its duty to pay social security contributions, it is proposed that 1,330,000 warrants be issued.
If all 1,330,000 warrants are issued and exercised to acquire 1,330,000 shares under the options program, the new shares will constitute approximately one percent of the share capital.
Each employee stock option will entitle the holder to acquire one new share in the company at a predetermined price calculated as a certain percentage (110-140 percent) of the volume-weighted average price of Morphic’s shares on First North during the period October 22 – November 2, 2007. The option program will run for about four years. All options can be exercised upon expiration. It will also be possible to exercise a small share of the options during the first three years of their duration.
Employee stock options will be allocated to leading executives and other key individuals in Group companies and the Group’s associated companies in Sweden and abroad based on each employee’s salary level, experience, position in the company and other factors. It is proposed that the Chief Executive Officer of the company be allocated 250,000 employee stock options.
Under Chapter 16 of the Swedish Companies Act (which contains the rules previously contained in “Lex Leo”), a decision requires, for its validity, the support of shareholders representing at least nine tenths of both the number of votes cast and the number of shares represented at the meeting.
* Decide on the nomination process for the 2008 AGM (item 21)
Shareholders representing approximately 33 percent of all votes in the company have proposed that the meeting resolve that the nomination process for the 2008 AGM be conducted in the following manner. The Nomination Committee shall consist of representatives of the four shareholders holding the largest number of votes in the company as well as the Chairman of the Board, who shall act as convener. The names of the members of the Nomination Committee shall be announced no later than six months before the 2008 AGM. In case of a material change in ownership prior to completion of the task of the Nomination Committee, it shall be possible to change the composition of the Nomination Committee. The Nomination Committee shall prepare proposals for the following decisions at the 2008 AGM: (i) a proposal for election of a chairman for the meeting, (ii) a proposal for election of Directors, (iii) a proposal for election of the Chairman of the Board of Directors, (iv) a proposal for Directors’ fees, (v) a proposal for compensation for the company’s auditors, and (vi) a proposal for how to conduct the nomination process for the 2009 AGM.
Other business
A complete set of proposals for decisions will be available from the company (address and telephone as stated above) and on the company’s website, www.morphic.se, and sent to those shareholders requesting this. The annual report will be available from the company’s office no later than October 5, 2007 and posted on the company’s website.