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NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED.
SHARES ISSUABLE UPON EXERCISE: 60,750
WARRANT TO PURCHASE
SHARES OF SERIES B PREFERRED STOCK
EXPIRES NOVEMBER 2, 2000
THIS CERTIFIES THAT, For value received, Dominion Ventures, Inc., is
entitled to subscribe for and purchase 60,750 shares (as adjusted pursuant to
provisions hereof, the "Shares") of the fully paid and nonassessable Series B
Preferred Stock of Biostar, Inc., a Delaware corporation (the "Company"). The
purchase price of each share shall be the amount set forth in Section 1.1 below
as such amount may be adjusted from time to time from adjustments specified
herein (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth. As used herein, the term "Preferred Stock"
shall mean the Company's presently authorized Series B Preferred Stock, and any
stock into or for which such Series B Preferred Stock may hereafter be
converted or exchanged pursuant to the Certificate of Incorporation of the
Company as from time to time amended as provided by law and in such
Certificate, and the term "Grant Date" shall mean November 2, 1992.
1. INITIAL WARRANT PRICE AND TERM.
1.1 INITIAL WARRANT PRICE. The initial Warrant Price
shall be equal to the lesser of (a) the price per share of the Company's equity
securities in the Company's next Equity Financing (as hereinafter defined) and
(b) $2.20. The term "Equity Financing" shall be defined as the first sale of
preferred equity securities of the Company after the date hereof to reputable
venture capital firms, with net proceeds to the Company of not less than $1
million.
1.2 TERM. The purchase right represented by this Warrant
is exercisable, in whole or in part, at any time and from time to time from and
after the Grant Date and prior to the earlier of the ninth annual anniversary
date of the Grant Date or the fourth annual anniversary of the consummation of
the Company's initial public offering of its Common Stock, the aggregate gross
proceeds from which exceed $5,000,000.
1.
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2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
2.1 METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
The purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election
of the holder hereof, (a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A duly executed) at the principal
office of the Company and by the 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 or (b) if in connection with a registered public
offering of the Company's securities, the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A-1 duly executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by check or from
the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Preferred Stock
shall be issuable upon exercise of this Warrant shall be deemed to have become
the holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed
to have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in
any event within thirty days of receipt of such notice and, unless this Warrant
has been fully exercised or expired, a new Warrant representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period.
2.2 NET ISSUE EXERCISE.
(a) In lieu of exercising this Warrant, holder may elect
to receive shares equal to the value of this Warrant (or the portion thereof
being canceled) 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 a number of shares of the Company's Preferred Stock computed
using the following formula:
X= Y(A-B)
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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.
A = the fair market value of one share of the Company's
Common Stock.
B = Warrant price (as adjusted to the date of such
calculations).
2.
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(b) For purposes of this Section, fair market value of
the Company's Common Stock shall mean the average of the closing bid and asked
prices of the Company's Preferred Stock quoted in the Over-The-Counter Market
Summary or the closing price quoted on any exchange on which the Preferred
Stock is listed, whichever is applicable, as published in the Western Edition
of The Wall Street Journal for the ten trading days prior to the date of
determination of fair market value. If the Preferred Stock is not traded Over-
The-Counter or on an exchange, the fair market value shall be the price per
share which the Company could obtain from a willing buyer for shares sold by
the Company from authorized but unissued shares, as such price shall be agreed
by the Company and the Holder.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may
be issued upon the exercise of the rights represented by this Warrant and
Common Stock issuable upon conversion of the Preferred Stock 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 the Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of shares of
its Preferred Stock (and Common Stock issuable upon conversion thereof) to
provide for the exercise of the right represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable upon the exercise of the Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) RECLASSIFICATION OR MERGER. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as
the case may be, shall execute a new Warrant (in form and substance reasonably
satisfactory to the holder of this Warrant) providing that the holder of this
Warrant shall have the right to exercise such new Warrant and upon such
exercise to receive, in lieu of each share of Preferred Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of one share of Preferred Stock. Such new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Paragraph 4. The provisions
of this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) SUBDIVISIONS OR COMBINATION OF SHARES. If the Company
at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Preferred Stock, the Warrant Price and the number of
Shares issuable upon exercise hereof shall be proportionately adjusted.
