NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER
SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION.
------------------------
WARRANT TO PURCHASE SHARES OF COMMON STOCK
February 16, 1998
THIS CERTIFIES THAT, for value received, Lease Management Services, Inc.,
("Holder") is entitled to subscribe for and purchase the number of shares of
the fully paid and nonassessable Common Stock ("the Shares") of LJL
BIOSYSTEMS, INC., a Delaware corporation (the "Company"), determined as set
forth below, at the Warrant Price (as hereinafter defined), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, the term "Common Stock" shall mean the Company's presently authorized
Common Stock, and any stock into which such Common Stock may hereafter be
exchanged.
1. WARRANT PRICE. The Warrant Price shall initially be Two and 60/100
dollars ($2.60) per share [based on the capitalization of the Company as of
February 6, 1998 and before the stock split approved by the Company's Board
of Directors on 12/16/97 ("the Pre-Split Capitalization")], subject to the
following adjustment upon the consumation of Borrower's first major equity
financing of at least One Million dollars ($1,000,000), from institutional
venture investors or through an initial public offering, prior to the
12/31/98 expiration of the equipment financing line:
(a) If the equity financing is at a price per share lower than $2.60
(based on the Pre-Split Capitalization), the most recent financing price per
share becomes the Warrant Price; or
(b) If the equity financing is at a price per share higher than $2.60
(based on the Pre-Split Capitalization), the Warrant Price becomes $2.60 plus
10% of the difference between $2.60 and the new equity financing price. For
example, if Xxxxxxxx concludes a major equity financing at $5.00 per share,
the Warrant Price will be $2.84 (i.e., $2.60 + 10%($5.00 - $2.60).
The foregoing Warrant Price is subject to adjustment as provided in Section 7
below. The number of shares for which this Warrant shall be exercisable
shall be equal to the number of shares based pro rata on the actual amount of
equipment financed. For example, if $700,000 equipment is financed and the
Warrant Price is $2.60 per share, then the Warrant will be for 14,807 shares
(i.e., $700,000 x 5.5% DIVIDED BY $2.60).
2. CONDITIONS TO EXERCISE. The purchase right represented by this Warrant
may be exercised at any time, or from time to time, in whole or in part
during the term commencing on the date hereof and ending on the earlier of:
(a) 5:00 P.M. Pacific time on the sixth annual anniversary of
this Warrant; or
(b) the closing of the initial public offering of the Company's
Common Stock pursuant to a registration statement under the Securities Act of
1933, as amended (the "Initial
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 2 of 7
Public Offering"). The Company shall provide notice of the Initial Public
Offering to the Holder at least 30 days prior to the anticipated closing
thereof; or
(c) the effective date of the merger of the Company with or into, the
consolidation of the Company with, or the sale by the Company of all or
substantially all of its assets to another corporation or other entity (other
than such a transaction wherein the shareholders of the Company retain or
obtain a majority of the voting capital stock of the surviving, resulting, or
purchasing corporation); provided that the Company shall notify the
registered Holder of this Warrant of the proposed effective date of the
merger, consolidation, or sale at least 30 days prior to the effectiveness
thereof.
In the event that, although the Company shall have given notice of a
transaction pursuant to subparagraph (b) or subparagraph (c) hereof, the
transaction does not close within 60 days of the day specified by the
Company, unless otherwise elected by the Holder any exercise of the Warrant
subsequent to the giving of such notice shall be rescinded and the Warrant
shall again be exercisable until terminated in accordance with this Paragraph
2.
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF SHARES; ISSUANCE OF NEW
WARRANT.
(a) CASH EXERCISE. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole
or in part, by the surrender of this Warrant (with a duly executed Notice of
Exercise in the form attached hereto) at the principal office of the Company
(as set forth in Section 18 below) and by payment to the Company, by check,
of an amount equal to the then applicable Warrant Price per share multiplied
by the number of shares then being purchased. In the event of any exercise of
the rights represented by this Warrant, certificates for the shares of stock
so purchased shall be in the name of, and delivered to, the Holder hereof, or
as such Holder may direct (subject to the terms of transfer contained herein
and upon payment by such Holder hereof of any applicable transfer taxes).
Such delivery shall be made within 30 days after exercise of the Warrant and
at the Company's expense and, unless this Warrant has been fully exercised or
expired, a new Warrant having terms and conditions substantially identical to
this Warrant and representing the portion of the Shares, if any, with respect
to which this Warrant shall not have been exercised, shall also be issued to
the Holder hereof within 30 days after exercise of the Warrant.
