<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
MARK ONE
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ______________ TO ______________
Commission File Number: 0-24274
LA JOLLA PHARMACEUTICAL COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 33-0361285
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6455 NANCY RIDGE DRIVE 92121
SAN DIEGO, CA (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (858) 452-6600
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
The number of shares of the Registrant's common stock, $.01 par value,
outstanding at September 30, 1999 was 20,159,559.
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LA JOLLA PHARMACEUTICAL COMPANY
FORM 10-Q
REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
<TABLE>
<S> <C>
COVER PAGE.................................................................................1
INDEX .....................................................................................2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets as of September 30, 1999 (Unaudited) and December 31, 1998............3
Statements of Operations (Unaudited) for the three months and nine months ended
September 30, 1999 and 1998..........................................................4
Statements of Cash Flows (Unaudited) for the nine months ended September 30, 1999
and 1998.............................................................................5
Notes to Financial Statements (Unaudited)............................................6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................7
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.................11
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K....................................... ...11
SIGNATURE......................................................................... .......12
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LA JOLLA PHARMACEUTICAL COMPANY
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,311 $ 11,176
Short-term investments 7,841 12,174
Other current assets 282 517
-------- --------
Total current assets 14,434 23,867
Property and equipment, net 734 659
Patent costs and other assets, net 1,508 1,289
-------- --------
Total assets $ 16,676 $ 25,815
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51 $ 1,254
Accrued expenses 425 575
Accrued payroll and related expenses 682 355
Deferred revenue - related party -- 1,769
Current portion of obligations under capital leases 196 3
-------- --------
Total current liabilities 1,354 3,956
Noncurrent portion of obligations under capital leases 97 --
Commitments
Stockholders' equity:
Common stock 201 201
Additional paid-in capital 84,320 84,276
Accumulated deficit (69,296) (62,618)
-------- --------
Total stockholders' equity 15,225 21,859
-------- --------
Total liabilities and stockholders' equity $ 16,676 $ 25,815
======== ========
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
3
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LA JOLLA PHARMACEUTICAL COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue from collaborative agreement -
related party $ 1,576 $ 1,839 $ 4,690 $ 6,005
Expenses:
Research and development 3,170 3,344 9,577 10,589
General and administrative 717 711 2,420 2,363
-------- -------- -------- --------
Total expenses 3,887 4,055 11,997 12,952
-------- -------- -------- --------
Loss from operations (2,311) (2,216) (7,307) (6,947)
Interest expense (3) (1) (16) (6)
Interest income 197 292 645 943
-------- -------- -------- --------
Net loss and comprehensive net loss $ (2,117) $ (1,925) $ (6,678) $ (6,010)
======== ======== ======== ========
Basic and diluted net loss per share $ (.11) $ (.10) $ (.33) $ (.33)
======== ======== ======== ========
Shares used in computing basic and diluted
net loss per share 20,160 18,523 20,127 18,290
======== ======== ======== ========
</TABLE>
See accompanying notes.
4
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LA JOLLA PHARMACEUTICAL COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (6,678) $ (6,010)
Adjustments to reconcile net loss to net cash used
for operating activities:
Depreciation and amortization 266 286
Loss on disposal of property and equipment 23 --
Deferred compensation amortization -- 22
Changes in operating assets and liabilities:
Other current assets 235 206
Accounts payable and accrued expenses (1,353) (1,427)
Accrued payroll and related expenses 327 44
Deferred revenue - related party (1,769) 993
-------- --------
Net cash used for operating activities (8,949) (5,886)
INVESTING ACTIVITIES
Proceeds from maturity of short-term investments 4,333 8,077
Proceeds from the sale of property and equipment 20 --
Deletions to property and equipment 55 86
Increase in patent costs and other assets (254) (186)
-------- --------
Net cash provided by investing activities 4,154 7,977
FINANCING ACTIVITIES
Net proceeds from issuance of common stock 44 130
Payments on obligations under capital leases (114) (121)
-------- --------
Net cash (used for) provided by financing activities (70) 9
Net (decrease) increase in cash and cash equivalents (4,865) 2,100
Cash and cash equivalents at beginning of period 11,176 11,999
-------- --------
Cash and cash equivalents at end of period $ 6,311 $ 14,099
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 16 $ 6
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations incurred for property and
equipment $ 404 $ --
======== ========
Adjustment to deferred compensation for terminations $ -- $ 8
======== ========
</TABLE>
See accompanying notes.
5
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LA JOLLA PHARMACEUTICAL COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
SEPTEMBER 30, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of La Jolla Pharmaceutical
Company (the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine months ended September 30, 1999 are not necessarily indicative of
the results that may be expected for other quarters or the year ended December
31, 1999. For more complete financial information, these financial statements,
and the notes thereto, should be read in conjunction with the audited financial
statements for the year ended December 31, 1998 included in the Company's Form
10-K filed with the Securities and Exchange Commission.
2. ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and disclosures made in
the accompanying notes to the financial statements. Actual results could differ
from those estimates.
3. COLLABORATIVE AGREEMENTS
In September 1999, Abbott Laboratories terminated its license and development
agreement for the experimental lupus drug, LJP 394, and returned all rights to
the compound to the Company.
