<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 2000.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PHARMACOPEIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0557266
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
CN 5350
PRINCETON, NEW JERSEY 08543-5340
(609) 452-3600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOSEPH A. MOLLICA, PH.D.
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PHARMACOPEIA, INC.
CN 5350
PRINCETON, NJ 08543-5340
(609) 452-3600
(Name, address including zip code, and telephone number, including area
code, of agent for service)
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COPIES TO:
JAMES J. MARINO, ESQUIRE
DECHERT PRICE & RHOADS
997 LENOX DRIVE, BUILDING 3, SUITE 210
LAWRENCEVILLE, NEW JERSEY 08648
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per share 1,927,362 shares $53.234375 $102,601,911 $27,090
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the high and low prices
of the Common Stock on April 6, 2000, as reported on the Nasdaq National
Market.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
The information contained in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor does it seek an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
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<PAGE>
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
PROSPECTUS Subject to Completion, dated April 10, 2000
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PHARMACOPEIA, INC.
1,927,362 Shares of Common Stock
We have prepared this prospectus to allow the selling stockholders we identify
herein to sell up to 1,927,362 shares of our common stock. We will not receive
any of the proceeds from the sale of common stock by the selling stockholders.
Our common stock is listed on the Nasdaq National Market under the symbol
"PCOP." On April 6, 2000 the average of the high and low price of our common
stock was $53.234375 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER CERTAIN "RISK FACTORS" IN DETERMINING WHETHER TO BUY ANY OF
OUR COMMON STOCK. SEE PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2000.
<PAGE>
SUMMARY
OUR BUSINESS
We design, develop, market and support science and technology-based
products and services intended to improve and accelerate the processes of drug
discovery and chemical development. Our Drug Discovery Services Segment provides
drug discovery services to pharmaceutical and biotechnology companies based on
proprietary combinatorial chemistry and high throughput screening technologies.
Our Software Segment provides molecular modeling, simulation and information
management software that facilitates the discovery and development of new drug
and chemical products and processes in the pharmaceutical, biotechnology,
chemical, petrochemical and materials industries.
In 1999, we developed and began implementing a strategic plan that
emphasizes the sale of products and services that enable pharmaceutical,
biotechnology and broader chemical companies to discover drugs and develop
chemicals more quickly and less expensively. This new strategic plan eliminates
continued investment in the self-funded drug discovery projects that we had been
working on since 1996. The intent of this new strategic plan is to generate
sustainable near term and long term revenue and profit growth while still
remaining eligible for certain milestones and royalties based on past, current,
and expected future drug discovery services.
We are a Delaware corporation with principal executive offices at CN
5350, Princeton, New Jersey 08543-5340. Our telephone number is (609) 452-3600.
Our web site address is pcop.com.
<PAGE>
RISK FACTORS
RISKS RELATED TO OUR BUSINESS
PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES MAY DISCONTINUE OR DECREASE
THEIR PURCHASES OF OUR PRODUCTS OR THEIR USAGE OF OUR SERVICES.
We depend on pharmaceutical and biotechnology companies that buy our
products and use our services for a large portion of our revenues. Although
pharmaceutical and biotechnology companies are generally growing, there is a
trend among pharmaceutical and biotechnology companies to outsource drug
research and development functions, and there is a trend among pharmaceutical
and biotechnology companies to increase the usage of modeling, simulation and
informatics software tools, these trends may not continue. If these trends do
not continue, and if pharmaceutical companies and biotechnology discontinue or
decrease their purchases of our products or their usage of our services, our
revenues and earnings could be lower than we expect and our revenues and
earnings may not grow at historical rates or at all.
IT IS DIFFICULT AND COSTLY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS,
AND WE CANNOT ENSURE THEIR PROTECTION.
Some of our most valuable assets include patents and trade secrets.
Part of our business is developing technologies and chemical compositions that
we patent and then license to other companies. However, some technologies and
chemical compositions that we develop may already be patented by other
companies. For this and other reasons, we may not be able to obtain patents for
or otherwise protect each new technology or chemical composition that we
develop. Even if we are able to obtain patents, the patents may not sufficiently
protect our interest in the technology or chemical composition. Similarly, we
may not be able to protect our trade secrets by keeping them confidential. To
the extent we are unable to protect intellectual property, our investment in
those technologies and chemical compositions will not yield the benefits that we
expected.
The degree of patent protection afforded to pharmaceutical inventions
is uncertain and any patents that may issue with regard to our potential
products and services will be subject to this uncertainty. There can be no
assurance that competitors will not develop competitive products and services
outside the protection that may be afforded by the claims of our patents. Others
have filed patent applications relating to encoded combinatorial libraries prior
to our patent applications. In February of 1997, the European Patent Office, or
EPO, granted to Affymax Technologies N.V., Affymax, a subsidiary of Glaxo
Wellcome Inc., certain patent claims which, if valid, would cover the synthesis
of encoded small molecule libraries of the type we have developed. On November
12, 1997, we filed an Opposition to the Affymax patent claims and, on December
2, 1999, the EPO revoked the Affymax patent claims, although Affymax can appeal
the decision. On January 13, 1998, Affymax received a U.S. patent that contains
certain claims covering a method of preparing an encoded library of chemical
compounds. Our scientific staff has reviewed these patent claims and believes
that they do not cover our ECLiPS technology, which is the technology that
allows us to generate large, diverse libraries of the small molecules
pharmaceutical companies favor for development. If these claims are valid and
enforceable and our ECLiPS technology infringes the claims, our ability to use
our ECLiPS technology in the U.S. may be restricted unless we obtain appropriate
licenses from Affymax, and we may be subject to a claim for monetary damages.
There can be no assurance that any licenses from Affymax would be available to
us or would be available upon terms reasonably acceptable to us.
Some of our competitors have, or are affiliated with companies having,
substantially greater resources than we, and those competitors may be able to
sustain the costs of complex patent litigation to a greater degree and for
longer periods of time than we. Uncertainties resulting from the initiation and
continuation of any patent or related litigation could have a material adverse
effect on our ability to compete in the marketplace pending resolution of the
disputed matters. In addition, there can be no assurance that additional patents
will issue to us or our licensors as a result of their pending applications or
that, if issued, such patents will be sufficiently broad to afford protection
against competitors with similar technology. Moreover, there can be no assurance
that our customers or we will be able to obtain patent protection for lead
compounds or pharmaceutical products based upon our technology. There can be no
assurance that any patents issued to us or our collaborative partners, or for
which we have license rights, will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to us. Litigation, which could result in substantial costs to us, may
be necessary to enforce our patent and license rights or to determine the scope
and validity of others' proprietary rights. If our competitors prepare and file
patent applications in the United States that claim technology also claimed by
us, we may have to participate in interference proceedings declared by the U.S.
Patent and Trademark Office, the PTO, to determine the priority of
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invention, which could result in substantial costs to us, even if the outcome
is favorable to us. An adverse outcome could subject us to significant
liabilities to third parties and require us to license disputed rights from
third parties or cease using the technology. A number of pharmaceutical and
biotechnology companies, and research and academic institutions have
developed technologies, filed patent applications or received patents on
various technologies that may be related to our business. Some of these
technologies, patent applications or patents may conflict with our
technologies, patent applications or patents. These conflicts could also
limit the scope of patents, if any, that we may be able to obtain, or result
in the denial of our patent applications.
Our Software Segment relies primarily on a combination of copyright,
trademark and trade secret laws, confidentiality procedures and contractual
provisions to protect its proprietary rights. Our Software Segment also has two
U.S. patents. Our Software Segment seeks to protect its software, documentation
and other written materials under trade secret and copyright laws, which afford
only limited protection. There can be no assurance that our Software Segment's
patents, trademarks or copyrights will offer any protection or that they will
not be challenged, invalidated or circumvented. Furthermore, there can be no
assurance that others will not develop technologies that are similar or superior
to our Software Segment's technology. Despite our Software Segment's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy aspects
of our Software Segment's products or to obtain and use information that our
Software Segment regards as proprietary. In limited instances, our Software
Segment has licensed source codes of certain products to customers or
collaborators. For these reasons, policing unauthorized use of our Software
Segment's products may be difficult. In addition, the laws of some foreign
countries do not protect proprietary rights as fully as do U.S. laws. There can
be no assurance that our Software Segment's means of protecting its proprietary
rights in the U.S. or abroad will be adequate.
There can be no assurance that third parties will not claim
infringement by us of their intellectual property rights. From time to time we
have received letters from third parties claiming or suggesting that our
products may infringe their patents or other intellectual property rights. We
have investigated these matters and believe that they are immaterial to our
operations.
There can be no assurance that our products do not infringe patent or
other intellectual property rights of third parties, that we will not be
required to seek licenses for or otherwise acquire rights to technology as a
result of claims of infringement or that these third parties or other companies
will not bring infringement suits against us. We expect in general that
simulation software product developers will increasingly be subject to
infringement claims as the number of products and competitors in our industry
segments grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, could be time consuming to
defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to us, if at all. In the event of a successful
claim of product infringement against us, our failure or inability to license or
design around the infringed technology could have a material adverse effect on
our business, financial condition and results of operations.
As is commonplace in the biotechnology industry, we employ individuals
who were previously employed at other biotechnology or pharmaceutical companies,
including our competitors or potential competitors. To the extent our employees
are involved in research areas which are similar to those areas in which they
were involved at their former employer, we may be subject to claims that such
employees and/or we have inadvertently or otherwise used or disclosed the
alleged trade secrets or other proprietary information of the former employers.
Litigation may be necessary to defend against such claims, which could result in
substantial costs and be a distraction to management, and which may have a
material adverse effect on us, even if we are successful in defending such
claims.
WE MAY NOT BE ABLE TO LICENSE TECHNOLOGIES THAT WE NEED TO CONDUCT OUR
BUSINESS.
In addition to the technologies that we develop, we also rely on
technologies developed by other organizations which we license. We may not be
able to license technologies that we need in the future. Our inability to
license the technologies that we need could result in increased costs and,
therefore, reduced profits, or the inability to engage in certain activities
which require those technologies.
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OUR FUTURE PROFITABILITY IS UNCERTAIN.