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 3(a), Holder may elect to receive shares equal to the value of this
Warrant (or of any portion thereof remaining unexercised) by surrender of
this Warrant at the principal office of the Company together with notice of
such election, in which event the Company shall issue to Holder the number of
shares of the Company's Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under this Warrant
(at the date of such calculation).
A = the Fair Market Value of one share of the Company's Common Stock
(at the date of such calculation).
B = Warrant Price (as adjusted to the date of such calculation).
2
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 3 of 7
(c) FAIR MARKET VALUE. For purposes of this Section 3, Fair Market Value of
one share of the Company's Common Stock shall mean:
(i) In the event of an exercise in connection with an Initial
Public Offering, the per share Fair Market Value for the Common
Stock shall be the Offering Price at which the underwriters
initially sell Common Stock to the public; or
(ii) The average of the closing bid and asked prices of the
Common Stock quoted in the Over-The-Counter Market Summary, or the
average of the last reported sale price of the Common Stock or the
closing price quoted on the Nasdaq National Market System ("NMS")
or on any exchange on which the Common Stock is listed, whichever
is applicable, as published in the Western Edition of the WALL
STREET JOURNAL over the ten (10) trading days prior to the date of
determination of fair market value; or
(iii) In the event of an exercise in connection with a merger,
acquisition or other consolidation in which the Company is not the
surviving entity, as described in Section 2(c), the per share Fair
Market Value for the Common Stock shall be the value to be received
per share of Common Stock by all holders of the Common Stock in
such transaction as determined by the Board of Directors; or
(iv) If the Common Stock is not publicly traded, the per share
fair market value of the Common Stock shall be as determined in
good faith by the Company's Board of Directors.
In the event of 3(c)(iii) or 3(c)(iv), above, the Company's Board
of Directors shall prepare a certificate, to be signed by an
authorized Officer of the Company, setting forth in reasonable
detail the basis for and method of determination of the per share
Fair Market Value of the Common Stock. The Board will also certify
to the Holder that this per share Fair Market Value will be
applicable to all holders of the Company's Common Stock. Such
certification must be made to Holder at least thirty (30) business
days prior to the proposed effective date of the merger,
consolidation, sale, or other triggering event as defined in
3(c)(iii) and 3(c)(iv).
(d) AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, it shall be automatically exercised in accordance with Sections
3(b) and 3(c) hereof (even if not surrendered) immediately before: (i) its
expiration, or (ii) the consummation of any consolidation or merger of the
Company, or any sale or transfer of a majority of the Company's assets
pursuant to Section 2(c).
4. REPRESENTATIONS AND WARRANTIES OF HOLDER AND RESTRICTIONS ON TRANSFER
IMPOSED BY THE SECURITIES ACT OF 1933.
(a) Representations and Warranties by Xxxxxx. The Holder represents and
warrants to the Company with respect to this purchase as follows:
(i) The Holder has substantial experience in evaluating and
investing in private placement transactions of securities of
companies similar to the Company so that the Holder is capable of
evaluating the merits and risks of its investment in the Company
and has the capacity to protect its interests.
(ii) The Holder is acquiring the Warrant and the Shares of Common
Stock issuable upon exercise of the Warrant (collectively the
"Securities") for investment for its own account and not with a
view to, or for resale in connection with, any distribution
thereof. The Holder understands that the Securities have not been
registered under the Securities Act
3
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 4 of 7
of 1933, as amended (the "Act") by reason of a specific exemption
from the registration provisions of the Act which depends upon,
among other things, the bona fide nature of the investment intent
as expressed herein. In this connection, the Holder understands
that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable
if this representation was predicated solely upon a present
intention to hold the Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Securities
or for a period of one year or any other fixed period in the future.
(iii) The Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available. The Holder is aware
of the provisions of Rule 144 promulgated under the Act ("Rule
144") which permits limited resale of securities purchased in a
private placement subject to the satisfaction of certain
conditions, including, in case the securities have been held for
more than one but less than two years, the existence of a public
market for the shares, the availability of certain public
information about the Company, the resale occurring not less than
one year after a party has purchased and paid for the security to
be sold, the sale being through a "broker's transaction" or in a
transaction directly with a "market maker" (as provided by Rule
144(f)) and the number of shares or other securities being sold
during any three-month period not exceeding specified limitations.
