SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LJL BIOSYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
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and 0-11.
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[LOGO]
405 TASMAN DRIVE
SUNNYVALE, CA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of LJL BioSystems,
Inc., a Delaware corporation (the "Company"), will be held at the Company's
headquarters, located at 405 Tasman Drive, Sunnyvale, California 94089 on
Tuesday, June 1, 1999, at 1:00 p.m., local time, for the following purposes:
1. To elect directors of the Company to serve for a term expiring at the
Annual Meeting of Stockholders held in the second year following the year
of their election or until their respective successors are elected and
qualified;
2. To approve an amendment of the Company's 1997 Stock Plan to increase the
aggregate number of shares of Common Stock authorized for issuance under
such plan by 450,000 shares, to 2,520,750 shares;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending
December 31, 1999; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are
more fully described in the Proxy Statement which is attached and made a part of
this Notice.
The Board of Directors has fixed the close of business on Tuesday, April 13,
1999 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, you are urged to mark, date, sign and return the enclosed proxy card as
promptly as possible in the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Annual Meeting. If you send
in your proxy card and then decide to attend the Annual Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
[LOGO]
Mark B. Weeks
SECRETARY
Sunnyvale, California
April 16, 1999
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE
ADDED EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND
SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
[LOGO]
405 TASMAN DRIVE
SUNNYVALE, CA 94089
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of LJL BioSystems, Inc., a Delaware corporation
(the "Company"), of proxies in the enclosed form for use in voting at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at the Company's
headquarters, located at 405 Tasman Drive, Sunnyvale, California, on Tuesday,
June 1, 1999, at 1:00 p.m., local time, and any adjournment or postponement
thereof.
This Proxy Statement, the enclosed proxy card and the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1998, including
financial statements, were first mailed to stockholders entitled to vote at the
meeting on or about April 16, 1999.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company, Attention:
Robert T. Beggs, a written notice of revocation or a duly executed proxy bearing
a later date, or by attending the Annual Meeting and voting in person.
RECORD DATE; VOTING SECURITIES
The close of business on Tuesday, April 13, 1999 has been fixed as the
record date (the "Record Date") for determining the holders of shares of Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting. At
the close of business on the Record Date, the Company had approximately
12,592,045 shares of Common Stock outstanding and held of record by
approximately 103 stockholders and approximately 450 beneficial owners.
VOTING AND SOLICITATION
Each outstanding share of Common Stock on the Record Date is entitled to one
vote on all matters. Shares of Common Stock may not be voted cumulatively.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's transfer agent. The Inspector will also determine whether or not a
quorum is present. The nominees for election as directors at the Annual Meeting
will be elected by a plurality of the votes of the shares of Common Stock
present in person or represented by proxy at the meeting. All other matters
submitted to the stockholders will require the affirmative vote of a majority of
shares present in person or represented by proxy at a duly held meeting at which
a quorum is present as required under Delaware law for approval of proposals
presented to stockholders. In general, Delaware law also provides that a quorum
consists of a majority of the shares entitled to vote and present in person or
represented by proxy. The Inspector will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum and as negative votes for purposes of determining the approval of any
matter submitted to the stockholders for a vote. Any proxy which is returned
using the form of proxy enclosed and which is not marked as to a particular item
will be voted FOR the election of directors, FOR the amendment to the 1997 Stock
Plan, FOR ratification of the appointment of the designated independent auditors
and as the proxy holders deem advisable on other matters that may come before
the meeting, as the case may be with respect to the item not marked. If a broker
indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to
certain shares to vote on a particular matter ("broker non-votes"), those shares
will not be considered as present with respect to that matter. The Company
believes that the tabulation procedures to be followed by the Inspector are
consistent with the general statutory requirements in Delaware concerning voting
of shares and determination of a quorum.
The solicitation of proxies will be conducted by mail and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy solicitation materials for the Annual Meeting and reimbursements
paid to brokerage firms and others for their expenses incurred in forwarding
solicitation materials regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
telephonically or by facsimile through its officers, directors and employees,
none of whom will receive additional compensation for assisting with the
solicitation.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company currently has authorized seven (7) directors. In accordance with
the terms of the Company's Fourth Amended and Restated Certificate of
Incorporation, and effective at the time the Company became a Listed Corporation
within the meaning of Section 301.5 of the California Corporations Code, the
terms of office of the Board of Directors were divided into two classes: Class
I, whose term will expire at the annual meeting of stockholders to be held in
1999 and Class II, whose term will expire at the annual meeting of stockholders
to be held in 2000. The Class I directors (the "Class I Directors") are Galina
Leytes, George W. Dunbar, Jr. and Daniel S. Janney, and the Class II directors
(the "Class II Directors") are Lev J. Leytes, Michael F. Bigham, John G. Freund,
M.D. and John D. Diekman, Ph.D. At each annual meeting of stockholders after the
Annual Meeting, the successors to directors whose terms will then expire will be
elected to serve from the time of election and qualification until the second
annual meeting following election. Any additional directorships resulting from
an increase in the number of directors will be distributed among the two classes
so that, as nearly as possible, each class will consist of one-half of the
directors.
NOMINEES
At the Annual Meeting, the stockholders will elect three (3) directors, each
to serve until the next annual meeting at which elections of the class of
directors to which such director belongs are held, or, in each case, until their
respective successors are elected and qualified. Accordingly, the Class I
Directors will be elected to serve until the annual meeting of stockholders to
be held in 2001. In the event any nominee is unable or unwilling to serve as a
director at the time of the Annual Meeting, the proxies may be voted for the
balance of those nominees named and for any substitute nominee designated by the
present Board or the proxy holders to fill such vacancy, or for the balance of
the nominees named without nomination of a substitute, or the size of the Board
may be reduced in accordance with the Bylaws of the Company. The Board has no
reason to believe that any of the persons named below will be unable or
unwilling to serve as a nominee or as a director if elected.
Assuming a quorum is present, the Class I nominees receiving the highest
number of affirmative votes of shares entitled to be voted for them will be
elected as Class I directors of the Company to serve until the next annual
meeting at which elections of Class I directors are held or until their
respective successors are elected and qualified.
2
The names of the Directors, their ages as of December 31, 1998, and certain
other information about them are set forth below:
DIRECTOR
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION SINCE CLASS
- -------------------------------------------- --- -------------------------------------------- ----------- -----
Lev J. Leytes............................... 43 President, Chief Executive Officer and 1988 II
Chairman of the Board of Directors
Galina Leytes............................... 44 Executive Vice President and Director 1988 I
George W. Dunbar, Jr.(1).................... 51 Director 1995 I
Daniel S. Janney(1)......................... 32 Director 1997 I
Michael F. Bigham(2)........................ 40 Director 1997 II
John G. Freund, M.D.(2)..................... 44 Director 1997 II
John D. Diekman, Ph.D....................... 56 Director 1999 II
- ------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
LEV J. LEYTES is a co-founder of the Company and has been its President,
Chief Executive Officer and Chairman of the Board of Directors since inception.
Prior to founding the Company, Mr. Leytes worked in various technical and
management positions at Beckman Instruments, Inc., a life sciences company, and
Molecular Devices Corporation, a bioanalytical instrumentation company. Mr.
Leytes holds an M.S. in engineering from the Moscow Engineering Institute. Mr.
Leytes is the spouse of Galina Leytes.
GALINA LEYTES is a co-founder of the Company and has been Vice President and
a director since inception, and was promoted to Executive Vice President in
January 1996. Ms. Leytes previously served as the Company's Chief Financial
Officer and Secretary from inception to December 1997. Prior to founding the
Company, Ms. Leytes managed the information systems group at Stanford
University, was a consultant in management information systems, and was a senior
programmer at Charles Schwab & Co., Inc. She holds an M.S. in engineering from
the Kiev Engineering Institute. Ms. Leytes is the spouse of Lev J. Leytes.
GEORGE W. DUNBAR, JR. has been a director of the Company since February
1995. Mr. Dunbar has been the President, Chief Executive Officer and a director
of Metra BioSystems, Inc., a medical device company specializing in products for
the detection and management of metabolic bone and joint diseases, since July
1991. He is also a member of the Board of Directors of DepoTech Corporation, a
drug delivery company, and Sonus Pharmaceuticals, Inc., a medical diagnostic
ultrasound company. Mr. Dunbar holds a B.S. in electrical engineering and an
M.B.A. from Auburn University.
DANIEL S. JANNEY has been a director of the Company since June 1997. Mr.
Janney is a Principal of Alta Partners, a venture capital company, which he
joined in April 1996. Prior to joining Alta Partners, Mr. Janney served as a
Vice President in the health care investment banking group of Montgomery
Securities (now NationsBanc Montgomery Securities LLC) from January 1994 to
April 1996 and as an Associate at Montgomery Securities from March 1993 to
December 1993. From June 1990 to February 1993, Mr. Janney was an Associate at
Bankers Trust Company in the leveraged buyout/private equity group. Mr. Janney
holds a B.A. from Georgetown University and an M.B.A. from the Anderson School
at the University of California, Los Angeles.
MICHAEL F. BIGHAM has been a director of the Company since June 1997. Mr.
Bigham has been the President, Chief Executive Officer and a director of Coulter
Pharmaceutical, Inc., a drug development company ("Coulter"), since July 1996.
Prior to joining Coulter, Mr. Bigham served as Executive Vice President of
Operations from April 1994 to June 1996, Chief Financial Officer from April 1989
to
3
June 1996, and Vice President of Corporate Development from July 1988 to March
1992 at Gilead Sciences, Inc., a biotechnology company. Previously, Mr. Bigham
was Co-head of Healthcare Investment Banking for Hambrecht & Quist LLC, an
investment banking firm. Mr. Bigham is also a member of the Board of Directors
of Datron Systems, Inc., an electronics company, and several privately-held
companies. Mr. Bigham received a B.S. degree in commerce with distinction from
the University of Virginia and an M.B.A. from the Stanford University Graduate
School of Business.
JOHN G. FREUND, M.D. has been a director of the Company since June 1997. Dr.