For the years ended December 31, 1999 and 1998, we had net income of
$3.8 million and a net loss of $10.2 million, respectively. As of December 31,
1999, we had an accumulated deficit of approximately $69 million. Our future
revenue levels depend upon myriad factors, including many that are beyond our
control. These factors include changes in the demand for our products and
services, the introduction of competitive drug discovery services and software,
changes in the research and development budgets of our customers and potential
customers, and our ability to successfully and timely develop, introduce and
market new products, services and product enhancements.
OUR DRUG DISCOVERY APPROACH MAY NOT BE SUCCESSFUL.
Our technological approach to combinatorial chemistry builds
collections, or libraries, of 10,000 to 50,000 or more small molecule compounds
by performing only 50 to 200 individual chemical reactions. We are able to
synthesize a large number of widely diverse libraries of small molecules because
our chemists can combine a nearly unlimited set of chemical building blocks
using a wide variety of reactions. Our drug discovery approach faces the
substantial risks of failure inherent in developing drugs based on new
technologies.
THERE MAY ONLY BE A LIMITED MARKET FOR OUR DRUG DISCOVERY SERVICES.
A significant part of our drug discovery services segment strategy is
to use combinatorial chemistry for the purpose of rapidly identifying,
optimizing and obtaining proprietary rights to as many lead compounds and drug
development candidates on behalf of our customers as possible. Our ability to
achieve profitability in the near term in this segment depends on our ability to
identify lead compounds and drug development candidates and to enter into
additional collaborative and licensing agreements with third parties and to
maintain the agreements we currently have in place. The pricing and nature of
our drug discovery services are such that there may only be a limited number of
companies that are potential customers for these services. Our ability to
succeed is also dependent upon the acceptance by potential customers of
combinatorial chemistry and analysis of compounds provided by us as an effective
tool in new drug discovery.
Historically, pharmaceutical and biotechnology companies have conducted
lead compound identification and optimization within their own research
departments, due to the highly proprietary nature of the activities being
conducted, the central importance of these activities to their drug discovery
and development efforts, and the desire to obtain maximum patent and other
proprietary protection on the results of their internal programs. In order to
achieve our business objectives, we must continue to convince these companies
that our technology and expertise justify the outsourcing of these programs to
us. Although we have entered into license and collaboration agreements with
major pharmaceutical and biotechnology companies, there can be no assurance that
we will be able to continue to attract customers on acceptable terms for our
products and services or develop a sustainable profitable business.
THE SUCCESS OF OUR DRUG DISCOVERY SERVICES OPERATIONS WILL DEPEND ON
THE EXPANSION AND MANAGEMENT OF OUR CURRENT OPERATIONS.
To be cost effective in our drug discovery services, we must enhance
productivity through further automation of our processes and improvements to and
integration of our technology generally, and through the migration of our high
throughout screening services to higher density formats. There can be no
assurance that we will be successful in improving and integrating our
technology. In addition, we must successfully structure and manage multiple
additional collaborative relationships, including maintaining confidentiality of
the research being performed for multiple customers. There can be no assurance
that we will be successful in adding technical personnel as needed to meet the
staffing requirements of additional collaborative relationships.
There can be no assurance that we will be successful in our engineering
efforts to further automate our processes or in our initiatives to develop new
materials or reactions for solid phase synthesis and therefore expand the
potential range of compounds we can produce. In addition, there can be no
assurance that conflicts will not arise between customers as to proprietary
rights to particular compounds in our libraries or as to proprietary rights to
biological targets such as receptors or enzymes against which we screen
compounds in our libraries. Failure to achieve any of these goals or the
occurrence of conflicts could have a material adverse effect on our business,
financial condition or results of operations.
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WE FACE COMPETITION IN THE DEVELOPMENT AND MARKETING OF OUR PRODUCTS
AND SERVICES.
We compete directly with the in-house research departments of
pharmaceutical companies and biotechnology companies, as well as combinatorial
chemistry companies, software companies, contract research companies, and
research and academic institutions. Many of our competitors have greater
financial and other resources than we. As new companies enter the market and as
more advanced technologies become available, we expect to face increased
competition. In the future, any one of our competitors may develop technological
advances that render the products or services that we provide obsolete. While we
plan to develop technologies which will give us competitive advantages, our
competitors plan to do the same. We may not be able to develop the technologies
we need to successfully compete in the future, and our competitors may be able
to develop those technologies before we do. Consequently, we may not be able to
successfully compete in the future.
The market for our software products is intensely competitive, subject
to rapid change and significantly affected by new product introductions and
other market activities of industry participants. Our software competitors offer
a variety of products and services to address this market, including modeling,
simulation and informatics software. We believe that the principal competitive
factors in this market are product quality, flexibility, ease-of-use, scientific
validation and performance, functionality and features, open architecture,
quality of support and service, reputation and price. Competition currently
comes from the following principal sources: other molecular simulation software
packages and software for analysis of chemical and biological data; desktop
software applications, including chemical drawing, molecular modeling and
analytical data simulation applications; consulting and outsourcing services;
other types of simulation software provided to engineers; and firms supplying
databases, such as chemical or genomic information databases, database
management systems and information technology. In addition, certain of our
software licenses grant the right to sublicense our software. As a result, our
software customers and third-party licensees could develop specific simulation
applications using our software developer's kit and compete with us by
distributing these programs to our potential customers. Customers or licensees
could also develop their own simulation technology or informatics software and
cease using our products and services.
Certain of our software competitors and potential competitors have
longer operating histories than we and have greater financial, technical,
marketing, research and development and other resources. Many of our software
competitors offer products and services directed at more specific markets than
those we target, enabling these competitors to focus a greater proportion of
their efforts on such markets. Certain offerings that are competitive with our
software products are developed and made available by governmental organizations
and academic institutions, and these entities may be able to devote substantial
resources to product development and also offer their products to users for
little or no charge. There can be no assurance that our current or potential
competitors will not develop products, services or technologies that are
comparable to, superior to, or render obsolete, the products, services and
technologies we offer. There can be no assurance that our competitors will not
adapt more quickly than we to technological advances and customer demands,
thereby increasing such competitors' market share relative to that of us. Any
material decrease in demand for our technologies or services may have a material
adverse effect on our business, financial condition and results of operations.
OUR CURRENT AND POTENTIAL CUSTOMERS ARE PRIMARILY FROM, AND ARE SUBJECT
TO RISKS FACED BY, THE PHARMACEUTICAL, CHEMICAL AND BIOTECHNOLOGY INDUSTRIES.
We derive a substantial portion of our revenue from fees paid by
pharmaceutical companies, chemical companies and larger biotechnology companies
for our products and services. We expect that pharmaceutical companies, chemical
companies and larger biotechnology companies will be our primary source of
revenues for the foreseeable future. As a result, we are, and we expect to be,
subject to risks and uncertainties that affect the pharmaceutical, chemical and
biotechnology industries and to possible reduction and delays in research and
development expenditures by companies in these industries. Our future revenues
may also be adversely affected by mergers and consolidation in the
pharmaceutical, chemical and biotechnology industries, which will reduce the
number of our potential customers.
THERE MAY ONLY BE A LIMITED MARKET FOR OUR SOFTWARE SEGMENT SERVICES.
A significant part of our Software Segment strategy is to broaden the
types of users of our molecular simulation products and services. We intend to
expand the marketing of our software products beyond our traditional simulation
specialist customers to the larger category of potential customers who are
scientists and engineers, or experimentalists. We do not have any historical or
comparative sales data to rely upon to indicate that
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our software products will achieve commercial success with experimentalists.
Increased market acceptance of our software products will depend on a number
of factors, including:
* perceptions by experimentalists of the effectiveness and quality
of our software products;
* cost-effectiveness of our software products relative to other
software products; and
* the effectiveness of marketing and support efforts by us and our
distributors.
FAILURE TO ATTRACT AND RETAIN SKILLED PERSONNEL COULD HAVE A MATERIAL
ADVERSE EFFECT ON US.
Our future success will depend in part on the continued service of key
scientific, software, sales, engineering and management personnel and our
ability to identify, hire and retain additional personnel. There is intense
competition for such qualified personnel, and immigration laws may further
restrict our ability to attract or hire qualified personnel. There can be no
assurance that we will be able to continue to attract and retain the personnel
necessary for the development of our business. Failure to attract and retain key
personnel could have a material adverse effect on our business, financial
condition and results of operations.
We are highly dependent on the principal members of our scientific and
management staff, including Joseph A. Mollica, Ph.D., Chairman of the Board,
President and Chief Executive Officer; Saiid Zarrabian, Chief Operating Officer;
John J. Baldwin, Chief Science and Technology Officer; Stephen A. Spearman,
Ph.D., Executive Vice President, Drug Discovery Operations; and Bruce C. Myers,
Executive Vice President and Chief Financial Officer. One or more of these key
employees could retire or otherwise leave our employ within the foreseeable
future, and the loss of any of these people could have a material adverse effect
on our business, financial condition and results of operations. We do not
maintain key person life insurance on the life of any employee.
SOME OF OUR PRODUCT DEVELOPMENT AND MARKETING ACTIVITIES ARE, OR WILL
BE, CONDUCTED BY THIRD PARTIES. IF THESE THIRD PARTIES FAIL TO PERFORM THESE
FUNCTIONS SATISFACTORILY, OUR REVENUES AND PROFITS COULD BE REDUCED OR DELAYED.
Our drug discovery services will only result in commercialized
pharmaceutical products generating milestone payments and royalties upon
significant preclinical and clinical development, requisite regulatory
approvals, the establishment of manufacturing capabilities and successful
marketing. We do not currently intend to perform any of these activities.
Therefore, we will be dependent upon the expertise and dedication of sufficient
resources by third parties to develop and commercialize products based on
library compounds produced and lead compounds discovered by us.
If a collaborative partner fails to develop or commercialize a compound
or product to which it has rights from us, we may not receive any future
milestone payments or royalties associated with that compound or product. Our
contractual arrangements with our customers do not obligate the customers to
develop or commercialize lead compounds discovered by us. In addition, there can
be no assurance that any such development or commercialization would be
successful. The compound basis for drugs developed by a customer may be a
derivative or optimized version of the lead compound that we provide to the
customer. Although our existing collaborative agreements provide that we will
receive milestone payments and royalties with respect to products developed from
certain derivative compounds, there can be no assurance that disputes will not
arise over the application of payment provisions to such products. There can be
no assurance that current or future collaborative partners will not pursue
alternative technologies, or develop alternative products either on their own or
in collaboration with others, including our competitors, as a means for
developing treatments for the diseases targeted by collaborative arrangements
with us.
