<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
IDEC PHARMACEUTICALS CORPORATION
--------------------------------
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
LOGO
November 5, 1999
Dear Stockholder:
Stockholders of record as of October 18, 1999 are encouraged to vote on the
enclosed proposal, which amends IDEC Pharmaceuticals Corporation's ("we," "our,"
or "us") Amended and Restated Certificate of Incorporation ("Certificate of
Incorporation") by increasing the total number of authorized shares in part to
accommodate the proposed two-for-one split of our common stock.
The Board of Directors has approved this amendment, subject to stockholder
approval, and encourages stockholders to vote FOR this proposal.
After reading the attached Notice of Special Meeting of Stockholders and
Proxy Statement, I urge you to sign, date, and promptly return the enclosed
proxy in the enclosed postage-paid envelope.
To complete this vote, we will hold a special meeting of stockholders at
10:00 a.m. on Wednesday, December 1, 1999, at our corporate headquarters, 11011
Torreyana Road, San Diego, California.
PLEASE NOTE THAT THE ONLY ITEM ON THE AGENDA FOR THIS SPECIAL MEETING WILL
BE VOTING ON THIS AMENDMENT. OTHER THAN MATTERS DIRECTLY RELATING TO THE
PROPOSED AMENDMENT, MANAGEMENT WILL BE MAKING NO PRESENTATIONS AT THE SPECIAL
MEETING, AND SENIOR MEMBERS OF MANAGEMENT MAY NOT BE IN ATTENDANCE. YOU MAY, OF
COURSE, ATTEND THIS SPECIAL MEETING IN PERSON TO VOTE YOUR SHARES.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in our affairs.
Sincerely,
/s/ WILLIAM H. RASTETTER
William H. Rastetter
Chairman, President and
Chief Executive Officer
<PAGE> 3
IDEC PHARMACEUTICALS CORPORATION
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 1, 1999
A special meeting of the stockholders of IDEC Pharmaceuticals Corporation
will be held at our corporate headquarters, 11011 Torreyana Road, San Diego,
California on December 1, 1999, at 10:00 a.m. for the following purposes:
1. To consider and vote upon a proposed amendment and restatement of our
Amended and Restated Certificate of Incorporation to increase the number
of shares of authorized common stock from 50,000,000 shares to
200,000,000 shares, to halve the par value of the common stock from
$0.001 per share to $0.0005 per share and to effect a two-for-one split
of our common stock; and
2. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on October 18, 1999
are entitled to notice of, and to vote at, this meeting. Our stock transfer
books will remain open between the record date and the date of the meeting. A
list of stockholders entitled to vote at the meeting will be available for
inspection at our corporate headquarters.
By Order of the Board of Directors
Kenneth J. Woolcott
Secretary
San Diego, California
November 5, 1999
IMPORTANT
All stockholders are invited to attend the meeting in person. Whether or
not you expect to attend in person, we urge you to sign, date, and return the
enclosed proxy at your earliest convenience. This will ensure the presence of a
quorum at the special meeting. PROMPTLY SIGNING, DATING, AND RETURNING THE PROXY
WILL SAVE US THE EXPENSE AND EXTRA WORK OF ADDITIONAL SOLICITATION. An addressed
envelope for which no postage is required if mailed in the United States is
enclosed for that purpose. Should you receive more than one proxy because your
shares are registered in different names and addresses, each proxy should be
signed and returned so that all your shares are voted. You may revoke your proxy
at any time prior to the meeting. Sending in your proxy will not prevent you
from voting your stock at the meeting if you desire to do so, as your proxy will
be automatically revoked if you vote by ballot at the meeting.
<PAGE> 4
IDEC PHARMACEUTICALS CORPORATION
------------------------
PROXY STATEMENT
------------------------
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 1, 1999
GENERAL
This Proxy Statement, which was first mailed to stockholders on or about
November 5, 1999, is furnished in connection with the solicitation of proxies by
our Board of Directors, to be voted at a special meeting of our stockholders,
which will be held at 10:00 a.m. on December 1, 1999, at our corporate
headquarters, 11011 Torreyana Road, San Diego, California, 92121, for the
purposes set forth in the accompanying Notice of Special Meeting of
Stockholders.
VOTING
Stockholders of record at the close of business on October 18, 1999 will be
entitled to vote at the meeting on the basis of one vote for each share held. On
October 18, 1999, there were 21,000,520 shares of common stock, par value $0.001
per share, outstanding, held of record by 318 stockholders.
PROXIES
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented are to be voted, the proxy will be voted FOR the approval of the
proposal described in the accompanying Notice of Special Meeting of Stockholders
and in this Proxy Statement. You may revoke your proxy at any time before the
commencement of the meeting by filing with our Corporate Secretary at our
corporate headquarters, 11011 Torreyana Road, San Diego, California, 92121, a
notice of revocation or another signed proxy with a later date. You may
automatically revoke your proxy by attending the meeting and voting in person.
SOLICITATION
We will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this Proxy Statement, the proxy and any
additional solicitation materials furnished to the stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, we may reimburse such persons for their costs in forwarding the
solicitation materials to such beneficial owner. The original solicitation of
proxies by mail may be supplemented by solicitation by telephone, telegram or
other means by our directors, officers or employees. No additional compensation
will be paid to these individuals for any such services. We have engaged Beacon
Hill Partners, Inc. ("Beacon Hill Partners") to solicit and distribute materials
to brokers, banks, custodians, fiduciaries and other nominee holders. We will
pay Beacon Hill Partners approximately $3,500 for these services. Except as
described above, we do not presently intend to solicit proxies other than by
mail.
PROPOSALS OF STOCKHOLDERS
Stockholders who intend to have a proposal considered for inclusion in our
proxy materials for presentation at the 2000 Annual Meeting of Stockholders must
submit the proposal to us no later than December 18, 1999. Stockholders who
intend to present a proposal at the 2000 Annual Meeting of Stockholders without
inclusion of such proposal in our proxy materials are required to provide notice
of such
<PAGE> 5
proposal to us no later than March 2, 2000. We reserves the right to reject,
rule out of order, or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
PROPOSAL: APPROVAL OF AN AMENDMENT AND RESTATEMENT OF OUR
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES, ADJUST THE
PAR VALUE AND EFFECT A STOCK SPLIT OF OUR COMMON STOCK
The Board of Directors has approved, and is recommending to the
stockholders for approval at the special meeting, an amendment and restatement
of our Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") to (1) increase the number of shares of common stock which we
are authorized to issue from 50,000,000 shares to 200,000,000 shares, (2) halve
the par value of each share of common stock from $0.001 to $0.0005, and (3)
effect a two-for-one stock split with respect to each outstanding share of our
common stock. The Board of Directors determined that this amendment is advisable
and should be considered at the special meeting to be held December 1, 1999. The
full text of the proposed amendment and restatement of our Certificate of
Incorporation (the "Amended and Restated Certificate of Incorporation") is
attached hereto as Appendix A. We are currently authorized to issue 8,000,000
shares of preferred stock, par value $0.001 per share, and the proposed
amendment will not affect this authorization.