3.
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(c) STOCK DIVIDENDS. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend payable in
shares of Preferred Stock (except any distribution specifically provided for in
the foregoing subparagraphs (a) and (b)), then the Warrant Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by
a fraction (a) the numerator of which shall be the total number of shares of
Preferred Stock outstanding immediately prior to such dividend or distribution,
and (b) the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately after such dividend or distribution and
the number of Shares subject to this Warrant shall be proportionately adjusted.
(d) NO IMPAIRMENT. The Company 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 the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Paragraph 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights
of the holder of this Warrant against impairment.
(e) NOTICES OF RECORD DATE. In the event of any taking by
the Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed merger or
consolidation of the Company with or into any other corporation, or any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
Company, the Company shall mail to the holder of the Warrant, at least ten (10)
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.
5. FRACTIONAL SHARES. No fractional shares of Preferred Stock
will be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Warrant Price then in effect.
6. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR
SHARES OF PREFERRED STOCK.
(a) COMPLIANCE WITH SECURITIES ACT. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant, the shares of
Preferred Stock to be issued upon exercise hereof and the Common Stock to be
issued upon conversion of such Preferred Stock are being acquired for
investment and that such holder will not offer, sell or otherwise dispose of
this Warrant or any shares of Preferred Stock to be issued upon exercise hereof
(or Common Stock issued upon conversion of the Preferred Stock) except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Act") and in compliance with the provisions of the legend
set forth below. This Warrant and all shares of Preferred Stock issued
4.
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upon exercise of this Warrant (unless registered under the Act) shall be
stamped or imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (ii) AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO
THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED.
(b) DISPOSITION OF WARRANT AND SHARES. With respect to
any offer, sale or other disposition of this Warrant or any shares of Preferred
Stock acquired pursuant to the exercise of this Warrant (or Common Stock issued
upon conversion of such Preferred Stock) prior transfer of the Warrant or
stock, as applicable, the holder hereof and each subsequent holder of the
Warrant or stock, as applicable, agrees to give written notice to the Company
prior thereto, describing briefly the manner thereof, together with a written
opinion of such holder's counsel, if reasonably requested by the Company, to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal
or state law then in effect) of this Warrant or such shares of Preferred Stock
or Common Stock and indicating whether or not under the Act certificates for
this Warrant or such shares of Preferred Stock or Common Stock to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to insure compliance with the Act.
Each certificate representing this Warrant or the shares of Preferred Stock or
Common Stock thus transferred (except a transfer pursuant to Rule 144) shall
bear a legend as to the applicable restrictions on transferability in order to
insure compliance with the Act, unless in the aforesaid opinion of counsel for
the holder and the opinion of counsel to the Company, such legend is not
required in order to insure compliance with the Act. Nothing herein shall
restrict the transfer of this Warrant or any portion hereof by the initial
holder hereof to any partnership affiliated with the initial holder, or to any
partner of any such partnership provided such transfer may be made in
compliance with applicable federal and state securities laws. The Company may
issue stop transfer instructions to its transfer agent in connection with the
foregoing restrictions.
7. RIGHTS AS SHAREHOLDERS; INFORMATION.
7.1 SHAREHOLDER RIGHTS. No holder of the Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise thereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
5.
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7.2 FINANCIAL STATEMENTS AND INFORMATION. The Company
shall deliver to the registered holder hereof (i) within 120 days after the end
of the fiscal year of the Company, a consolidated balance sheet of the Company
as of the end of such year and a consolidated statement of income, retained
earnings and cash flows for such year, which year-end financial reports shall
be in reasonable detail and certified by independent public accountants of
nationally recognized standing selected by the Company, and (ii) within 45 days
after the end of each fiscal quarter other than the last fiscal quarter,
unaudited consolidated statements of income, retained earnings and cash flows
for such quarter and a consolidated balance sheet as of the end of such
quarter. In addition, the Company shall deliver to the registered holder hereof
any other information or data provided to the shareholders of the Company.