WE AND OUR PRODUCTS ARE SUBJECT TO STRICT GOVERNMENT REGULATION.
Regulation by governmental entities in the U.S. and other countries
will be a significant factor in the production and marketing of any
pharmaceutical products that our customers may develop. The nature and the
extent to which government regulation may apply to our customers will vary
depending on the nature of the pharmaceutical products, if any. Virtually all
pharmaceutical products that our customers develop will require regulatory
approval by governmental agencies prior to commercialization. In particular,
human pharmaceutical therapeutic products are subject to rigorous preclinical
and clinical testing and other approval procedures by the U.S. Food and Drug
Administration, the FDA, and by foreign regulatory authorities. Various federal
and, in some cases, state statutes and regulations also govern or influence the
manufacturing, safety, labeling, storage, record keeping
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and marketing of such pharmaceutical products. The process of obtaining these
approvals and the subsequent compliance with appropriate federal and foreign
statutes and regulations are time consuming and require the expenditure of
substantial resources. If we fail or our collaborators or licensees fail to
obtain, or encounter delays in obtaining or maintaining, regulatory approvals
it could adversely affect the marketing of any products we develop, our
ability to receive product or royalty revenues and our liquidity and capital
resources.
Generally, in order to gain FDA approval, a company first must conduct
preclinical studies in the laboratory and in animal models to gain preliminary
information on a compound's efficacy and to identify any safety problems. The
results of these studies are submitted to the FDA as a part of an
Investigational New Drug application, or IND, which must be approved before
clinical trials in humans can begin. Typically, clinical evaluation involves a
time consuming and costly three-phase process.
Phase I Clinical trials are conducted with a small number of
subjects to determine the early safety profile, the
pattern of drug distribution and metabolism.
Phase II Clinical trials are conducted with groups of patients
afflicted with a specific disease in order to determine
preliminary efficacy, optimal dosages and expanded
evidence of safety.
Phase III Large-scale, multi-center, comparative trials are
conducted with patients afflicted with a target disease in
order to provide enough data to demonstrate with
substantial evidence the efficacy and safety required by
the FDA.
The FDA closely monitors the progress of each of the three phases of
clinical trials and may, at its discretion, re-evaluate, alter, suspend or
terminate the testing based upon the data accumulated to that point and its
assessment of the risk/benefit ratio to the patient.
The results of preclinical testing and clinical trials are submitted to
the FDA in the form of a New Drug Application, or NDA, for approval to commence
commercial sales. In responding to an NDA, the FDA may grant marketing approval,
request additional information or deny the application if the FDA determines
that the application does not satisfy its regulatory approval criteria. There
can be no assurance that approvals will be granted on a timely basis or at all.
If approved, there can be no assurance that the approval will include acceptable
labeling to adequately commercialize the product. Similar regulatory procedures
must also be complied with in countries outside the United States.
The results of preclinical testing and early clinical trials may not be
predictive of results obtained in later clinical trials. As a result, there can
be no assurance that clinical trials our collaborators conduct will demonstrate
sufficient safety and efficacy to obtain the requisite regulatory approvals or
will result in marketable products or marketable indications. In addition, late
stage clinical trials are often conducted with patients having the most advanced
stages of disease. During the course of treatment, these patients can die or
suffer other adverse medical effects for reasons that may not be related to the
pharmaceutical agent being tested but which can nevertheless adversely affect
clinical trial results. A number of companies in the biotechnology and
pharmaceutical industries have suffered significant setbacks in advanced
clinical trials, even after promising results in earlier trials. If our drug
candidates are not shown to be safe and effective in clinical trials, the
resulting delays in developing other compounds and conducting related
preclinical testing and clinical trials, as well as the potential need for
additional financing, would have a material adverse effect on our business,
financial condition and results of operations.
The rate of completion of clinical trials our collaborators conduct may
be delayed by many factors, including slower than expected patient recruitment
or unforeseen safety issues. Any delays in, or termination of, the clinical
trials for our products would have a material adverse effect on our business,
financial condition and results of operations. There can be no assurance that
our collaborators will be permitted by regulatory authorities to undertake
clinical trials for our products or, if such trials are conducted, that any of
our product candidates will prove to be safe and efficacious or will receive
regulatory approvals.
IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE
WILL BE UNABLE SUCCESSFULLY TO DEVELOP PRODUCTS.
Our research programs under collaborative agreements with third parties
will expire over the next one to three years unless they are renewed or
extended. There can be no assurance that these research programs will be
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<PAGE>
renewed or extended, that any such renewals or extensions will be on terms
and conditions similar to those currently in place, or that we will enter
into similar collaborative agreements with third parties. If these research
programs are not renewed or extended and we do not enter into similar
collaborative agreements with third parties, we may need to seek additional
capital. We may also need to seek additional capital if we invest in new
technologies, attempt to develop and bring our own drugs to market, or engage
in mergers or similar extraordinary transactions.
If we determine that we must raise additional capital, such capital
could be raised through public or private financings involving debt or equity.
There can be no assurance that additional capital could be raised on favorable
terms, or at all. If adequate funds are not available, we may be required to
curtail operations significantly or to obtain funds through entering into
arrangements with collaborative partners or others that may require us to
relinquish rights to certain of our technologies, product candidates, products
or potential markets that we would not otherwise relinquish.
GOVERNMENTAL ACTIONS THAT SEEK TO REDUCE OR CONTAIN THE COST OF HEALTH
CARE MAY HAVE AN ADVERSE EFFECT ON OUR COLLABORATORS, AND, AS A RESULT, MAY HAVE
AN ADVERSE EFFECT ON US.
We expect that a majority of our revenues in the foreseeable future
will be derived from products and services provided to the pharmaceutical and
biotechnology industries. Accordingly, our success in the foreseeable future is
directly dependent upon the success of the companies within those industries and
their continued demand for our products and services. The levels of revenues and
profitability of pharmaceutical and biotechnology companies may be affected by
the continuing efforts of governmental and third party payors to contain or
reduce the costs of health care through various means and the initiatives of
third party payors with respect to the availability of reimbursement. For
example, in certain foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to governmental control. In the U.S., there have
been, and we expect that there will continue to be, a number of federal and
state proposals to implement similar governmental control. It is uncertain what
legislative proposals may be adopted or what actions federal, state or private
payors for health care goods and services may take in response to any health
care reform proposals or legislation. To the extent that such proposals or
reforms have an adverse effect on the business, financial condition and
profitability of pharmaceutical and biotechnology companies that are actual or
prospective collaborators for our products, our business, financial condition
and results of operations could be adversely affected.
IF WE USE BIOLOGICAL AND HAZARDOUS MATERIALS IN A MANNER THAT CAUSES
INJURY OR VIOLATES LAWS, WE MAY BE LIABLE FOR DAMAGES.
Our drug discovery services research and development activities involve
the controlled use of potentially harmful biological materials as well as
hazardous materials, chemicals and various radioactive compounds. We cannot
completely eliminate the risk of accidental contamination or injury from the
use, storage, handling or disposal of these materials. In the event of
contamination or injury, we could be held liable for damages that result, and
any liability could exceed our resources. We are subject to federal, state and
local laws and regulations governing the use, storage, handling and disposal of
these materials and specified waste products. The cost of compliance with these
laws and regulations could be significant.
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE
MAY INCUR SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION
OF OUR PRODUCTS.
The testing and marketing of medical products entail an inherent risk
of product liability. If we cannot successfully defend ourselves against product
liability claims, we may incur substantial liabilities or be required to limit
commercialization of our products. Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of
pharmaceutical products we develop, alone or with corporate collaborators. We do
not currently carry clinical trial insurance and have only limited product
liability insurance. Our corporate collaborators or we may not be able to obtain
insurance at a reasonable cost, if at all. While under various circumstances we
are entitled to be indemnified against losses by our corporate collaborators,
indemnification may not be available or adequate should any claim arise.
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<PAGE>
RISKS RELATED TO THIS OFFERING
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE
LAW MAY MAKE AN ACQUISITION OF US, WHICH MAY BE BENEFICIAL TO OUR STOCKHOLDERS,
MORE DIFFICULT.
Our Restated Certificate of Incorporation, the Certificate, authorizes
our Board of Directors to issue, without stockholder approval, 2,000,000 shares
of preferred stock with voting, conversion and other rights and preferences that
could adversely affect the voting power or other rights of the holders of our
common stock. The issuance of preferred stock or of rights to purchase preferred
stock could discourage an unsolicited acquisition proposal. In addition, the
possible issuance of preferred stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of our common stock or limit
the price that investors might pay in the future for our common stock.
The Certificate also provides for staggered terms for the members of
our Board of Directors. A staggered Board of Directors and certain provisions of
our by-laws and of Delaware law applicable to us could delay or make more
difficult a merger, tender offer or proxy contest involving us. In addition, our
stock option plans generally provide for the acceleration of vesting of options
granted under such plans in the event of certain transactions which result in a
change of control of us.
Until November 2000, Section 203 of the Delaware General Corporation
Law may discourage, delay or prevent a third party from acquiring us.
THE PRICE OF OUR COMMON STOCK IS VOLATILE.
The market prices for securities of biotechnology and pharmaceutical
companies have historically been highly volatile, and the market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. The following factors may
have an adverse effect on our stock price:
* fluctuations in operating results;
* announcements of technological innovations or new therapeutic
products by us or others;
* clinical trial results;
* developments concerning strategic alliance agreements;
* government regulation;
* developments in patent or other proprietary rights;
* public concern as to the safety of our drugs;
* future sales of substantial amounts of our Common Stock by
existing stockholders; and
* comments by securities analysts and general market conditions.
The realization of any of the risks described in these "Risk Factors"
could cause our stock price to fall dramatically.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the Securities Act), and Section 21E
of the Securities Exchange Act of 1934, as amended (the Exchange Act). Any
statements about our
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<PAGE>
expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or
phrases like "anticipate," "estimate," "plans," "projects," "continuing,"
"ongoing," expects," "management believes," "we believe," "we intend" and
similar words or phrases. Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual results to differ
materially from those expressed in them. Any forward-looking statements are
qualified in their entirety by reference to the factors discussed in this
prospectus or incorporated by reference.