PURPOSES AND EFFECTS OF PROPOSED INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
The proposed amendment would increase the number of shares of common stock
we are authorized to issue from 50,000,000 shares to 200,000,000 shares. The
additional 150,000,000 shares will be a part of the existing class of common
stock and, if and when issued, will have the same rights and privileges as the
shares of common stock presently issued and outstanding. On October 18, 1999,
21,000,520 shares of common stock were outstanding. The Board of Directors
believes it is desirable to increase the number of shares of common stock we are
authorized to issue to accomplish the proposed stock split, which stock split
cannot occur under Delaware law under our current Certificate of Incorporation,
and to provide us with adequate flexibility in the future. In addition to the
stock split, potential uses of the additional authorized shares may include
acquisition transactions, equity financings, stock dividends or distributions,
issuance of options pursuant to our stock option and stock purchase plans
without further action by the stockholders, unless such actions are specifically
required by law or rules of any stock exchange on which our securities may then
be listed. Except for the proposed stock split, we have no present commitments,
agreements, or intent to issue additional shares of common stock, other than
with respect to currently reserved shares, in connection with transactions in
the ordinary course of our business, or shares which may be issued under our
director stock option, employee stock option and employee stock purchase plans.
The proposed increase in the authorized number of shares of common stock
could have a number of effects on our stockholders depending upon the exact
nature and circumstances of any actual issuances of authorized but unissued
shares. The increase could have an anti-takeover effect, in that additional
shares could be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover of us more
difficult. For example, additional shares could be issued by us so as to dilute
the stock ownership or voting rights of persons seeking to obtain control of us.
Similarly, the issuance of additional shares to certain persons allied with our
management could have the effect of making it more difficult to remove our
current management by diluting the stock ownership or voting rights of persons
seeking to cause such removal. In addition, an issuance of additional shares by
us could have an effect on the potential realizable value of a stockholder's
investment. In the absence of a proportionate increase in our earnings and book
value, an increase in the aggregate number of our outstanding shares caused by
the issuance of the additional shares, would dilute the earnings per share and
book value per share of all outstanding shares of our common stock. If such
factors were reflected in the price per share of common stock, the potential
realizable value of a stockholder's investment could be adversely affected. The
common stock carries no preemptive rights to purchase additional shares.
2
<PAGE> 6
The proposed amendment and restatement of our Certificate of Incorporation
was approved by unanimous written consent of our directors on October 11, 1999.
PURPOSES AND EFFECTS OF PROPOSED TWO-FOR-ONE COMMON STOCK SPLIT
The Board of Directors anticipates that the increase in the number of
outstanding shares of our common stock resulting from a two-for-one stock split
will place the market price of the common stock in a range more attractive to
investors, particularly individuals. The common stock is listed for trading on
The Nasdaq Stock Market, and we will apply for listing of the additional shares
of common stock to be issued in the event the proposed stock split is approved.
If the proposed amendment is adopted, each stockholder of record at 5:00 p.m.,
eastern standard time, on the date the Amended and Restated Certificate of
Incorporation is filed with the Secretary of State of the State of Delaware,
which we expect to be December 1, 1999, will be the record owner of, and
entitled to receive, a certificate or certificates representing one additional
share of common stock, par value $0.0005 per share, for each share of common
stock then owned of record by such stockholder. In addition, certificates
representing shares of common stock, $0.001 par value, would be deemed to
represent the same number of shares of common stock having a par value of
$0.0005 per share. CONSEQUENTLY, CERTIFICATES REPRESENTING SHARES OF COMMON
STOCK SHOULD BE RETAINED BY EACH STOCKHOLDER AND SHOULD NOT BE RETURNED TO US OR
OUR TRANSFER AGENT. IT WILL NOT BE NECESSARY TO SUBMIT OUTSTANDING CERTIFICATES
FOR EXCHANGE. In addition, appropriate adjustments will be made to our stock
option, stock purchase plans and the conversion ratios of our convertible
preferred stock and our 20-year convertible zero coupon subordinated notes
("Notes"). Holders of our convertible preferred stock and Notes will be
separately notified of those adjustments.
TAX EFFECT AND BROKERAGE COSTS OF THE TWO-FOR-ONE STOCK SPLIT
We have been advised by counsel that the proposed stock split will result
in no gain or loss or realization of taxable income to owners of common stock
under existing United States federal income tax laws. The cost basis for tax
purposes of each new share and each retained share of common stock would be
equal to one-half of the cost basis for tax purposes of the corresponding share
immediately preceding the stock split. In addition, the holding period for the
additional shares issued pursuant to the stock split would be deemed to be the
same as the holding period for the original share of common stock. The laws of
jurisdictions other than the United States may impose income taxes on the
issuance of the additional shares and stockholders are urged to consult their
tax advisors. If stockholders dispose of their shares after the stock split,
they may pay higher brokerage commissions on the same relative interest in us
because that interest is represented by a greater number of shares. Stockholders
may wish to consult their brokers to ascertain the brokerage commission that
would be charged for disposing of the greater number of shares. If the proposed
amendment is adopted, our stockholders' equity accounts will not change. The par
value of a share of common stock after the split will be halved, from the
current $0.001 per share to $0.0005 per share, while the number of shares issued
and outstanding will double.
EFFECTIVE DATE OF PROPOSED AMENDMENT AND ISSUANCE OF SHARES FOR STOCK SPLIT
The proposed amendment and restatement of our Certificate of Incorporation,
if adopted by the required vote of stockholders, will become effective at 5:00
p.m., eastern standard time, on the date the Amended and Restated Certificate of
Incorporation is filed with the Secretary of State of the State of Delaware,
which we expect to be December 1, 1999, the proposed record date for the
determination of the owners of common stock entitled to receive a certificate or
certificates representing the additional shares. PLEASE DO NOT DESTROY OR SEND
TO US, YOUR PRESENT COMMON STOCK CERTIFICATES. IF THE PROPOSED AMENDMENT IS
ADOPTED, THOSE CERTIFICATES WILL REMAIN VALID FOR THE NUMBER OF SHARES SHOWN
THEREON, AND SHOULD BE CAREFULLY PRESERVED BY YOU. We expect that the additional
shares will be distributed on or about December 20, 1999 by book-entry in our
records. Stockholders will be entitled to receive physical stock certificates
upon request.
3
<PAGE> 7
LANGUAGE OF THE PROPOSED AMENDMENT AND RESTATEMENT OF OUR CERTIFICATE OF
INCORPORATION
If approved, our Certificate of Incorporation will be amended and restated
as set forth in Appendix A hereto.
VOTING TABULATION AND BOARD RECOMMENDATION
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote at the special meeting is
required to approve the proposed amendment. All votes will be tabulated by the
inspector of election appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes. Abstentions
with respect to any matter are treated as shares present or represented and
entitled to vote on that matter and thus have the same effect as negative votes.
If, however, shares are not voted by the broker who is the record holder of the
shares, or if shares are not voted in other circumstances in which proxy
authority is defective or has been withheld with respect to any matter, these
non-voted shares are not deemed to be present or represented for purposes of
determining whether stockholder approval of that matter has been obtained, but
are counted for quorum purposes. Brokers holding stock for the accounts of their
clients who have not been given specific voting instructions as to a matter by
their clients may vote their clients' proxies in their own discretion. If the
amendment is not approved by the stockholders, our Certificate of Incorporation,
which authorizes the issuance of 50,000,000 shares of common stock, will
continue as currently in effect and neither the adjustment of the par value per
share nor the two-for-one split of the common stock will take place.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION.