(iv) The Holder further understands that at the time the Holder
wishes to sell the Securities there may be no public market upon
which such a sale may be effected, and that even if such a public
market exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that in such event, the
Holder may be precluded from selling the Securities under Rule 144
unless a) a two-year minimum holding period has been satisfied and
b) the Holder was not at the time of the sale nor at any time
during the three-month period prior to such sale an affiliate of
the Company.
(v) The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with its management and
an opportunity to review the Company's facilities. The Holder
understands that such discussions, as well as the written
information issued by the Company, were intended to describe the
aspects of the Company's business and prospects which it believes
to be material but were not necessarily a thorough or exhaustive
description.
(b) LEGENDS. Each certificate representing the Securities shall be endorsed
with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS
OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR (IF
REASONABLY REQUIRED BY THE COMPANY) AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
The Company need not enter into its stock record a transfer of Securities unless
the conditions specified in the foregoing legend are satisfied. The Company may
also instruct its transfer agent not to allow the transfer of any of the Shares
unless the conditions specified in the foregoing legend are satisfied.
4
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 5 of 7
(c) REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. The legend relating to
the Act endorsed on a certificate pursuant to paragraph 4(b) of this Warrant
and the stop transfer instructions with respect to the Securities represented
by such certificate shall be removed and the Company shall issue a
certificate without such legend to the Holder of the Securities if (i) the
Securities are registered under the Act and a prospectus meeting the
requirements of Section 10 of the Act is available or (ii) the Holder
provides to the Company an opinion of counsel for the Holder reasonably
satisfactory to the Company, or a no-action letter or interpretive opinion of
the staff of the SEC reasonably satisfactory to the Company, to the effect
that public sale, transfer or assignment of the Securities may be made
without registration and without compliance with any restriction such as Rule
144.
5. CONDITION OF TRANSFER OR EXERCISE OF WARRANT. It shall be a condition
to any transfer or exercise of this Warrant that at the time of such transfer
or exercise, the Holder shall provide the Company with a representation in
writing that the Holder or transferee is acquiring this Warrant and the
shares of Common Stock to be issued upon exercise for investment purposes
only and not with a view to any sale or distribution, or will provide the
Company with a statement of pertinent facts covering any proposed
distribution. As a further condition to any transfer of this Warrant or any
or all of the shares of Common Stock issuable upon exercise of this Warrant,
other than a transfer registered under the Act, the Company must have
received a legal opinion, in form and substance satisfactory to the Company
and its counsel, reciting the pertinent circumstances surrounding the
proposed transfer and stating that such transfer is exempt from the
registration and prospectus delivery requirements of the Act. Each
certificate evidencing the shares issued upon exercise of the Warrant or upon
any transfer of the shares (other than a transfer registered under the Act or
any subsequent transfer of shares so registered) shall, at the Company's
option, contain a legend in form and substance satisfactory to the Company
and its counsel, restricting the transfer of the shares to sales or other
dispositions exempt from the requirements of the Act.
As further condition to each transfer, the Holder shall surrender this
Warrant to the Company and the transferee shall receive and accept a Warrant,
of like tenor and date, executed by the Company.
6. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens,
and charges with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at
all times have authorized, and reserved for issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by
this Warrant.
7. ADJUSTMENT FOR CERTAIN EVENTS: In the event of changes in the
outstanding Common Stock by reason of stock dividends, split-ups,
recapitalizations, reclassifications, mergers, consolidations, combinations
or exchanges of shares, separations, reorganizations, liquidations, or the
like, the number and class of shares available under the Warrant in the
aggregate and the Warrant Price shall be correspondingly adjusted, as
appropriate, by the Board of Directors of the Company. The adjustment shall
be such as will give the Holder of this Warrant upon exercise for the same
aggregate Warrant Price the total number, class and kind of shares as he
would have owned had the Warrant been exercised prior to the event and had he
continued to hold such shares until after the event requiring adjustment.
8. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted
pursuant to Section 7 hereof, the Company shall prepare a certificate signed
by an officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the
5
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 6 of 7
method by which such adjustment was calculated, and the Warrant Price and
number of shares issuable upon exercise of the Warrant after giving effect to
such adjustment, and shall cause copies of such certificate to be mailed (by
certified or registered mail, return receipt required, postage prepaid)
within thirty (30) days of such adjustment to the Holder of this Warrant as
set forth in Section 18 hereof.