4. RESTRUCTURE CHARGES
As a result of the termination of the collaborative agreement with Abbott in
September 1999, the Company restructured its operations in order to reduce
expenses and to focus its resources to accelerate the development of an
experimental drug for the treatment of antibody-mediated thrombosis and to
partner its xenotransplantation drug candidate. The Company reduced its
workforce from approximately 95 to 54 full-time employees and recorded
restructuring charges of approximately $742,000, primarily composed of severance
and benefit payments.
6
<PAGE> 7
LA JOLLA PHARMACEUTICAL COMPANY
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, including without
limitation, those dealing with the analysis of the data from the clinical
trials, as well as the Company's drug candidates and drug development plans and
other matters described in terms of the Company's plans and expectations. The
forward-looking statements involve risks and uncertainties and a number of
factors, both foreseen and unforeseen, could cause actual results to differ
materially from those anticipated. The analysis of the data from the Company's
Phase II/III clinical trial of LJP 394 may have negative or inconclusive
results. If clinical trials of LJP 394 continue, they may have negative or
inconclusive results. Further, delays in continued testing of LJP 394, the
Company's lead product candidate, and/or termination of development would result
in delays or an inability to market the compound. Tolerance, or the specific
inactivation of pathogenic B cells, is a new technology that has not been
proven, and the development of LJP 394 involves many risks and uncertainties,
including, without limitation, whether LJP 394 can provide a meaningful clinical
benefit. Any positive results observed to date may not be indicative of future
results. The Company's other potential drug candidates, none of which has
advanced to clinical testing, are at earlier stages of development and involve
comparable risks.
Additional risk factors include the uncertainty of obtaining required
regulatory approvals, successfully marketing products, receiving future revenue
from product sales or other sources such as collaborative relationships, future
profitability, the need for additional financing, the Company's dependence on
patents and other proprietary rights, the Company's limited manufacturing
capabilities and the Company's lack of marketing experience. Readers are
cautioned not to place undue reliance upon forward-looking statements, which
speak only as of the date hereof, and the Company undertakes no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date hereof. Interested parties are urged to review the risks
described below and in other reports and registration statements of the Company
filed with the Securities and Exchange Commission from time to time.
RECENT DEVELOPMENTS
As announced on May 12, 1999, Abbott Laboratories ("Abbott") and the
Company, in discussion with the Food and Drug Administration, elected to stop
the enrollment and treatment of the more than 200 patients enrolled in the
jointly conducted Phase II/III clinical trial of LJP 394, the Company's lupus
drug candidate, until the data could be validated and analyzed. This
announcement was made subsequent to a planned interim analysis of the Phase
II/III clinical trial, wherein the independent Data Monitoring Committee
reported efficacy as defined by the primary chosen endpoint, time to renal
flare, was less than expected. No major safety concerns were observed, and
patients receiving the experimental drug appeared to have a reduction in
circulating antibodies to double-stranded DNA that are associated with lupus
nephritis.
The Company is continuing to analyze the results of this clinical
program and is expecting to be completed with this analysis by the end of the
first quarter of 2000. A Phase II dose-ranging study of LJP 394 involving 75
lupus patients was recently completed, and the data from this study is also
currently being analyzed. The Company is committed to understanding the effects
of LJP 394 on endpoints from these studies before deciding on how to proceed
with any further development.
7
<PAGE> 8
LA JOLLA PHARMACEUTICAL COMPANY
In September 1999, Abbott terminated its license and development
agreement for the experimental lupus drug, LJP 394, and returned all rights to
the compound to the Company. Thus, while continuing to analyze the results of
the clinical program, the Company has restructured its operations in order to
reduce expenses and to focus its resources to accelerate the development of an
experimental drug for the treatment of antibody-mediated thrombosis and to
partner its xenotransplantation drug candidate. During September, the Company
reduced its workforce from approximately 95 to 54 full-time employees and
incurred expenses for these restructuring charges of approximately $742,000.
While the Company believes its cost cutting measures are appropriate, there can
be no assurance that such measures will be sufficient.
During the third quarter 1999, the Company announced that treatment with
a Toleragen(R) appeared to reduce the relative production of specific antibodies
in a mouse model of antibody-mediated thrombosis. In this autoimmune disorder,
certain antibodies exacerbate inappropriate clot formation, resulting in stroke,
myocardial infarction, and deep vein thrombosis. Antibody-mediated thrombosis,
also known as antiphospholipid syndrome, is a clotting disorder that afflicts
more than 500,000 patients in the U.S. and Europe.
On August 10, 1999, the closing bid price for the Company's common stock
had been below $1.00 per share for 30 consecutive days. On this date, the
Company received notice from The Nasdaq Stock Market, Inc. that its common stock
will be delisted from the Nasdaq National Market unless the Company can comply
with the Nasdaq requirement that its common stock maintain a minimum bid price
greater than or equal to $1.00 per share. In response to this notice, the
Company's Board proposed a reverse split of the Company's common stock and the
Company announced that it expected to distribute proxy materials on
approximately October 8, 1999. The Company has subsequently extended the date
that it expects to distribute proxy materials pending a hearing before the
Nasdaq Listing Qualification Panel, and while it continues to review any
available alternative causes of action.