We know of no other matters that will be presented for consideration at the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the shares
they represent as the Board of Directors may recommend. Discretionary authority
with respect to such other matters is granted by the execution of the enclosed
proxy.
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<PAGE> 8
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF
PRINCIPAL STOCKHOLDERS, DIRECTORS, AND MANAGEMENT
The following table sets forth certain information known to us with respect
to the beneficial ownership of the our common stock as of September 30, 1999,
unless otherwise noted, by (i) all persons who are beneficial owners of five
percent or more of our common stock, (ii) each director, (iii) certain executive
officers and (iv) all current directors and executive officers as a group.
Unless otherwise noted, each of the stockholders has sole voting and dispositive
power with respect to the shares beneficially owned, subject to community
property laws, where applicable.
<TABLE>
<CAPTION>
SHARES PERCENT OF SHARES
NAME AND ADDRESS, IF REQUIRED, OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
- -------------------------------------------------- ------------------ ---------------------
<S> <C> <C>
FMR Corp.(2)................................. 2,340,919 11.1%
82 Devonshire Street
Boston, MA 02109-3614
Wellington Management Company, LLP(3)........ 1,652,590 7.9%
75 State Street
Boston, MA 02109
Citigroup, Inc.(4)........................... 1,612,125 7.7%
153 East 53rd Street
New York, NY 10043
Genentech, Inc.(5)........................... 1,508,293 6.7%
One DNA Way
South San Francisco, CA 94080
Christopher J. Burman(6)..................... 234,952 1.1%
Charles C. Edwards, M.D.(7).................. 25,375 *
Alan B. Glassberg, M.D.(8)................... 20,625 *
Antonio J. Grillo-Lopez, M.D.(9)............. 186,350 *
Nabil Hanna, Ph.D.(10)....................... 308,250 1.4%
Kazuhiro Hashimoto(11)....................... 696,667 3.3%
Franklin P. Johnson, Jr.(12)................. 86,737 *
Robert W. Pangia(13)......................... 23,500 *
William H. Rastetter, Ph.D.(14).............. 558,898 2.6%
William R. Rohn(15).......................... 241,633 1.1%
Bruce R. Ross(16)............................ 22,500 *
The Honorable Lynn Schenk(17)................ 39,500 *
William D. Young(5).......................... 1,508,293 6.7%
All directors and executive officers as a group
(17 persons)(6 through 18)................. 3,019,274 18.5%
</TABLE>
- ---------------
* Less than one percent of our outstanding common stock.
(1) Percentage of beneficial ownership is calculated assuming 20,997,819 shares
of common stock were outstanding on September 30, 1999. Beneficial
ownership is determined in accordance with the rules of the United States
Securities and Exchange Commission ("SEC") and generally includes voting or
dispositive power with respect to securities. Shares of common stock
subject to stock options and non-voting convertible preferred stock
currently exercisable or convertible or exercisable or convertible within
60 days after September 30, 1999, are deemed outstanding for computing the
percentage of the person holding such stock options and non-voting
convertible preferred stock but are not deemed outstanding for computing
the percentage of any other person.
(2) Pursuant to a Schedule 13F filed with the SEC on August 16, 1999, FMR Corp.
("FMR") reported that, as of June 30, 1999, Fidelity Management & Research
Company ("Fidelity"), a wholly-owned subsidiary of FMR and an investment
advisor registered under Section 203 of the Investment Advisors Act of
1940, Fidelity Financial Trust and Fidelity Mt. Vernon St. Trust had
defined dispositive power and no voting power over 1,804,819 common shares.
Fidelity Select Portfolios and Fidelity Advisor
5
<PAGE> 9
Series I had defined dispositive power and no voting power over 448,600
common shares. Fidelity Management Trust Company, a wholly-owned subsidiary
of FMR and a bank as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934, was reported to have defined dispositive power and sole voting
power over 87,500 common shares.
(3) Pursuant to a Schedule 13F filed with the SEC on August 16, 1999,
Wellington Management Company, LLP ("WMC") reported that, as of June 30,
1999, it had sole voting power over 78,600 common shares and no voting
power over 1,135,500 common shares. Wellington Trust Company, NA was
reported to have defined dispositive power and shared voting power over
438,490 common shares.
(4) Pursuant to a Schedule 13F filed with the SEC on August 17, 1999,
Citigroup, Inc. reported that, as of June 30, 1999, it had sole voting
power and defined dispositive power over 13,270 common shares. SSBC Fund
Management Inc. (formerly Mutual Management Corp.) had sole voting power
and defined dispositive power over 916,961 common shares. The
Robinson-Humphrey Company, LLC had sole voting power and defined
dispositive power over 5,092 common shares and no voting power and defined
dispositive power over 7,081 common shares. Salomon Brothers Asset
Management Inc. had sole voting power and defined dispositive power over
63,000 common shares. Salomon Brothers Holding Company Inc. had sole voting
power and defined dispositive power over 278,275 common shares and no
voting power and defined dispositive power over 336,076 common shares.
Salomon Smith Barney Holdings Inc. had sole voting power and defined
dispositive power over 1,262,779 common shares and no voting power and
defined dispositive power over 336,076 common shares. Salomon Smith Barney
Inc. had sole voting power and defined dispositive power over 215,275
common shares and no voting power and defined dispositive power over
336,076 common shares. The Travelers Investment Management Company had sole
voting power and defined dispositive power over 67,543 common shares.
(5) Includes Non-voting Convertible Preferred Stock convertible into 1,390,793
common shares held by Genentech, Inc. ("Genentech"). Mr. Young, a director
of ours and the Chief Operating Officer of Genentech, disclaims beneficial
ownership of the Non-voting Convertible Preferred Stock held by Genentech.
Effective November 1, 1999, Mr. Young resigned his position as the Chief
Operating Officer of Genentech to become Chairman of the Board and Chief
Executive Officer of ViroLogic, Inc. Includes stock options to purchase
17,500 common shares held by Mr. Young. Genentech disclaims beneficial
ownership of such stock options.
(6) Includes stock options to purchase 169,651 common shares held by Mr.
Burman.
(7) Includes stock options to purchase 24,375 common shares held by Dr.
Edwards.
(8) Includes stock options to purchase 20,625 common shares held by Dr.
Glassberg.
(9) Includes stock options to purchase 136,023 common shares held by Dr.
Grillo-Lopez.
(10) Includes stock options to purchase 288,994 common shares held by Dr. Hanna.
(11) Includes 666,667 common shares held by Zenyaku Kogyo Co. Mr. Hashimoto, a
director of ours and the President of Zenyaku Kogyo Co., disclaims
beneficial ownership of such common shares. Includes stock options to
purchase 30,000 common shares held by Mr. Hashimoto.