Because the factors discussed in this prospectus or incorporated by
reference could cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements made by us or on behalf of us, you
should not place undue reliance on any such forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which it is made,
and we undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for us to predict which
will arise. In addition, we cannot assess the impact of each factor on our
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of common
stock by the selling stockholders.
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<PAGE>
SELLING STOCKHOLDERS
The selling stockholders are the holders of 2,278,952 shares of our
common stock. The following table provides certain information with respect to
shares of common stock held and to be offered under this prospectus from time to
time by each selling stockholder. Because the selling stockholders may sell all
or part of their common stock pursuant to this prospectus, and this offering is
not being underwritten on a firm commitment basis, only an estimate can be given
as to the number and percentage of shares of common stock that will be held by
each selling stockholder upon termination of this offering.
We have agreed to pay for all costs and expenses related to the
offer, sale and delivery of the shares of common stock to be offered under
this prospectus, including all expenses and fees of preparing, filing and
printing this prospectus and the registration statement of which it is a part
and related exhibits, amendments and supplements and related mailing
expenses. We will not pay selling commissions and expenses associated with
the sale of any shares of common stock offered under this prospectus. We have
agreed to indemnify certain of the selling stockholders against claims made
against them arising out of, among other things, statements made in this
registration statement. We have agreed to cause this registration statement
to remain effective until the earliest of: (i) March 13, 2002, (ii) the date
on which the first twelve selling stockholders listed in the following table
can sell the shares registered under this registration statement without
restriction by the volume limitations of Rule 144(e) of the Securities Act,
or (iii) the date on which the shares owned by the first twelve selling
stockholders listed in the following table have been sold by the selling
stockholders.
Except as disclosed in this paragraph, we are not aware of any material
relationship between any of the selling stockholders and us in the past three
years other than as a result of the ownership of the shares of our common stock.
In 1993, we entered into an exclusive license agreement with The Trustees of
Columbia University, or Columbia, and Cold Spring Harbor Laboratory, or Cold
Spring, covering technology related to tagged combinatorial chemical libraries
and methods of preparing and utilizing those libraries. The licensed technology
includes patents and patent applications filed by Columbia and Cold Spring
covering the use of encoding tag sets to implement the drug discovery process
using combinatorial chemistry libraries. We are obligated to pay a minimum
annual license fee of $100,000. The term of the agreement is the later of (i) 20
years or (ii) the expiration of the last patent relating to the technology, at
which time we will have a fully paid license to the technology. We are also
obligated to pay royalties to Columbia and Cold Spring based on net sales of
pharmaceutical products developed by us as well as a percentage of all other
payments and royalties received by us from customers where we have utilized the
technology licensed from Columbia and Cold Spring. Since 1992, Glen A. Hopkinson
has been the Managing Director of Synopsis Scientific Systems Ltd., a company we
acquired on February 29, 2000. Mr. Hopkinson is now our Vice President of
Cheminformatics.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
NUMBER OF
NUMBER OF SHARES NUMBER OF SHARES SHARES OWNED
NAME OF OWNED PRIOR TO THE SOLD IN THE AFTER THE
SELLING STOCKHOLDER OFFERING OFFERING OFFERING
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BlackRock Funds, Small Cap Growth Equity Portfolio 400,000 400,000 0
T. Rowe Price New Horizons Fund, Inc. 80,000 80,000 0
T. Rowe Price Health Sciences Fund, Inc. 53,333 53,333 0
Green Line Mutual Funds - Green Line Health Sciences
Fund 26,667 26,667 0
Invesco VIF Health Sciences Fund 8,000 8,000 0
Invesco Global Health Sciences Fund 120,000 120,000 0
Invesco Health Sciences Fund 272,000 272,000 0
Delaware Group Premium Fund, on behalf of its Trend
Series 191,900 120,300 71,600
Delaware Group Equity Funds III, on behalf of its
Delaware Trend Fund 339,100 218,100 121,000
Delaware Management Company, sub-investment adviser on
behalf of PACE Small/Medium Company Growth Equity
Investments 134,900 59,500 75,400
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
Delaware Pooled Trust, on behalf of its The Small-Cap
Growth Equity Portfolio 4,400 2,100 2,300
Biotech Invest S.A. 500,000 500,000 0
Cold Spring Harbor Laboratory 60,000 24,110 35,890
The Trustees of Columbia University 69,510 24,110 45,400
Glen Anthony Hopkinson 12,454 12,454 0
KB (CI) Nominees Ltd. 6,688 6,688 0
----------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may sell the shares of common stock from time
to time. The selling stockholders will act independently of us in making
decisions regarding the timing, manner and size of each sale. The selling
stockholders may make these sales on the Nasdaq National Market or otherwise, at
prices and terms that are then-prevailing or at prices related to the
then-current market price, or in privately negotiated transactions. The selling
stockholders may use one or more of the following methods to sell the shares of
common stock:
* a block trade in which a selling stockholder's broker
or dealer will attempt to sell the shares as agent,
but may position and resell all or a portion of the
block as a principal to facilitate the transaction;
* a broker or dealer may purchase the common stock as a
principal and then resell the common stock for its
own account pursuant to this prospectus;
* an exchange distribution in accordance with the rules
of the applicable exchange; and
* ordinary brokerage transactions and transactions in
which the broker solicits purchasers.
In effecting sales, broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in the resales.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principal, or both. Compensation
as to a particular broker-dealer might be in excess of customary commissions and
will be in amounts to be negotiated in connection with the sale. Broker-dealers
or agents and any other participating broker-dealers or the selling stockholders
may be deemed to be "underwriters" within the meaning of section 2(11) of the
Securities Act in connection with sales of the shares. Accordingly, any such
commission, discount or concession received by them and any profit on the resale
of the shares purchased by them may be deemed to be underwriting discounts or
concessions under the Securities Act. Because selling stockholders may be deemed
"underwriters" within the meaning of section 2(11) of the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act.
Any shares covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sale of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. We have agreed to
indemnify the selling stockholders against certain liabilities in connection
with their offering of the shares, including liabilities arising under the
Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for us by Dechert Price & Rhoads, Lawrenceville, New Jersey. James
J. Marino, one of our directors, is a partner in Dechert Price & Rhoads. Mr.
Marino received an option to purchase 10,000 shares of our common stock pursuant
to our 1995 Directors Option Plan.
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<PAGE>
EXPERTS
Our financial statements appearing in our Annual Report on Form
10-K/A for the year ended December 31, 1999, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The financial statements of our subsidiary, Molecular Simulations
Inc., for the year ended December 31, 1997, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
with respect thereto that is included in our Annual Report on Form 10-K/A and
incorporated herein by reference. Such reports included herein in reliance
upon the authority of said firm as experts in giving said report.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act.
Accordingly, we file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document that we have filed at the SEC's public reference
rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. You can obtain copies of our SEC filings at prescribed rates from the SEC
Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. Our
SEC filings are also available to you free of charge at the SEC's web site at
http: //www.sec.gov.
Shares of our common stock are traded as "National Market Securities"
on the Nasdaq National Market. Documents we have filed can be inspected at the
offices of the National Association of Securities Dealers, Inc., Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is a part of a Registration Statement on Form S-3
(together with all amendments and exhibits, referred to as the "Registration
Statement") filed by us with the SEC under the Securities Act of 1993, as
amended. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the SEC. For further information with respect
to us and the shares of our common stock offered hereby, please refer to the
Registration Statement. The Registration Statement may be inspected at the
public reference facilities maintained by the SEC at the addresses set forth
above. Statements in this Prospectus about any document filed as an exhibit are
not necessarily complete and, in each instance, you should refer to the copy of
such document filed with the SEC. Each such statement is qualified in its
entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information filed
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we have filed
later with the SEC will automatically update and supersede previously filed
information, including information contained in this Prospectus.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act until this offering has been completed:
(1) Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
(2) Annual Report on Form 10-K/A-1 for the fiscal year ended
December 31, 1999;
(3) The description of our Common Stock contained in the
Registration Statement on Form S-1, (Registration No.
33-93460), as amended, which was declared effective by the
SEC on December 5, 1995; and
(4) Report on Form 8-K, filed on March 9, 2000.
You may request a free copy of these documents by writing to Investor
Relations, Pharmacopeia, Inc., CN 5350, Princeton, New Jersey 08543-5340, or by
calling our Investor Relations department at (609) 452-3600.
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<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN
THIS PROSPECTUS OR A PROSPECTUS SUPPLEMENT OR AMENDMENT. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF
THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. ALSO, THIS
PROSPECTUS DOES NOT OFFER TO SELL ANY SECURITIES OTHER THAN THE SECURITIES
COVERED BY THIS PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS OR A PROSPECTUS SUPPLEMENT OR AMENDMENT IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.................................. 1
Risk Factors........................................ 2
Disclosure Regarding Forward-Looking
Statements....................................... 9
Use of Proceeds..................................... 10
Selling Stockholders................................ 11
Plan of Distribution................................ 13
Legal Matters....................................... 13
Experts............................................. 14
Where You Can Find More Information................. 14
Information Incorporated by Reference............... 14
</TABLE>
THROUGH AND INCLUDING _____________, 2000 (THE 25TH DAY AFTER COMMENCEMENT OF
THIS OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK
OFFERED BY THIS PROSPECTUS, WHETHER OR NOT PARTICIPATING IN THIS OFFERING,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
PROSPECTUS , 2000
1,927,362 SHARES
PHARMACOPEIA, INC.
COMMON STOCK
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company and Selling Stockholders will pay all expenses incident to
the offering and sale to the public of the shares being registered other than
any commissions and discounts of underwriters, dealers or agents and any
transfer taxes. Such expenses are set forth in the following table. All of the
amounts shown are estimates except the SEC registration fee and the Nasdaq
National Market listing fee.
<TABLE>
<S> <C>
SEC registration fee................................................ $ 27,090
Nasdaq National Market listing fee.................................. $ 17,500
Legal fees and expenses............................................. $ 20,000
Accounting fees and expenses........................................ $ 10,000
Miscellaneous expenses.............................................. $ 25,410
Total...................................................... $100,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons serving at the
request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he or she
is or is threatened to be made a party by reason of such position, if such
person has acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, and, in any
criminal proceeding, if such person had no reasonable cause to believe his or
her conduct was unlawful; provided that, in the case of actions brought by or in
the right of the corporation, no indemnification may be made with respect to any
matter as to which such person has been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Registrant's Certificate of Incorporation provides that no director
will be personally liable to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for authorizing the
payment of an unlawful dividend or repurchase of stock or (iv) for any
transaction in which the director derived an improper personal benefit.