RESULTS OF OPERATIONS
The Company earned $1.6 and $4.7 million in revenue from its
collaborative agreement with Abbott in the three and nine months ended September
30, 1999, respectively, and earned $1.8 million and $6.0 million in revenue for
the same periods in 1998. Payments received in advance under the collaborative
agreement with Abbott were recorded as deferred revenue until earned. Total cash
payments of approximately $2.9 million were received in advance under the
collaborative agreement with Abbott during the first six months of 1999. As of
September 30, 1999, the Company earned all of the revenue received to date
from Abbott. The receipt of payments and the recognition of revenue from the
collaborative agreement with Abbott have historically varied significantly from
quarter to quarter and from year to year depending on the level of research
effort expended. In September 1999, Abbott terminated its license and
development agreement for LJP 394, including any further development funding,
and has returned all rights to the compound to La Jolla Pharmaceutical. There
can be no assurance that the Company will realize any further revenue from any
other collaborative arrangement.
Research and development expenses decreased to $3.2 million for the
third quarter of 1999 from $3.3 million for the same period in 1998. For the
nine months ended September 30, 1999, research and development expense decreased
to $9.6 million from $10.6 million for the same period in 1998. The decrease in
the third quarter in 1999 from the third quarter in 1998 was primarily due to
the decrease in expenses as a result of stopping the Company's Phase II/III
clinical trial for LJP 394. Depending on the results of the data analysis from
the clinical trial of LJP 394, the Company's research and development expenses
may increase significantly in the future as efforts to develop additional drug
candidates are intensified, products potentially progress into and through
clinical trials, and manufacturing scale-up activities are possibly increased.
8
<PAGE> 9
LA JOLLA PHARMACEUTICAL COMPANY
General and administrative expenses of $717,000 for the third quarter of
1999 increased slightly from $711,000 for the same period in 1998. For the nine
months ended September 30, 1999 and 1998, general and administrative expense was
$2.4 million. The Company's general and administrative expenses may increase in
the future in order to support increased research and development and, possibly,
manufacturing scale-up activities.
Interest income decreased to $197,000 for the third quarter of 1999 from
$292,000 for the same period in 1998. For the nine months ended September 30,
1999, interest income decreased to $645,000 from $943,000 for the same period in
1998. The decrease was due to lower investment balances. For the third quarter
of 1999, interest expense increased slightly to $3,000 from $1,000 for the same
period in 1998. For the nine months ended September 30, 1999, interest expense
increased to $16,000 from $6,000 for the same period in 1998. The increase was
the result of increases in the Company's capital lease obligations as compared
to the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, the Company had incurred a cumulative net loss
since inception of approximately $69.3 million, and had financed its operations
through private and public offerings of its securities, payments under
collaborative agreements, capital and operating lease transactions, and interest
income on its invested cash balances. As of September 30, 1999, the Company had
raised approximately $83.7 million in net proceeds since inception from sales of
equity securities.
At September 30, 1999, the Company had $14.2 million in cash, cash
equivalents and short-term investments, as compared to $23.4 million at December
31, 1998. The Company's working capital at September 30, 1999 was $13.1 million,
as compared to $19.9 million at December 31, 1998. The decrease in cash, cash
equivalents and short-term investments resulted from the continued use of the
Company's cash toward operating activities, restructuring charges, patent
expenditures and the purchase of property and equipment. The decrease in working
capital is primarily due to the use of cash for net operating expenses,
restructuring charges and the addition of property and equipment under capital
leases in the first nine months of 1999. The Company invests its cash in
corporate and United States government-backed debt instruments.
As of September 30, 1999, the Company had acquired an aggregate of $4.4
million in property and equipment, of which approximately $293,000 of total
property and equipment costs remains financed under capital lease obligations.
In addition, the Company leases its office and laboratory facilities and certain
property and equipment under operating leases. The Company has no material
commitments for the acquisition of property and equipment but anticipates
increasing investment in property and equipment in connection with the
enhancement of its research and development and manufacturing facilities and
capabilities.
The Company intends to use its financial resources to fund its research
and development efforts, to fund its possible manufacturing scale-up activities
and for working capital and other general corporate purposes. The amounts
actually expended for each purpose may vary significantly depending upon
numerous factors, including the results of clinical trials, the analysis of the
Phase II/III clinical trial data, the timing of any regulatory applications and
approvals, and technological developments. Expenditures will also depend upon
the establishment and progression of collaborative arrangements and contract
research as well as the availability of other financings. There can be no
assurance that these funds will be available on acceptable terms, if at all.
9
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LA JOLLA PHARMACEUTICAL COMPANY
The Company anticipates that its existing capital and interest earned
thereon will be sufficient to fund the Company's operations as currently planned
through 2000. The Company's future capital requirements will depend on many
factors, including continued scientific progress in its research and development
programs, the size and complexity of these programs, the scope and results of
clinical trials, the analysis of data from the Phase II/III clinical trial, the
time and costs involved in applying for any regulatory approvals, the costs
involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims, competing technological and market developments, the ability of the
Company to establish and maintain collaborative relationships, and the cost of
possible manufacturing scale-up and effective commercialization activities and
arrangements. The Company expects to incur significant net operating losses each
year for at least the next several years as it continues its research and
development efforts and incurs general and administrative expenses to support
its research and development programs. It is possible that the Company's cash
requirements will exceed current projections and that the Company will therefore
need additional financing sooner than currently expected.