9. "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that for a period of
up to 180 days following the effective date of the first registration
statement of the Company covering common stock (or other securities) to be
sold on behalf of the Company in an underwritten public offering, it will
not, to the extent requested by the Company and any underwriter, sell or
otherwise transfer or dispose of (other than to donees or transferees who
agree to be similarly bound) any of the Shares at any time during such period
except common stock included in such registration; provided, however, that
all officers and directors of the Company (other than officers and directors
of the Company who are selling stockholders on such public offering) who hold
securities of the Company or options to acquire securities of the Company
enter into similar agreements.
10. TRANSFERABILITY OF WARRANT. This Warrant is transferable only in its
entirety on the books of the Company at its principal office by the
registered Holder hereof upon surrender of this Warrant properly endorsed,
subject to compliance with Section 5 and applicable federal and state
securities laws. The Company shall issue and deliver to the transferee a new
Warrant representing the Warrant so transferred. Holder shall not have any
right to transfer any portion of this Warrant to any direct competitor of the
Company.
11. NO FRACTIONAL SHARES. No fractional share of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional share the Company shall make a cash payment therefor upon the
basis of the Warrant Price then in effect.
12. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder for any United States or state of the United States documentary
stamp tax or other incidental expense with respect to the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder.
13. NO SHAREHOLDER RIGHTS UNTIL EXERCISE. This Warrant does not entitle
the Holder hereof to any voting rights or other rights as a shareholder of
the Company prior to the exercise hereof.
14. REGISTRY OF WARRANT. The Company shall maintain a registry showing the
name and address of the registered Holder of this Warrant. This Warrant may
be surrendered for exchange or exercise, in accordance with its terms, at
such office or agency of the Company, and the Company and Holder shall be
entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
15. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft,
or destruction, of indemnity reasonably satisfactory to it, and, if
mutilated, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant, having terms and conditions substantially
identical to this Warrant, in lieu hereof.
16. MISCELLANEOUS.
(a) ISSUE DATE. The provisions of this Warrant shall be construed
and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof.
6
LMSI/LJL BIOSYSTEMS, INC. WARRANT
Page 7 of 7
(b) SUCCESSORS. This Warrant shall be binding upon any successors
or assigns of the Company.
(c) GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of California.
(d) HEADINGS. The headings used in this Warrant are used for
convenience only and are not to be considered in construing or
interpreting this Warrant.
(e) SATURDAYS, SUNDAYS, HOLIDAYS. If the last or appointed day for
the taking of any action or the expiration of any right required or
granted herein shall be a Saturday or a Sunday or shall be a legal
holiday in the State of California, then such action may be taken or
such right may be exercised on the next succeeding day not a legal
holiday.
17. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder hereof against impairment.
18. ADDRESSES. Any notice required or permitted hereunder shall be in
writing and shall be mailed by overnight courier, registered or certified
mail, return receipt required, and postage pre-paid, or otherwise delivered
by hand or by messenger, addressed as set forth below, or at such other
address as the Company or the Holder hereof shall have furnished to the other
party.
If to the Company: LJL BioSystems, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Vice President, Finance & Administration
If to the Holder: Lease Management Services, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, EVP/GM
IN WITNESS WHEREOF, LJL BIOSYSTEMS, INC. has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated as of February 16, 1998.
LJL BioSystems, Inc.
-------------------------------------------
BY: /s/ X.X. Xxxxx
--------------------------------------
TITLE: Vice President, Finance and
Administration
------------------------------------
7
NOTICE OF EXERCISE
------------------
TO:
1. The undersigned Warrantholder ("Holder") elects to acquire shares of the
Common Stock of LJL BIOSYSTEMS, INC. (the "Company"), pursuant to the
terms of the Stock Purchase Warrant dated _________________, 1998, (the
"Warrant").
2. The Holder exercises its rights under the Warrant as set forth below:
( ) The Holder elects to purchase _____________ shares of
Common Stock as provided in Section 3(a), (c) and
tenders herewith a check in the amount of $___________
as payment of the purchase price.
( ) The Holder elects to convert the purchase rights
into shares of Common Stock as provided in Section
3(b), (c) of the Warrant.
3. The Holder surrenders the Warrant with this Notice of Exercise.
4. The Holder represents that it is acquiring the aforesaid shares of
Common Stock for investment and not with a view to, or for resale in
connection with, distribution and that the Holder has no present
intention of distributing or reselling the shares.
5. Please issue a certificate representing the shares of Common Stock in
the name of the Holder or in such other name as is specified below:
Name:
Address:
Taxpayer I.D.:
_________________________________
(Holder)
By: _____________________________
Title: __________________________
Date:____________________________