The Registrant's by-laws provide that the Registrant must indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Registrant) by reason of the fact that he or she is or was a
director or officer of the Registrant, or that such director or officer is or
was serving at the request of the Registrant as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (collectively "Agent"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Registrant, which approval may not be unreasonably withheld)
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, will not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Registrant, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
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<PAGE>
The Registrant's by-laws provide further that the Registrant must
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Registrant to procure a judgment in its favor by reason of the fact that he or
she is or was an Agent against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Registrant, provided that no indemnification may be made in respect of any
claim, issue or matter as to which such person has been adjudged to be liable to
the Registrant unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court deems proper.
As permitted under its by-laws, the Registrant has purchased and
maintains a directors' and officers' liability insurance policy to insure its
officers and directors against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Form of Stock Purchase Agreement, dated as of
March 13, 2000, among Pharmacopeia, Inc. and
the investors set forth therein.*
4.2 Stockholders Rights Agreement, dated February
15, 1995.(1)
4.3 Warrant to purchase Common Stock issued to
Columbia University.(2)
4.4 Warrant to purchase Common Stock issued to
Cold Spring Harbor Laboratory.(3)
4.5 Share Acquisition Agreement, dated as of
February 29, 2000, by and between
Pharmacopeia, Inc. and the Persons named
therein.(4)
5.1 Opinion of Dechert Price & Rhoads.*
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Arthur Andersen LLP.*
23.3 Consent of Dechert Price & Rhoads (included in
Exhibit 5.1)*
24.1 Powers of Attorney (included on signature
page).*
</TABLE>
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* Filed herewith
(1) Incorporated by reference to Exhibit 4.3 filed
with the Registrant's Registration Statement on Form S-1 (No.
33-93460).
(2) Incorporated by reference to Exhibit 10.23 filed
with the Registrant's Registration Statement on Form S-1 (No.
33-93460).
(3) Incorporated by reference to Exhibit 10.24 filed
with the Registrant's Registration Statement on Form S-1 (No.
33-93460).
(4) Incorporated by reference to Exhibit 2.1 filed with the
Registrant's Report on Form 8-K filed on March 9, 2000.
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
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(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs A(l) (i) and A(l) (ii) do
not apply if the Registration Statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of this offering.
B. Undertaking Regarding Filings Incorporating Subsequent
Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Princeton, New Jersey, on this 10th day of April,
2000
PHARMACOPEIA, INC.
By:/s/ Joseph A. Mollica
----------------------------------------
Joseph A. Mollica, Ph.D.
Chairman of the Board, President and Chief
Operating Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joseph A. Mollica, Ph.D. and Bruce C.
Myers, jointly and severally, as his or her attorney-in-fact, each with full
power of substitution, for him or her, in any and all capacities, to sign any
amendment to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Joseph A Mollica Chairman of the Board, President and
- -------------------------------- Chief Executive Officer
Joseph A. Mollica, Ph.D. (Principal Executive Officer) April 10, 2000
/s/ Bruce C. Myers Executive Vice President and Chief April 10, 2000
- -------------------------------- Financial Officer (Principal
Bruce C. Myers Financial and Accounting Officer)
/s/ Frank Baldino, Jr.
- --------------------------------
Frank Baldino, Jr., Ph.D. Director April 10, 2000
/s/ Paul A. Bartlett
- --------------------------------
Paul A. Bartlett, Ph.D. Director April 10, 2000
- --------------------------------
C. Peter W. Booth Director April 10, 2000
/s/ Gary E. Costley
- --------------------------------
Gary E. Costley, Ph.D. Director April 10, 2000
/s/ James J. Marino
- --------------------------------
James J. Marino Director April 10, 2000
II-4
<PAGE>
/s/ Edith W. Martin
- --------------------------------
Edith W. Martin, Ph.D. Director April 10, 2000
/s/ Charles A. Sanders
- --------------------------------
Charles A. Sanders, M.D. Director April 10, 2000
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Form of Stock Purchase Agreement, dated as of March 13,
2000, among Pharmacopeia, Inc. and the investors set forth therein.*
4.2 Stockholders Rights Agreement, dated February 15, 1995.(1)
4.3 Warrant to purchase Common Stock issued to Columbia University.(2)
4.4 Warrant to purchase Common Stock issued to Cold Spring Harbor Laboratory.(3)
4.5 Share Acquisition Agreement, dated as of February 29, 2000, by and between
Pharmacopeia, Inc. and the Persons named therein.(4)
5.1 Opinion of Dechert Price & Rhoads.*
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Arthur Andersen LLP.*
23.3 Consent of Dechert Price & Rhoads (included in Exhibit 5.1).*
24.1 Powers of Attorney (included on signature page).*
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to Exhibit 4.3 filed with the
Registrant's Registration Statement on Form S-1 (No. 33-93460).
(2) Incorporated by reference to Exhibit 10.23 filed with the
Registrant's Registration Statement on Form S-1 (No. 33-93460).
(3) Incorporated by reference Exhibit 10.24 filed with the
Registrant's Registration Statement on Form S-1 (No. 33-93460).
(4) Incorporated by reference to Exhibit 2.1 filed with the Registrant's
Report on Form 8-K filed on March 9, 2000.
<PAGE>
EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
Pharmacopeia, Inc.
CN 5350
Princeton, NJ 08543-5340
The undersigned (the "Investor"), hereby confirms its agreement with you as
follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of the date set
forth below between Pharmacopeia, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company has authorized the sale and issuance of up to 3 million
shares (the "Shares") of common stock of the Company, $.0001 par value per share
(the "Common Stock"), subject to adjustment by the Company's Board of Directors,
to certain investors in a private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor ____________
shares, for a purchase price of $_________________ per share, or an aggregate
purchase price of $____________________, pursuant to the Terms and Conditions
for Purchase of Shares attached hereto as Annex I and incorporated herein by
this reference as if fully set forth herein. Unless otherwise requested by the
Investor, certificates representing the Shares purchased by the Investor will be
registered in the Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has
had no position, office or other material relationship within the past three
years with the Company or its affiliates, (b) neither it, nor any group of which
it is a member or to which it is related, beneficially owns (including the right
to acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any NASD member. Exceptions:
- -------------------------------------------------------------------------------
(If no exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
DATED AS OF: , 2000
-------------------
---------------------------------------
"INVESTOR"
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
AGREED AND ACCEPTED:
PHARMACOPEIA, INC.
By:
-----------------------------
Title:
--------------------------
<PAGE>
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. AUTHORIZATION AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Shares.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES; SUBSCRIPTION DATE.
2.1 At the Closing (as defined in Section 3), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares set forth on the
signature page to which these Terms and Conditions for Purchase of Shares are
attached as Annex I (the "Signature Page") at the purchase price set forth on
such Signature Page.
2.2 The Company proposes to enter into this same form of Stock
Purchase Agreement with certain other investors (the "Other Investors") and
expects to complete sales of Shares to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.") The Company will accept executed Agreements from Investors for
the purchase of Shares commencing upon the date on which the Company provides
the Investors with the proposed purchase price per Share and concluding upon the
date (the "Subscription Date") on which the Company has (i) executed Agreements
with Investors for the purchase of Shares in the aggregate amount of at least
$20,000,000 and (ii) notified Deutsche Bank Securities, Inc. (in its capacity as
Placement Agent for the Shares, the "Placement Agent") in writing that it is no
longer accepting Agreements from Investors for the purchase of Shares.
2.3 Investor acknowledges that the Company intends to pay the
Placement Agent a fee in respect of the sale of Shares to the Investor.
3. DELIVERY OF THE SHARES. The completion of the purchase and sale of
the Shares (the "Closing") shall occur at a place and time (the "Closing Date")
to be specified by the Company and the Placement Agent, and of which the
Investors will be notified in advance by the Placement Agent. After receipt of
payment therefor at the Closing, the Company shall direct the transfer agent of
the Company to deliver to the Investor one or more stock certificates
representing the number of Shares set forth on the signature page hereto, each
such certificate to be registered in the name of the Investor or, if so
indicated on the Stock Certificate Questionnaire attached hereto as Exhibit A,
in the name of a nominee designated by the Investor. The Company shall ensure
that such stock certificates are delivered to the Investor within three business
days of the Closing.
The Company's obligation to issue the Shares to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) Investors shall have executed Agreements for the purchase of
Shares in the aggregate of at least $20 million; (b) receipt by the Company of
the purchase price in same day funds for the Shares being purchased hereunder as
set forth on the Signature Page hereto; (c) completion of all purchases and
sales under the Agreements with the Other Investors; and (d) the accuracy of the
<PAGE>
representations and warranties made by the Investors and the fulfillment of
those undertakings of the Investors to be fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) Investors shall have executed Agreements for the purchase of Shares in the
aggregate amount of at least $20,000,000; and (b) the satisfaction of all of the
conditions set forth in the Engagement Letter between the Company and the
Placement Agent. Subject to clause (a) above, the Investor's obligations are
expressly not conditioned on the purchase by any or all of the other Investors
of the Shares that they have agreed to purchase from the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. Except as
otherwise described in the Company's regular reports on Form 10-Q, 10-K, and 8-K
as filed by the Company with the Securities and Exchange Commission in 1999 (the
"SEC Documents") and in the Company's press releases since September 30, 1999,
which reports and press releases qualify the following representations and
warranties in their entirety, the Company hereby represents and warrants to, and
covenants with, the Investor, as follows:
4.1 ORGANIZATION. The Company is duly incorporated and validly
existing in good standing under the laws of the jurisdiction of its
organization. The Company has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each jurisdiction
in which it owns or leases property or transacts business and where the failure
to be so qualified would have a material adverse effect upon the business,
financial condition, properties or operations of the Company and its
subsidiaries, taken as a whole ("Material Adverse Effect"), and no proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
4.2 DUE AUTHORIZATION. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 NON-CONTRAVENTION. The execution and delivery of the Agreements,
the issuance and sale of the Shares to be sold by the Company under the
Agreements, the fulfillment of the terms of the Agreements and the consummation
of the transactions contemplated thereby will not (A) conflict with or
constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
or any material lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
is a party or by which it or its property is bound, where such conflict,
violation or default is likely to result in a Material Adverse Effect,
-2-
<PAGE>
(ii) the charter, by-laws or other organizational documents of the Company, or
(iii) any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority binding upon the Company or
its property, where such conflict, violation or default is likely to result in a
Material Adverse Effect, or (B) result in the creation or imposition of any
lien, encumbrance, claim, security interest or restriction whatsoever upon any
of the material properties or assets of the Company or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company is a party or by which it is bound or to which
any of the material property or assets of the Company is subject. No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, or other governmental
body in the United States is required for the execution and delivery of the
Agreements and the valid issuance and sale of the Shares to be sold pursuant to
the Agreements, other than such as have been made or obtained, and except for
any securities filings required to be made under federal or state securities
laws.