Freund has been Managing Director of the General Partner of Skyline Venture
Partners, L.P., a venture capital firm, since October 1997. He served as
Managing Director in the Alternative Assets Group of Chancellor LGT Asset
Management, Inc. (now AMVESCAP PLC) from August 1995 to September 1997. In 1995,
Dr. Freund co-founded Intuitive Surgical Devices, Inc., a privately-held medical
device company. From July 1988 through December 1994, Dr. Freund was employed at
Acuson Corporation, a medical equipment company, where he was Vice
President-Corporate Development and later Executive Vice President. Previously,
he was a partner in Morgan Stanley Venture Partners, a venture capital firm, and
co-founded the healthcare group in the corporate finance department of Morgan
Stanley & Co., Inc. Dr. Freund holds a B.A. from Harvard College, an M.D. from
Harvard Medical School and an M.B.A. from Harvard Business School, where he was
a Baker Scholar and won what is now called the John L. Loeb Fellowship for
excellence in finance.
JOHN D. DIEKMAN, PH.D. has been a director of the Company since January
1999. Dr. Diekman has been a managing partner of Bay City Capital, a life
sciences merchant bank since 1997 and has also been Chairman of Affymetrix,
Inc., a company developing and marketing DNA chip technology for the genetic
analysis, genomics, clinical diagnostics and research instrumentation markets
since 1995. Until April 1997, he was also Chief Executive Officer of Affymetrix.
Over the past ten years, Dr. Diekman has served as Chairman and Managing
Director of Affymax N.V., President of Monclonal Antibodies Inc., President of
Salutar, and he spent sixteen years at Zoecon Corporation, the last three of
which as President and Chief Executive Officer. Dr. Diekman is a director of
Quidel Corporation, a diagnostic company, Metabolex, Inc., a private
biotechnology diabetes company, and Hilltop Laboratories, a consumer testing and
clinical research site management organization. He is Chairman of the Board of
Molecular Applications Group, a private bioinformatics company. He holds an A.B.
in chemistry from Princeton University and a Ph.D. in chemistry from Stanford
University. He is Chairman of the Board of Trustees of The Scripps Research
Institute in La Jolla and a member of the Board of Directors of The Tech Museum
of Innovation in San Jose. He is a member of the advisory board to the
Department of Chemistry of Princeton University.
EXECUTIVE OFFICERS
Set forth below is certain information describing the Company's other
executive officers:
NAME AGE POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
Anthony H. Bautista.................................. 43 Vice President of Manufacturing Operations
Robert T. Beggs...................................... 50 Vice President of Finance and Administration
William G. Burton, Ph.D.............................. 58 Chief Technology Officer
Douglas N. Modlin, Ph.D.............................. 46 Vice President of Instrumentation Systems Research
and Development
John C. Owicki, Ph.D................................. 51 Vice President of Research
James S. Richey...................................... 45 Senior Vice President of Sales and Marketing
Larry Tannenbaum..................................... 47 Chief Financial Officer and Senior Vice President
4
ANTHONY H. BAUTISTA joined the Company in November 1991 as Manufacturing
Operations Manager, and was promoted to Director of Manufacturing Operations in
December 1993 and Vice President of Manufacturing Operations in May 1996. Prior
to joining the Company, Mr. Bautista held various management positions in the
manufacturing divisions of Molecular Devices Corporation, a bioanalytical
instrumentation company, and Hewlett-Packard Company, a computer and electronics
company. Mr. Bautista holds an A.A. in electronic technology from the College of
San Mateo and a B.S. in electrical engineering from San Jose State University.
ROBERT T. BEGGS joined the Company in November 1992 as Controller, and was
promoted to Director of Finance and Administration in December 1994 and Vice
President of Finance and Administration in May 1996. Prior to joining the
Company, Mr. Beggs was the Controller of Sequoia-Turner Corporation, a medical
instruments company, acquired in 1991 by Abbott Laboratories, a pharmaceutical
and diagnostics company. Mr. Beggs held several financial management positions
at G.D. Searle & Co., a pharmaceutical company and a wholly-owned subsidiary of
Monsanto Company, Siemens AG, a diversified electronics company, and Tandem
Computer (Compaq), a diversified computer and electronics company. Mr. Beggs
holds a B.S. in business administration from Nichols College and an M.B.A. from
the University of Massachusetts, Amherst.
WILLIAM G. BURTON, PH.D. joined the Company in March 1996 as Director of
Technology and Business Development, and was promoted to Vice President of
Technology and Business Development in January 1997 and Chief Technology Officer
in August 1997. Dr. Burton was Program Manager, Strategic Market Development for
the BioScience Products Division of Hewlett-Packard Company from September 1994
until March 1996. From January 1993 to September 1994, Dr. Burton was a business
consultant to various biotechnology and pharmaceutical companies. From June 1989
to January 1993, he was a Managing Director of TS/BioDevices, Inc., a
biotechnology systems development company and was responsible for operations and
business development. Previously, Dr. Burton held senior management positions in
biotechnology and health care-related research, product development, marketing
and strategic planning and analysis. He holds a B.S. in biology from California
State University, Long Beach, and an M.S. and Ph.D. in biochemistry from the
University of California at Los Angeles.
DOUGLAS N. MODLIN, PH.D. joined the Company in December 1996 as Senior
Director of Research and Development, and was promoted to Vice President of
Instrumentation Systems Research and Development in October 1997. Prior to
joining the Company, Dr. Modlin was the Manager of Advanced Test Systems
Development at Micro Module Systems, Inc., an electronic integration company,
from November 1995 to December 1996, and was the Associate Technical Director of
Research at Molecular Devices Corporation, a bioanalytical instrumentation
company, from August 1993 to October 1995. From November 1991 to August 1993, he
was the Program Manager of Diagnostic Instrumentation for Affymax NV, a drug
discovery company. Dr. Modlin holds a B.S. in electrical engineering from the
California Polytechnic State University, San Luis Obispo, and an M.S. and Ph.D.
in electrical engineering from Stanford University.
JOHN C. OWICKI, PH.D. joined the Company in February 1997 as Senior Director
of Cell and Molecular Applications, was promoted to Vice President of Cell and
Molecular Applications in May 1998, and became Vice President of Research in
October 1998. Prior to joining the Company, Dr. Owicki was at Molecular Devices
Corporation, a bioanalytical instrumentation company, from September 1987 to
February 1997, most recently as Associate Technical Director. From September
1979 to September 1987 he was on the faculty of the University of California,
Berkeley, as Assistant and then Associate Professor of Biophysics. Dr. Owicki
holds a B.S. and M.S. in biochemistry from Michigan State University, an M.S.
and Ph.D. in chemistry from Cornell University and held a postdoctoral
fellowship in chemistry at Stanford University.
JAMES S. RICHEY joined the company in February of 1998 as Senior Vice
President of Sales and Marketing. Prior to joining the Company, Mr. Richey was
Vice President, Indirect Channels at PerSeptive
5
BioSystems, Inc, a biotechnology tools provider, from January 1996 to February
1998. Mr. Richey held various management positions including his last position
of Vice President of Global Sales and Marketing for Biosensor AB, an analytical
research technology provider from September 1989 to January 1996. Prior to that,
Mr. Richey held various positions in sales, marketing and research and
development in various divisions of Pharmacia Biotech Inc., a subsidiary of
Pharmacia Biotech AB. Mr. Richey holds a B.S. in Biochemistry from Rutgers
University.
LARRY TANNENBAUM joined the Company in November 1998 as Chief Financial
Officer and Senior Vice President. From August 1998 to October 1998, Mr.
Tannenbaum served as an independent consultant. Mr. Tannenbaum was Vice
President and Chief Financial Officer at SinoGen, a privately held
pharmaceutical company, from October 1997 to August 1998. From September 1995 to
October 1997, Mr. Tannenbaum was Vice President, Finance and Administration and
Chief Financial Officer at ArthroCare, a medical device company. Mr. Tannenbaum
was Vice President, Finance and Administration and Chief Financial Officer at
Target Therapeutics, a developer of minimally invasive neurological devices,
from May 1992 to May 1995. Prior to that, Mr. Tannenbaum held various financial
management positions at Tandem Computer (Compaq), Alpha Partners, Gould/AMI
(American Microsystem) and Intel Corporation. Mr. Tannenbaum holds a B.A. in
finance and a B.S. in political science from Arizona State University and an
M.B.A. in finance from the University of Utah.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the period from January 1, 1998 through December 31, 1998 (the "last
fiscal year"), the Board met five times and Messrs. Bigham and Dunbar attended
three of the five meetings; no other director attended fewer than 75% of the
aggregate number of meetings of the Board and meetings of the committees of the
Board on which he or she serves. The Board has an Audit Committee and a
Compensation Committee. The Board does not have a nominating committee or a
committee performing the functions of a nominating committee. Although there are
no formal procedures for stockholders to nominate persons to serve as directors,
the Board will consider nominations from stockholders, which should be addressed
to Robert T. Beggs at the Company's address set forth above.
The Audit Committee consists of Messrs. Dunbar and Janney, two of the
Company's non-employee directors, and did not hold any separate meetings during
the last fiscal year. Its functions are to review the annual audit and meet with
the Company's independent accountants to review the Company's internal
accounting procedures and financial management practices. Final audited results
for the fiscal year ended December 31, 1998, were reviewed and discussed at a
regular board meeting by the Board and the Company's independent accountants,
PricewaterhouseCoopers LLP.
The Compensation Committee consists of Mr. Bigham and Dr. Freund, two of the
Company's non-employee directors, and held seven separate committee meetings as
well as additional meetings together with the full Board during the last fiscal
year. Its functions are to recommend compensation and benefits for the Company's
President and Chief Executive Officer and the Company's other executive officers
to the Board of Directors, review general policy relating to compensation and
benefits of employees of the Company, and administer the Company's Stock Plans.
COMPENSATION OF DIRECTORS
The Company does not currently provide cash compensation to directors for
services in such capacity, but directors may be reimbursed for certain expenses
in connection with attendance at Board of Directors and committee meetings.
Directors are eligible to participate in the Company's Stock Plans and in 1998,
employee directors were eligible to participate in the Company's 1998 Employee
Stock Purchase Plan and non-employee directors were eligible to participate in
the 1998 Directors' Stock Option Plan (the "Directors' Plan"). The Directors'
Plan provides that each person who first becomes a nonemployee director of the
Company after the date of its initial public offering shall be granted a
nonstatutory stock
6
option to purchase 20,000 shares of Common Stock (the "First Option") on the
date on which the optionee first becomes a nonemployee director of the Company.