8. REGISTRATION RIGHTS. The holder hereof and Company agree the
holder of this Warrant (or any registered transferee thereof pursuant to
Section 6 hereof) shall be entitled to participate in the registration rights
with respect to the Investors Rights Agreement (as hereinafter defined), that
the holder hereof shall be deemed an "Holder" and that all shares of Common
Stock issued upon conversion of the Preferred Stock subject to this Warrant
shall deemed "Registrable Securities" as such terms are defined in the
Investors Rights Agreement (as defined herein) and shall be subject to the same
terms and conditions with respect to the registration and sale of such shares
as set forth in Section 1 of that certain BioStar, Inc. Investor Rights
Agreement dated June 17, 1992 (the "Investors Rights Agreement"), by and among
the Company and those certain Investors identified therein.
8.1 TRANSFER OF REGISTRATION RIGHTS. The registration
rights of the holder under this Section 9 may be transferred to any transferee
of the Warrantholder provided that the Company is given written notice by the
holder of this Warrant at the time of such transfer stating the name and
address of the transferee and identifying the Registrable Securities with
respect to which the rights under this Section 9 are being assigned.
Notwithstanding the foregoing and anything to the contrary contained herein or
in the Investors Rights Agreement, the holder hereof may transfer the
registration rights granted in connection with this Warrant only to affiliated
Limited Partnerships of the holder hereof.
9. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and
delivered on the basis of the following:
(a) This Warrant has been duly authorized and executed by
the Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Preferred Stock has been duly authorized and
reserved for issuance by the Company and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the shares of Preferred Stock and the holders
thereof are as set forth in the Company's Certificate of Incorporation, as
amended, a true and complete copy of which has been delivered to the original
Warrantholder;
6.
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(d) The shares of Common Stock issuable upon conversion
of the Shares have been duly authorized and reserved and, when issued in
accordance with the terms of the Company's Certificate of Incorporation, as
amended, will be validly issued, fully paid and nonassessable; and
(e) The execution and delivery of this Warrant are not,
and the issuance of the Shares upon exercise of this Warrant in accordance with
the terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or by-laws, do not (i) contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person.
10. AMENDMENT OF CONVERSION RIGHTS. During the term of this
Warrant, the Company agrees that it shall not amend its Certificate of
Incorporation without the prior written consent of the holder or holders
entitled to purchase a majority of the Common Stock upon conversion of the
Series A, Series B and Series C Preferred Stock as a result of such amendment
any of the conversion rights, including without limitation the conversion price
or antidilution protection privileges, of the Preferred Stock would be
affected.
11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefore on the signature page of this
Warrant.
13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company relating to the Preferred Stock issuable upon the
exercise of this Warrant shall survive the exercise and termination of this
Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof. The Company
will, at the time of the exercise of this Warrant, in whole or in part, upon
request of the holder hereof but at the Company's expense, acknowledge in
writing its continuing obligation to the holder hereof in respect of any rights
(including, without limitation, any right to registration of the shares of
Registrable Securities) to which the holder hereof shall continue to be
entitled after such exercise in accordance with this Warrant; provided, that
the failure of the holder hereof to make any such request shall not affect the
continuing obligation of the Company to the holder hereof in respect of such
rights.
7.
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14. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to
the holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
16. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS
OF THE STATE OF CALIFORNIA.
BIOSTAR, INC.
By: /s/ Teresa W. Ayers
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Title: Teresa W. Ayers
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Address: 5766 Central Avenue
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Boulder Colorado 80301
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Date: November 2, 1992
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EXHIBIT A
NOTICE OF EXERCISE
To:
1. The undersigned hereby elects to purchase __________ shares of
Series ___ Preferred Stock of _________________________ Corporation pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
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(Signature)
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(Date)
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EXHIBIT A-1
NOTICE OF EXERCISE
To:
1. Contingent upon and effective immediately prior to the closing
(the "Closing") of the Company's public offering contemplated by the
Registration Statement of Form S-____, filed _______________, 19___, the
undersigned hereby elects to purchase _________________ shares of Series ___
Preferred Stock of the Company (or such lesser number of shares as may be sold
on behalf of the undersigned at the Closing) pursuant to the terms of the
attached Warrant.
2. Please deliver to the custodian for the selling shareholders a
stock certificate representing such _________________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $____________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such
shares, the undersigned agrees to deliver the difference to the Company prior
to the Closing.
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(Signature)
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(Date)