4.4 CAPITALIZATION. The capitalization of the Company is described in
the Company's SEC Documents, as of the dates set forth therein. The Company has
not issued any capital stock since September 30, 1999 other than (i) 48,220
shares of Common Stock issued pursuant to the exercise of certain warrants, (ii)
certain shares issued pursuant to employee benefit plans (the "Benefit Plans"),
as described in the Company's SEC Documents, and (iii) as set forth in Schedule
I attached hereto. The Shares to be sold pursuant to the Agreements have been
duly authorized, and when issued and paid for in accordance with the terms of
the Agreements, will be duly and validly issued, fully paid and nonassessable.
The outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as set forth in or contemplated by the Company's SEC
Documents, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party and relating to the
issuance or sale of any capital stock of the Company, any such convertible or
exchangeable securities or any such rights, warrants or options, other than
those issued pursuant to the Benefit Plans. Without limiting the foregoing, no
preemptive right, co-sale right, registration right, right of first refusal or
other similar right exists with respect to the issuance and sale of the Shares.
Except as disclosed in the Company's SEC Documents, there are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Common Stock to which the Company is a party. The Company is required to file a
registration statement for the 19,142 shares of Common Stock issued in
connection with the acquisition of Synopsys Scientific Systems, Ltd, as
described on Schedule I, within 30 days of the date of such acquisition, and the
Company has granted incidental registration rights covering the 48,220 shares of
Common Stock referenced in subsection (i) above, to which a 20 day notice period
applies with respect to any registration statement filed by the Company.
4.5 LEGAL PROCEEDINGS. There is no legal or governmental proceeding
pending to which the Company is a party or of which the business or property of
the Company is
-3-
<PAGE>
subject that has or could be reasonably deemed to have a Material Adverse
Effect, except as disclosed in the Company's SEC Documents.
4.6 NO VIOLATIONS. The Company is not in violation of its charter,
bylaws or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in the
performance of any material bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company is a party or by which the Company
is bound or by which the property of the Company is bound, which would be
reasonably likely to have a Material Adverse Effect.
4.7 GOVERNMENTAL PERMITS, ETC. With the exception of the matters
which are dealt with separately in Sections 4.1, 4.12, and 4.13, the Company has
all necessary franchises, licenses, certificates and other authorizations from
any foreign, federal, state or local government or governmental agency,
department or body that are currently necessary for the operation of the
business of the Company as currently conducted except where the failure to
currently possess could not reasonably be expected to have a Material Adverse
Effect.
4.8 INTELLECTUAL PROPERTY.
(a) Except as described in the Company's SEC Documents, the
Company has ownership or license or legal right to use all patent, copyright,
trade secret, trademark, customer lists, designs, manufacturing or other
processes, computer software, systems, data compilation, research results or
other proprietary rights used in the business of the Company and material to the
Company and its subsidiaries, taken as a whole, (collectively, "Intellectual
Property") other than Intellectual Property generally available on commercial
terms from other sources. All of such patents, trademarks and registered
copyrights owned by the Company have been duly registered in, filed in or issued
by the United States Patent and Trademark Office, the United States Register of
Copyrights or the corresponding offices of other jurisdictions and have been
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and all such jurisdictions,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) All material licenses or other material agreements under
which (i) the Company is granted rights in Intellectual Property, other than
Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company, are, to the knowledge of the Company,
after due investigation, in full force and effect and, to the knowledge of the
Company, there is no material default by the Company thereto.
(c) The Company believes it has taken all steps required in
accordance with sound business practice and business judgment to establish and
preserve its ownership of all material copyright, trade secret and other
proprietary rights with respect to its products and technology.
-4-
<PAGE>
(d) Except as described in the Company's SEC Documents, to the
knowledge of the Company, the present business, activities and products of the
Company do not infringe any intellectual property of any other person, except
where such infringement would not have a Material Adverse Effect on the Company.
Except as described in the Company's SEC Documents, no proceeding charging the
Company with infringement of any adversely held Intellectual Property has been
filed. To the knowledge of the Company, the Company is not making unauthorized
use of any confidential information or trade secrets of any person. Neither the
Company nor, to the knowledge of the Company, any of its employees have any
agreements or arrangements with any persons other than the Company related to
confidential information or trade secrets of such persons, other than such
agreements that would not materially restrict the Company from conducting its
business as currently conducted.
(e) No proceedings have been instituted or are pending which
challenge in a material manner the rights of the Company in respect to the
Company's right to the use of the Intellectual Property. The Company has the
right to use, free and clear of material claims or rights of other persons, all
of its customer lists, designs, computer software, systems, data compilations,
and other information that are material to the Company and its subsidiaries,
taken as a whole, and required for its products or its business as presently
conducted.
4.9 FINANCIAL STATEMENTS. The financial statements of the Company and
the related notes contained in the Company's SEC Documents present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company as of the dates indicated, and the results of its operations and
cash flows for the periods therein specified. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, except as disclosed in the Company's SEC Documents.
4.10 NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Company's
SEC Documents or press releases, since September 30, 1999, there has not been
(i) any Material Adverse Effect affecting the Company, (ii) any obligation,
direct or contingent, that is material to the Company and its subsidiaries
considered as one enterprise, incurred by the Company, except obligations
incurred in the ordinary course of business, (iii) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company, or (iv)
any loss or damage (whether or not insured) to the physical property of the
Company which has been sustained which has a Material Adverse Effect.
4.11 NASDAQ COMPLIANCE. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq
National Market (the "Nasdaq Stock Market"), and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common Stock from the
Nasdaq Stock Market.
4.12 REPORTING STATUS. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the 12 months preceding the
date of this Agreement. The following documents complied in all material
respects with the SEC's requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not
-5-
<PAGE>
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 in
light of the circumstances under which they were made not misleading:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "10-K");
(b) The Company's Quarterly Reports on Form 10-Q for each of the
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999; and
(c) All other documents, if any, filed by the Company with the
Securities and Exchange Commission since December 31, 1998 pursuant to the
reporting requirements of the Exchange Act.
4.13 LISTING. The Company shall comply with all requirements of the
National Association of Securities Dealers, Inc. with respect to the issuance of
the Shares and the listing thereof on the Nasdaq Stock Market, and use its best
efforts to have such Shares listed on the Nasdaq Stock Market on or before the
first date that the Registration Statement is declared effective by the SEC.
4.14 FOREIGN CORRUPT PRACTICES. Neither the Company nor, to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, have (i) directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company or made by any person acting on its
behalf and of which the Company is aware in violation of law or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
4.15 NO MANIPULATION OF STOCK. The Company has not taken and will not,
in violation of applicable law, take, any action outside the ordinary course of
business designed to or that might reasonably be expected to cause or result in
unlawful manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
4.16 ACCOUNTANTS. To the knowledge of the Company, Ernst & Young LLP,
who the Company expects will express their opinion with respect to the financial
statements to be incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 into the Registration Statement
(as defined below) and the Prospectus which forms a part thereof, are
independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder (the "Rules and Regulations").
4.17 CONTRACTS. The contracts described in the SEC Documents or
incorporated by reference therein that are material to the Company are, to the
knowledge of the Company, in full force and effect on the date hereof, and
neither the Company nor, to the Company's knowledge, any other party to such
contracts is in breach of or default under any of such contracts which would
have a Material Adverse Effect.
-6-
<PAGE>
4.18 TRANSFER TAXES. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Investor hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.19 INVESTMENT COMPANY. The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
4.20 INSURANCE. The Company maintains and will continue to maintain
insurance of the types and in the amounts that the Company reasonably believes
is adequate for its business, including, but not limited to, insurance covering
all real and personal property owned or leased by the Company against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against by similarly situated companies, all of which insurance is in full force
and effect.
4.21 LEGAL OPINION. The Company shall cause to be delivered to the
Investors and the Placement Agent by counsel to the Company (i) a customary
legal opinion pertaining to the availability of an exemption from the
registration provisions of the Securities Act and (ii) a customary letter
pertaining to Rule 10b-5 under the Exchange Act.
4.22 OFFERING MATERIALS. Other than the SEC Documents, the Company has
not distributed and will not distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Shares. The Company has
not in the past nor will it hereafter take any action independent of the
Placement Agent to sell, offer for sale or solicit offers to buy any securities
of the Company which would bring the offer, issuance or sale of the Shares, as
contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the
exemption of Section 4 of the Securities Act.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
5.1 The Investor represents and warrants to, and covenants with, the
Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to, investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the number of Shares set forth on the Signature Page hereto in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares; (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act, applicable state securities laws and the respective
rules and
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regulations promulgated thereunder; (iv) the Investor has answered all questions
on the Signature Page hereto and the Investor Questionnaire attached hereto as
Exhibit B for use in preparation of the Registration Statement and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the Closing Date; (v) the Investor will notify the Company immediately of
any change in any of such information until such time as the Investor has sold
all of its Shares or until the Company is no longer required to keep the
Registration Statement effective; and (vi) the Investor, in connection with its
decision to purchase the number of Shares set forth on the signature page
hereto, relied only upon the Company's SEC Documents and the representations and
warranties of the Company contained herein. Investor understands that its
acquisition of the Shares has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or registered or qualified under any
state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of the
Investor's investment intent as expressed herein. Investor has completed or
caused to be completed and delivered to the Company the Investor Questionnaire
attached hereto as Exhibit B, which questionnaire is true and correct in all
material respects.