(12) Includes 34,303 common shares beneficially owned by Asset Management
Partners. Mr. Johnson, a Director of ours and the General Partner of Asset
Management Partners, disclaims beneficial ownership of such common shares
except to the extent of his pecuniary interest arising from his interest in
Asset Management Partners. Includes stock options to purchase 30,000 common
shares held by Mr. Johnson.
(13) Includes stock options to purchase 23,500 common shares held by Mr. Pangia.
(14) Includes stock options to purchase 483,460 common shares held by Dr.
Rastetter.
(15) Includes stock options to purchase 224,156 common shares held by Mr. Rohn.
(16) Includes stock options to purchase 22,500 common shares held by Mr. Ross.
(17) Includes stock options to purchase 28,750 common shares held by Ms. Schenk.
(18) Includes stock options to purchase 1,949,614 common shares and Non-voting
Convertible Preferred Stock convertible into 1,390,793 common shares.
6
<PAGE> 10
APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IDEC PHARMACEUTICALS CORPORATION
PURSUANT TO THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
IDEC Pharmaceuticals Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: The original Certificate of Incorporation of IDEC Pharmaceuticals
Corporation was filed with the Secretary of State of Delaware on April 1, 1997.
SECOND: The Amended and Restated Certificate of Incorporation, as herein
amended, and the Rights, Preferences and Restrictions of the Series X Junior
Participating Preferred Stock of the Corporation are hereby restated and
integrated into the single instrument which is hereinafter set forth, and which
is entitled Amended and Restated Certificate of Incorporation of IDEC
Pharmaceuticals Corporation, without any further amendments other than the
amendments herein certified and without any discrepancy between the provisions
of the Amended and Restated Certificate of Incorporation, as herein amended, and
the Rights, Preferences and Restrictions of the Series X Junior Participating
Preferred Stock and the provisions of the said single instrument hereinafter set
forth.
THIRD: The amendment and the restatement of the Amended and Restated
Certificate of Incorporation set forth herein has been duly adopted in
accordance with the provisions of Sections 245, 242 and 211 of the General
Corporation Law of the State of Delaware by the directors and stockholders of
the Corporation.
FOURTH: Effective upon the filing of this Amended and Restated Certificate
of Incorporation, each issued and outstanding share of Common Stock of the
Corporation shall be split into two shares of Common Stock.
FIFTH: The text of the Corporation's Amended and Restated Certificate of
Incorporation so adopted reads in full as set forth in Exhibit A attached hereto
and is hereby incorporated herein by this reference.
IN WITNESS WHEREOF, IDEC Pharmaceuticals Corporation has caused this
Amended and Restated Certificate of Incorporation to be signed by the President
and the Secretary this day of December, 1999.
IDEC PHARMACEUTICALS CORPORATION
By:
------------------------------------
William H. Rastetter, Ph.D.
Chairman, President and Chief
Executive
Officer
Attest:
By:
--------------------------------------------------
Kenneth J. Woolcott, Secretary
<PAGE> 11
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IDEC PHARMACEUTICALS CORPORATION
ARTICLE I
The name of this corporation is IDEC Pharmaceuticals Corporation.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
ARTICLE IV
(A) Classes of Stock. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is Two
Hundred Eight Million (208,000,000) shares. Two Hundred Million (200,000,000)
shares shall be Common Stock, par value $0.0005 per share, and Eight Million
(8,000,000) shares shall be Preferred Stock, par value $0.001 per share.
(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred
Stock authorized by this Certificate of Incorporation may be issued from time to
time in series. The rights, preferences, privileges, and restrictions granted to
and imposed on the Series A Preferred Stock, which series shall consist of One
Million Seven Hundred Fifty Thousand (1,750,000) shares, which may be issued in
seven subseries designated as (i) "Series A-1 Preferred Stock," consisting of
One Hundred Thousand (100,000) authorized shares; (ii) "Series A-2 Preferred
Stock," consisting of One Hundred Fifty Thousand (150,000) authorized shares;
(iii) "Series A-3 Preferred Stock," consisting of Seven Hundred Thousand
(700,000) authorized shares; (iv) "Series A-4 Preferred Stock," consisting of
Two Hundred Fifty Thousand (250,000) authorized shares; (v) "Series A-5
Preferred Stock," consisting of Three Hundred Fifty Thousand (350,000)
authorized shares; (vi) "Series A-6 Preferred Stock," consisting of One Hundred
Thousand (100,000) authorized shares; and (vii) "Series A-7 Preferred Stock,"
consisting of One Hundred Thousand (100,000) authorized shares; and on the
Series X Junior Participating Preferred Stock, consisting of Fifty-Eight
Thousand (58,000) authorized shares, are as set forth below in this Article
IV(B). The Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon additional
series of Preferred Stock, and the number of shares constituting any such
additional series and the designation thereof, or of any of them. Subject to
compliance with applicable protective voting rights which have been or may be
granted to the Preferred Stock or series thereof in the Corporation's
Certificate of Incorporation, as amended and restated from time to time, and
requirements and restrictions of applicable law ("Protective Provisions"), the
rights, privileges, preferences and restrictions of any such additional series
may be subordinated to, pari passu with (including, without limitation,
inclusion in provisions with respect to liquidation and acquisition preferences,
redemption and/or approval of matters by vote or written consent), or senior to
any of those of any present or future class or series of Preferred or Common
Stock. Subject to compliance with applicable Protective Provisions, the Board of
Directors is also authorized to increase the number of shares of any series
(other than the Series A Preferred Stock), or decrease the number of shares of
any series prior or subsequent to the issue of that series, but not below the
number of shares of such series then outstanding. In case the
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number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series. The Series
A Preferred Stock and the subseries thereof shall have the relative rights,
preferences and restrictions set forth in Annex A hereto, which is incorporated
by reference herein and made a part hereof. The Series X Junior Participating
Preferred Stock shall have the relative rights, preferences and restrictions set
forth in Annex B hereto, which is incorporated by reference herein and made a
part hereof.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of any assets of the
Corporation legally available therefor, such dividends as may be declared
from time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up
of the Corporation, the assets of the Corporation shall be distributed to
the holders of the Common Stock as provided in Annex A and Annex B hereto.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of the Corporation, and shall be
entitled to vote upon such matters and in such manner as may be provided by
law.
ARTICLE V
The Board of Directors may from time to time make, amend, supplement or
repeal the bylaws of the corporation by the requisite affirmative vote of
directors as set forth in the bylaws of the corporation; provided, however, that
the stockholders may change or repeal any bylaw adopted by the Board of
Directors by the requisite affirmative vote of stockholders as set forth in the
bylaws of the corporation; and, provided further, that no amendment or
supplement to the bylaws of the corporation adopted by the Board of Directors
shall vary or conflict with any amendment or supplement thus adopted by the
stockholders.
ARTICLE VI
The number of directors of the corporation shall be fixed from time to time
by, or in the manner provided in, the bylaws or amendment thereof duly adopted
by the board of directors or by the stockholders of the corporation.