The Company has no current means of generating cash flow from
operations. Unless the Company's lead drug candidate, LJP 394, has been proven
safe and effective, has received regulatory approval and has been successfully
commercialized, it will not generate revenues. This process, if completed, could
likely take several years. The Company's other drug candidates are much less
developed than LJP 394. There can be no assurance that the Company's product
development efforts with respect to any drug candidate will be successfully
completed, that required regulatory approvals will be obtained, or that any
product, if introduced, will be successfully marketed or achieve commercial
acceptance. Accordingly, the Company must continue to rely upon outside sources
of financing to meet its capital needs for the foreseeable future.
The Company anticipates increasing expenditures on the development of
other drug candidates and, over time, the Company's consumption of cash will
necessitate additional sources of financing. Furthermore, the Company has no
internal sources of liquidity, and termination of the Abbott arrangement has had
an adverse effect on the Company's ability to generate sufficient cash to meet
its needs.
The Company will continue to seek capital through any appropriate means,
including issuance of its securities and establishment of additional
collaborative arrangements. However, there can be no assurance that additional
financing will be available on acceptable terms and the Company's negotiating
position in its capital-raising efforts may worsen as it continues to use its
existing resources. There is no assurance that the Company will be able to enter
into further collaborative relationships.
IMPACT OF YEAR 2000
The "Year 2000 Issue" is the result of computer programs written using
two digits rather than four to define the applicable year. As a result, these
computer programs may be unable to distinguish 21st century dates from 20th
century dates. This problem may cause systems to fail or miscalculate, causing
disruptions of operations, including a temporary inability to process
transactions or engage in similar normal business activities.
Based on recent assessments, the Company believes that it has an
effective program in place to resolve the Year 2000 Issue in a timely manner and
that its total internal Year 2000 Issue costs for information technology and
non-information technology systems will be less than $100,000 of which
approximately $85,000 has been incurred to date in 1999. The Company's year 2000
conversion requirements are expected to be achieved through routine upgrades to
its hardware and software programs and these upgrades are expected to be
completed in the fourth quarter of 1999. These costs and the expected
completion date are based on management's best estimates; therefore, there can
be no assurance that these estimates will be achieved and actual results could
differ materially from those anticipated.
10
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LA JOLLA PHARMACEUTICAL COMPANY
The Company's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Company has completed the assessment phase for 100% of the systems that could be
significantly affected by the Year 2000 Issue and has determined that the
majority of the systems assessed do not require remediation to be year 2000
compliant. Approximately 90% of the systems requiring remediation are now year
2000 compliant. In addition, the Company has communicated with its significant
suppliers and has found that most of these suppliers have indicated that their
systems are year 2000 compliant. There can be no assurance that the systems of
other companies on which the Company's systems rely will be timely converted and
will not have an adverse effect on the Company's systems.
The Company currently has a contingency plan in place in the event it
does not complete all phases of the year 2000 program including back-up
emergency generators for selected critical systems, back-up tapes of computer
data and powering off all equipment, if applicable.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash in interest-bearing investment-grade
securities that it holds for the duration of the term of the respective
instrument. The Company does not utilize derivative financial instruments,
derivative commodity instruments or other market-risk-sensitive instruments,
positions or transactions in any material fashion. Accordingly, the Company
believes that, while the investment-grade securities it holds are subject to
changes in the financial standing of the issuer of such securities, the Company
is not subject to any material risks arising from changes in interest rates,
foreign currency exchange rates, commodity prices or other market changes that
affect market-risk-sensitive instruments.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<CAPTION>
================================================================================
Exhibit
Number Description
- --------------------------------------------------------------------------------
<S> <C>
3.1 Intentionally omitted
3.2 Amended and Restated Bylaws of the Company (1)
3.3 Amended and Restated Certificate of Incorporation of the Company (1)
27 Financial Data Schedule (1)
================================================================================
</TABLE>
- -----------------------
(1) Filed herein.
(b) REPORTS ON FORM 8-K
During the quarter ended September 30, 1999, the Company filed a Current
Report on Form 8-K dated September 14, 1999 reporting the following: that the
Company had regained the rights to its experimental lupus drug, LJP 394,
following termination by Abbott of a license and development agreement between
the Company and Abbott; that it is restructuring operations while it is
evaluating the results of a clinical trial of its experimental lupus drug, LJP
394, and that its Board of Directors had set a special meeting of stockholders,
the primary purpose of which is to put forth to the stockholders a proposed
one-for-five reverse split of the Company's Common Stock.