5.2 The Investor acknowledges, represents and agrees that no action
has been or will be taken in any jurisdiction outside the United States by the
Company or the Placement Agent that would permit an offering of the Shares, or
possession or distribution of offering materials in connection with the issue of
the Shares, in any jurisdiction outside the United States where action for that
purpose is required. Each Investor outside the United States will comply with
all applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense. The
Placement Agent is not authorized to make any representation or use any
information in connection with the issue, placement, purchase and sale of the
Shares.
5.3 The Investor hereby covenants with the Company not to make any
sale of the Shares without complying with the provisions of this Agreement,
including Section 7.2 hereof, and without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied, and the Investor
acknowledges that the certificates evidencing the Shares will be imprinted with
a legend that prohibits their transfer except in accordance therewith. The
Investor acknowledges that there may occasionally be times when the Company,
based on the advice of its counsel, determines that it must suspend the use of
the Prospectus forming a part of the Registration Statement until such time as
an amendment to the Registration Statement has been filed by the Company and
declared effective by the SEC or until the Company has amended or supplemented
such Prospectus.
5.4 The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
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equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
5.5 Investor will not, prior to the effectiveness of the Registration
Statement, directly or indirectly sell, offer to sell, solicit offers to buy,
dispose of, loan, pledge or grant any right with respect to (collectively, a
"Disposition"), the Shares, nor will Investor engage in any hedging or other
transaction which is designed to or could reasonably be expected to lead to or
result in a Disposition of the Shares by the Investor or any other person or
entity. Such prohibited hedging or other transactions would include, without
limitation, effecting any short sale or having in effect any short position
(whether or not such sale or position is against the box and regardless of when
such position was entered into) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to the
Common Stock of the Company or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock of the Company.
5.6 The Investor understands that nothing in this Agreement or any
other materials presented to the Investor in connection with the purchase and
sale of the Shares constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of Shares.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Investor herein shall survive the execution of this
Agreement, the delivery to the Investor of the Shares being purchased and the
payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) subject to receipt of necessary information from the
Investors, prepare and file with the SEC, as soon as practicable, but in no
event later than thirty (30) days after the Closing Date, a registration
statement on Form S-3 (or in the event that the Company is unable to use Form
S-3, then on Form S-1) (the "Registration Statement") to enable the resale of
the Shares by the Investors from time to time through the automated quotation
system of the Nasdaq Stock Market or in privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of necessary
information from the Investors, to cause the Registration Statement to become
effective as soon as practicable, but in no event later than ninety (90) days
after the Registration Statement is filed by the Company. Notwithstanding the
foregoing, if the Registration Statement is not declared effective by July 15,
2000 (the "Final Effectiveness Date") and does not remain effective for thirty
(30) continuous days thereafter, the Investor shall be entitled to a stock
dividend in the amount of two percent (2%) of the Shares purchased by such
Investor hereunder, provided that an additional stock dividend in the amount of
one and one-half percent (1.5%) of the Shares
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purchased hereunder shall be made at each of the first two three-month
anniversaries of the Final Effective Date if the Registration Statement has not
been declared effective and remained effective for thirty (30) continuous days
from the date of the first effectiveness as of such three month anniversaries;
provided further that any such stock dividend shall not exceed in the aggregate
five percent (5%).
(c) use its reasonable efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current and effective for a period not exceeding, with respect to each
Investor's Shares purchased hereunder, the earliest of (i) the second
anniversary of the Closing Date, (ii) the date on which the Investor may sell
all Shares then held by the Investor without restriction by the volume
limitations of Rule 144(e) of the Securities Act or (iii) such time as all
Shares purchased by such Investor in this Offering have been sold pursuant to a
registration statement.
(d) furnish to the Placement Agent and to the Investor with
respect to the Shares registered under the Registration Statement such number of
copies of the Registration Statement, Prospectuses and Preliminary Prospectuses
in conformity with the requirements of the Securities Act and such other
documents as the Investor may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Investor,
provided, however, that the obligation of the Company to deliver copies of
Prospectuses or Preliminary Prospectuses to the Investor shall be subject to the
receipt by the Company of reasonable assurances from the Investor that the
Investor will comply with the applicable provisions of the Securities Act and of
such other securities or blue sky laws as may be applicable in connection with
any use of such Prospectuses or Preliminary Prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Investor, provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
(f) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, other than fees and expenses, if any, of
counsel or other advisors to the Investors, provided, however, that the Company
shall pay the reasonable fees and expenses of one firm of attorneys for the
Investors as a group, or underwriting discounts, brokerage fees and commissions
incurred by the Investors, if any; and
(g) advise the Investors, promptly after it shall receive notice
or obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose; and it will promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
(h) with a view to making available to the Investor the benefits
of Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investor to sell Shares to the public without
registration, the Company covenants
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and agrees to: (i) make and keep public information available, as those terms
are understood and defined in Rule 144, until the earlier of (A) such date as
all of the Investor's Shares may be resold pursuant to Rule 144(k) or any other
rule of similar effect or (B) such date as all of the Investor's Shares shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and under the
Exchange Act; and (iii) furnish to the Investor upon request, as long as the
Investor owns any Shares, (A) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act, (B) a copy of the Company's most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Investor of any rule or regulation of
the SEC that permits the selling of any such Shares without registration.
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Section 7.1 that the Investor shall furnish to the
Company such information regarding itself, the Shares to be sold by Investor,
and the intended method of disposition of such securities as shall be required
to effect the registration of the Shares.
The Company understands that the Investor disclaims being an underwriter,
but the Investor being deemed an underwriter by the SEC shall not relieve the
Company of any obligations it has hereunder, provided, however, that if the
Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period by which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the 90th
day after such SEC notification, or (ii) 120 days after the initial filing of
the Registration Statement with the SEC.
7.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSION.
(a) The Investor agrees that it will not effect any Disposition
of the Shares or its right to purchase the Shares that would constitute a sale
within the meaning of the Securities Act except as contemplated in the
Registration Statement referred to in Section 7.1 and as described below, and
that it will promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding the Investor or its plan of
distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall: (i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not 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 so that, as thereafter delivered to purchasers of the Shares
being sold thereunder, such Prospectus will not 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, in light of the
circumstances under which they were made, not misleading; (ii) provide the
Investor copies of any documents filed pursuant to Section 7.2(b)(i); and
(iii) inform each Investor that the Company has complied with its obligations
in Section 7.2(b)(i) (or that, if the Company has filed a post-effective
amendment to the Registration Statement which
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has not yet been declared effective, the Company will notify the Investor to
that effect, will use its reasonable efforts to secure the effectiveness of
such post-effective amendment as promptly as possible and will promptly
notify the Investor pursuant to Section 7.2(b)(i) hereof when the amendment
has become effective).
(c) Subject to paragraph (d) below, in the event: (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a 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; then the Company shall
deliver a certificate in writing to the Investor (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Shares pursuant to the Registration
Statement (a "Suspension") until the Investor's receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or until
it is advised in writing by the Company that the current Prospectus may be used,
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable within 20 business days after delivery of a Suspension Notice to the
Investors. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investor, the Investor
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares under the
Registration Statement as a result of Suspensions on more than three occasions
of not more than 30 days each in any twelve month period, unless, in the good
faith judgment of the Company's Board of Directors, upon advice of counsel, the
sale of Shares under the Registration Statement in reliance on this paragraph
7.2(d) would be reasonably likely to cause a violation of the Securities Act or
the Exchange Act and result in potential liability to the Company.
(e) Provided that a Suspension is not then in effect the
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has
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agreed to provide an adequate number of current Prospectuses to the Investor and
to supply copies to any other parties requiring such Prospectuses.
(f) In the event of a sale of Shares by the Investor, the
Investor shall deliver to the Company's transfer agent, with a copy to the
Company, a Certificate of Subsequent Sale substantially in the form attached
hereto as Exhibit C, so that the shares may be properly transferred.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(a) the term "Selling Stockholder" shall include the Investor
and any officer, director, trustee or affiliate of such Investor, and
"affiliate" shall mean any person who controls the Investor within the meaning
of Section 15 of the Securities Act;
(b) the term "Registration Statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
(c) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a 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.
(i) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages or liabilities
to which such Selling Stockholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of, or are based upon, (i) any
untrue statement of a material fact contained in the Registration Statement, or
(ii) any failure by the Company to fulfill any undertaking included in the
Registration Statement, and the Company will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, provided,
however, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the Registration
Statement or the failure of such Selling Stockholder to comply with its
covenants and agreements contained in Sections 5.1, 5.2, 5.3 or 7.2 hereof or
any statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Investor prior to the pertinent sale or
sales by the Investor.
(ii) The Investor agrees to indemnify and hold harmless
the Company (and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or
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actions or proceedings in respect thereof) arise out of, or are based upon, (i)
any failure to comply with the covenants and agreements contained in Section
5.1, 5.2, 5.3 or 7.2 hereof, or (ii) any untrue statement of a material fact
contained in the Registration Statement if such untrue statement was made in
reliance upon and in conformity with written information furnished by or on
behalf of the Investor specifically for use in preparation of the Registration
Statement, and the Investor will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim. In no event shall the Investor's liability
hereunder exceed the gross proceeds received from the sale of Shares.
(iii) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the reasonable opinion of counsel to the indemnified person,
for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld or delayed. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release of
such indemnified person from all liability on claims that are the subject matter
of such proceeding.
(iv) If the indemnification provided for in this Section 7.3
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (i) or (ii) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the
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Company on the one hand and the Investors on the other in connection with the
statements or omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the one
hand or an Investor on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investors agree that it would not be just and
equitable if contribution pursuant to this subsection (iv) were determined by
pro rata allocation (even if the Investors were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (iv). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (iv) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (iv), no Investor shall be required to contribute any amount in
excess of the amount by which the gross amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which such Investor has otherwise been required to pay by reason of such untrue
statement. 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
Investors' obligations in this subsection to contribute are several in
proportion to their sales of Shares to which such loss relates and not joint.