ARTICLE VII
Elections of directors need not be by written ballot unless the bylaws of
the corporation shall so provide. The directors shall be classified into three
classes, as nearly equal in number as possible as determined by the board of
directors, with (i) the term of office of the first class to expire at the 1998
Annual Meeting of Stockholders, (ii) the term of office of the second class to
expire at the 1999 Annual Meeting of Stockholders and (iii) the term of office
of the third class to expire at the 2000 Annual Meeting of Stockholders. At each
Annual Meeting of Stockholders, directors elected to succeed those directors
whose terms expire shall be elected for a term of office to expire at the third
succeeding Annual Meeting of Stockholders after their election. Additional
directorships resulting from an increase in the number of directors shall be
apportioned among the classes as equally as possible as determined by the board
of directors.
ARTICLE VIII
The Corporation is to have perpetual existence.
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ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws of the corporation may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the bylaws of the corporation.
ARTICLE X
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval of this Article to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of the
foregoing provisions of this Article X shall not adversely affect any right or
protection of a director of the Corporation with respect to any acts or
omissions of such director occurring prior to such repeal or modification.
ARTICLE XI
To the fullest extent permitted by applicable law, the Corporation is also
authorized to provide indemnification of (and advancement of expenses to) such
agents (and any other persons to which Delaware law permits the Corporation to
provide indemnification) though bylaw provisions, agreements with such agents or
other persons, vote of stockholders or disinterested directors or otherwise, in
excess of the indemnification and advancement otherwise permitted by Section 145
of the Delaware General Corporation Law, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to actions
for breach of duty to the Corporation, its stockholders, and others. Any repeal
or modification of any of the foregoing provisions of this Article XI shall not
adversely affect any right or protection of a director, officer, agent or other
person existing at the time of, or increase the liability of any director of the
Corporation with respect to any acts or omissions of such director, officer or
agent occurring prior to such repeal or modification.
ARTICLE XII
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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ANNEX A
RIGHTS, PREFERENCES AND RESTRICTIONS OF THE
SERIES A-1, A-2, A-3, A-4, A-5, A-6 AND A-7 PREFERRED STOCK
The rights, preferences, restrictions and other matters relating to the
Series A Preferred Stock are as follows:
1. Certain Definitions.
"Affiliate" means an entity that, directly or indirectly, through one or
more intermediaries, is controlled by IDEC or Genentech. As used herein, the
term "control" will mean the direct or indirect ownership of fifty percent (50%)
or more of the stock having the right to vote for directors thereof or the
ability to otherwise control the management of the corporation or other business
entity.
"Approval Process Event" means a determination by the Joint Development
Committee that the formulation of C2B8 and the process for C2B8 recovery are
commercially viable as more fully described in Appendix I to the Development
Plan.
"C2B8" means that certain monoclonal antibody to B cells more particularly
described on Exhibit B to the Collaboration Agreement.
"Co-Promotion Territory" means the United States and Canada.
"Collaboration Agreement" shall mean the Collaboration Agreement dated the
Effective Date between the Corporation and Genentech.
"Controlled," unless specified otherwise herein, means possession of the
ability to grant a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any entity other
than the Corporation or Genentech.
"Development Plan" means the comprehensive plan for the development of
C2B8, designed to generate the preclinical, process development/manufacturing
scale-up, clinical and regulatory information required to obtain Regulatory
Approval in the Co-Promotion Territory, and may be modified from time to time by
the JDC. Development shall refer to all activities related to preclinical
testing, toxicology, formulation, process development, manufacturing scale-up,
quality assurance/quality control, clinical studies and regulatory affairs for a
Licensed Product in connection with obtaining Regulatory Approvals of such
Products.
"Effective Date" means March 16, 1995.
"First Anniversary Date" means the date which is twelve (12) calendar
months following March 16, 1995.
"FDA Approval Date" means the date on which the United States Food and Drug
Administration grants Regulatory Approval of C2B8 for manufacture and sale in
the United States.
"FDA Approval Event" means the FDA Approval Date occurs on or before the
Fifty-Four Month Anniversary Date.
"Fifty-Four Month Anniversary Date" means that date which is fifty-four
(54) calendar months following March 16, 1995.
"Genentech" means Genentech, Inc., a Delaware corporation, and its
Affiliates.
"IDEC" means IDEC Pharmaceuticals Corporation, a Delaware corporation, and
its Affiliates.
"Joint Development Committee" or "JDC" means that committee established
pursuant to Section 3.2 of the Collaboration Agreement.
"Licensed Product(s)" means any compound or composition of matter whose
mechanism of action is initiated by interaction with the CD20 or CD19 B-cell
determinant (including C2B8, but excluding Y2B8 (as
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defined in Section 2.2. of the Collaboration Agreement) and In2B8 (as defined in
Section 2.2. of the Collaboration Agreement) unless the option set forth in
Section 2.3 of the Collaboration Agreement is exercised) (a) developed by IDEC
or (b) the intellectual property rights to which are owned or Controlled, in
whole or in part, by IDEC, in either (a) or (b) as of the Effective Date or
during the term of the Collaboration Agreement.
"Major European Country" means the United Kingdom, Italy, Germany, France
or Spain.
"ML/MS Agreement" means the Preferred and Common Stock Purchase Agreement
dated March 16, 1995 by and between ML/MS Associates, L.P. and IDEC, whereby
IDEC reacquired the rights to certain technologies for the treatment of B-cell
lymphomas funded and developed by ML/MS Partners pursuant to a Development
Agreement and related agreements, dated as of February 17, 1988 and October 27,
1988.
"ML/MS Partners" shall mean ML Technology Ventures, L.P. and Morgan Stanley
Ventures, L.P., and any assignee or successor to ML/MS Partners.
"National Exchange" shall mean the Nasdaq National Market or any other
national exchange on which the Common Stock of the Corporation is listed.
"Option Agreement" means the Option Agreement to be dated as of the
Effective Date between Genentech and the Corporation.
"Patent Milestone Event" means the notice of grant in the European Patent
Office or issuance in a Major European Country of the first valid and
enforceable letters patent covering C2B8.
"Preferred Stock Purchase Agreement" means the Preferred Stock Purchase
Agreement dated the Effective Date between the Corporation and Genentech.
"Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture and sale of a Licensed
Product in a regulatory jurisdiction.
"Registration Rights Agreement" means the 1995 Registration Rights
Agreement dated as of the Effective Date between Genentech, ML/MS Associates,
L.P. and the Corporation.
"Third Anniversary Date" means that date which is thirty-six months
following March 16, 1995.
2. Dividend Provisions.
a. Series A-1, A-2, A-3, A-4, A-5 and A-6 Preferred Stock Dividend
Provisions. No dividend or other distribution shall be paid, or declared
and set apart for payment (other than dividends of Common Stock on the
Common Stock of the Corporation and dividends payable on the Series A-7
Preferred Stock pursuant to Section 2(b) below), on the shares of any class
or series of capital stock of the Corporation unless and until a dividend
of equal or greater amount (calculated as if the shares of Series A-1, A-2,
A-3, A-4, A-5 and A-6 Preferred Stock had been converted Common Stock on
the date the dividend is declared) is first declared and paid with respect
to any series of Series A Preferred Stock.
b. Series A-7 Preferred Stock Dividend Provisions. Cumulative
dividends shall accrue from the date of issuance of the Series A-7
Preferred Stock at a fluctuating rate per annum equal to the sum of two
percent (2%) plus the "Prime Rate" as announced by the Bank of America, San
Francisco Branch, from time to time. Accrued dividends shall be payable
quarterly in arrears on the first day of each quarter, commencing with the
first day of the first quarter following the earlier of the FDA Approval
Date or the Fifty-Four Month Anniversary Date. On the earlier of the FDA
Approval Date or the Fifty-Four Month Anniversary Date, all dividends
accrued through such date shall be paid. Any accumulation of dividends on
the Series A-7 Preferred Stock shall not bear interest. No dividend or
other distribution shall be paid, or declared and set apart for payment
(other than dividends of Common Stock on the Common Stock of the
Corporation), on the shares of any class or series of capital stock of the
Corporation unless and until such dividends have been paid. The Corporation
shall take any and all corporate action necessary to declare and pay such
dividends described in this Section 2(b).