11
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12
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LA JOLLA PHARMACEUTICAL COMPANY
SIGNATURE
SEPTEMBER 30, 1999
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
La Jolla Pharmaceutical Company
Date: November 12, 1999 By: /s/ Steven B. Engle
---------------------------------------
Steven B. Engle
Chairman and
Chief Executive Officer
Signed on behalf of the Registrant
By: /s/ Gail A. Sloan
----------------------------------------
Gail A. Sloan
Signed as Principal Accounting Officer
12
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LA JOLLA PHARMACEUTICAL COMPANY
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
3.2 Amended and Restated Bylaws of the Company
3.3 Amended and Restated Certificate of Incorporation of the Company
27 Financial Data Schedule
</TABLE>
13
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
FOR THE REGULATION OF
LA JOLLA PHARMACEUTICAL COMPANY,
a Delaware Corporation
ARTICLE I
Principal Executive Office
Section 1.01 Registered Office. The registered office of La Jolla
Pharmaceutical Company (the "Corporation") in the State of Delaware shall be at
1013 Centre Road, in the City of Wilmington 19805, County of New Castle, and the
name of the registered agent in charge thereof shall be United States
Corporation Company.
Section 1.02 Principal Office. The principal executive office of the
Corporation shall be 6455 Nancy Ridge Drive, San Diego, California 92121.
ARTICLE II
Meeting of Stockholders
Section 2.01 Annual Meetings The annual meeting of stockholders shall be
held between 30 and 150 days following the end of the fiscal year of the
Corporation at such time and on such date as the board of directors shall
determine. At each annual meeting, directors shall be elected and any other
proper business may be transacted.
Section 2.02 Special Meetings. A special meeting of the stockholders for
the transaction of any proper business may be called at any time only by the
board of directors, the chairman of the board (if there is such an officer) or
the president and may be held at such time and place and on such date as is
determined by the person calling the meeting, within the limits fixed by law.
Section 2.03 Place of Meetings. Each annual or special meeting of
stockholders shall be held a such location as may be determined by the board of
directors, or if no such determination is made, at such place as may be
determined by the chief executive officer, or by any other officer authorized by
the board of directors or the chief executive officer to make such
determination. If no location is so determined, any annual or special meeting
shall be held at the principal executive office of the Corporation.
Section 2.04 Notice of Meetings. Notice of each annual or special
meeting of stockholders shall contain such information, and shall be given to
such persons at such time, and in such manner, as the board of directors shall
determine, or if no such determination is made, as the chief executive officer,
or any other officer so authorized by the board of directors or the chief
executive officer, shall determine, subject to the requirements of applicable
law.
<PAGE> 2
Section 2.05 Conduct of Meetings Subject to the requirements of
applicable law, all annual and special meetings of stockholders shall be
conducted in accordance with such rules and procedures as the board of directors
may determine and, as to matters not governed by such rules and procedures, as
the chairman of such meeting shall determine. The chairman of any annual or
special meeting of stockholders shall be designated by the board of directors
and, in the absence of any such designation, shall be the chief executive
officer of the Corporation.
Section 2.06 Advance Notice of Stockholder Proposals and Stockholder
Nominations.
(a) At any meeting of the stockholders, only such business may be
conducted, and only such proposals may be acted upon, as have been brought
before the meeting (i) by or at the direction of the board of directors, or (ii)
by any stockholder of the Corporation entitled to vote on such business who
complies with the notice procedures set forth in this Section 2.06(a). For
business to be properly brought before any meeting of the stockholders by a
stockholder, the stockholder must have given notice thereof in writing which is
received by the Secretary of the Corporation not less than ninety (90) days nor
more than one hundred twenty (120) days in advance of such meeting, regardless
of any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than ninety-five (95) days' notice or prior
public disclosure of the date of the scheduled meeting is given or made, notice
by the stockholder, to be timely, must be so delivered or received not later
than the close of business on the seventh day following the earlier of the date
of the first public announcement of the date of such meeting and the date on
which such notice of the scheduled meeting was mailed. A stockholder's notice to
the Secretary must set forth as to each matter the stockholder proposes to bring
before the meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business and any stockholders known by such
stockholder to be supporting such proposal, (iii) the class and number of shares
of the Corporation that are beneficially owned by the stockholder and by any
other stockholder known by such stockholder to be supporting such matter on the
date of such stockholder notice, and (iv) any material interest of the
stockholder in such business. In addition, the stockholder making such proposal
shall promptly provide any other information reasonably requested by the
Corporation. Notwithstanding anything in these Bylaws to the contrary, no
business may be conducted at any meeting of the stockholders except in
accordance with the procedures set forth in this Section 2.06(a). The presiding
officer of the meeting shall determine and declare at the meeting whether the
stockholder proposal was made in accordance with the terms of this Section
2.06(a). If the presiding officer determines that a stockholder proposal was not
made in accordance with the terms of this Section 2.06(a), he or she shall so
declare at the meeting and any such proposal will not be acted upon at the
meeting. This provision will not prevent the consideration and approval or
disapproval at the meeting of reports of officers, directors and committees of
the board of directors, but, in connection with such reports, no new business
may be acted upon at such meeting unless stated, filed and received as herein
provided.