(v) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including, without limitation,
the provisions of this Section 7.3, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Act and the Exchange Act. The
parties are advised that federal or state public policy as interpreted by the
courts in certain jurisdictions may be contrary to certain of the provisions of
this Section 7.3, and the parties hereto hereby expressly waive and relinquish
any right or ability to assert such public policy as a defense to a claim under
this Section 7.3 and further agree not to attempt to assert any such defense.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares when
such Shares shall have been effectively registered under the Securities Act and
sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Shares or at
such time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
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7.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Investor, the Company will
furnish to the Investor:
(a) as soon as practicable after it is available, one copy of
(i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants) and (ii) if not
included in substance in the Annual Report to Stockholders, its Annual Report on
Form 10-K (the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Investor, all exhibits
excluded by the parenthetical to subparagraph (a)(ii) of this Section 7.5 as
filed with the SEC and all other information that is made available to
shareholders; and
(c) upon the reasonable request of the Investor, an adequate
number of copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and the Company, upon the reasonable request of the Investor, will
meet with the Investor or a representative thereof at the Company's headquarters
to discuss all information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise cooperate with any Investor conducting an
investigation for the purpose of reducing or eliminating such Investor's
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters; provided, that the
Company shall not be required to disclose any confidential information to or
meet at its headquarters with any Investor until and unless the Investor shall
have entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Company with the Company with respect thereto.
7.6 PUBLIC DISCLOSURES. The Company will not issue any public
statement, press release or any other public disclosure listing the Investor as
one of the purchasers of the Shares without the Investor's prior written
consent.
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one (1) business day after so
mailed, (iii) if delivered by International Federal Express, two (2) business
days after so mailed, (iv) if delivered by facsimile, upon electric confirmation
of receipt and shall be delivered as addressed as follows:
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(a) if to the Company, to:
Pharmacopeia, Inc.
CN 5350
Princeton, NJ 08543-5340
Attn: Chief Executive Officer
cc: General Counsel
Phone: 609-452-3600
Telecopy: 609-452-3655
(b) with a copy mailed to:
Dechert Price & Rhoads
Princeton Pike Corporate Center
P.O. Box 5218
Princeton, NJ 08543-5218
Attn: James J. Marino
Phone: 609-620-3230
Telecopy: 609-620-3259
(c) if to the Investor, at its address on the Signature
Page hereto, or at such other address or addresses as may have been furnished to
the Company in writing.
9. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
10. HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. CONFIDENTIAL DISCLOSURE AGREEMENT. Notwithstanding any provision
of this Agreement to the contrary, any confidential disclosure agreement
previously executed by the Company and the Investor in connection with the
transactions contemplated by this Agreement shall remain in full force and
effect in accordance with its terms following the execution of this Agreement
and the consummation of the transactions contemplated hereby.
-17-
<PAGE>
EXHIBIT A
PHARMACOPEIA
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 5 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be ___________________
registered in (this is the name that will
appear on your stock certificate(s)). You
may use a nominee name if appropriate:
2. The relationship between the Investor and ___________________
the registered holder listed in response to
item 1 above:
3. The mailing address of the registered holder ___________________
listed in response to item 1 above:
4. The Social Security Number or Tax ___________________
Identification Number of the registered
holder listed in the response to item 1
above:
A-1
<PAGE>
EXHIBIT B
PHARMACOPEIA, INC.
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Pharmacopeia, Inc.
This Investor Questionnaire ("Questionnaire") must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.001 per share, of Pharmacopeia, Inc. (the
"Securities"). The Securities are being offered and sold by Pharmacopeia, Inc.
(the "Corporation") without registration under the Securities Act of 1933, as
amended (the "Act"), and the securities laws of certain states, in reliance on
the exemptions contained in Section 4(2) of the Act and on Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Corporation must determine that a potential investor meets
certain suitability requirements before offering or selling Securities to such
investor. The purpose of this Questionnaire is to assure the Corporation that
each investor will meet the applicable suitability requirements. The information
supplied by you will be used in determining whether you meet such criteria, and
reliance upon the private offering exemption from registration is based in part
on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Corporation to provide a completed copy of this Questionnaire to such parties as
the Corporation deems appropriate in order to ensure that the offer and sale of
the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable
to purchasers of the Securities. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. BACKGROUND INFORMATION
<TABLE>
<CAPTION>
<S><C>
Name:
--------------------------------------------------------------------------------------------------------------
Business Address:
--------------------------------------------------------------------------------------------------
(Number and Street)
- -------------------------------------------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
-------------------------------------------------------------------------------------
Residence Address:
-------------------------------------------------------------------------------------------------
(Number and Street)
- -------------------------------------------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
-------------------------------------------------------------------------------------
If an individual:
Age: Citizenship: Where registered to vote:
------ ---------- ------------------------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
----------------------------------------------------------------------------------------------------
State of formation: Date of formation:
-------------- -------------------------------
Social Security or Taxpayer Identification No.
---------------------------------------------------------------------
Send all correspondence to (check one): Residence Address Business Address
---- ----
</TABLE>
B-1
<PAGE>
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):(1)
_____(1) a bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Act; an investment company
registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that
are accredited investors;(1)
_____(2) a private business development company as defined in
Section 202(a)(22) of the Investment Adviser Act of 1940;
_____(3) an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Securities
offered, with total assets in excess of $5,000,000;
_____(4) a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of such person's purchase of the Securities
exceeds $1,000,000;
_____(5) a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
_____(6) a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
_____(7) an entity in which all of the equity owners are accredited investors
(as defined above).
- -------------------
(1) As used in this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose
of subsection (4), the principal residence of the investor must be valued at
cost, including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In
determining income, the investor should add to the investor's adjusted gross
income any amounts attributable to tax exempt income received, losses claimed
as a limited partner in any limited partnership, deductions claimed for
depiction, contributions to an IRA or KEOGH retirement plan, alimony
payments, and any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income.
B-2
<PAGE>
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as follows:
1. Any purchase of the Securities would be solely for the account
of the undersigned and not for the account of any other person or with a view to
any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and
may be relied upon by the Corporation, and the undersigned will notify the
Corporation immediately of any material change in any of such information
occurring prior to the closing, if any, with respect to the purchase of
Securities by the undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be
times when the Corporation, based on the advice of its counsel, determines that
it must suspend the use of the Prospectus forming a part of the Registration
Statement (as such terms are defined in the Stock Purchase Agreement to which
this Questionnaire is attached) until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Securities and Exchange Commission or until the Corporation has amended or
supplemented such Prospectus. The undersigned is aware that, in such event, the
Securities will not be subject to ready liquidation, and that any Securities
purchased by the undersigned would have to be held during such suspension. The
overall commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned's net worth and financial
circumstances, and any purchase of the Securities will not cause such commitment
to become excessive. The undersigned is able to bear the economic risk of an
investment in the Securities.
5. In addition to reviewing the Corporation's SEC Documents, as
defined in the Stock Purchase Agreement to which this questionnaire is an
exhibit, the undersigned has carefully considered the potential risks relating
to the Corporation and a purchase of the Securities, and fully understands that
the Securities are speculative investments which involve a high degree of risk
of loss of the undersigned's entire investment. Among others, the undersigned
has carefully considered each of the risks described under the heading "Risk
Factors" in the Corporation's most recent annual report on Form 10-K.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this _____
day of _____________, 2000, and declares under oath that it is truthful and
correct.
Print Name
By:
----------------------------------------------
Signature
Title:
-------------------------------------------
(required for any purchaser that is a
corporation, partnership, trust or other
entity)
B-3
<PAGE>
EXHIBIT C
PHARMACOPEIA, INC.
CERTIFICATE OF SUBSEQUENT SALE
American Stock Transfer and Trust Company
RE: Sale of Shares of Common Stock of Pharmacopeia, Inc. (the
"Company") pursuant to the Company's Prospectus dated
_______________, 2000 (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Shareholders in
the Prospectus, that the undersigned has sold the Shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.
Selling Shareholder (the beneficial owner):
----------------------------
Record Holder (e.g., if held in name of nominee):
----------------------
Restricted Stock Certificate No.(s):
-----------------------------------
Number of Shares Sold:
-------------------------------------------------
Date of Sale:
----------------------------------------------------------
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
By:
--------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
Dated:
----------------------
cc: Investor Relations
Pharmacopeia, Inc.
CN 5350
Princeton, NJ 08543-5340
C-1
<PAGE>
SCHEDULE I
EXCEPTIONS
1. On February 29, 2000, the Company acquired all of the issued and
outstanding stock of Synopsys Scientific Systems Ltd for an aggregate purchase
price of $25 million, which consisted of approximately $23,687,000 in cash and
the balance in shares of common stock of the Company.
See Form 8-K, Item 5, filed on March [ ], 2000.
<PAGE>
EXHIBIT 5.1
[Letterhead of Dechert Price & Rhoads]
April 10, 2000
Pharmacopeia, Inc.
CN 5350
Princeton, NJ 08543-5340
Re: Pharmacopeia, Inc.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Pharmacopeia, Inc., a Delaware corporation
(the "Company"), in connection with preparation of the above-referenced
Registration Statement on Form S-3 (the "Registration Statement"), relating to
the offering of up to 1,927,362 shares of the Company's common stock, par value
$0.0001 per share (the "Selling Stockholder Shares"), to be sold by the selling
stockholders (the "Selling Stockholders") listed in the Registration Statement
under "Selling Stockholders."
In rendering the opinion set forth below, we have reviewed (a) the
Registration Statement and the exhibits thereto; (b) the Company's Restated
Certificate of Incorporation; (c) the Company's Bylaws; (d) certain records of
the Company's corporate proceedings as reflected in its minute and stock books;
and (e) such other documents as we have deemed relevant. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with the original of
all documents submitted to us as copies thereof.
Based upon the foregoing, we are of the opinion that the Selling
Stockholder Shares are validly issued, fully paid and nonassessable.
Our opinion set forth above is limited to the laws of the Commonwealth
of Pennsylvania.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters." In giving such opinion, we do not thereby admit that we are
acting within the category of persons whose consent is required under Section 7
of the Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Dechert Price + Rhoads
<PAGE>
Consent of Ernst & Young LLP
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Pharmacopeia, Inc.
for the registration of shares of its common stock and to the incorporation by
reference therein of our report dated January 28, 2000, except for Note 9, as to
which the date is March 6, 2000, with respect to the consolidated financial
statements and schedule of Pharmacopeia, Inc. included in its Annual Report
(Form 10-K/A-1) for the year ended December 31, 1999, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
San Diego, California
April 4, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on Molecular
Simulations Inc. dated February 4, 1998 in Pharmacopeia, Inc.'s Form 10-K for
the year ended December 31, 1999 and to all references to our firm included
in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Diego, California
April 4, 2000