Dr. Diekman was granted a First Option in January 1999. On the date of each
annual meeting of the Company's stockholders, including this meeting, each
nonemployee director (including nonemployee directors who were not granted a
First Option prior to the date of such annual meeting) shall be granted an
option to purchase 5,000 shares of Common Stock (a "Subsequent Option") if, on
such date, he or she has served on the Company's Board of Directors for at least
six months.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF ALL NOMINEES NAMED ABOVE.
7
PROPOSAL NO. 2
AMENDMENT OF THE 1997 STOCK PLAN
At the Annual Meeting, the Company's stockholders are being asked to approve
the amendment of the Company's 1997 Stock Plan (the "1997 Plan") and the
reservation of 450,000 additional shares of Common Stock for issuance
thereunder. The following is a summary of principal features of the 1997 Plan.
The summary, however, does not purport to be a complete description of all the
provisions of the 1997 Plan. Any stockholder of the Company who wishes to obtain
a copy of the actual plan document may do so upon written request to Robert T.
Beggs at the Company's principal offices at 405 Tasman Drive, Sunnyvale,
California 94089.
GENERAL
The Company's 1997 Plan was adopted by the Board of Directors in March,
1997. Under the 1997 Plan, 2,070,750 shares of Common Stock are reserved for
issuance thereunder. In connection with the amendment of the 1997 Plan, the
Board of Directors has reserved 450,000 additional shares of Common Stock for
issuance thereunder. The Board of Directors believes that, in order to attract
qualified employees, officers, consultants and directors to the Company and to
provide incentives to its current employees, officers, consultants and
directors, it is necessary to grant options to purchase Common Stock to such
persons pursuant to the 1997 Plan. Accordingly, the stockholders are being asked
to approve the amendment of the 1997 Plan.
The 1997 Plan provides for the granting to employees of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and for the granting of nonstatutory stock options to
employees, consultants and directors. See "United States Federal Income Tax
Information" below for information concerning the tax treatment of both
incentive stock options and nonstatutory stock options.
As of December 31, 1998, 34,678 shares had been issued upon exercise of
options granted under the 1997 Plan, options to purchase 1,256,055 shares were
outstanding and 752,217 shares remained available for future grant. The
following table sets forth information with respect to the stock options granted
to the Named Executive Officers, all current executive officers as a group, all
current directors who are not
8
executive officers as a group, and all employees and consultants (including all
current officers who are not executive officers) as a group under the 1997 Plan
as of December 31, 1998.
NUMBER OF SHARES SUBJECT
TO WEIGHTED AVERAGE
OPTIONS GRANTED UNDER EXERCISE PRICE
NAME THE 1997 STOCK PLAN PER SHARE
- ------------------------------------------------------------- -------------------------- -------------------------
Lev J. Leytes ............................................... 77,104 $ 4.97
President, Chief Executive Officer
and Chairman of the Board
Galina Leytes ............................................... 4,823 $ 2.20
Executive Vice President and
Director
William G. Burton, Ph.D. .................................... 55,691 $ 3.45
Chief Technology Officer
Doug N. Modlin, Ph.D. ....................................... 104,597 $ 4.18
Vice President of Instrumentation Systems
Research and Development
James S. Richey ............................................. 147,500 $ 5.17
Vice President of Sales and Marketing
All current executive officers as a group (9 persons)........ 671,856 $ 3.92
All directors who are not executive officers (5 persons)..... 20,000 $ 1.50
All employees and consultants (including all current officers
who are not executive officers) as a group (84 persons).... 1,290,733 $ 3.29
The 1997 Plan is not a qualified deferred compensation plan under Section
401(a) of the Code, and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
RESERVATION OF SHARES UNDER THE 1997 PLAN
The Board of Directors believes that in order to attract and retain highly
qualified employees, consultants and directors and to provide such employees,
consultants and directors with adequate incentive through their proprietary
interest in the Company, it is necessary to reserve 450,000 additional shares of
Common Stock for issuance thereunder. At the Annual Meeting of Stockholders, the
stockholders are being asked to approve the amendment of the 1997 Plan and the
reservation of 450,000 additional shares of Common Stock for issuance
thereunder.
PURPOSE
The purposes of the 1997 Plan are to attract and retain the best available
personnel for the Company, to provide additional incentive to the employees,
officers, consultants and directors of the Company, and to promote the success
of the Company's business.
ADMINISTRATION
If permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and by the legal requirements relating to the
administration of incentive stock option plans, if any, of applicable securities
laws and the Code (collectively, the "Applicable Laws"), grants under the 1997
Plan may (but need not) be made by different administrative bodies with respect
to employees or consultants who are also officers or directors and employees who
are neither directors nor officers.
9
With respect to grants of options to employees or consultants who are also
officers or directors of the Company, grants under the 1997 Plan shall be made
by (A) the Board of Directors, if the Board of Directors may make grants under
the 1997 Plan in compliance with Rule 16b-3 of the Exchange Act and Section
162(m) of the Code as the latter applies so as to qualify grants of options to
"covered employees" as performance-based compensation, or (B) a committee
designated by the Board of Directors to make grants under the 1997 Plan, which
committee shall be constituted in such a manner as to permit grants under the
1997 Plan to comply with Rule 16b-3, to qualify grants of options to "covered
employees" as performance-based compensation under Section 162(m) of the Code
and otherwise so as to satisfy the Applicable Laws.
With respect to grants of options to employees or consultants who are
neither directors nor officers of the Company, the 1997 Plan will be
administered by (A) the Board of Directors or (B) a committee designated by the
Board of Directors, which committee will be constituted in such a manner so as
to satisfy the Applicable Laws. The Board of Directors or the committee
designated by the Board of Directors to administer the 1997 Plan is referred to
in this Proxy Statement as the "Administrator." The Administrator receives no
additional compensation for its services in connection with the administration
of the 1997 Plan.
ELIGIBILITY
The 1997 Plan provides that options and rights to purchase Common Stock of
the Company (a "Stock Purchase Right") may be granted to employees (including
officers and directors who are also employees) and consultants of the Company
(including non-employee directors). Incentive stock options may be granted only
to employees. The Administrator, upon the recommendation of management, selects
the optionees and determines the number of shares and the exercise price to be
associated with each option. In making such determination, the Administrator
takes into account the duties and responsibilities of the optionee, the value of
the optionee's services, the optionee's present and potential contribution to
the success of the Company, and other relevant factors. See also "Stock Purchase
Rights" below. As of December 31, 1998, there were approximately 80 employees,
officers, consultants and directors eligible to participate in the 1997 Plan.
The 1997 Plan provides that the maximum number of shares of Common Stock
which may be granted under options to any one employee under the 1997 Plan
during any fiscal year is 2,000,000, subject to adjustment as provided in the
1997 Plan.
TERMS OF OPTIONS AND STOCK PURCHASE RIGHTS
The terms of options and Stock Purchase Rights granted under the 1997 Plan
are determined by the Administrator. Each option is evidenced by a stock option
agreement and each Stock Purchase Right is evidenced by a restricted stock
purchase agreement between the Company and the optionee or purchaser,
respectively, and is subject to the following additional terms and conditions:
(a) EXERCISE OF THE OPTION. The optionee must earn the right to exercise
the option by continuing to work for the Company. The Administrator determines
when options are exercisable. An option is exercised by giving written notice of
exercise to the Company specifying the number of full shares of Common Stock to
be purchased, and by tendering payment of the purchase price to the Company. The
method of payment of the exercise price of the shares purchased upon exercise of
an option is determined by the Administrator.
(b) EXERCISE PRICE. The exercise price of options granted under the 1997
Plan is determined by the Administrator, and must be at least equal to the fair
market value of the shares on the date of grant, in the case of incentive stock
options, based upon the closing price on the Nasdaq Stock Market on the date of
grant. In the case of nonstatutory stock options, the exercise price of options
granted to any person other than a "covered employee" under the 1997 Plan shall
be such price as is determined by the Administrator on the date of grant.
Incentive stock options granted to stockholders owning more than 10% of the
total
10
combined voting power of all classes of the Company's stock (such holders are
referred to as "10% Stockholders") are subject to the additional restriction
that the exercise price on such options must be at least 110% of the fair market
value on the date of the grant. Nonstatutory stock options granted to a "covered
employee" under Section 162(m) of the Code are subject to the additional
restriction that the exercise price on such options must be at least 100% of the
fair market value on the date of grant.
(c) TERMINATION OF EMPLOYMENT. If the optionee's employment or consulting
relationship with the Company is terminated for any reason other than death or
total and permanent disability, options under the 1997 Plan may be exercised not
later than three (3) months (or such other period of time not less than thirty
(30) days as is determined by the Administrator, with such determination in the
case of an incentive stock option being made at the time of grant and not
exceeding three (3) months) after the date of such termination to the extent the
option was exercisable on the date of such termination. In no event may an
option be exercised by any person after the expiration of its term.
(d) DISABILITY. If an optionee is unable to continue his or her employment
or consulting relationship with the Company as a result of his or her total and
permanent disability, options may be exercised within twelve (12) months after
the date of termination and may be exercised only to the extent the option was
exercisable on the date of termination, but in no event may the option be
exercised after its termination date.
(e) DEATH. In the event of the death of an optionee during the period of
continuous service for the Company since the date of grant of the option, or
within thirty (30) days following termination of optionee's continuous service
for the Company, the option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the expiration date of
the term of such option), by optionee's estate or by a person who acquired the
right to exercise the option by bequest or inheritance, but only to the extent
that the right to exercise had accrued at the date of death, or, if earlier, the
date of termination of optionee's continuous service for the Company. To the
extent that optionee was not entitled to exercise the option at the date of
death or termination, as the case may be, or if optionee does not exercise such
option to the extent so entitled within the time specified herein, the option
shall terminate.
(f) OPTION TERMINATION DATE. Incentive stock options granted under the 1997
Plan expire ten years from the date of grant unless a shorter period is provided
in the option agreement. Incentive stock options granted to 10% Stockholders may
not have a term of more than five years.