(b) Nominations for the election of directors may be made by the
board of directors, any nominating committee or person appointed by the board of
directors, or by any stockholder entitled to vote in the election of directors;
provided, however, that, subject to the
2
<PAGE> 3
rights, if any, of the holders of shares of Preferred Stock then outstanding, a
stockholder may nominate a person for election as a director at a meeting only
if written notice of such stockholder's intent to make such nomination has been
received by the Secretary of the Corporation not less than ninety (90) days nor
more than one hundred twenty (120) days in advance of such meeting regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, further, that if less than ninety-five (95) days' notice or prior
public disclosure of the date of the scheduled meeting is given or made, notice
by the stockholder, to be timely, must be so delivered or received not later
than the close of business on the seventh day following the earlier of the date
of the first public announcement of the date of such meeting and the date on
which such notice of the scheduled meeting was mailed. Each such notice must set
forth: (i) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (ii) the class and
number of shares of the Corporation's stock which are beneficially owned by the
stockholder and a representation that such stockholder intends to appear in
person or by proxy at the meeting and nominate the person or persons specified
in the notice; (iii) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (iv) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated, or intended to be nominated, by the
board of directors; and (v) the consent of each nominee to serve as a director
of the Corporation if so elected. In addition, the stockholder making such
nomination shall promptly provide any other information reasonably requested by
the Corporation. No person will be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 2.06(b). The presiding officer of the meeting shall determine and
declare at the meeting whether the nomination was made in accordance with the
terms of this Section 2.06(b). If the presiding officer determines that a
nomination was not made in accordance with the terms of this Section 2.06(b), he
or she shall so declare at the meeting and any such defective nomination will be
disregarded. No stockholder may nominate any person for election as a director
to any Class for which such stockholder is not entitled to vote.
(c) Nothing herein is intended or will be construed to limit
requirements imposed by applicable laws or regulations upon stockholder
proposals, opposition thereto by the Corporation, or inclusion thereof in the
Corporation's proxy materials.
ARTICLE III
Directors
Section 3.01 Number of Directors and Term of Office. Unless otherwise
provided in the Corporation's certificate of incorporation, the total number of
directors of the Corporation shall be not less than five (5) nor more than nine
(9), with the actual total number of directors set from time to time exclusively
by resolution of the Board of Directors. The Board of Directors shall consist of
six members until changed by such a resolution. There shall be three classes of
directors (each, a "Class"), known as Class 1, Class 2 and Class 3. The initial
Class 1, Class 2
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<PAGE> 4
and Class 3 directors shall serve in office as follows: Class 1 shall retire at
the first annual meeting of stockholders following the filing of the
Corporation's Amended and Restated Certificate of Incorporation (the "Effective
Date"), Class 2 shall retire at the second annual meeting of stockholders
following the Effective Date, and Class 3 shall retire at the third annual
meeting of stockholders following the Effective Date. This annual sequence shall
be repeated thereafter. Each director in a Class shall be eligible for
re-election if nominated, and such director's seat shall be open for election of
a director, at the annual meeting of stockholders of the Corporation at which
such Class shall retire, to hold office for three years or until his successor
is elected or appointed.
Any additional directors elected or appointed shall be elected or
appointed to such Class as will ensure that the number of directors in each
Class remains as nearly equal as possible, and if all Classes have an equal
number of directors or if one Class has one director more than the other two
Classes, then any additional directors elected or appointed shall be elected or
appointed to the Class that does not have more directors than any other Class
and is subject to election at an ensuing annual meeting before any other such
Class.
Vacancies due to resignation, death, increases in the number of
directors, or any other cause shall be filled only by the Board of Directors
(unless there are no directors, in which case vacancies will be filled by the
stockholders) in accordance with the rule that each Class of directors shall be
as nearly equal in number of directors as possible. Notwithstanding such rule,
in the event of any change in the authorized number of directors each director
then continuing to serve as such will nevertheless continue as a director of the
Class of which he or she is a member, until the expiration of his or her current
term or his earlier death, resignation or removal. If any newly created
directorship or vacancy on the Board of Directors, consistent with the rule that
the three Classes shall be as nearly equal in number of directors as possible,
may be allocated to one or two or more Classes, then the Board of Directors
shall allocate it to that of the available Classes whose term of office is due
to expire at the earliest date following such allocation. When the Board of
Directors fills a vacancy, the director chosen to fill that vacancy shall be of
the same Class as the director he or she succeeds and shall hold office until
such director's successor shall have been elected and qualified or until such
director shall resign or shall have been removed. No reduction of the authorized
number of directors shall have the effect of removing any director prior to the
expiration of such director's term of office.
Section 3.02 Meetings of the Board. Each regular and special meeting of
the board shall be held at a location determined as follows: The board of
directors may designate any place, within or without the State of Delaware, for
the holding of any meeting. If no such designation is made, (i) any meeting
called by a majority of the directors shall be held at such location, within the
county of the Corporation's principal executive office, as the directors calling
the meeting shall designate; and (ii) any other meeting shall be held at such
location, within the county of the Corporation's principal executive office, as
the chief executive officer may designate, or in the absence of such
designation, at the Corporation's principal executive office. Subject to the
requirements of applicable law, all regular and special meetings of the board of
directors shall be conducted in accordance with such rules and procedures as the
board of directors may approve and, as to matters not governed by such rules and
procedures, as the
4
<PAGE> 5
chairman of such meeting shall determine. The chairman of any regular or special
meeting shall be designated by the directors and, in the absence of any such
designation, shall be the chief executive officer of the Corporation.