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3. Liquidation Preference. The holders of Series A Preferred Stock share a
liquidation preference as follows:
a. Series A-1, A-2, A-3, A-4, A-5, A-6 and A-7 Preferred Stock
Liquidation Preference. In the event of any liquidation, dissolution or
winding up of this Corporation, either voluntary or involuntary, subject to
the rights of series of Series A Preferred Stock that may from time to time
come into existence, the holders of Series A-1, Series A-2, Series A-3,
Series A-4, Series A-5, Series A-6 and Series A-7 Preferred Stock, shall be
entitled to receive, prior and in preference to any distribution of any of
the assets of this Corporation to the holders of Common Stock and any other
series of Series A Preferred Stock by reason of their ownership thereof, an
amount per share equal to the Original Issue Price (defined below) for such
subseries plus an amount equal to (i) the declared but unpaid dividends and
distributions on such share in the case of the Series A-1, Series A-2,
Series A-3, Series A-4, Series A-5 and Series A-6 Preferred Stock and (ii)
the accrued but unpaid dividends and distributions on such share in the
case of the Series A-7 Preferred Stock. If upon the occurrence of such
event, the assets and funds thus distributed among the holders of the
Series A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and
Series A-7 Preferred Stock shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amounts, then, subject to
the rights of series of Series A Preferred Stock that may from time to time
come into existence, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders
of the Series A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series
A-6 and Series A-7 Preferred Stock on an as-converted to Common Stock basis
in proportion to the amount of such stock owned by each such holder. The
"Original Issue Price" for each subseries shall mean the price at which the
initial share of such subseries is issued.
b. Upon the completion of the distribution required by subparagraph
(a) of this Section 3 and any other distribution that may be required with
respect to series of Series A Preferred Stock that may from time to time
come into existence, if assets remain in this Corporation, the holders of
the Common Stock of this Corporation, shall receive all of the remaining
assets of this Corporation.
c. If (i) a single shareholder or group of affiliated shareholders,
other than a holder of the Series A Preferred Stock, or a Controlled
Affiliate thereof, who would be required to file a Schedule 13D under the
Securities Exchange Act of 1934, as amended, acquires or obtains the right
to acquire voting stock of the Corporation so that its total holdings of
such stock equal or exceed fifty percent (50%) of the then outstanding
voting stock of the Corporation, or (ii) any third party (i.e., a party
other than a holder or a Controlled Affiliate) acquires or obtains the
right to acquire all or substantially all of the assets of the Corporation,
then such event shall be considered a liquidation under this Section 3. For
purposes hereunder, "Controlled Affiliate" shall mean a party that,
directly or indirectly, through one or more intermediaries, is controlled
by such holder.
4. Series A Preferred Stock Conversion. The holders of the Series A-1,
Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and Series A-7
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
a. Series A-1, Series A-2, Series A-3, Series A-4 and Series A-5,
Preferred Stock Conversion. Each share of Series A-1, Series A-2, Series
A-3, Series A-4 and Series A-5 Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of
such share at the office of this Corporation or any transfer agent for such
stock, into ten (10) fully paid and nonassessable shares of Common Stock
(the "Conversion Rate" for the Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock and
the Series A-5 Preferred Stock).
b. [Intentionally omitted.]
c. Series A-6 Preferred Stock Conversion.
(1) "Series A-6 Conversion Number" means the number calculated
according to the following formulas: (i) If the FDA Approval Date occurs
prior to the Fifty-Four Month Anniversary Date, then the
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Series A-6 Conversion Number shall equal the average closing price for the
Common Stock during the period beginning on the FDA Approval Date and
ending on the date which is twenty (20) trading days following the FDA
Approval Date, as reported on the National Exchange; or (ii) if the
Fifty-Four Month Anniversary Date occurs prior to the FDA Approval Date,
then the Series A-6 Conversion Number shall equal the average closing price
for the Common Stock during the period beginning on the date which is
twenty (20) trading days prior to the Fifty-Four Month Anniversary Date and
ending on the Fifty-Four Month Anniversary Date, as reported on the
National Exchange.
(2) The Series A-6 Preferred Stock shall not be convertible until the
earlier of (i) twenty (20) trading days following the FDA Approval Date or
(ii) the Fifty-Four Month Anniversary Date. Thereafter, each share of
Series A-6 Preferred Stock shall be convertible, at the option of the
holder thereof, into the number of shares of fully paid and nonassessable
shares of Common Stock as equals seventy-five (75) divided by the Series
A-6 Conversion Number (the "Conversion Rate" for the Series A-6 Preferred
Stock).
d. Series A-7 Preferred Stock Conversion.
(1) "Series A-7 Conversion Number" means the average closing price for
the Common Stock during the period beginning on the twentieth (20th)
trading day preceding the date on which the holder gives notice of such
holder's intention to convert (the "Notice Date") and ending on the Notice
Date, as reported on the National Exchange.
(2) Each share of Series A-7 Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the Fifty-Four Month
Anniversary Date at the office of this Corporation or any transfer agent
for such stock, into such number of shares of fully paid and nonassessable
shares of Common Stock as equals (A) one hundred (100) divided by (B) the
Series A-7 Conversion Number (the "Conversion Rate" for the Series A-7
Preferred Stock).
e. Automatic Conversion. (i) Each share of Series A-1, Series A-2,
Series A-3, Series A-4 and Series A-5 Preferred Stock; (ii) each share of
Series A-6 Preferred Stock that has become convertible at the option of the
holder pursuant to Section 4(c); and (iii) each share of Series A-7
Preferred Stock that has become convertible at the option of the holder
pursuant to Section 4(d), shall, in each case, automatically be converted
into shares of Common Stock at its then effective Conversion Rate
immediately upon the transfer of ownership by the initial holder to a third
party which is not an Affiliate of such holder. For purposes hereunder,
"Affiliate" shall mean a party that, directly or indirectly, through one or
more intermediaries, controls or is controlled by such holder.