(g) STOCK PURCHASE RIGHTS. A Stock Purchase Right may be issued either
alone, in addition to, or in tandem with other awards granted under the 1997
Plan and/or cash awards made outside of the 1997 Plan. After the Administrator
determines that it will offer a Stock Purchase Right under the 1997 Plan, it
shall advise the offeree in writing of the terms, conditions and restrictions
related to the offer, including the number of shares of Common Stock that such
person shall be entitled to purchase, the price to be paid, which price shall be
the price determined by the Administrator on the date of offer (which shall not
be less than 100% of the fair market value of the Common Stock in the case of an
offer to a "covered employee" under Section 162(m) of the Code), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
are referred to herein as "Restricted Stock".
Unless the Administrator determines otherwise, the Restricted Stock purchase
agreement shall grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or disability). The purchase price for
the Common Stock repurchased pursuant to the Restricted Stock purchase agreement
shall be the original purchase price paid by the purchaser and may be paid by
cancellation of any indebtedness of
11
the purchaser to the Company. The repurchase option shall lapse at such rate as
the Administrator may determine.
Once the Stock Purchase Right is exercised, the purchaser shall have the
rights equivalent to those of a stockholder, and shall be a stockholder when his
or her purchase is entered upon the records of the duly authorized transfer
agent of the Company.
(h) NONTRANSFERABILITY OF OPTIONS. Stock options and Stock Purchase Rights
are not transferable by the optionee, other than by will or the laws of descent
and distribution, and are exercisable or purchasable only by the optionee or
purchaser, respectively, during his or her lifetime or, in the case of a stock
option, in the event of death, by a person who acquires the right to exercise
the option by bequest or inheritance or by reason of the death of the optionee.
(i) MERGER OR SALE OF ASSETS. In the event of a proposed sale of all or
substantially all of the Company's assets or a merger of the Company with or
into another corporation where the successor corporation issues its securities
to the Company's stockholders, each outstanding option or Stock Purchase Right
shall be assumed or an equivalent option or right shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the successor corporation does not agree to assume the option or Stock
Purchase Right or to substitute an equivalent option or right, in which case
such option or Stock Purchase Right shall terminate upon the consummation of the
merger or sale of assets.
(j) OTHER PROVISIONS. The option agreement and the Restricted Stock
purchase agreement may contain such other terms, provisions and conditions not
inconsistent with the 1997 Plan as may be determined by the Administrator.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split, reverse stock split, stock
dividend, combination or reclassification, is made in the Company's
capitalization that results in an increase or decrease in the number of
outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustment shall be made in the exercise price of each
outstanding option and Stock Purchase Right, the number of shares subject to
each option and Stock Purchase Right, and the annual limitation on grants to
employees, as well as the number of shares available for issuance under the 1997
Plan. In the event of the proposed dissolution or liquidation of the Company,
each option will terminate unless otherwise provided by the Administrator.
AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, alter, suspend or discontinue
the 1997 Plan, but no amendment, alteration, suspension or discontinuation shall
be made that would impair the rights of any holder of a stock option or Stock
Purchase Right under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 of the
Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any 1997 Plan
amendment in such a manner and to such a degree as required.
UNITED STATES FEDERAL INCOME TAX INFORMATION
The following is a brief summary of the U.S. federal income tax consequences
of transactions under the 1997 Plan based on federal income tax laws in effect
on the date of this Proxy Statement. This summary is not intended to be
exhaustive and does not address all matters which may be relevant to a
particular optionee based on his or her specific circumstances. The summary
addresses only current U.S. federal income tax law and expressly does not
discuss the income tax laws of any state, municipality, non-U.S. taxing
jurisdiction or gift, estate or other tax laws other than federal income tax
law. The Company advises
12
all optionees to consult their own tax advisor concerning the tax implications
of option grants and exercises and the disposition of stock acquired upon such
exercises, under the 1997 Plan.
Options granted under the 1997 Plan may be either incentive stock options,
which are intended to qualify for the special tax treatment provided by Section
422 of the Code, or nonstatutory stock options, which will not so qualify. If an
option granted under the 1997 Plan is an incentive stock option, the optionee
will recognize no income upon grant of the incentive stock option and will incur
no tax liability due to the exercise, except to the extent that such exercise
causes the optionee to incur alternative minimum tax. (See discussion below.)
The Company will not be allowed a deduction for federal income tax purposes as a
result of the exercise of an incentive stock option regardless of the
applicability of the alternative minimum tax. Upon the sale or exchange of the
shares more than two years after grant of the option and one year after exercise
of the option by the optionee, any gain will be treated as a long-term capital
gain. If both of these holding periods are not satisfied, the optionee will
recognize ordinary income equal to the difference between the exercise price and
the lower of the fair market value of the Common Stock on the date of the option
exercise or the sale price of the Common Stock. The Company will be entitled to
a deduction in the same amount as the ordinary income recognized by the
optionee. Any gain or loss recognized on a disposition of the shares prior to
completion of both of the above holding periods in excess of the amount treated
as ordinary income will be characterized as long-term capital gain if the sale
occurs more than one year after exercise of the option or as short-term capital
gain if the sale is made earlier. For individual taxpayers, the current U.S.
federal income tax rate on long-term capital gains is 20% (in the case of shares
held more than one year after exercise) whereas the maximum rate on other income
is 39.6%. Capital losses for individual taxpayers are allowed in full against
capital gains plus $3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income at the time he or she is granted a nonstatutory stock option.
However, upon its exercise, the optionee will recognize ordinary income for tax
purposes measured by the excess of the fair market value of the shares over the
exercise price. The income recognized by an optionee who is also an employee of
the Company will be subject to income and employment tax withholding by the
Company by payment in cash by the optionee or out of the optionee's current
earnings. Upon the sale of such shares by the optionee, any difference between
the sale price and the fair market value of the shares as of the date of
exercise of the option will be treated as capital gain or loss, and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than one year from date of exercise.
ALTERNATIVE MINIMUM TAX
The exercise of an incentive stock option may subject the optionee to the
alternative minimum tax under Section 55 of the Code. The alternative minimum
tax is calculated by applying a tax rate of 26% to alternative minimum taxable
income of joint filers up to $175,000 ($87,500 for married taxpayers filing
separately) and 28% to alternative minimum taxable income above that amount.
Alternative minimum taxable income is equal to (i) taxable income adjusted for
certain items, plus (ii) items of tax preference less (iii) an exemption amount
of $45,000 for joint returns, $33,750 for unmarried individual returns and
$22,500 in the case of married taxpayers filing separately (which exemption
amounts are phased out for upper income taxpayers). Alternative minimum tax will
be due if the tax determined under the foregoing formula exceeds the regular tax
of the taxpayer for the year.
In computing alternative minimum taxable income, shares purchased upon
exercise of an incentive stock option are treated as if they had been acquired
by the optionee pursuant to exercise of a nonstatutory stock option. As a
result, the optionee recognizes alternative minimum taxable income equal to the
excess of the fair market value of the Common Stock on the date of exercise over
the option exercise price. Because the alternative minimum tax calculation may
be complex, optionees should consult their own tax advisors prior to exercising
incentive stock options.
13
If an optionee pays alternative minimum tax, the amount of such tax may be
carried forward as a credit against any subsequent year's regular tax in excess
of the alternative minimum tax for such year.
REQUIRED VOTE
The approval of the amendment of the 1997 Plan and the reservation of
450,000 additional shares for issuance thereunder requires the affirmative vote
of the holders of a majority of the shares of the Company's Common Stock present
at the Annual Meeting in person or by proxy and entitled to vote.
RECOMMENDATION OF THE BOARD:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDMENT OF THE 1997 PLAN AND THE RESERVATION OF 450,000 ADDITIONAL
SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER.
14
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as the Company's independent
accountants since 1993 and has been appointed by the Board to continue as the
Company's independent accountants for the fiscal year ending December 31, 1999.
In the event that ratification of this selection of independent accountants is
not approved by a majority of the shares of Common Stock voting at the Annual
Meeting in person or by proxy, the Board will reconsider its selection of
independent accountants.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting. This representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
15
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information that has been provided to the
Company with respect to beneficial ownership of shares of the Company's Common
Stock as of March 1, 1999 for (i) each person who is known by the Company to own
beneficially more than five percent of the outstanding shares of Common Stock,
(ii) each director of the Company, (iii) each of the executive officers named in
the Summary Compensation Table of this Proxy Statement (the "Named Executive
Officers"), and (iv) all directors and executive officers of the Company as a
group.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS NUMBER PERCENT(2)
- ----------------------------------------------------------------------------------------- ---------- -------------
Entities affiliated with AMVESCAP PLC(3) ................................................ 1,538,462 12.2%
11 Devonshire Square
London EC2M 4YR
England
Entities affiliated with Alta Partners(4) ............................................... 975,001 7.7%
One Embarcadero Center
Suite 4050
San Francisco, CA 94111
The Bay City Capital Fund I, L.P.(5). ................................................... 857,143 6.8%
750 Battery Street, Suite 600
San Francisco, CA 94111
The Kaufmann Fund, Inc. ................................................................. 857,143 6.8%
140 E. 45th Street, 43rd Floor
New York, NY 10017
Entities affiliated with Hambrecht & Quist Capital Management, Inc.(6) .................. 969,232 7.7%
50 Rowes Wharf
Boston, MA 02110
Skyline Venture Partners, L.P.(7) ....................................................... 285,714 2.3%
525 University Avenue, Suite 701
Palo Alto, CA 94301
Lev J. Leytes(8)......................................................................... 4,646,381 36.8%
Galina Leytes(9)......................................................................... 4,628,424 36.7%
Douglas N. Modlin, Ph.D.(10)............................................................. 44,684 0.3%
William G. Burton, Ph.D.(11)............................................................. 40,747 0.3%
James S. Richey(12)...................................................................... 26,562 0.2%
Daniel S. Janney(13) .................................................................... 995,001 7.9%
Alta Partners
One Embarcadero Center
Suite 4050
San Francisco, CA 94111
16
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS NUMBER PERCENT(2)
- ----------------------------------------------------------------------------------------- ---------- -------------
John D. Diekman, Ph.D.(14). ............................................................. 857,143 6.8%
The Bay City Capital Fund I, L.P.