Section 3.03 Qualifications of Directors.
No person shall be qualified to be elected to, or appointed to fill a
vacancy on, the board of the Corporation during the pendency of a Business
Combination transaction, as defined herein, if such person is, or (in the case
of a person described in clause (i), (ii) or (iii) below) was within the two
years preceding the date of such election or appointment: (i) an officer,
director, employee or affiliate (as defined in Rule 144 under the Securities Act
of 1933, as amended) of a party to such transaction (an "Interested Party") or
of any affiliate of an Interested Party; (ii) an agent subject to the direction
of an Interested Party; (iii) a consultant or advisor to an Interested Party;
(iv) a person having a material financial interest in the transaction (other
than through the ownership of stock or securities of the Corporation); or (v) a
person having any business, financial, or familial relationship with any person
referred to in clauses (i)-(iv) above that would reasonably be expected to
affect such person's judgment in a manner adverse to this Corporation. A person
shall not be disqualified from election or appointment to the board by reason of
this Section 3.03 solely because such person is a director or officer of this
Corporation who receives normal and customary compensation as such and/or is a
stockholder or affiliate of this Corporation.
For the purpose of this Section 3.03, a Business Combination shall mean
any of the following: (i) a merger or consolidation of this Corporation with
another corporation, or a sale of all or substantially all of the business and
assets of this Corporation; or (ii) an acquisition (including by tender offer or
any other means) by any person (including any two or more persons comprising a
group, within the meaning of Rule 13d-5 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), of beneficial ownership, within the
meaning of Rule 13d-3 under the Exchange Act, of 15% or more of the outstanding
common stock of this Corporation.
A Business Combination shall be deemed pending for purposes of this
Section 3.03 commencing on the date any offer or proposal for such transaction
shall be made and until such time as the proposed transaction is abandoned or
until such time as: (i) the party proposing such transaction shall have acquired
beneficial ownership, as defined above, of 50% or more of this Corporation's
outstanding voting stock; and (ii) 10 business days shall have elapsed
thereafter. A business day shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
ARTICLE IV
Indemnification
Section 4.01 Action, Etc. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party
5
<PAGE> 6
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, that the person had reasonable cause to believe
that such person's conduct was unlawful.
Section 4.02 Actions, Etc. by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 4.03 Determination of Right of Indemnification. Any
indemnification under Section 4.01 or 4.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 4.01 and 4.02. Such determination shall
be made (i) by the Board by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.
Section 4.04 Indemnification Against Expenses of Successful Party
Notwithstanding the other provisions of this Article, to the extent that a
director, officer, employee or agent of the
6
<PAGE> 7
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 4.01 or 4.02, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 4.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board deems appropriate.
Section 4.06 Other Rights and Remedies. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
subsections of this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office.
Section 4.07 Continuation of Indemnification and Advancement of Expenses
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
Section 4.08 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Article.
Section 4.09 Constituent Corporations. For the purposes of this Article,
references to "the Corporation" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation, so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as such person would if such person had served the
resulting or surviving corporation in the same capacity.
Section 4.10 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprises" shall
include employee benefit plans;
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<PAGE> 8
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.
ARTICLE V
Officers
Section 5.01 Officers. The Corporation shall have a chairman of the
board, a chief executive officer, a chief financial officer, a secretary, and
such other officers as may be designated by the board. Officers shall have such
powers and duties as may be specified by, or in accordance with, resolutions of
the board of directors. In the absence of any contrary determination by the
board of directors, the chief executive officer shall, subject to the power and
authority of the board of directors, have general supervision, direction, and
control of the officers, employees, business, and affairs of the Corporation.
Section 5.02 Limited Authority of Officers. No officer of the
Corporation shall have any power or authority outside the normal day-to-day
business of the Corporation to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable in connection with any
transaction unless so authorized by the board of directors.
ARTICLE VI
Waiver of Annual Reports
(a) In the event the Corporation becomes subject to the provisions of
Section 1501 of the California Corporations Code ("Code") by reason of the
applicability of Section 2115 of the Code, then so long as the Corporation has
less than 100 holders of record of its shares (determined as provided in Section
605 of the Code), no annual report to stockholders shall be required, and the
requirement to the contrary of Section 1501 of the Code is hereby expressly
waived.
(b) If the Corporation is not subject to Section 2115 of the Code,
Section 8.05(a) above shall not require or be interpreted to require the
Corporation to provide an annual report to stockholders under any circumstances,
and the Corporation shall not be under any such obligation unless the same is
required by any applicable provision of the General Corporation Law of Delaware
or any applicable federal laws.
8
<PAGE> 9
ARTICLE VII
Amendments
New bylaws may be adopted or these bylaws may be amended or repealed by
the stockholders or, except for Section 3.01, by the directors.
9
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
LA JOLLA PHARMACEUTICAL COMPANY
1. The undersigned, Steven B. Engle, certifies that he is the Chief
Executive Officer of la jolla pharmaceutical company, a Delaware corporation
(the "CORPORATION"), and does further certify that:
2. The name of the Corporation is La Jolla Pharmaceutical Company, the
name under which it was originally incorporated.