f. Mechanics of Conversion of Series A Preferred Stock. Before any
holder of Series A Preferred Stock shall be entitled to convert the same
into shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this Corporation or
of any transfer agent for the Series A Preferred Stock, and shall give
written notice to this Corporation at its principal corporate office, of
the election to convert the same and shall state therein the name or names
in which the certificate or certificates for shares of Common Stock are to
be issued; provided, however, that in the event of an automatic conversion
pursuant to Section 4(e), the outstanding shares of Series A Preferred
Stock shall be converted automatically without any further action by the
holder of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent, and
provided further that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless the certificates evidencing such shares of
Series A Preferred Stock are delivered to the Corporation or its transfer
agent as provided herein. This Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred
Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid and shall promptly pay in cash or, to the
extent sufficient funds are not then legally available therefor, in Common
Stock (at the Common Stock's fair market value determined by the Board of
Directors as of the date of such conversion), any declared and unpaid
dividends on the shares of Series A-1, Series A-2, Series A-3, Series A-4,
Series A-5 and Series A-6 Preferred Stock being converted and any accrued
but unpaid
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dividends on the shares of Series A-7 Preferred Stock being converted. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A
Preferred Stock to be converted, or in the case of automatic conversion
pursuant to Section 4(e), on the date of transfer to the new non-Affiliate
holder; and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such
date.
g. Conversion Rate Adjustments of Series A Preferred Stock for Splits
and Combinations. The Conversion Rate of the Series A-1, Series A-2, Series
A-3, Series A-4, Series A-5, Series A-6 and Series A-7 Preferred Stock
shall be subject to adjustment from time to time as follows:
(1) In the event the Corporation should at any time or from time to
time after the date upon which any shares of Series A Preferred Stock
were first issued (the "Purchase Date"), fix a record date for the
effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common
Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable
upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no
record date is fixed), the Conversion Rate of the Series A Preferred
Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall
be increased in proportion to such increase of the aggregate of shares
of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(2) If the number of shares of Common Stock outstanding at any time
after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such
combination, the Conversion Rate for the applicable series of Series A
Preferred Stock shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of such
series shall be decreased in proportion to such decrease in outstanding
shares. Any adjustment under Section 4(g)(1) or (2) shall become
effective at the close of business on the date the split, subdivision,
stock dividend, other distribution or combination becomes effective.
h. Distributions. In the event this Corporation shall declare a
distribution payable in securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets (excluding
cash dividends), then, in each such case for the purpose of this subsection
4(h), the holders of the Series A Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the
holders of the number of shares of Common Stock of the Corporation into
which their shares of Series A Preferred Stock are convertible as of the
record date fixed for the determination of the holders of Common Stock of
the Corporation entitled to receive such distribution.
i. Recapitalizations. If at any time or from time to time there shall
be a recapitalization of the Common Stock (other than a subdivision or
combination provided for elsewhere in this Section 4 or a change in control
provided for in Section 3(c)) provision shall be made so that the holders
of the Series A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series
A-6 and Series A-7 Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series A Preferred Stock the number of shares of
stock or other securities or property of the Corporation or otherwise, to
which a holder of Common Stock deliverable upon conversion would have been
entitled on such recapitalization, all subject to further adjustment as
provided herein or with respect to such other securities or property by the
terms thereof. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the
rights of the holders of the Series A Preferred Stock after the
recapitalization to the end that the provisions of this Section 4
(including adjustment of the applicable
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Conversion Rate then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.
j. No Impairment. This Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by this Corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Series A
Preferred Stock against impairment.
k. No Fractional Shares and Certificate as to Adjustments.
(1) No fractional shares shall be issued upon the conversion of any
share or shares of the Series A Preferred Stock, and the number of shares
of Series A Preferred Stock or Common Stock to be issued shall be rounded
to the nearest whole share. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number
of shares of Series A Preferred Stock the holder is at the time converting
into Series A Preferred Stock or Common Stock and the number of shares of
Series A Preferred Stock or Common Stock issuable upon such aggregate
conversion.
(2) Upon the occurrence of each adjustment or readjustment of the
Conversion Rate of Series A Preferred Stock pursuant to this Section 4,
this Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the
written request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting
forth (a) such adjustment and readjustment, (b) the Conversion Rate for
such Series A Preferred Stock at the time in effect, and (c) the number of
shares of Common Stock and the amount, if any, of other property which at
the time would be received upon the conversion of a share of Series A
Preferred Stock.
l. Notices of Record Date. In the event of any taking by this
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
this Corporation shall mail to each holder of Series A Preferred Stock, at
least 20 days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
m. Reservation of Stock Issuable Upon Conversion. This Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A-1, Series A-2, Series A-3, Series
A-4, Series A-5, Series A-6 and Series A-7 Preferred Stock, respectively,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series
A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and Series
A-7 Preferred Stock, respectively, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Series A-1,
Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and Series A-7
Preferred Stock, respectively, in addition to such other remedies as shall
be available to the holder of such Preferred Stock, this Corporation will
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes, including,
without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to its Certificate of
Incorporation.
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<PAGE> 20
n. Notices. Any notice required to be given to the holders of shares
of Series A Preferred Stock shall be deemed given if deposited in the
United States mail, postage prepaid, and addressed to each holder of record
at his address appearing on the books of this Corporation.
5. Voting Rights. The holders of shares of Series A Preferred Stock shall
not have any voting rights, except as required under the General Corporation Law
of Delaware.
6. Status of Unissued, Converted or Redeemed Stock. In the event any shares
shall be converted pursuant to Section 4 hereof, the shares so converted shall
be cancelled and shall not be issuable by the Corporation. The Certificate of
Incorporation of this Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock. In the
event the Corporation issues less than the number of authorized shares of any
subseries of Series A Preferred Stock, the Certificate of Incorporation of this
Corporation shall be appropriately amended to effect a corresponding reduction
in such subseries of Preferred Stock.
7. Cancellation of Series A-3 Preferred Stock. If the Approval Process
Event has not occurred on or before the First Anniversary Date and if the Patent
Milestone Event occurs prior to the Third Anniversary Date, then this
Corporation may, at its option, cancel that number of shares of Series A-3
Preferred Stock (or if an insufficient number of shares of Series A-3 Preferred
Stock are outstanding, then an equivalent number of outstanding shares of other
subseries of Series A Preferred Stock or Common Stock) equal to $2,500,000
divided by the Series A-3 Cancellation Price, where the "Series A-3 Cancellation
Price" equals the higher of the (i) price paid per share for the Series A-3
Preferred Stock on the date of issuance, or (ii) fair market value of the Series
A-3 Preferred Stock calculated as (A) the average closing price for the
Corporation's Common Stock during the period beginning twenty-three (23) trading
days prior to the date of cancellation and ending three (3) trading days prior
to the date of cancellation, as reported on the National Exchange, multiplied by
(B) the Conversion Rate for the Series A-3 Preferred Stock.