750 Battery Street, Suite 600
San Francisco, CA 94111
John G. Freund, M.D.(15) ................................................................ 305,714 2.4%
Skyline Venture Partners, L.P.
525 University Avenue, Suite 701
Palo Alto, CA 94301
Michael F. Bigham(16) ................................................................... 57,500 0.5%
750 Forest Avenue
Palo Alto, CA 94301
George W. Dunbar, Jr.(17) ............................................................... 20,000 0.2%
Metra BioSystems, Inc.
265 North Whisman Road
Mountain View, CA 94043
All directors and executive officers as a group (14 persons)(18)......................... 7,128,454 55.7%
- ------------------------
(1) Except pursuant to applicable community property laws or as indicated in
the footnotes to this table, to the Company's knowledge, each stockholder
identified in the table possesses sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
stockholder.
(2) Applicable percentage of ownership for each stockholder is based on
12,590,420 shares of Common Stock outstanding as of March 1, 1999, together
with applicable options for such stockholders. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC"). The number of shares beneficially owned by a person
includes shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of March 1, 1999.
Such shares issuable pursuant to such options are deemed outstanding for
computing the percentage ownership of the person holding such options but
are not deemed outstanding for the purposes of computing the percentage
ownership of each other person. Unless otherwise indicated, the address of
each of the individuals named above is: c/o LJL BioSystems, Inc., 405
Tasman Drive, Sunnyvale, CA 94089.
(3) This information is based on a Schedule 13G/A filed on February 11, 1999.
AMVESCAP PLC refers herein to the following persons: AMVESCAP PLC, AVZ,
Inc., AIM Management Group Inc., AMVESCAP Group Services, Inc., INVESCO,
Inc., INVESCO North American Holdings, Inc., INVESCO Capital Management,
Inc., INVESCO Funds Group, Inc., INVESCO Management & Research, Inc.,
INVESCO Realty Advisors, Inc., INVESCO (NY) Asset Management, Inc., all of
which are organized under the laws of England and all of which share voting
and dispositive power over all shares held by AMVESCAP PLC.
(4) This information is based on a Schedule 13D filed by Alta Partners on
February 2, 1999. Alta Partners refers herein to the following persons:
Alta Partners, a California company, Alta California Partners, L.P.
("ACP"), a Delaware limited partnership, Alta California Management
Partners, L.P. ("ACMP"), a Delaware limited partnership, Alta Embarcadero
Partners, L.L.C. ("AEP"), a California limited liability company, Jean
Deleage, Garrett Gruener, Guy Nohra and Marino Polestra. According to the
Schedule 13G, Alta Partners has sole voting and dispositive power over
975,001 shares, ACP and ACMP have sole voting and dispositive power over
953,223 shares, AEP has sole voting and
17
dispositive power over 21,778 shares and Messrs. Deleage, Gruener, Nohra
and Polestra share voting and dispositive power over 975,001 shares. Daniel
S. Janney, a director of the Company, is a limited partner of the general
partner of Alta California Partners, L.P., does not share voting and
dispositive power with respect to the shares held by such entity, and
disclaims beneficial ownership of such shares in which he has no pecuniary
interest.
(5) This information is based on a Schedule 13D filed on February 3, 1999. Bay
City Capital Management LLC refers herein to the following persons: The Bay
City Capital Fund I, L.P., a Delaware limited partnership, Bay City Capital
Management LLC, a Delaware limited liability company and Bay City Capital
LLC, a Delaware limited liability company, all of which share voting and
dispositive power over all shares held by Bay City Capital Management LLC.
John D. Diekman, Ph.D., a director of the Company, is a limited partner of
the general partner of The Bay City Capital Fund I, L.P., does not share
voting and dispositive power with respect to the shares held by such
entity, and disclaims beneficial ownership of such shares in which he has
no pecuniary interest.
(6) Based on information provided by Hambrecht & Quist Capital Management,
Inc., the total number consists of 581,539 shares held by H&Q Healthcare
Investors and 387,693 shares held by H&Q Life Sciences Investors.
(7) Consists of 285,714 shares held by Skyline Venture Partners, L.P. John G.
Freund, M.D., a director of the Company, is the Managing Director of
Skyline Venture Management LLC, the general partner of Skyline Venture
Partners, L.P. ("Skyline"). Dr. Freund disclaims beneficial ownership of
shares held by Skyline, except to the extent of any indirect pecuniary
interest in his distributive shares therein.
(8) Consists of 3,955,500 shares jointly held by Lev J. Leytes and Galina
Leytes, 600,000 shares held by Yalta Investments, L.P., 30,000 shares held
by the Dina L. Leytes Irrevocable Trust and 30,000 shares held by the Mary
E. Leytes Irrevocable Trust and 30,881 shares issuable upon exercise of
options exercisable within 60 days of March 1, 1999. Mr. Leytes disclaims
beneficial ownership of the shares held in each trust except to the extent
of his pecuniary interest therein.
(9) Consists of 3,955,500 shares jointly held by Lev J. Leytes and Galina
Leytes, 600,000 shares held by Yalta Investments, L.P., 30,000 shares held
by the Dina L. Leytes Irrevocable Trust and 30,000 shares held by the Mary
E. Leytes Irrevocable Trust and 12,924 shares issuable upon exercise of
options exercisable within 60 days of March 1, 1999. Ms. Leytes disclaims
beneficial ownership of the shares held in each trust except to the extent
of her pecuniary interest therein.
(10) Includes 17,177 shares issuable upon exercise of options exercisable within
60 days of March 1, 1999.
(11) Includes 30,747 shares issuable upon exercise of options exercisable within
60 days of March 1, 1999.
(12) Includes 25,440 shares issuable upon exercise of options exercisable within
60 days of March 1, 1999.
(13) See footnote 4, above. Daniel S. Janney, a director of the Company, is a
limited partner of the general partner of Alta California Partners, L.P.,
does not share voting and dispositive power with respect to the shares held
by such entity, and disclaims beneficial ownership of such shares in which
he has no pecuniary interest. Also includes of 20,000 shares of restricted
stock held by Mr. Janney.
(14) See footnote 5, above. John D. Diekman, Ph.D., a director of the Company,
is a limited partner of the general partner of The Bay City Capital Fund I,
L.P. does not share voting and dispositive power with respect to the shares
held by such entity, and disclaims beneficial ownership of such shares in
which he has no pecuniary interest.
(15) See footnote 7, above. John G. Freund, M.D., a director of the Company, is
the Managing Director of Skyline Venture Management LLC, the general
partner of Skyline Venture Partners, L.P. ("Skyline"). Dr. Freund disclaims
beneficial ownership of shares held by Skyline, except to the extent of any
18
indirect pecuniary interest in his distributive shares therein. Also
includes of 20,000 shares of restricted stock held by Dr. Freund.
(16) Includes 25,000 shares held by a charitable trust formed by Michael F.
Bigham, 15,000 shares held by an irrevocable trust formed by Mr. Bigham,
5,000 shares of restricted stock and 12,500 shares issuable upon exercise
of options exercisable within 60 days of March 1, 1999. Mr. Bigham
disclaims beneficial ownership of the shares held in each trust except to
the extent of his pecuniary interest therein.
(17) Consists of 20,000 shares issuable upon exercise of options exercisable
within 60 days of March 1, 1999.
(18) Includes 2,117,858 shares held by entities affiliated with certain
directors of the Company as described in Notes 4, 5 and 7 and 199,170
shares subject to options exercisable within 60 days of March 1, 1999.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation earned by (a) the individual who
served as the Company's Chief Executive Officer during the fiscal year ended
December 31, 1998; (b) the four other most highly compensated individuals who
served as an executive officer of the Company during the fiscal year ended
December 31, 1998 (collectively, the "Named Executive Officers"); and (c) the
compensation received by each such individual for the Company's preceding fiscal
year.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -------------
COMPENSATION(1) SECURITIES
--------------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#) OTHER
- -------------------------------------------------------- ---------- --------- ------------- ---------
Lev J. Leytes(2) ....................................... 1998 $ 250,000 $ -- 64,800 --
President, Chief Executive Officer and 1997 $250,000 $75,000 12,304 --
Chairman of the Board of Directors
Galina Leytes(2) ....................................... 1998 $ 148,619 $ -- -- --
Executive Vice President and Director 1997 $140,000 $ -- 4,823 --
William G. Burton, Ph.D. ............................... 1998 $ 158,165 $ -- 28,800 --
Chief Technology Officer 1997 $137,437 $36,721 26,891 --
Doug N. Modlin, Ph.D. .................................. 1998 $ 136,168 $ 10,000 71,616 --
Vice President of Instrumentation 1997 $108,935 $ -- 70,481
Systems Research and Development
James S. Richey ........................................ 1998 $ 160,723 $ 20,000 147,500 $ 20,678(3)
Vice President of Sales and Marketing 1997 $ -- $ -- --
- ------------------------
(1) In accordance with SEC rules, other annual compensation in the form of
perquisites and other personal benefits has been omitted where the aggregate
amount of such perquisites and other personal benefits constitutes less than
the lesser of $50,000 or 10% of the total annual salary and bonus for the
Named Executive Officer for the fiscal year.
19
(2) Prior to June 1997, the Company had been taxed as an S corporation for
federal and state income tax purposes. Under the Internal Revenue Code
regulations regarding S corporations, the Company had not been subject to
federal income taxes but had been subject to state income taxes at a reduced
rate. As an S corporation, the Company's stockholders paid taxes on their
share of the Company's taxable income on their individual tax returns. In
June 1997, in connection wit the Company's preferred stock financing, the
Company became subject to the provisions of subchapter C of the Internal
Revenue Code pursuant to which the Company's earnings are taxed for federal
and state income tax purposes at the corporate level. Amounts exclude S
corporation dividends declared and paid in the aggregate amount of
$1,075,000 to Lev J. Leytes and Galina Leytes for the period from January 1
through June 5, 1997 during which the Company operated as a subchapter S
corporation for federal and state income tax purposes.
(3) Represents relocation expenses paid by the Company.