3. The original Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of Delaware on May 2, 1989.
4. This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware.
5. The text of the Restated Certificate of Incorporation of the
Corporation is hereby amended and restated in its entirety as follows:
ARTICLE I
NAME OF CORPORATION
The name of the Corporation is La Jolla Pharmaceutical Company.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington 19805, County of New
Castle. The name of the registered agent of the Corporation at such address is
United States Corporation Company.
ARTICLE III
PURPOSE
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the Delaware
Corporations Code.
<PAGE> 2
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The Corporation is authorized to issue two classes of stock designated
"Common Stock" and "Preferred Stock." The number of shares of Common Stock that
the Corporation is authorized to issue is 100,000,000; the number of shares of
Preferred Stock that the Corporation is authorized to issue is 8,000,000. The
Board is hereby authorized to issue the shares of Preferred Stock in one or more
series, to fix the number of shares of any such series of Preferred Stock, to
determine the designation of any such series, and to fix the rights,
preferences, and privileges and the qualifications, limitations or restrictions
of the series of Preferred Stock to the full extent permitted under the Delaware
General Corporation Law. The authority of the Board with respect to any series
of Preferred Stock shall include, without limitation, the power to fix or alter
the dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions, if any), the redemption
price or prices, and the liquidation preferences and the number of shares
constituting any such additional series and the designation thereof, or any of
them; and to increase or decrease the number of authorized shares of any series
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the authorized 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. All shares of the Common Stock and
the Preferred Stock shall have a par value of $.01 per share.
ARTICLE V
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law,
a director of this corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
ARTICLE VI
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, repeal, alter, amend and
rescind the Bylaws of this corporation; provided, however, that after the
initial adoption of the Bylaws, the Board of Directors may not repeal, alter,
amend, or rescind Section 3.01 thereof which shall establish the manner in which
the number of directors is set.
2
<PAGE> 3
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE VIII
NUMBER OF DIRECTORS AND TERM OF OFFICE
The total number of directors of the Corporation shall be not less than
five (5) nor more than nine (9), with the actual total number of directors set
from time to time exclusively by resolution of the Board of Directors. The Board
of Directors shall initially consist of six members until changed by such a
resolution. There shall be three classes of directors (each, a "Class"), known
as Class 1, Class 2 and Class 3. The initial Class 1, Class 2 and Class 3
directors shall serve in office as follows: Class 1 shall retire at the first
annual meeting of stockholders following the filing of the Corporation's Amended
and Restated Certificate of Incorporation (the "Effective Date"), Class 2 shall
retire at the second annual meeting of stockholders following the Effective
Date, and Class 3 shall retire at the third annual meeting of stockholders
following the Effective Date. This annual sequence shall be repeated thereafter.
Each director in a Class shall be eligible for re-election if nominated, and
such director's seat shall be open for election of a director, at the annual
meeting of stockholders of the Corporation at which such Class shall retire, to
hold office for three years or until his successor is elected or appointed.
Any additional directors elected or appointed shall be elected or
appointed to such Class as will ensure that the number of directors in each
Class remains as nearly equal as possible, and if all Classes have an equal
number of directors or if one Class has one director more than the other two
Classes, then any additional directors elected or appointed shall be elected or
appointed to the Class that does not have more directors than any other Class
and is subject to election at an ensuing annual meeting before any other such
Class.
Vacancies due to resignation, death, increases in the number of
directors, or any other cause shall be filled only by the Board of Directors
(unless there are no directors, in which case vacancies will be filled by the
stockholders) in accordance with the rule that each Class of directors shall be
as nearly equal in number of directors as possible. Notwithstanding such rule,
in the event of any change in the authorized number of directors each director
then continuing to serve as such will nevertheless continue as a director of the
Class of which he or she is a member, until the expiration of his or her current
term or his earlier death, resignation or removal. If any newly created
directorship or vacancy on the Board of Directors, consistent with the rule that
the three Classes shall be as nearly equal in number of directors as possible,
may be allocated to one or two or more Classes, then the Board of Directors
shall allocate it to that of the available Classes whose term of office is due
to expire at the earliest date following such allocation. When the Board of
Directors fills a vacancy, the director chosen to fill that vacancy shall be of
the same Class as the director he or she succeeds and shall hold office until
such
3
<PAGE> 4
director's successor shall have been elected and qualified or until such
director shall resign or shall have been removed. No reduction of the authorized
number of directors shall have the effect of removing any director prior to the
expiration of such director's term of office.
ARTICLE IX
STOCKHOLDER ACTION BY WRITTEN CONSENT
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by a consent in writing by any such holders.
ARTICLE X
CORPORATE POWER
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
on stockholders herein are granted subject to this reservation; provided,
however, that any amendment of Article VIII or of this Article X will require an
affirmative vote of the holders of seventy-five percent (75%) or more of the
total voting power of all outstanding shares of voting stock of the Corporation.
IN WITNESS WHEREOF, the undersigned Corporation has executed this
Amended and Restated Certificate of Incorporation as of May 21, 1999.
LA JOLLA PHARMACEUTICAL COMPANY
By: /s/ Steven B. Engle
------------------------------------
Steven B. Engle,
Chief Executive Officer
4
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