8. Cancellation of Series A-7 Preferred Stock. If the FDA Approval Date
occurs on or before the Fifty-Four Month Anniversary Date, the Corporation shall
cancel all of the then outstanding shares of Series A-7 Preferred Stock by
crediting therefor an amount equal to the liquidation preference of such shares
(including accrued but unpaid dividends) against the milestone payments due the
Corporation pursuant to the Collaboration Agreement, such amount to be credited
first to the milestone payment payable upon Regulatory Approval in the United
States (as described in Section 7.4 of the Collaboration Agreement) and second,
to the extent the aforesaid liquidation preference remains unpaid, to the
milestone payment then payable on the date of regulatory approval in the first
Major European Country (as described in Section 7.4 of the Collaboration
Agreement) (collectively, the "Milestone Payments"). If at any time there is a
Default Event (defined below), the Corporation shall immediately cancel all of
the outstanding shares of Series A-7 Preferred Stock by paying the holders in
cash an amount equal to the liquidation preference of such shares (including
accrued but unpaid dividends) (an "Acceleration Event"). If the Corporation is
unable to cancel such shares of Series A-7 Preferred Stock within seven (7)
calendar days from the occurrence of the Default Event, then notwithstanding any
provision herein to the contrary, the holder of such shares may, at its sole
election, convert such shares into shares of Common Stock of the Corporation
equal to the liquidation preference of such shares (including accrued but unpaid
dividends) divided by the Original Issue Price for such subseries multiplied by
the Conversion Rate for the Series A-7 Preferred Stock. If there is an
Acceleration Event and the holder receives cash or converts to Common Stock in
exchange for cancellation of the outstanding shares of Series A-7 Preferred
Stock as described in the preceding sentence, the holder shall be obligated to
pay, in cash, to the Corporation, any and all Milestone Payments as such
payments become due under the Collaboration Agreement.
A "Default Event" shall mean the occurrence of any of the following events:
(i) Distributions. Failure to make a required payment or distribution
hereunder;
(ii) Material Adverse Event. At the end of any fiscal quarter, the
total cash, cash equivalents and marketable debt investments of the
Corporation shall be valued at less than the sum of the principal of and
unpaid accrued interest on (i) all indebtedness of the Corporation to
banks, insurance companies or
A-7
<PAGE> 21
financial institutions regularly engaged in the business of lending money,
which is for money borrowed by the Corporation; (ii) all purchase money
security interests in an amount not to exceed $5,000,000 (as defined in the
California Uniform Commercial Code); and (iii) the liquidation preference
of the outstanding Series A-7 Preferred Stock. In such event, the
Corporation shall provide holder with written notice thereof within
twenty-four (24) hours of determining that such event has occurred;
(iii) Bankruptcy Commenced by the Corporation. If the Corporation:
(a) shall commence any proceeding in bankruptcy or seek
reorganization, arrangement, readjustment of its debts, dissolution,
liquidation, winding-up, composition or any other relief under the
United States Bankruptcy Act, as amended, or under any other insolvency,
liquidation, dissolution, arrangement, composition, readjustment of debt
or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing;
(b) shall admit is inability to pay its debts as they mature in any
petition or pleading in connection with any such proceeding;
(c) shall apply for, or, in writing, consent to or acquiesce in, an
appointment of a receiver, conservator, trustee or similar officer for
it or for all or substantially all of its assets;
(d) shall make a general assignment for the benefit of creditors;
or
(e) shall admit in writing its inability to pay its debts as they
mature;
(iv) Bankruptcy Commenced Against the Corporation. If any proceedings
are commenced or any other action is taken against the Corporation in
bankruptcy or seeking reorganization, arrangement, readjustment of its
debts, dissolution, liquidation, winding-up, composition or any other
relief under the United States Bankruptcy Act, as amended, or under any
other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law, of any
jurisdiction, domestic or foreign, now or hereafter existing; or a
receiver, conservator, trustee or similar officer for the Corporation or
for all or substantially all of its assets is appointed; and in each such
case, such event continues for ninety (90) days undismissed, unbounded and
undischarged; and
(v) Material Breach. (A) Any breach of any material representation,
warranty, covenant or obligation of the Corporation under (i) the
Collaboration Agreement, which breach is not cured within sixty (60) days
of written notice thereof from Genentech (or if such breach is not
susceptible of cure within such period, the Corporation is not making
diligent good faith efforts to cure such breach); (ii) the Preferred Stock
Purchase Agreement, the Option Agreement or the Registration Rights
Agreement, which breach is not cured within thirty (30) days after receipt
of written notice of such breach from Genentech to the Corporation; or
(iii) the ML/MS Agreement, to the extent such breach materially adversely
affects the Corporation's ability to perform its obligations under the
Collaboration Agreement; or (B) if, at any time, any of the Collaboration
Agreement, the Series A Preferred Stock Agreement, the Option Agreement or
the Registration Rights Agreement ceases to be in full force and effect.
A-8
<PAGE> 22
ANNEX B
RIGHTS, PREFERENCES AND RESTRICTIONS OF THE
SERIES X JUNIOR PARTICIPATING PREFERRED STOCK
The rights, preferences, restrictions and other matters relating to the
Series X Junior Participating Preferred Stock shall be as follows:
SECTION 1. Designation and Amount. The shares of such series shall be
designated as "Series X Junior Participating Preferred Stock" (the "Series X
Preferred Stock") and the number of shares constituting the Series X Preferred
Stock shall be Fifty Eight Thousand (58,000). Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series X Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation which are convertible into Series X Preferred Stock.
SECTION 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
X Preferred Stock with respect to dividends, the holders of shares of Series X
Preferred Stock, in preference to the holders of the Common Stock of the
Corporation (the "Common Stock"), and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series X Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1000 times the aggregate per share amount of
all cash dividends, and 1000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series X Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series X Preferred Stock were entitled
immediately prior to such event under the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
X Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series X Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series X Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
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<PAGE> 23
paid on the shares of Series X Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series X Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Series X Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series X Preferred Stock shall entitle the holder thereof to
1000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series X Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series X Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series X Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
SECTION 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series X Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series X Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series X Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series X Preferred Stock,
except dividends paid ratably on the Series X Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series X Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series X Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series X Preferred Stock, or any shares of stock ranking on a
parity with the Series X Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective
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<PAGE> 24
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. Reacquired Shares. Any shares of Series X Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
SECTION 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series X Preferred Stock unless,
prior thereto, the holders of shares of Series X Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series X Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series X Preferred Stock,
except distributions made ratably on the Series X Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series X Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series X Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series X Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8. No Redemption. The shares of Series X Preferred Stock shall not
be redeemable.
SECTION 9. Rank. The Series X Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
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<PAGE> 25
SECTION 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series X Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series X Preferred Stock, voting together
as a single class.
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<PAGE> 26
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
IDEC PHARMACEUTICALS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersign appoints WILLIAM H. RASTETTER and KENNETH J. WOOLCOTT, and each
of them, proxies with full power of substitution, to vote all shares of common
stock of IDEC Pharmaceuticals Corporation ("our") held of record by the
undersigned as of October 18, 1999 at our Special Meeting of Stockholders
("Special Meeting") to be held at our corporate headquarters, 11011 Torreyana
Road, San Diego, California, 92121, on December 1, 1999, at 10:00 a.m., local
time, and at all adjournments thereof, upon the following matters:
(1) Proposal to approve an amendment and restatement of our Amended and
Restated Certificate of Incorporation to increase the number of shares of
authorized common stock from 50,000,000 shares to 200,000,000 shares, to
halve the par value of the common stock from $0.001 per share to $0.0005
per share, and to effect a two-for-one stock split of our common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the Special Meeting and upon other
matters as may properly come before the Special Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.
Dated:____________________________, 1999
________________________________________
________________________________________
Signature or Signatures of Stockholder
(This signature should conform to your
name as printed hereon. Co-owners should
both sign.)
IMPORTANT - PLEASE SIGN AND RETURN PROMPTLY. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