EMPLOYMENT AGREEMENTS
In December 1995, the Company entered into an agreement with Mr. Leytes
providing that, in the case of involuntary termination other than for cause,
salary and benefits will continue to be paid for a period of one year from the
date of termination, all stock options and restricted stock then held by Mr.
Leytes will immediately vest, and a bonus equal to the greater of the actual
bonus owing to Mr. Leytes in the year of termination or 100% of the base salary
Mr. Leytes received for the preceding twelve calendar months will be paid.
In January 1998, the Company entered into an employment agreement with Mr.
Richey providing that in the case of termination by the Company or its successor
within two years from his start date for any reason other than cause, (i) he
would be entitled to receive continuation of his base salary for up to twelve
months following the date of termination of his employment (the "Severance
Period"), provided that if he commenced full-time employment during the
Severance Period, the Company's obligation to pay any severance shall cease at
the time of such employment, and (ii) 15,000 shares of stock subject to his
outstanding options shall immediately vest in full. In connection therewith the
Company extended a home loan in the amount of $190,000 to Mr. Richey. The loan
is secured by the officer's home and shares of the Company's Common Stock. The
loan bears interest at 5.83% per annum and is to be repaid in full on the
earliest of February 15, 2008 or the dates of certain other conditions of the
note. The loan and the interest may be forgiven at a rate of 20% per year
starting on the sixth anniversary of Mr. Richey's employment with the Company,
provided he is still employed by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information regarding stock options
granted to the Named Executive Officers during the fiscal year ended December
31, 1998. In addition, as required by SEC rules,
20
the table sets forth the hypothetical gains that would exist for the options
based on assumed rates of annual compound stock price appreciation during the
option term.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
-------------------------------------------------------------- ASSUMED ANNUAL RATES
NUMBER OF PERCENTAGE OF OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(5)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR(3) ($/SH)(4) DATE 5%($) 10%($)
- ---------------------------------------- ----------- ----------------- ----------------- ----------- ---------- ----------
Lev J. Leytes........................... 64,800(1) 7.2% $ 6.05 5/21/03 $ 108,313 $ 239,344
William G. Burton, Ph.D................. 28,800(1) 3.2 5.50 5/21/08 99,617 252,449
Doug N. Modlin, Ph.D.................... 25,500(1) 2.8 5.50 5/21/08 88,202 223,522
Doug N. Modlin, Ph.D.................... 36,116(2) 4.0 5.50 5/21/08 124,922 316,578
Doug N. Modlin, Ph.D.................... 10,000(1) 1.1 2.50 10/14/08 15,722 39,844
James S. Richey......................... 75,000(2) 8.3 6.00 2/16/08 283,003 717,184
James S. Richey......................... 37,500(1) 4.1 6.00 2/16/08 141,501 358,592
James S. Richey......................... 35,000(1) 3.9 2.50 10/14/08 55,028 139,452
- ------------------------
(1) All of such options granted vest in five years from the vesting commencement
date. Such options expire 10 years (5 years in the case of Mr. Leytes) from
the date of grant, or earlier upon termination of employment. These options
may be vested on an accelerated basis based on milestones set by the
Company's Compensation Committee.
(2) Twenty percent (20%) of such options granted vest one year from the vesting
commencement date, and 1/20th of the total shares vest on each quarterly
anniversary of the vesting commencement date thereafter. Such options expire
10 years from the date of grant, or earlier upon termination of employment.
(3) Based on an aggregate of 904,356 options granted to employees, consultants
and directors during the fiscal year ended December 31, 1998.
(4) The exercise price per share of each option was equal to the estimated fair
value of the Common Stock (110% of the estimated fair value in the case of
Mr. Leytes) on the date of grant as determined by the Board of Directors.
(5) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the SEC. There can be no assurance that the
actual stock price appreciation over the option term will be at the assumed
5% and 10% levels or at any other defined level. Unless the market price of
the Common Stock appreciates over the option term, no value will be realized
from the option grants made to the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN FISCAL 1998 AND YEAR-END OPTION HOLDINGS AND
VALUES
The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on exercise of stock options during the
fiscal year ended December 31, 1998 and the number
21
and value of securities underlying unexercised options held by each of the Named
Executive Officers as of December 31, 1998:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL YEAR-
SHARES FISCAL YEAR-END END(2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
Lev J. Leytes............................ -- -- 12,304 64,800 $ 11,382 --
Galina Leytes............................ -- -- 4,823 -- 4,462 --
William G. Burton, Ph.D.................. -- -- 39,891 55,800 94,977 $ 76,275
Doug N. Modlin, Ph.D..................... 17,981 $ 35,962 6,375 117,741 13,547 116,266
James S. Richey.......................... -- -- -- 147,500 -- 21,875
- ------------------------
(1) "Value Realized" represents the fair market value of the shares of the
Company's Common Stock underlying the option on the date of exercise less
the aggregate exercise price of the option and does not indicate that the
optionee sold such stock.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized and are based on the
positive spread between the respective exercise prices of outstanding
options and $3.125, which was the closing price of the Company's Common
Stock on December 31, 1998, the last day of trading for the fiscal year.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the following report and the Stock Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report of the Compensation Committee of the Board of
Directors (the "Committee") describing the compensation policies applicable to
the Company's executive officers during the fiscal year ended December 31, 1998.
The Committee is responsible for establishing and monitoring the general
compensation policies and compensation plans of the Company, as well as the
specific compensation levels for executive officers. Executive officers who are
also directors have not participated in deliberations or decisions involving
their own compensation.
GENERAL COMPENSATION POLICY
Under the supervision of the Board of Directors, the Company's compensation
policy is designed to attract and retain qualified key executives critical to
the Company's growth and long-term success. It is the objective of the Board of
Directors to have a portion of each executive's compensation contingent upon the
Company's performance as well as upon the individual's personal performance.
Accordingly, each executive officer's compensation package is comprised of three
elements: (i) base salary which reflects individual performance and expertise,
(ii) variable bonus awards payable in cash and tied to the achievement of
certain performance goals that the Board of Directors establishes from time to
time for the Company and (iii) long-term stock-based incentive awards which are
designed to strengthen the mutuality of interests between the executive officers
and the Company's stockholders.
The summary below describes in more detail the factors which the Board of
Directors considers in establishing each of the three primary components of the
compensation package provided to the executive officers.
22
BASE SALARY
The level of base salary is established primarily on the basis of the
individual's qualifications and relevant experience, the strategic goals for
which he or she has responsibility, the compensation levels at companies which
compete with the Company for business and executive talent, and the incentives
necessary to attract and retain qualified management. Base salary is adjusted
each year to take into account the individual's performance and to maintain a
competitive salary structure. Company performance does not play a significant
role in the determination of base salary.
CASH-BASED INCENTIVE COMPENSATION
Cash bonuses are awarded on a discretionary basis to executive officers on
the basis of their success in achieving designated individual goals and the
Company's success in achieving specific company-wide goals, such as customer
satisfaction, revenue and earnings targets, expense control and new product
introductions. For 1998, the Company determined that payment of cash bonuses
earned by executive officers would be deferred until the Company achieved
certain goals.
LONG-TERM INCENTIVE COMPENSATION
The Company has utilized its stock option plans to provide executives and
other key employees with incentives to maximize long-term stockholder values.
Awards under this plan by the Board of Directors take the form of stock options
designed to give the recipient a significant equity stake in the Company and
thereby closely align his or her interests with those of the Company's
stockholders. Factors considered in making such awards include the individual's
position in the Company, his or her performance and responsibilities, and
internal comparability considerations.
Each option grant allows the executive officer to acquire shares of Common
Stock at a fixed price per share (at least the fair market value on the date of
grant) over a specified period of time (up to 10 years). The options typically
vest over five years. Certain of these options may vest on an accelerated basis
based on milestones set by the Company's Compensation Committee. Accordingly,
the option will provide a return to the executive officer only if he or she
remains in the Company's service, and then only if the market price of the
Common Stock appreciates over the option term.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Lev J. Leytes has served as the Company's President, Chief Executive Officer
and Chairman of the Board of Directors since the Company's inception. His base
salary for fiscal 1998 was $250,000.
The factors discussed above in "Base Salaries" and "Cash-Based Incentive
Compensation" were also applied in establishing the amount of Mr. Leytes'
salary. Significant factors in establishing Mr. Leytes' compensation were the
Company's rate and amount of revenue growth, the Company's ability to hire and
retain key employees, the Company's achievement of certain of its goals relative
to the introduction of new products and expansion into new markets.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee has considered the impact of Section 162(m) of the Internal
Revenue Code adopted under the Omnibus Budget Reconciliation Act of 1993, which
disallows a deduction for any publicly held corporation for individual
compensation exceeding $1 million in any taxable year for the Chief Executive
Officer and four other most highly compensated executive officers, respectively,
unless such compensation meets the requirements for the "performance-based"
exception to Section 162(m). As the cash compensation paid by the Company to
each of its executive officers is expected to be below $1 million and the
Committee believes that options granted under the Company's 1994 Equity
Incentive Plan, 1997 Stock Plan, 1998 Employee Stock Purchase Plan, or 1998
Directors' Stock Option Plan to such officers will meet
23
the requirements for qualifying as performance-based, the Committee believes
that Section 162(m) will not affect the tax deductions available to the Company
with respect to the compensation of its executive officers. It is the
Committee's policy to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax law. The Company, however,
may from time to time pay compensation to its executive officers that may not be
deductible.
Compensation Committee:
Michael F. Bigham
John G. Freund, M.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee of the Board is currently
or has been, at any time since the formation of the Company, an officer or
employee of the Company. No executive officer of the Company serves as a member
of the Board of Directors or compensation committee of any entity that has one
or more executive officers serving on the Company's Board or Compensation
Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1999, the Company issued, in a private placement transaction, an
aggregate of 2,000,000 shares of Common Stock at a purchase price of $3.50 per
share. The purchasers of the Common Stock included the following 5% stockholders
of the Company and persons and entities associated with them:
SHARES OF
COMMON
INVESTOR(1) STOCK
- ----------------------------------------------------------------------------------- -----------
The Bay City Capital Fund I, L.P.(2)(3)............................................ 857,143
The Kaufmann Fund, Inc.(2)......................................................... 857,143
Skyline Venture Partners, L.P.(4).................................................. 285,714
- ------------------------
(1) Shares held by affiliated persons and entities have been aggregated.
(2) Holder is a 5% stockholder.
(3) John D. Diekman, Ph.D., a director of the Company, is a limited partner of
the general partner of The Bay City Capital Fund I, L.P., does not share
voting and dispositive power with respect to the shares held by such entity,
and disclaims beneficial ownership of such shares in which he has no
pecuniary interest.
(4) John G. Freund, M.D., a director of the Company, is the Managing Director of
Skyline Venture Management LLC, the general partner of Skyline Venture
Partners, L.P. ("Skyline"). Dr. Freund disclaims beneficial ownership of
shares held by Skyline, except to the extent of any indirect pecuniary
interest in his distributive shares therein.
In December 1995, the Company entered into an agreement with Mr. Leytes
providing that, in the case of involuntary termination other than for cause,
salary and benefits will continue to be paid for a period of one year from the
date of termination, all stock options and restricted stock then held by Mr.
Leytes will immediately vest, and a bonus equal to the greater of the actual
bonus owing to Mr. Leytes in the year of termination or 100% of the base salary
Mr. Leytes received for the preceding twelve calendar months will be paid.
During the fiscal year ending December 31, 1998, Joseph Leytes, the father
of Lev J. Leytes, received total compensation of $61,234, of which $60,083 was
salary and $1,151 was paid in the form of a bonus, in connection with services
provided to the Company in his capacity as a senior mechanical engineer.
24
In November 1998, the Company entered into an agreement with Mr. Tannenbaum
providing that, in the case of involuntary termination by any
successor-in-interest of the Company for any reason other than cause within
three years of his start date, his base salary would continue until the earlier
of six months or commencement of full-time employment with another employer, and
100% of his unvested outstanding initial option grant of 100,000 shares will
immediately vest.
In January 1998, the Company entered into an employment agreement with Mr.
Richey providing that in the case of termination by the Company or its successor
within two years from his start date for any reason other than cause, (i) he
would be entitled to receive continuation of his base salary for up to twelve
months following the date of termination of his employment (the "Severance
Period"), provided that if he commenced full-time employment during the
Severance Period, the Company's obligation to pay any severance shall cease at
the time of such employment, and (ii) 15,000 shares of stock subject to his
outstanding options shall immediately vest in full. In connection therewith the
Company extended a home loan in the amount of $190,000 to Mr. Richey. The loan
is secured by the officer's home and shares of the Company's Common Stock. The
loan bears interest at 5.83% per annum and is to be repaid in full on the
earliest of February 15, 2008 or the dates of certain other conditions of the
note. The loan and the interest may be forgiven at a rate of 20% per year
starting on the sixth anniversary of Mr. Richey's employment with the Company,
provided he is still employed by the Company.
The Company has entered into indemnification agreements with its officers
and directors containing provisions which may require the Company, among other
things, to indemnify its officers and directors against certain liabilities that
may arise by reason of their status or service as officers or directors and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified. The Company also intends to execute such
agreements with its future directors and executive officers.
The Company believes that all of the transactions set forth above were in
its best interests. As a matter of policy, the transactions were, and all future
transactions between the Company and its officers, directors, principal
stockholders and affiliates will be approved by a majority of the Board of
Directors, including a majority of the independent and disinterested directors
on the Board of Directors, and will generally be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
25
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return data
for the Company's stock for the period from March 13, 1998 (the date on which
the Company's stock was first registered under Section 12 of the Securities
Exchange Act of 1934, as amended) through December 31, 1998 to the cumulative
return over such period of (i) the Nasdaq National Market Composite Index and
(ii) the Hambrecht & Quist--Healthcare (Excluding Biotechnology) Index. The
graph assumes that $100 was invested on March 13, 1998, the date on which the
Company completed the initial public offering of its Common Stock, in the Common
Stock of the Company and in each of the comparative indices. The graph further
assumes that such amount was initially invested in the Common Stock of the
Company at a per share price of $7.00, the price at which such stock was first
offered to the public by the Company on the date of its initial public offering,
and reinvestment of any dividends. The stock price performance on the following
graph is not necessarily indicative of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HAMBRECHT & QUIST - HEALTHCARE (EXCLUDING BIOTECHNOLOGY)
DATES LJL BIOSYSTEMS, INC. THE NASDAQ STOCK MARKET - U.S. INDEX INDEX
3/13/98 $100.00 $100.00 $100.00
3/31/98 $100.90 $103.75 $100.38
6/30/98 $69.64 $106.75 $102.28
9/30/98 $35.71 $96.64 $90.28
12/31/98 $44.64 $124.64 $107.27
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's next
Annual Meeting of Stockholders must be received by Robert T. Beggs, LJL
BioSystems, Inc., 405 Tasman Drive, Sunnyvale, California 94089, no later than
December 17, 1999. If the Company is not notified of a stockholder proposal by
March 2, 2000, then the proxies held by management of the Company provide
discretionary authority to vote against such stockholder proposal, even though
such proposal is not discussed in the Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the SEC initial reports
of ownership and changes in ownership of the Company's Common Stock. Reporting
Persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) reports they file. To the Company's knowledge, based solely on
its review of the copies of such reports received or written representations
from certain Reporting Persons that no other reports were required,
26
the Company believes that during its fiscal year ended December 31, 1998, all
Reporting Persons complied with all applicable filing requirements, except that
Mr. Richey filed a late Form 3 on March 27, 1998.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement incorporates certain documents of the Company by
reference that are not presented herein or delivered herewith. Such documents
are available to any person, including any beneficial owner, to whom this Proxy
Statement is delivered, upon oral or written request, without charge, directed
to Robert T. Beggs, LJL BioSystems, Inc., 405 Tasman Drive, Sunnyvale,
California 94089, (408) 541-8787. In order to ensure timely delivery of the
documents, such requests should be made by May 1, 1999.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies in the enclosed form will be voted in respect thereof as the
proxy holders deem advisable.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
[LOGO]
Mark B. Weeks
SECRETARY
April 16, 1999
Sunnyvale, California
27
APPENDIX
LJL BIOSYSTEMS, INC.
1997 STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1997 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants
of the Company and its Subsidiaries and to promote the success of the
Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or nonstatutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as
amended, and the regulations promulgated thereunder. Stock purchase rights
may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan.
(e) "COMMON STOCK" means the Common Stock of the Company.
(f) "COMPANY" means LJL BioSystems, Inc., a Delaware corporation.
(g) "CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.
(i) "EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company, with the
status of employment determined based upon such minimum number of hours or
periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment by the Company of a
director's fee to a Director shall not be sufficient to constitute
"employment" of such Director by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the fair market
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange, or the exchange with the
greatest volume of trading in Common Stock on the grant date, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is quoted on the Nasdaq System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common
Stock on the grant date, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code,
as designated in the applicable written option agreement.
(m) "NAMED EXECUTIVE" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer). Such officer status
shall be determined pursuant to the executive compensation disclosure rules
under the Exchange Act.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.
-2-
(o) "OPTION" means a stock option granted pursuant to the Plan.
(p) "OPTIONED STOCK" means the Common Stock subject to an Option
or a Stock Purchase Right.
(q) "OPTIONEE" means an Employee or Consultant who receives an
Option or a Stock Purchase Right.
(r) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any
successor provision.
(s) "PLAN" means this 1997 Stock Plan.
(t) "REPORTING PERSON" means an officer, director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.
(u) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(v) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as the same may be amended from time to time, or any successor provision.
(w) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(x) "STOCK EXCHANGE" means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted
at any given time.
(y) "STOCK PURCHASE RIGHT" means the right to purchase Common
Stock pursuant to Section 11 below.
(z) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 2,070,750 shares (post reverse split) of Common Stock.
The Shares may be authorized, but unissued, or reacquired Common Stock. If
an Option should expire or become unexercisable for any reason without having
been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. In addition, any Shares of Common Stock which
are retained by the Company upon exercise of an Option or Stock Purchase
Right in order to satisfy the exercise or purchase price for such Option or
Stock Purchase Right or any withholding taxes due with respect to such
exercise shall be treated as not issued and shall continue to be available
under the Plan. Shares repurchased by the Company pursuant to any repurchase
right which the Company may have shall not be available for future grant
under the Plan.
-3-
4. ADMINISTRATION OF THE PLAN.
(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.
(b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, grants under the Plan may be made by different bodies with respect to
directors, non-director officers and Employees or Consultants who are not
Reporting Persons.
(ii) ADMINISTRATION WITH RESPECT TO REPORTING PERSONS. With
respect to grants of Options or Stock Purchase Rights to Employees who are
Reporting Persons, such grants shall be made by (A) the Board if the Board
may make grants to Reporting Persons under the Plan in compliance with Rule
16b-3 or any successor thereto and Section 162(m) of the Code as it applies
so as to qualify grants of Options to Named Executives as performance-based
compensation, or (B) a committee designated by the Board to make such grants
under the Plan, which committee shall be constituted in such a manner as to
permit grants under the Plan to comply with Rule 16b-3, to qualify grants of
Options to Named Executives as performance-based compensation under Section
162(m) of the Code and otherwise so as to satisfy the legal requirements
relating to the administration of incentive stock option plans, if any, of
California corporate and securities laws, of the Code and of any applicable
Stock Exchange (the "APPLICABLE LAWS"). Once appointed, such committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the committee
and appoint additional members thereof, remove members (with or without
cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the committee and thereafter
directly make grants to Reporting Persons under the Plan, all to the extent
permitted by Rule 16b-3 and to the extent required under Section 162(m) of
the Code to qualify grants of Options to Named Executives as
performance-based compensation.
(iii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Options or Stock Purchase Rights to
Employees or Consultants who are not Reporting Persons, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board,
which committee shall be constituted in such a manner as to satisfy the
Applicable Laws. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by the Applicable Laws.
(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, and
-4-
subject to the approval of any relevant authorities, including the approval,
if required, of any Stock Exchange, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom Options
and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(viii) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights; and
(ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan; and
(x) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options or Stock Purchase Rights to
participants who are foreign nationals or employed outside of the United
States in order to recognize differences in local law, tax policies or
customs.
(d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options or Stock Purchase Rights.
5. ELIGIBILITY.
(a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Employee or Consultant who has
been granted an Option or Stock Purchase Right may, if he or she is otherwise
eligible, be granted additional Options or Stock Purchase Rights.
-5-
(b) TYPE OF OPTION. Each Option shall be designated in the
written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to
the extent that the aggregate Fair Market Value of Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares
subject to an Incentive Stock Option shall be determined as of the date of
the grant of such Option.
(c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship
at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated
under Section 15 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated
in the Option Agreement; provided, however, that the term shall be no more
than ten (10) years from the date of grant thereof or such shorter term as
may be provided in the Option Agreement and provided further that, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant thereof or such shorter term as may be provided in the written
option agreement.
8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as
provided in this Plan, the maximum number of Shares which may be subject to
options granted to any one Employee under this Plan for any fiscal year of
the Company shall be 2,000,000 (on a post-split basis). This Section 8 shall
not apply prior to the date upon which the Company becomes subject to the
Exchange Act and following such date, shall not apply until the (i) earliest
of: (A) the first material modification of the Plan (including any increase
to the number of shares reserved for issuance under the Plan in accordance
with Section 3); (B) the issuance of all of the shares of common stock
reserved for issuance under the Plan; (C) the expiration of the Plan; or (D)
the first meeting of shareholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year
in which occurred the first registration of any equity security under Section
12 of the Exchange Act; or (ii) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.
-6-
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board and set forth in the applicable agreement, but shall be subject to the
following:
(i) In the case of an Incentive Stock Option that is:
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.
(ii) In the case of a Nonstatutory Stock Option that is:
(A) granted to a person who, at the time of the grant of
such Option is a Named Executive of the Company, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
the grant.
(B) granted to any person other than a Named Executive,
the per Share exercise price shall be such price as is determined by the
Administrator on the date of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note (subject to the provisions of Section 153 of the
Delaware General Corporation Law), (4) other Shares that (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee
for more than six months on the date of surrender or such other period as may
be required to avoid a charge to the Company's earnings, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which such Option shall be exercised, (5) authorization
for the Company to retain from the total number of Shares as to which the
Option is exercised that number of Shares having a Fair Market Value on the
date of exercise equal to the exercise price for the total number of Shares
as to which the Option is exercised, (6) delivery of a properly executed
exercise notice together with such other documentation as the Administrator
and the broker, if applicable, shall require to effect an exercise of the
Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price and any applicable income or employment taxes, (7)
delivery of an irrevocable subscription agreement for the Shares that
irrevocably obligates the option holder to take and pay for the Shares not
more than twelve months after the date of delivery of the subscription
agreement, (8) any combination of the foregoing methods of payment, or (9)
such other consideration and method of payment for
-7-
the issuance of Shares to the extent permitted under Applicable Laws. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, and reflected in the written
option agreement, which may include vesting requirements and/or performance
criteria with respect to the Company and/or the Optionee.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms
of the Option by the person entitled to exercise the Option and the Company
has received full payment for the Shares with respect to which the Option is
exercised. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 13 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares that thereafter may be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Subject
to Section 10(c), in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than
thirty (30) days as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time
of grant of the Option and not exceeding three (3) months) after the date of
such termination (but in no event later than the expiration date of the term
of such Option as set forth in the Option Agreement), exercise his or her
Option to the extent that the Optionee was entitled to exercise it at the
date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of such termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate. No termination shall be deemed to occur
and this Section 10(b) shall not apply if (i) the Optionee is a Consultant
who becomes an Employee; or (ii) the Optionee is an Employee who becomes a
Consultant.
(c) DISABILITY OF OPTIONEE. Notwithstanding Section 10(b) above,
in the event of termination of an Optionee's Continuous Status as an Employee
or Consultant as a
-8-
result of his or her total and permanent disability (within the meaning of
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12)
months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee
during the period of Continuous Status as an Employee or Consultant since the
date of grant of the Option, or within thirty (30) days following termination
of Optionee's Continuous Status as an Employee or Consultant, the Option may
be exercised, at any time within six (6) months following the date of death
(but in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that had accrued at the date of death
or, if earlier, the date of termination of Optionee's Continuous Status as an
Employee or Consultant. To the extent that Optionee was not entitled to
exercise the Option at the date of death or termination, as the case may be,
or if Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
(e) RULE 16b-3. Options granted to Reporting Persons shall comply
with Rule 16b-3 and shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption for Plan
transactions.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid which price shall
be the price determined by the Administrator on the date of offer (which
shall not be less than 100% of the Fair Market Value of the Shares in the
case of an offer to a Named Executive), and the time within which such person
must accept such offer, which shall in no event exceed thirty (30) days from
the date upon which the Administrator made the determination to grant the
Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase
Right shall be referred to herein as "Restricted Stock."
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser's employment with the Company for any reason (including
death or disability). The purchase price for Shares repurchased pursuant to
the Restricted Stock purchase agreement shall be the original purchase price
paid by
-9-
the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as
the Administrator may determine.
(c) OTHER PROVISIONS. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase
agreements need not be the same with respect to each purchaser.
(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax
liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee is obligated to pay the Company an amount required to be withheld
under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by one or some combination of the following methods: (a) by cash
payment, or (b) out of Optionee's current compensation, (c) if permitted by
the Administrator, in its discretion, by surrendering to the Company Shares
that (i) in the case of Shares previously acquired from the Company, have
been owned by the Optionee for more than six months on the date of surrender,
and (ii) have a fair market value on the date of surrender equal to or less
than the applicable withholding taxes, or (d) by electing to have the Company
withhold from the Shares to be issued upon exercise of the Option, or the
Shares to be issued in connection with the Stock Purchase Right, if any, that
number of Shares having a fair market value equal to the amount required to
be withheld. For this purpose, the fair market value of the Shares to be
withheld shall be determined on the date that the amount of tax to be
withheld is to be determined (the "TAX DATE").
Any surrender by a Reporting Person of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3. All elections by an
Optionee to have Shares withheld to satisfy tax withholding obligations shall
be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made; and
-10-
(c) all elections shall be subject to the consent or disapproval
of the Administrator.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN OTHER
TRANSACTIONS.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or that have
been returned to the Plan upon cancellation or expiration of an Option or
Stock Purchase Right, the maximum number of shares of Common Stock for which
Option may be granted to any employee under Section 8 of the Plan, as well as
the price per share of Common Stock covered by each such outstanding Option
or Stock Purchase Right, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment
shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.
(c) MERGER OR SALE OF ASSETS. In the event of a proposed sale of
all or substantially all of the Company's assets or a merger of the Company
with or into another corporation where the successor corporation issues its
securities to the Company's stockholders, each outstanding Option or Stock
Purchase Right shall be assumed or an equivalent option or right shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the successor corporation does not agree to
assume the Option or Stock Purchase Right or to substitute an equivalent
option or right, in which case such Option or Stock Purchase Right shall
terminate upon the consummation of the merger or sale of assets.
-11-
(d) CERTAIN DISTRIBUTIONS. In the event of any distribution to
the Company's stockholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without
receipt of consideration by the Company, the Administrator may, in its
discretion, appropriately adjust the price per share of Common Stock covered
by each outstanding Option or Stock Purchase Right to reflect the effect of
such distribution.
14. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised or purchased during the
lifetime of the Optionee or Stock Purchase Rights Holder only by the Optionee
or Stock Purchase Rights Holder.
15. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option
or Stock Purchase Right, or such other date as is determined by the Board;
provided however that in the case of any Incentive Stock Option, the grant
date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of
commencement of the Optionee's employment relationship with the Company.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Stock Purchase Right is so granted within a reasonable time
after the date of such grant.
16. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AUTHORITY TO AMEND OR TERMINATE. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of
any Optionee under any grant theretofore made, without his or her consent.
In addition, to the extent necessary and desirable to comply with Rule 16b-3
or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or
termination of the Plan shall adversely affect Options already granted,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell
or dis-
-12-
tribute such Shares if, in the opinion of counsel for the Company, such
representation is required by law.
18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
19. AGREEMENTS. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Administrator shall approve from time to
time.
20. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under applicable state and federal
law and the rules of any Stock Exchange upon which the Common Stock is
listed. All Options and Stock Purchase Rights issued under the Plan shall
become void in the event such approval is not obtained.
21. INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS. At the time
of issuance of any securities under the Plan, the Company shall provide to
the Optionee or the Purchaser a copy of the Plan and any agreement(s)
pursuant to which securities under the Plan are issued.
-13-
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LJL BIOSYSTEMS, INC. FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1999
The undersigned stockholder of LJL BioSystems, Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 16, 1999, and hereby appoints
Lev J. Leytes and Robert T. Beggs or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of LJL BioSystems, Inc. to be held at the Company's headquarters,
located at 405 Tasman Drive, Sunnyvale, California on Tuesday, June 1, 1999, at
1:00 p.m. and at any adjournment or postponement thereof, and to vote all shares
of Common Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS: FOR all nominees listed below WITHHOLD authority
(EXCEPT AS INDICATED). / / to vote for all
nominees listed
below. / /
If you wish to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below:
Galina Leytes George W. Dunbar, Jr. Daniel S. Janney
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1997 STOCK PLAN TO
INCREASE THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER SUCH PLAN BY 450,000 SHARES:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER
31, 1999:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters that may properly
come before the meeting and any postponement(s) or adjournment(s) thereof.
PLEASE SIGN ON REVERSE SIDE AND RETURN IMMEDIATELY
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS; (2) FOR
THE AMENDMENT TO THE 1997 STOCK PLAN; (3) FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999; AND AS SAID PROXY HOLDERS DEEM ADVISABLE
ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
Date: _______________________
_____________________________
Signature
Date: _______________________
_____________________________
Signature
(This Proxy should be marked,
dated, signed by the
stockholder(s) exactly as his
or her name appears hereon,
and returned promptly in the
enclosed envelope. Persons
signing in a fiduciary
capacity should so indicate.
If shares are held by joint
tenants or as community
property, both should sign.)